You might begin to look at what debt payment to prioritize in light of the health crisis. It is easy to get overwhelmed with the many financial choices you have to make on a daily basis. This is further aggravated if your income is affected. You could be on a shorter schedule at work, put on furlough, or even let go.
Whatever your income situation is at the moment, there is no denying the fact that a lot of people are struggling and you could be one of them. In the past, debt payments were based primarily on financial goals. At the moment, it has shifted and you look at it a little differently. You prioritize now based on need and fund availability.
As you look at which debt payment to prioritize, your decision will be based on different factors because of the pandemic. Your priority list could change based on your financial status. And even if you were not at all affected financially, there is that lingering thought at the back of your mind. You never know how the health crisis will affect your finances.
Your current situation and the uncertainties that the crisis brings can change the way you prioritize. But it should always be based on what will be better for you and your finances. The crisis could have shifted your priorities and made you re-think your payments. It is also possible that your goals and plans are changing due to the crisis.
House payment
When you start to talk about debt payment to prioritize, your house payments should be on top of this list. This could be a little bit challenging at this time when income is affected. CNN even sharers that over 30% of renters failed to meet their house payments in the first few days of April. The pandemic has hit hard making it difficult to meet mortgage or rent payments.
But that does not change the fact that you need a place to stay and you have to prioritize your house payment. There is no doubt that it could be the biggest payment you have to make every month. You might have to move some payments around in your budget to make sure you meet your mortgage or rent payment.
With the health crisis still posing a real and immediate threat, the last thing you need is losing your home. You need a place to stay that is why your housing arrangements should take precedence over most, if not all your expenses. You need to make sure that your lender or landlord does not kick you out during these trying times.
Basic necessities
If you think about what debt payment to prioritize during this crisis, any item related to your basic necessities should also be on top of your list. There is no question that you need to spend on these needs even if it means getting in debt. There are some expenses that you cannot live without. This means that you need these items to be able to live from day to day.
On top of this list is your food requirement at home. You need to make sure that you have food on the table and in your fridge. A big part of your need to get out is to buy and stock for days at a time. The more people you have at home, the bigger your food budget can be. There are a number of ways you can lower down your food expenses at home.
For one, try to limit the number of times you have to order food. It would be a great idea to start cooking your own meals at home. You can start buying items and ingredients in bulk to help you save money as well. You can cook in batches so you just have to heat them up when mealtime comes. Not only will you be saving money but you are assured of healthy meals for your family.
Car loan
It could be a challenge when you begin to look at what debt payment to prioritize at a time when the pandemic is still out there. As businesses take a hit, you try your best to make sure your finances are intact. This means going through your expenses and making sure that you are able to make the necessary changes in your finances to make it work at this time.
Your car loan payments could be a big monthly debt payment that is hurting your finances. For one, you could be working from home and do not have much use for your car at the moment. It is just inside your garage and being used only for grocery runs. If you have more than one car, you choose to sell one of them.
This is a good idea especially if the car is worth more than the balance of your car loan. Before you even miss a payment sell your car and use the extra money to either buy a used car or put it in your emergency fund. You can also take out a lease which could be less expensive than paying for a new car loan.
Credit card
As soon as you start talking about what debt payment to prioritize, your credit card debt will surely be on that list. The health crisis has caught a lot of people off-guard when it comes to their finances. CNBC even shares that about 37% of Americans would use a credit card to handle unexpected expenses. This is one of the reasons why your credit card debt could rank high on your payment list.
One of the options you have when you are trying to manage your credit card payments is to find a repayment strategy. You can choose to pay the high-interest cards first or the accounts with the lowest balance on the card. The first one helps you save money from having to pay high-interest on your cards. The second one can give you that boost you need to pay off other debt accounts.
You can also look into debt consolidation to help you manage your credit card debt problems. It would be a big help if you can consolidate using a 0% interest card. Remember though that these types of cards have a promo period where after that, the card could go back to the regular interest rate. It is best to pay off the balance before that happens to maximize the benefits of the card.
Money borrowed from family is a debt payment to prioritize at this time
There is no question that a lot of people are having a hard time during this health crisis. Some are trying to make ends meet by tightening their budget. Some people were laid off while some are on furlough with no assurance of getting back to work. If you owe money to people, now is a good time to repay back that debt.
The person you borrowed money from might be going through some financial troubles at the moment. Paying them back could help them manage their finances better. Also, it is the right thing to do. Especially if you borrowed money from family and friends. They will appreciate getting than money back in times of need.
As you start to identify what debt payment to prioritize during this health crisis, you need to look at your budget and financial priorities. These two can help you find a way in making sure you focus on the correct debt accounts.
