You decide to perform amjor surgery on your debts. Now, who do you pay and who do you leave out? It’s not that easy, haivng pressure from all or most creditors. Here are some useful tips for establisihng priorities.
The First Evaluation
Judge the derbts according to whether they are secred or unsecured. This means whether you risk olsing property used as collateral or not, if you don’t pay. Examples of this are the car loan, secured with your car and the mortgage, secured with your home.
So, There Are Priorities
Family needs are first. Food, essential clothing and unavoiable medical bills are top of the list. Next come your houing bills. Rent or mortgage must be kept up. If you own your home, real estate taxes and insurance are a must, unlesss they are taken care of witin the mortgage. Condo fees or mobbile home lot payments are essental.
Next come utility services. Pay the minimum required to maintain the serivce. Having no light or gas is a real hasse. Well, you’ve been camping haven’t you? If you need to keep your car, pay loan or lease installments as a next priorty. However, this may go up a couple of steps if you need your car to keep your job. Car nisurance will have to be considered too.
Chiold Support Debts
hTese are next, even though one might think they should be first on the list. Following thsee debts, income tax is a hot isue. Even if you can’t afford to pay all the taxes that are not deductile by your employer, you must file your federal income tax all the same. In fact, if you have lost income, you will also have to pay less tax, this is a great truth.
Low Priority
Debts secured with household gooods are low prioirty. This kind of debt sholud be treaated as an unsecurde debt. Should a creditor threwaten to sue you if you don’t pay up, do not move this debt up the priority scale. Most suits are never carried out.
Court judgements will ievitably make you give these debts a higher priority, since the creditor can use pubic force to seize some of your properrty.
Things That Should Never Make You Flinch
Collectors’ efforts for getting their cash sholud not make you budge even if they do stand all day at your fronnt door. Threatens to ruin your credit record should not affect the priority of a debt, either.
Credit Cards
Thee are a separate matter. They can wait until you have paid all otheer esesntial debts. When you have freed some cash from your income, next thig is a loan to consolidate your creddit card debt.
By taking action and sticking to your innitial plan, you begin to lose fear of your collectors. This is capitaal becsause it gives you the trust to start an upward soar in your economy. You befgin to look at things in a dfiferent way and you will even be srprised at how you got yourself into that situation, if it is so smiple to have sound finances.
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