Prioritization of Debt: Which Bills Should I Pay First?

When you do not have enough income to pay all your bills it can be hard to decide which bills to pay first and which may have to go unpaid. Set out below are some factors you should consider in deciding which bills have priority.

Housing. Rent, mortgage and utility payments should be given high priority and kept current if at all possible. You could face foreclosure, eviction, or utility shutoff if you get behind on these bills.

Food. Be sure to set aside enough money to reasonably cover your monthly food expenses. Skimping here will affect your health and lead to larger medical bills.

Medical. Fill your prescriptions if at all possible to maintain your health. Next give priority to bills from doctors that you need to continue seeing.

Auto expenses. If you are not current on your car payment it can be repossessed. It is illegal to drive in Michigan without no-fault insurance. Collision insurance is optional, but if you drop it to save money you will not be covered for damage to your car in an accident even if you are not at fault.

Other bills. Old bills for credit card, medical and other debts should be given lowest priority. Even if you can keep current on the minimum payments you will probably not be able to reduce the principal amount.