Most personal finance advice answers questions like: what’s the difference between a traditional and a Roth IRA? How much should I keep in my emergency fund? What’s the best way to pay off debt? In other words, it’s geared towards people who have their basic needs taken care of and have extra funds leftover to save and invest.
But not everyone is in that situation, at least not all the time. Many of us face situations where we’re seriously short on cash and need make some tough choices about which bills get paid and which don’t.
If you find yourself unable to pay all of your bills at once, be sure to prioritize the three important payments below, then pay the others when you have more cash on hand:
Making the payment on your home should be your first concern every month, and this is especially true if you’re having trouble paying your other bills. This is true for two reasons: for one, from a survival standpoint, it’s important to keep a roof over your family’s head. Making your mortgage payments ensures that you’ll have a place to live.
Second, even if you’re struggling financially, you should be mindful of your credit. Times won’t always be hard, and when you’re doing better, you don’t want a foreclosure hanging over you. This type of black mark on your credit will follow you around for years to come, so be sure to make your mortgage payment – no matter what.
2.Your insurance premiums
This might seem like a strange financial priority during lean times, but keeping up with your insurance premiums is essential to your family’s safety. If you fail to make your life insurance payments, for example, and something happens to you, your family’s financial troubles will get exponentially worse. The same goes for car insurance: if your auto insurance lapses and you end up in an accident, your already strained finances will quickly spiral out of control.
In short, going without any type of insurance can have ruinous consequences, so even if you’re struggling to come up with the funds, make sure you’re paying your premiums.
3.Your car payment
If you still owe money on your car, keeping up with your auto payments is another must. Most Americans don’t have very many public transportation options, so if your car gets repossessed, you won’t be able to get to work. This is the primary reason it’s important to prioritize making your car payments, even if it’s tough to scrape together the cash.
And again, your credit is a consideration. A repossession is another serious problem for your credit history, so failing to make your car payments could have consequences for years to come.
When it comes to making difficult choices about your money, be sure to follow the advice above so that you don’t end up making a bad decision about how to allocate limited funds. You won’t always be strapped for cash, so it would be a shame to make a mistake that could follow you around long after your financial health has been restored.