by Glinda Bridgforth, published in Essence Magazine, February 2005

When money is tight and you have to choose who gets paid first and who you'll have to contact about deferment, don't make the decision based on which creditor is putting the most pressure on you. Your priorities should be the things necessary to maintain health and safety for you and your family. Here are some guidelines (in descending order) to use as you divvy up the dollars.

• Food and medical care – Pay for basic food and essential medical expenses first, including health insurance. Keep food expenses to a minimum. Don't spend $30 on Chinese take-out when the electric bill is unpaid. Use coupons, buy groceries, and cook economical meals like spaghetti or casseroles.

• Housing and utilities – To maintain a roof over your family's head, make your mortgage or rent payment a priority. Also included in this category are utility payments, homeowners insurance and property taxes.

• Transportation – You must have transportation to your job to maintain a steady flow of income. If you need your vehicle for this purpose, make your car load or leas payment next, along with automobile insurance. You can save on payments, gasoline, repairs, insurance, and registration fees if you can limit yourself to one vehicle in the household. Work out a transportation schedule to meet family needs.

• Dependent and Personal Care – Childcare expenses are important to pay so you can work without unnecessary worry about your children. Child support payments are essential because the possible alternative is garnishment of your wages and/or jail time. Personal care expenses should include the bare minimums for hair care, toiletries, and laundry.

• Debt Repayment – As you work out a new payment plan to propose to your creditors, consider this order of priority:

  • Unpaid taxes – The IRS can garnish your paycheck, take money from your bank accounts, or put a lien on your house and other property. Contact the IRS immediately to make payment arrangement.

  • Student loans – Because most of these loans are backed by the US Government, they can seize your tax refund or garnish your wages if you become delinquent.

  • Credit card, gasoline, and department store cards – If these accounts are unpaid, you could temporarily lose privileges, have the accounts closed, or possibly be sued if the unpaid balance is high.

  • Medical, legal, and accounting – If you need to continue using these services, you should contact the creditor and work out a minimal payment arrangement. If unpaid, they can be turned over to a collection agency and show up on your credit report.

  • Secured loans – These are loans on furniture, boats, expensive electronic equipment or anything you signed a security agreement for as collateral that can be repossessed by the lender. If you deem it a necessity, pay the bill, or you risk losing possession of the item.

  • Family and friends – Hopefully these are the most understanding of your creditors. Keep communication open, be honest, and confirm your commitment to repay the debt in full. Failure to do so will likely create anger, resentment, and possibly destroy the relationship.

Note: Tithing and church contributions are a very sensitive subject to deal with in our community. In many cases, it is without question, the first disbursement of funds people make. For those who believe in making their spiritual contribution the highest priority, the categories listed above should follow in the order stated.

<return to top>