Taking Care Of Your Debt Priorities

I have blogged about debt priorities before but it occurred to me today when I was working out the bills for the coming month that they are more important than ever in the wake of the credit crunch and ensuing recession. Believe it or not, many people are still confused by such terms but now is definitely the time to learn.

For example, your debt priorities are those payments that are of paramount importance every month and absolutely HAVE to be paid. Your mortgage or rent and utilities bills come in this category. Any other credit payments or expenses that you may have are secondary. The exception to this rule is insurance as you will often find that your insurance policies become invalid if you miss a payment. As such, you should be splitting your monthly outgoings in line with this principle. Pay what needs to be paid first and then deal with other payments that are necessary. Similarly, if you get a windfall, such as a mesothelioma payment or a compensation payment of any sort (let's face it, much more likely than winning more than £10 on the lottery), then you shouls use it to pay a little off the mortgage or settle any outstanding debt priorities you have. Once they are sorted, save some and pay the rest of further debts. You will get peace if mind and feel better for the financial safety net in the credit crunch!