The First Thing’s First: Prioritize Your Debts
Many Americans have the problem of having a taste for steak but only the budget to afford McDonalds. People tend to want more than they afford. Instead of accepting that there are things we can’t afford in this world, instead people borrow and borrow so that they can get what they want. This will work for a while, but eventually the debts will pile up and the situation will become unsustainable. People find themselves unable to pay all of their bills and start missing payments. When this happens, many people get late on their homes but are caught up on their credit cards! If you ever find yourself in a similar situation, make sure that your debts are being paid in the order that they should be.
The default rates for home equity loans and mortgages are increasing, but we’re actually defaulting less on credit cards. Credit card collectors are aggressive, intimidating, and harassing, and if you’ve ever had to deal with one, chances are you just want them out of your life. Many people pay their credit card bills first so that they don’t have to deal with that harassing individual anymore. They know they really can’t do much to you if you don’t pay your credit card bills, so they have to use psychological tactics to get you to pay.
We have a tendency to pay whatever company is screaming the loudest and making the biggest fuss about not paying their bill. This is entirely the wrong way to do it. You have to prioritize your debts. After you buy some food, put some gas in the car and pay basic utilities, the very first thing you should pay is your mortgage, because if you don’t take it, eventually the bank will take your house away. The second thing bill should pay is your car, because that will get repossessed if you don’t pay the bill and then you won’t have any form of transportation. After paying those two things you can then consider working on some of your other debts, such as credit cards and installment loans.
Credit card companies will kick and scream and harass you likely day and night, but that doesn’t mean they should be the number one priority. If it gets too much, just unplug your phone for a while or switch to an unlisted number. You should certainly pay all of your bills when you can afford to do so, but you should make sure that the first thing is first and take care of your most important debts before looking at paying unsecured credit card debt.
What is an IVA? It is a less severe debt solution than bankruptcy for people in serious debt. Learn more from experts in debt management.
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Thanks for participating in this week’s Carnival of Family Life hosted at Live from Waterloo on Monday, June 2, 2008! Be sure to check out the other excellent entries this week!