What Bills Should I Pay First
It’s safe to assume that paying bills is no one’s favorite activity. While it is a relief to stay current on payments and save thanks to paying your bills, seeing money leave your wallet is never fun.
If you’ve been wondering if there’s more you can do to get ahead of your monthly expenses and/or debts, here’s the sign you’ve been looking for.
According to the U.S. Bureau of Labor Statistics, Americans spent more money last year on household components such as transportation, healthcare, food and housing. With COVID-19 also affecting how we earn our income and how we pay our monthly expenses, our financial freedom could be on the line if we don’t have a firm grip on cash.
Here’s how to sort through the bills and determine which ones to pay first to stay afloat and regain control over your finances.
Three quick tips.
Create a list with every bill.
Write down their due dates (sometimes bills arrive early or later, but it’s usually within a certain timeframe) and set reminders.
Group bills that have similar due dates and set aside the cash (or transfer it to your savings account) to pay them on time.
Start with housing and food.
Keeping a roof over your head and food in your refrigerator is the most essential component your paycheck should cover. As other bills are of importance as well, you don’t want to risk becoming homeless.
Find out the due date (usually the first of the month) and grace period (usually 10 days, but be wary of extra fees) of your rent or mortgage, and pay them first and foremost. It doesn’t hurt to set reminders before your payment is due to ensure you’re prepared with your next paycheck or source of income.
Food is our literal life source, and while in extreme situations it can be tempting to skip eating to save money, try to budget and spend what you need on nourishment. If you are in a higher income bracket, perhaps you can afford to go grocery shopping once to twice a month. If so, schedule your trips around your rent or mortgage to make sure that you are spending a designated amount of money on these specific bills
If you are in a lower income bracket, smaller but more frequent grocery shopping might benefit you. Depending on what you need, you could pick up food and other household items at the same time once a week or biweekly.
If you ever run into trouble paying your housing or food bills, there are options to help you make it through.
For Renters: U.S. Rent Assistance Program
For Homeowners: U.S. Loan Lookup
For Renters & Homeowners: CARES Act (Coronavirus Aid, Relief, and Economic Security)
For Food Assistance: SNAP (Supplemental Nutrition Assistance Program) Benefits and Other U.S. Food Assistance Programs
Next, pay your utilities.
Your utilities include your electric, water and waste, gas, phone and Internet bills. As maintaining the home goes, you don’t want to be subjected to shut-offs and have no power or water.
In the three tips at the start of this article, we mentioned grouping together bills with similar dates to pay together. Since utility bills all serve the same purpose, equipping your home with necessary power, you can break down the fees of each bill and put back a little cash for each before they are due.
To do this, create a biweekly budget (if you don’t already have a budget that works for you). This means every two weeks, add up the total amount your bills come to and subtract it from your paycheck or checking account. Then transfer the money somewhere safe, like your savings account. What you have leftover is technically spending money, we suggest rolling those funds over into bills or savings, such as an emergency or retirement fund.
Then pay your insurance.
This could be your auto, home, health or any other insurance plan you have. Many states are still in quarantine and maybe you won’t be traveling as much. However, staying current on your car note and auto insurance, as well as your other policies, keeps you from wondering how to get around when you need to.
What to pay next?
After you’ve handled the most important bills, you can now focus on any other expenses without the pressure of bigger charges.
If you have credit card fees, child or spousal support, student loan debt or any other bills hanging over your head, give your attention to these next. Using the biweekly budget, factor in the amounts of these bills to put aside and pay.
If you have extra income remaining after you’ve contributed to your savings as well, you deserve to treat yourself...as long as it’s within your budget!
Paying bills is a necessary evil, and the sooner we pay them, the sooner we can put it behind us (until next month!). Do you need extra help getting your finances in order and reclaiming your financial freedom? It’s our pleasure at YFMUS to support you in reaching all of your financial goals.
Citations:
U.S. Bureau of Labor Statistics. (2020, September 9). CONSUMER EXPENDITURES--2019. https://www.bls.gov/news.release/cesan.nr0.htm
Adamczyk, A. (2020, November 18). Make a Biweekly Budget Instead of a Monthly Budget. Two Cents. https://twocents.lifehacker.com/make-a-biweekly-budget-instead-of-a-monthly-budget-1822038740
Washington LawHelp. (2020, November 23). Prioritizing Debt: Which Bills do I Pay First? https://www.washingtonlawhelp.org/resource/prioritizing-debt-which-bills-do-i-pay-first
Bieber, C. R. (2020, November 22). 7 Tips To Help You Pay Your Bills On Time. Credit Karma. https://www.creditkarma.com/advice/i/tips-pay-bills-on-time
Haagensen, E. (2020, July 14). Procrastinator’s Guide to Bill Payment. Investopedia. https://www.investopedia.com/articles/pf/08/stop-paying-bills-late.asp
