How to Prioritize Bills When You Cannot Pay Everything

When there isn’t enough money for every bill, pay first for the things that keep a roof over your head, the lights on, food on the table, and you able to get to work. Then call everyone else before the due date to ask for more time. Unsecured debts like credit cards and medical bills usually come after essentials, even when their collectors are the loudest.

Make a list for the next 30 days

Write down:

• the cash you have now, and pay you’re sure will arrive in the next month, with dates
• every bill due in that time, with its due date and minimum amount
• what happens if each one is late: a fee, a shutoff, a repossession, an eviction notice, or a hit to your credit

That last column is the one that sets priorities. The FDIC’s Money Smart program suggests ranking bills by how serious the consequences of not paying would be, and this is how to do that.

A common order

Every situation is different, but most people end up with something like this:

1. Housing. Rent or mortgage. Falling behind can start an eviction or foreclosure process that’s hard to stop.
2. Utilities. Electricity, heat, water, and a phone you need for work or emergencies.
3. Food and medicine.
4. Transportation to work. A car payment and insurance, or a transit pass. Losing the car can mean losing the income that pays everything else.
5. Child care, if you need it to work.
6. Secured debts and insurance you’d lose something without.
7. Unsecured debts. Credit cards, personal loans, medical bills, and collections.

Credit card companies can charge fees, raise your rate, and eventually send the account to collections. That’s serious and it hurts your credit. But it rarely takes away your home or your ride to work this month.

Call before you miss a payment

Creditors have far more options before an account is late than after. When you call, explain what changed, what you can pay, and when you expect things to improve. Ask about:

• moving the due date to after your payday
• a temporary lower payment or a skipped month
• waiving a late fee
• hardship programs

Write down who you spoke with, the date, and what was agreed, and ask for it in writing. For credit cards specifically, What to Ask for When You Can’t Make a Card Payment has a script.

For utilities, ask about payment plans and whether you qualify for the federal Low Income Home Energy Assistance Program (LIHEAP), which your state runs. For housing, contact a HUD-approved housing counselor early; the service is free or low-cost, and timelines matter. For medical bills, ask for an itemized bill and the hospital’s financial assistance policy before paying anything. Nonprofit hospitals have to offer one.

Avoid these shortcuts

• Payday loans and car title loans. The fees can turn a one-month gap into a months-long problem.
• Promising money you don’t have. A payment plan you can’t keep makes the next call harder.
• Letting a collector set your priorities. A pushy phone call doesn’t make an old card balance more urgent than rent.
• Debt relief companies that charge upfront. It’s illegal for them to collect fees before they’ve settled any of your debts; the FTC warns that this is a red flag.

Recheck every time money comes in

Update the list each payday. Turn off automatic payments for anything optional so they don’t drain money set aside for essentials, and watch for overdraft fees. Once the crisis passes, Creating a Personalized Budget and Understanding Debt Relief Options can help you rebuild and work down what’s left.

Sources

• FDIC: Money Smart for Adults
• FTC: How to get out of debt
• HHS: Low Income Home Energy Assistance Program (LIHEAP)
• HUD: Find a housing counselor

This article is for educational purposes and is not financial advice.