Financial Tip of the Day, number 8: Prioritizing

 Yesterday we took a look at all of the bills that are due between this paycheck and the next. If you have a good working budget, you probably are doing this automatically. So what happens if you have more week than you have money, or you get hit with some unexpected bills, bills you forgot about, or emergencies? There is only so much cash to divvy out, and you must decide what to pay and what can wait.

 This is not an exact science by any means. This is when it is crucial to write down everything you owe on a piece of paper (or use a spreadsheet to cut and paste easier!) just like we did on Day 1, except we’re writing the total that you own instead of just the payment.

Start with the greatest amount to the least. Include who you owe, how much, due date, interest rate, late fee if not paid on time, etc. Be sure to include your normal payments like mortgage, electric bill, etc too. Then take a look at bills that come in that are conveniences. Can you put any services (lawn, cable, etc) on hold or reduce them for a short time until you have more cash flow? For instance, if you MUST have cable, can you have basic cable? Or a lesser package? Can you have the lawn reduced to every three or four weeks***? If so, it is worth doing right away before things get worse so that you can recover quicker. 

If you have medical debt, there is an unwritten rule that this type of debt is more favorable. I mean, who can really not feel bad for you if you have significant issues that ran up the bills? So, pay the minimum amount or negotiate a small amount to pay regularly. Most doctors offices or medical facilities will work with you if you make an honest offer and attempt to pay the bill. You can always throw a larger chunk at it if you get a windfall, but you don’t want to be strapped if you have other debt.

Consider your credit score as well…late payments, missed payments, etc hit your score hard for some debts while others do not report that information. You might be able to let the ones that don’t report wait until the next paycheck or month, especially if you can pay a small amount up front to show your intentions. Be careful that if you have the option to pay a minimum amount with no interest or penalty if you don’t pay in full, do so. Put your money toward what costs you most if you don’t pay in full or miss a payment. 

As always, the best way to sleep at night is to avoid unnecessary debt by monitoring your purchases very closely. Food is your category that you have the most control over. Eat more peanut butter sandwiches or ramen noodles until you get caught up with your bills. You can even do a challenge week with your kids where you all think together what you can eat for a whole week that costs the least amount possible (many times using what you already have on hand). That savings can go toward debts, and your family learns in the process too!

***The fact just is that grass doesn’t have to look pretty if you can’t feed your family. It does make it hard on those who depend on that income, however. Notice I did not say “don’t pay them”…I suggested putting those services on hold. Responsible adults should have enough integrity to ask that the service be placed on hold for a month or two instead of letting a service be performed without paying for it.

 Renee Renner is a former accountant-turned-domestic-engineer, and the Vice President of Team Hope, a local mission supporting the Homeless in our community. She is mom to three boys, and her husband’s biggest supporter. She firmly believes that we should be good stewards, is happy to help those who need more help in this aspect of their spiritual and personal life, and is the epitome of a Proverbs 3:9 woman for God.