#1. Necessities: Basic survival depends on food and water. Take a hard look at your grocery bill. You can reduce your bill and still maintain basic health. Cut out the junk and prepackaged items, focus more on whole foods. Remember it’s always cheaper to make you own food than to eat out. So right there you can lighten your budget.
#2 Housing: This includes shelter. To feel secure you and your family need a roof over your heads. Do what you can to maintain this basic need. Try everything possible to keep up with mortgage or rent payments. Don’t ignore real estate taxes. Just a few hundred dollars of ignored taxes could cause you to lose your home. I’ve seen it happen.
#3 Utilities: I’m talking basic remember. Keep your heat and water. Air conditioning and satellite TV are not basic services.
Everything after these three is up for negotiation. Make a list of all of your other obligations and ask yourself the following questions regarding each bill to help you identify what is most important.
- What consequences might there be if you don’t pay?
- Is there any chance of lowering your payments?
- Have you tried talking to the creditor? Communication is still the best method for tackling a problem.
Be courteous of others. If someone has co-signed a loan for you whether it’s a credit card or a car, treat this with higher priority. If you should default on the loan it becomes the co-signers problem. That’s just bad manners and won’t win you friends.
Don't let creditors pressure you into giving their company priority. The three items above are the most important. When creditors start contacting and pressuring you, it's time to get some help. Colorado and most other states have foreclosure help and you there are reputable companies that will help you with your overall finances. It's also worthwhile to go to the credit union branch and talk with their financial assistance staff. Often they can help with everything from budgeting to loan consolidation. And they won't charge you anything. The credit union's only goal is to help you.