The economic impact of the COVID-19 pandemic has affected the personal finances of many. Under such exceptional circumstances, how do you sort out your bills? Housing should be a top priority...
In a nutshell:
- Pay for food and shelter first.
- Your secured debts should take precedence over your unsecured debts.
- Make your utility and car payments next.
- Everything else, like your unsecured credit card debt, is low-priority.
- Talk to a ClearOne Certified Debt Specialist to learn how to reduce your unsecured debt.
The economic impact of the COVID-19 pandemic has affected the personal finances of many. With entire industries on hold, furloughs and outright job losses have become common.
Having lost part or all of their income, many are struggling to make ends meet. With the federal moratorium on evictions now at its end, 19-23 million Americans are staring down the possibility of losing the roof over their heads.
Under such exceptional circumstances, how do you sort out your bills? How do you prioritize debt?
Housing Should Be Your Top Priority
To quickly learn which bills you should pay first, ask yourself a simple question.
“Can I live without this product or service?”
Regarding housing, the answer is “no”. Since the bare necessities are food, water, and shelter, handling your housing should be a top priority.
Under normal circumstances, missing a mortgage or rent payment will result in your eviction or the foreclosure of your property. With various COVID-19 economic stimulus measures in place, homeowners and renters may find that they have some legal maneuvering room regarding their payments. Note, though, that if you take advantage of reduced or postponed payments, you may have to make up for the temporary debt relief later.
If you find yourself unable to make the payments, contact your landlord or lender if you are an owner. Let them know that you cannot make full payments and try to work out a mutually agreeable solution. Remember during this process that it is in the best interest of both you and the other party to come to an equitable solution, so be patient and flexible where possible.
If it is not possible to come to an agreement regarding payment, you should be aware that, depending on the state where you reside, formal eviction may take weeks or months. During the process, you may have the right to continue staying in the home.
Make the Minimum Required Payments to Keep your Utilities Going
Utility bills and car payments are your medium priority debt obligations. Once you have secured your home, you need to make living there bearable. Pay your gas, electricity, and water bills.
Also in the medium-priority area are payments for things you need to maintain your job, such as internet access if you work remotely or car payments if you need a way to get to work.
Consider All Other Debt Obligations Low-Priority
If you have funds left after making your high- and medium-priority payments, address the following debt obligations, in this order:
- Child support debts. If left unpaid, such debts can land you in jail.
- Income taxes that are not automatically deducted.
- Unsecured debts, such as credit card debt.
If your long-term goal is to get out of debt, prioritize debt and learn how to take advantage of the legal debt relief options available to you. You do not have to drown in unsecured debt while struggling to pay your essential bills during the pandemic. A ClearOne Certified Debt Specialist can fill you in on the options you have to tackle such debt even during times of crisis. Get a personalized debt relief plan today.