Debt Advice for the Overwhelmed
When there are too many bills to pay and not enough money to cover them all, many people need solid debt advice to decide which debt bills to pay first.
Of course, we urge anyone struggling with too many bills to find a way to pay everyone they owe—but we understand this isn’t always realistically possible. Our credit counselors may be able to offer specific debt advice, but there are some things we can offer that should benefit anyone.
Debt Advice #1: Start with Budgeting
Do a quick survey of your financial obligations and compare that to your regular income. If there’s not enough coming in to cover everything, you’ll have to decide how to handle all of your payments.
Debt Advice #2: Prioritize
You could simply take the money you have available and split it up among all of your creditors. Seems fair, right? Unfortunately, not all debts are alike, and there are some debts that should always come first:
- Food and shelter-cut back on dining out, of course, but don’t put your family’s health at risk. Pay your housing bills first so that you have a roof over your head.
- Preserve your income-if you need your car to get to work and continue to get paid, then make sure you keep up the payments. Anything that preserves your ability to earn income is a must.
- Child support, back taxes-these debts can land you in jail if you don’t pay.
- Student loans-You may be able to get a deferment on your student loan payments, but only if you are not in default. Pay the minimum toward your student loans to keep your options open.
What are the consequences of non-payment?
For each obligation, ask yourself what will happen to you if you don’t pay. Will your property be repossessed? Will your cable television service be shut down? Debts with more severe consequences should get a higher priority.
Where can you go for help?
Check with your utility companies. They may have departments that can help you if you are struggling to make your payments. For credit card debt, consider credit counseling, since the consolidation of your debt payments can help you address all of your revolving debts in one payment.
If you want to talk to a counselor and get debt advice that is tailored to your specific situation, contact us now for a free credit counseling session.
Photo: images_of_money via Flickr CC
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