We went over how to prioritize debt in this post so by now you should understand which debts will cause you the most grief.
It goes without saying that taxes are at the top of the priority list as the IRS has more powers than anyone to recover money owed to them. Failure to pay them on time will not only result in interest but also penalties that can quickly mount up to more than the original debt.
Medical debt is also high on the list of priorities and it is essential that you look after your health and that of the members of your family. Without good health you will need more money to pay for your health care and if you can’t provide sufficient health care for yourself and those who are under your care then the long term problems that can come about from that are often much more costly than the original debt.
“The real measure of your wealth is how much you’d be worth if you lost all your money.”
Student loans and child care support are both top priority as they are debts where government departments get involved and they have wide reaching powers to recover monies owed to such an extent that they can actually make your debt reduction program more difficult to achieve.
You should prioritize your debts. Then you need to create a budget. Good time management will help you through your daily tasks and sticking to your budget will ensure that you have the least problems possible with your creditors by paying those who must be paid first.
Just because a debt collector starts putting pressure on you to pay a minor debt doesn’t mean that other more important debts should wait for payment. Take control of the situation in all instances where possible and stay with your budget and the process that you have created for efficient debt control.
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Disclaimer: I am not a financial professional and don’t play one on tv. The information provided on Single Mom on a Budget.com is my own opinion and should not be construed as fact or advice, and you follow it at your own risk. You are responsible for your own personal finances and should not rely on this site to make the final decision for you. This blog is my means of communicating my experiences to you and to prompt you to think and consider your own situation, but you are 100% responsible for any actions you take. Always consult an attorney or tax professional regarding your specific legal or tax situation.