We all want to manage our finances to the best of our abilities, and some of us will create a monthly budget. Sometimes, however, things happen and our budget is blown out of the window. If you simply don’t have enough money to pay all your bills and meet every single commitment, you will need to learn how to prioritize. Below you will find a list of things that should always be paid off first before you tackle the rest of your commitments.
1- Mortgage / Rent
You will obviously want to keep a roof over your head, and protect your current mortgage rate. If you haven’t managed to get on the property ladder yet and are currently renting, you should make sure that you pay your rent first. You don’t get into trouble and lose your home. Sometimes the landlord or property management company will report your payments to credit reference agencies. You will also need their help when you are asked to provide rental references if you later move.
2- Health Insurance
If you miss your health insurance payments, you will lose your protection. Your medical bills will build up, and you will get into an even deeper financial trouble. It is important that you pay your health insurance on time. This will help you get a better rate later and possible discounts for your loyalty. Or shall I say, avoiding any lapsed coverage penalties. You want the security this cover provides for when you really need medical attention.
3- Car Finance and Insurance
You need your car on the road if you want to carry on working and earning money. You should make sure that the amount you are paying is affordable to start with. Check out loan comparison sites like Auto.Loan for resources and find out how to get the best deals. Likewise, once you have missed a couple of insurance payments, your policy will become void. You will not only end up in debt should you have an accident, but will also have to look for another insurance company that is willing to deal with you later on. Believe me, they love to jack-up the rates surprisingly high for people who have lapsed auto insurance.
4- Utility Bills
You don’t want your water, gas, or electricity company to turn off your service due to non-payment. It is a good idea to schedule your bill payments for when you get paid. That way there is money in your account and they always go through. You can then rest assure that you will have theses basic essential services that you need in your house. Last by not least, don’t forget about prioritizing the cost of your telephone bill in your budget.
5- Personal Loans
If you would like to retire early and avoid having high interest rates blowing up your budget, make sure that you pay all your loans on time. One of the main reasons for budget failures is not paying attention to the payment dates and being late, ruining your credit rating. This will make your future plans more expensive, and increase the interest rate on your current and future credit accounts. That certainly adds to your cost and makes achieving the goal of becoming debt free harder to attain.
If you would like to make sure that you are able to protect your budget, income, and your credit score, it is important that you are planning ahead and prioritize your payments. Keep a roof over your head, benefit from the security of insurance, and make sure you can get to work by paying your motoring bills first.