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Prioritizing Your Bills to Get Out of Debt

Prioritizing your bills is crucial to getting out of debt, because all debt is not created equal. Though you should always strive to pay all your bills, some bills are more important than others. Learn which ones to prioritize to get out of debt faster.


Never miss a mortgage payment. It is your most important debt. It does more than provide you with shelter and comfort; it is an asset. It is likely to appreciate over time.

If you are having trouble making your mortgage payments, don’t fret. You may be able to modify or refinance your current loan to better rates or lower your mortgage payment. To see if you qualify, contact your mortgage service provider. Ask about the Home Affordable Modification Program (HAMP). If you just want to refinance your mortgage, ask about the Home Affordable Refinance Program (HARP).

Car Payments

It can be difficult to keep up with car payments when money is tight, especially if your car is nowhere close to being fully paid off. According to USA Today, a recent trend among car owners is to get a longer car loan to have lower monthly car payments. If you’re a follower of this trend, you might be wondering whether making car payments for that long is worth it. Unlike homes, cars are not asset builders: They depreciate over time. And when you have a long-term car loan, you end up paying down the balance much more slowly than the vehicle’s rate of depreciation.

However, making payments on a long-term car loan is worth it if you need a car to get yourself to and from work every day and would not be able to afford a car otherwise. Do not let yourself fall behind on car payments.

Credit Cards

Credit cards definitely have both their pros and their cons. They are easier to carry in your wallet than a wad of cash, and you need them to build credit, rent a car, and make some online purchases.

Credit card companies can also regularly change their terms, notes Investopedia. Make one mistake, such as missing a payment, and they can be heartless. According to Forbes, they can charge you a penalty interest rate, which is usually 29.99 percent on new purchases and your existing balance. The standard late fee will also add up to $35 to your bill.

Don’t ignore your credit card statement when prioritizing your bills. The late fees and increased APR can cause your debt to skyrocket otherwise.

Student Loans

If you have student loans, make sure you pay them. Defaulting on student loans can impact your credit and may prevent you from attending school in the future. If you’re having trouble paying your loans, talk to your lender. Often, they can help you with payment plans to reduce your monthly bill.

Back Taxes

If you are trying to stay afloat, save yourself a lifetime of headaches: pay your back taxes. The IRS has a loaded hand when it comes to tax collection. They will impose late fees, penalties, and interest to unpaid tax bills, which are costly, but not your greatest concern. Tax evasion is a serious crime that carries steep fines and jail time.

Installment Loans and Monthly Memberships

Installment loans and monthly memberships for things like clubs or gym memberships are things that can take a lower priority. Paying them on time helps your credit, but paying them before you pay your more important bills negatively impacts your financial life. If money is tight, it’s often best to just avoid taking out these debts if possible.

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