How to Determine Which Bills to Pay First

Finding yourself a little short of money this month? The bills won't go away, even if you're low on cash, so deciding which ones must be paid immediately and which can slide for a short time is very important. Failure to pay certain bills means you could find yourself in the dark when you try to turn the lights on or getting a dead line when you pick up the phone. And it's not too likely you want to have your credit card refused the next time you try to use it, either!

Instructions

Difficulty: Easy

1. Decide which bills are the most important to your household. Mortgage payments generally come first in a family's budget. Even though foreclosure may not come after missing only one payment, it'll be much harder to make double mortgage payments next month. Besides, sending late payments on your mortgage can lead to negative information being added to your credit record, so it's best to pay your mortgage before any other household bills.
2. Find out the last day you can pay a utility bill before the company will disconnect that service or another negative action will be taken. Many utilities indicate on their monthly statement when bills must be paid by each month before they are considered late and a late fee is assessed. If fees are added if you pay a bill late, you must decide if it's worth paying that bill late along with the added fees or if you should pay it on time and skimp on another bill this month.
3. Pay any bills that lead to disconnection for non-payment unless you can do without that particular service. If it comes down to a choice between water or cable TV, the choice should be obvious (pay water!).
4. Sometimes, calling creditors to ask for alternative payment arrangements will buy you some time before service is disconnected due to missed or late payments. Some creditors will work with you on overdue bills, particularly if your past payment record with them is unblemished or if you have been dealing with a medical emergency. However, if you have a history of late or missed payments, don't expect the utility to be too interested in negotiating with you.
   
   

Tips & Warnings

• Cut back on non-essentials to save some extra money this month. For example, skip buying that third cup of latte, carton of cigarettes or even stay home one extra night this week so you have money to pay for the daily necessities of life.
• Some utilitiy companies, like water or electric companies, don't necessarily disconnect services until you're at least two months behind on your bill. Of course, every company in every city is different, and companies are allowed to disconnect your service if your payment is late or missed the first time.
• A simple phone call to the creditor explaining your financial situation might go a long way towards getting an extension for making your payment. Of course, if you do this on a regular basis, don't expect this method to work forever.
• Place bills in stacks marked 'pay now', 'can pay next month' and even 'can do without it.' If there is a utility you can live without, call that company immediately to disconnect the service. And don't let them sucker you into renewing or adding new services when you're calling to disconnect.
• Some creditors will accept a post-dated check. If this happens, the company will actually receive payment on the agreed-upon date of the check. Some will hold the check for 30 days. Of course, each creditor has their own rules, so check with them individually.
• Don't assume it's okay to send a partial payment; many services will be terminated if the bill isn't paid in full each month. Mortgages are one example of a bill that should be paid in full, rather than in part. Many mortgages indicate that if the debtor (you) sends a partial payment, the money can go entirely towards principal or interest, but not both. Not only that, you will likely be assessed late fees since you did not pay your monthly payment in its entirety.
• Remember to deposit money into your checking account so post-dated checks will clear on the date they are written. Failure to ensure money is in your checking account, causing checks to bounce due to insufficient funds can result in hefty penalties, fines and fees. You could also be summoned to court for writing bad checks.
• Review contracts carefully to make sure they don't call for early termination fees should you decide to stop utilizing the service before the contract period ends. For example, some cell phone companies require a two-year agreement in order to purchase a cell phone, and if you end the contract early, you can be assessed financial penalties for doing so.