How to Prioritize Which Bills to Pay When You’re Struggling

Here is the next installment in our the Reader’s Questions Series which highlight questions emailed to me by you, the readers of Money Q&A. Be sure to find out at the end of this article how you can receive a free copy of Dave Ramsey’s book, The Total Money Makeover if your money question is chosen to be featured on an upcoming week’s blog post.

If you’re not familiar with Dave Ramsey’s book, you should run right out and get it. It is one of my the best personal finance books that everyone should read. Now….our reader’s question.

If you are in financial trouble and tight on funds, how do you prioritize which bills to pay and which to leave until next month?

How do you prioritize which bills to pay?

There eventually may come a time when you have reached your limit as to what your budget can handle if you are struggling financially. Even if you started off with a decent emergency fund of three to six months of living expenses, you could quickly find yourself in trouble.

While the economy and stock market slowly show signs of improving, there are still millions of houses upside down and almost 10% unemployment. There could come a time when you may have to choose to pay one bill over another.

How do you prioritize which bills to pay? Which one do you pick? How do you choose one over the other?

How To Prioritize Which Bills To Pay

Pay The Essentials Bills First

There are bills that you should pay no matter what. Dave Ramsey refers to your home, food, lights, water, and sometimes a car as necessary essentials. These are the things that you should continue to pay when times get tough. If it comes to keeping your lights on and paying a credit card bill, you should choose your electric payment every time.

You would be surprised by how many people make the wrong choice for whatever reason. Many times the bill collector on the other end of the phone berates you into making the wrong choice. You should always strive to keep a roof over your head and the lights on.

I mentioned that a car payment can sometimes be considered a necessity if you need the car to get back and forth to work. A car payment for you and your wife’s third car doesn’t count. A $500 a month car payment doesn’t count as a necessity either when you could sell the car and drive a beater around town to work and back. Far too often people try and justify a want as a necessity. It is this irrational thought process that gets so many people into trouble.

How to Prioritize Which Bills to Pay

Consider Protecting Your Credit Availability

As soon as you stop paying some of your bills, your credit score will start to decline. Depending on how far you let the bills go that you will not pay, you could see your credit score eventually drop very considerably.

You may want to strategically consider which credit cards you will stop paying if you have to make that choice. You will quickly face penalties and increased interest rates on the credit cards you stop paying.

If you think that you will need to have access to credit or have a credit card to use, you may want to consider trying to pay and protecting your reputation with the credit card company that has the lowest rate and that you have the best relationship with. This still may not save you.

Most credit card companies have clauses in their fine print that allows them to raise their interest rate and reduce your available credit if your credit score changes dramatically because of other information reported to the credit bureaus and placed on your credit report.

It may be a good choice to continue to monitor your credit score and credit reports through a service like TransUnion 3-Bureau Credit Monitoring or Equifax Score Power to know the extent of the damage you have caused while you stop paying some bills.

Please do not misconstrue this article as condoning the practice of not paying your bills. I think that everyone who borrows money has a legal and moral obligation to pay it back. But, if you have to choose which bills to pay and which ones to go for a certain month, you should make careful and calculated financial decisions that are in you and your family’s best interests.

Past Readers’ Questions:

Do you have a money question that you would like to ask? Email me your money, investing, retirement, savings, or other question to Questions[at] If I pick your question for the next article in the series, I’ll send you a free copy of Dave Ramsey’s book, The Total Money Makeover, or you can pick from any of these other free books instead.

How to Prioritize Which Bills to Pay

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