Prioritizing Debt

When growing a family this can be the time when a lot of debt is amassed. There will be times when you use a credit card, take paycheck advances, borrow for a home or car, or suffer an accident and need money for medical expenses. If debts start to pile up, you will have to get a handle on them all by prioritizing payments to help you gain time to generate more income.

Essentials First

Shelter, food, utilities, and transportation are the modern day essentials. The mortgage or rent should be paid first to avoid a situation where you are forced to move, incurring larger charges. Keep your utilities on automatic payments and join as many easy pay plans to keep those up and running. Sell any new cars, buy used, and use the savings to pay off more debt.

Loans

Credit cards will allow you to pay a minimum payment, rather than the full amount. Short-term loans like paycheck advances should be paid on the next paycheck cycle to avoid increasing the debt. Only borrow for a house or a car if your job situation is steady. Otherwise, you can buy a car outright used for a fraction of the cost of a new car and avoid financing it all together.

Medical Debt

This is only a priority if non-payment is going to keep you from receiving treatment. Most places will demand full payment, however will be very open to negotiating a payment plan or in some cases upon financial review, offering partial loan forgiveness. If it’s a situation of paying an old medical bill or keeping the heat on in the winter, prioritize the utilities first and the bill last. Even keeping your credit in good standing on accounts that offer emergency cash is better than paying off part of a bill you can’t afford and having nothing left to live on. If medical bills are extravagant and in collections, it may be time to seek bankruptcy protection, in which case much of the debt may end up dismissed in court.