Many people are experiencing financial hardship today. People who have never experienced the pinch of economic stress are buckling under the pressure of abysmal unemployment rates, high cost of living and record-high interest rates.
If you are among those struggling in today’s financial world, you may have wondered how you will make all of your payments at the end of the month. How should you prioritize your bills and keep afloat in this turbulent time?
Food and Household Necessities
Set aside money for your personal survival needs first. If you pay all of your bills but cannot eat, you are left with another difficult obstacle. Budget yourself tightly: Buy only the necessities when it comes to food. Skip expensive items such as fast food or sugary beverages. In addition to food groceries, budget for soap, toilet paper, tooth paste and laundry detergent as well. If you have infant children, include the cost of formula, diapers and other supplies, as needed.
Housing and Utilities
Make sure that you keep the roof over your head. Many states allow a landlord to evict his or her tenants if the rent is even one day late: It’s not a risk worth taking. Most mortgage lenders allow a grace period of 10 to 15 days after a bill’s due date before charging fees, but it’s still better to pay for your home first.
Additionally, utilities should be a top priority. Extreme temperatures can cause serious health issues. Electricity, gas and water bills should be paid to maintain the wellness of your family during hard times.
Adding a medical bill on top of your woes could worsen your financial situation exponentially. You may be able to save money month to month with a budget billing option, which spreads the cost of winter heating over the summer months. You’ll still owe the same amount of money, but you will receive a predictable bill instead of mile-high utility charges during peak-use months.
Child Support, Taxes and Insurance
If you owe child support or taxes, these should be paid with haste. Failure to pay support can result in the loss of visitation or custody rights of your children. You are required by law to make these payments whether or not you are employed, though you may be able to secure a reduced rate if you are without work.
If you skip on your taxes, you will be charged penalties and fines and may even go to jail. Insurance premiums may seem a steep price, but cutting them out of your budget only works to your advantage if no one in your family gets sick or has an accident. One major medical incident when you’re without coverage can add hundreds of thousands of dollars to your already overwhelming financial obligation.
Car and Phone Payments
You need transportation and a telephone. Certainly, you don’t need a brand new vehicle or a data plan set up on the hottest new smart phone, but you do need a means with which to get around and communicate with others. If you have both a home phone and a mobile phone, drop one of these services to save money. You can also negotiate with your mobile provider to get a by-the-minute plan. This may save money if you are an infrequent caller.
Debts
After the necessities are covered, pay your debts. Student loans, credit cards, doctor’s bills and other debts offer a minimum monthly payment. While making minimum payments costs you accrued interest over the life of the loan, it may be necessary just to get by. Any loans that have a collateral deposit, such as an auto title loan, should be paid first to avoid repossession of your valuables.
Subscription Services
If you’re fortunate enough to still have room in your budget, pay for luxuries last. Cable television, Internet service, Netflix, and gym memberships should be at the lowest priority setting for someone with a tight budget: They’re not necessary. If room in the budget is non-existent, cancel these services to make room for the more important payment. Access the Internet at free wireless hubs and forgo the cable television in order to make your finances work.
About the author: Jaye Ryan is a freelance writer who loves writing about financial management on behalf of Octopus Loans.
Credits: Photo courtesy of linusb4.