Debt Priority

This debt priority section will help you determine which debt you should pay off first and which debt priority should get extra payment each month. Debt priority is key because when you are in a debt management program, you do not have all the money in the world to pay off all of your debt which is why you are in a credit and debt counseling program.

If you have money left over at the end of the month, use the debt priority below to make extra payments to important debts or debts with high priority.

Debt priority #1: Family necessities

Before you pay any debts off, you must make sure you have enough family necessity items such as food, essential medical expenses, and clothing (not fashionable clothing but just something to wear for work, etc). While this is the most important on your debt priority, you should always look for the most cost effective way to spend money on family necessities.

Debt priority #2: Housing bills

Once you have made sure that you have food and medication to survive another day, next on your debt priority is housing bills. You want to make sure you have roof over your head. This follows the hierarchy of needs. Housing bills include mortgage or rent payments, real estate taxes, insurance, condo fees and dues, mobile home lot payments.

Debt priority #3: Utilities

Now you have a house or somewhere to say, next on your debt priority is to keep the lights on in the house and the water running, etc. Sometimes, you may not have to pay the full amount. You need to figure it out with your utility providers. Sometimes, you need to juggle the payments based on your list of debt priority.

Debt priority #4: Car loans or leases

If you need your car to go to work or for some critical reasons, you need to put the car loan on your list of debt priority after the utilities. If you need your car for work, it may even be higher on your debt priority than housing or utilities. After all, if you lose your job, you won't be able to afford to pay off any debts.

You also need to stay current on your car insurance or your creditor may take your car or you may end up paying too much for it if it were in an accident.

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