Which bills should I pay first: Part one
Some bills are more important than others. Tips to determine the priority and how much you should pay on each.
If you feel you are buried under with debt, you have some choices. After creating your spending plan, you need to decide which bills you should pay first and the amount you should pay. You are legally obligated to pay all your bills. However, you can determine the priority you need to pay and how much you should pay on each. You can work with your creditors, as they may be able to reduce some of your payments.
Some bills are more important than others are. To aid your family’s decision-making process, consider the following questions on the University of Illinois Extension Getting Through Tough Financial Times website:
What will affect your family’s health and security the most?
- Usually food, housing, utilities, transportation and medical care take priority.
- Keeping up with your mortgage or rent payment is essential to avoid losing your house or getting evicted. If you need a vehicle, paying the car loan or lease payment may be a priority. Missing payments on a vehicle can result in repossession or penalties for a leased vehicle.
- Avoid letting medical insurance slide when money is tight. Uninsured medical bills could be costly. If you’ve lost your job and had medical insurance through your previous employer, you may qualify for coverage through the Health Insurance Marketplace, Medicaid, the Healthy Michigan Plan, or MiChild.
What will you lose if the bills aren’t paid?
- After your house and vehicle, look over your list of remaining secured loans and determine which items are essential to keep. Creditors may repossess items, garnish your wages or put liens on property for nonpayment for items such as furniture, appliances, boats, recreational vehicles and electronic equipment. If you aren’t sure which loans are secured, check your contract.
How much do you still owe on the loan?
Determine how much you have paid on each loan and how much you owe. If you have only one or two payments to make on a loan, it’s probably a good idea to finish paying it, getting that debt out of the way. You may be able to return newer items or sell them to pay off the debt. The Federal Trade Commission (FTC) provides information about vehicle repossession. To learn more about your rights in Michigan, contact the State of Michigan Attorney General.
Michigan State University Extension has released a new toolkit for homeowners who are experiencing or have previously experienced foreclosure. This toolkit will equip these individuals and families with tools to help them recover their financial stability, in the case that a recovery of their home is not possible. The toolkit is available to download free at MI Money Health webpage.
Michigan State University Extension is a HUD-approved housing counseling agency has many MSHDA certified housing counselors at multiple county offices to assist you by phone or through technology. Find the one staff person nearest you at mimoneyhealth.org. MSHDA certified Housing counselors may be located online.
Other articles in this series: