Are you in that position wherein you know that it is time to face up when it comes to your finances? For the past months, or even years, you might have been living with a lot of debt, paying the minimum, and hoping that things will get better sooner or later. Then you come to a realisation – you have to do something or else, things will just get worse! So where do you start? Months, even years, of living with debt can take its toll. If you have not sat down and taken into account all that you owe, you might be in for a big surprise. But do not fret, there is a way around debt. All you need to do is to come up with a workable plan to deal with it and the first step towards that plan is to prioritise your debt. I am not in the position to tell you how to go about things but here is an idea on how to prioritise your debts.

First comes mortgage or rent
I believe that this is the most important thing that you should consider. Though the amount that you have to pay for mortgage or rent may much higher than the other debts that you have, you really cannot afford to pay your mortgage or rent late. Make one late payment and you will definitely have a negative impact on your credit score. More so, you can have legal action taken against you if you continue to miss out on these kinds of payments. How would you like to be out of a house and home just because you didn’t prioritise this payment?

Next come taxes
This is a no brainer – you have to pay your taxes, there is no going around it. I do not have to explain how NOT paying your tax can lead to dire consequences. Aside from the additional fees that you would be charged, you can have legal action taken against you and worse, you can be sent to prison. Oh, and don’t even think about trying to trick the government. These guys have been at this game for hundreds of years. They have seen every single trick and will punish you harshly for it.

Then come utility bills
What good is a house without electric power? How about gas? Phone connection? Internet? Yeah, it is true, you can survive without some of these utilities but living in a house without gas, power, and water can be as miserable as anything. Some utility companies have leeway as to when you can make payments but then again, this would count against your credit history. More so, you will be charged extra fines for late payments. The worst case scenario would be that they would cut off your utilities. Again, this is something that you would not want to happen. If you are not convinced, imagine having to go through a winter day without heating. Not a good image, is it?