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Who Do I Pay First?

by Diane Conlinn, November 6, 2000

Yikes, I have bills running out my ears. Everybody is clamouring to be paid at once, who do I pay first?

A very good question. So some of us in the interest of not making a mistake, pay noone. That's the answer right? Well... that is one method of dealing with the problem, but I guarantee you'll be getting more calls and start having things shut off.

So, what can you do when there isn't enough money to go around, and you have more things to put your money to, than you have money.

I can't emphasize the basics enough. First you must meet basic needs, Food, Shelter, and Clothing.

No matter what everyone else is saying, these basics need to be taken care of first for you and your family. Without these things, you won't have enough ambition to take care of the remainder.

Suppose you have committed to not incurring more debt, and you are just starting out on this program. As before I recommend tracking your expenses. I recommend that you get a small notebook (I mean very small that you can fit in your pocket or purse, and just record your expenditures, don't add them up yet, just keep a record of everything you spend, whether it's by check, by charge, whatever. Next is collecting your bills and seeing what you have to meet.

I live in California, and it costs me personally anywhere from $220 to $300 a month just for food for me along. My husband and I together spend about $500 to $600 a month on food. I divide that up between paychecks, and take the money out and put it aside in an envelope designated for food.

The next thing is shelter, and I give an example of paying a $1000 a month for one's home (remember this is California, and btw, that's dirt cheap). I divide the shelter payment between paychecks as well. Next, I turn to my utilities, and insure that my electricity, gas, and water are paid. Next, I make sure that I have clean clothes and laundry.

Following that I worry about transportation, I can take the bus if necessary, or make arrangements for a ride. But, if I don't have enough money to pay my car payments, well then, its time to sell the car. This might not be your opinion though. I went without a car for 5 years, and used the bus in Tucson, Arizona. Or used a cab when I need to go to the grocery store. My transportation expenses were about $900 a year, and I figured it cost me $2000 just to own a car with payments, and insurance, before we consider tires, gasoline, oil, parking, etc.

Then next I worry about telephone, because if worst comes to worst I can use a payphone. One trick I used for a long time was to have local phone service, but no long distance service. I went to a nearby place, and bought phone cards for $20 a month. This insured that I paid for my long distance in advance. There are some payment plans on line such as and a person could look into those. The next thing I insure is that the federal government is paid any bills they are owed, such as student loan repayments, or IRS payments.

Next, I look into basic care such as hair care, clothing replacement, gift giving, etc. Next, I look into savings, and try to put something away, even if it's only $5. Though I try to have 3 months living expenses on hand, as well as contribute to retirement. The final thing I worry about is my old debt. These are payments on credit cards, loans, etc. If everybody is clamoring to be paid, I don't put out fires, I write everybody a letter, and tell them what I can do even if what I say is that I have no money to pay them. It helps to make a good faith payment of something, even if it's only a couple dollars.

This emphasis I have on records is for more than one reason, one, knowing what we spend our money on is the first step of getting control of our money. #2 good records can help if you get called into court by one of your creditors, horror of horrors. Most judges will take into account that you have been making good faith attempts with your creditors, and will also be able to see that you are using good judgement with regard to taking care of your greater responsibilities.

Though I don't know each person who will read this article, I will recap generally what a person's priorities should be when trying to spend that too small paycheck around.

#1 Food
#2 Shelter, rent, and basic utilities
#3 Clothing (upkeep)
#4 Transportation
#5 Telephone
#6 Federal Government, student loans, IRS
#7 Other bills (gift giving, paying your bills such as cable, etc.).
#8 Creditors, good faith with a letter

So what do you do if you really find that you are in a bind? What I personally have done is the following: I look for things I have to sell, such as clothing I don't wear, used books, old appliances. I have a garage sale or put an ad out. I usually can find $30 or so this way.

If I really have nothing then I look to food programs in the area for help, and make arrangements to volunteer my help in other ways to repay the organizations for their assistance.

I truly hope that you don't have these kind of hard times hit you, but it can happen to anyone at any time from illness, etc. So I hope that these suggestions will be of use to you. Good luck.

I am not a lawyer, thus, if you have questions, about this please check with your attorney. Thanks.