COVID Which bills to prioritize when money is tight

The COVID-19 pandemic has made money tight for most average families and individuals. More often than not, such people find they don’t have enough money to meet all their needs. If you are one of them, you need to prioritize to say afloat until things get better. The following are some of the bills you should pay first.

Food, Shelter, and Health

The one thing keeping you afloat during this challenging time is your ability to work. You should therefore ensure that you pay every bill that would slow you down if it remains unpaid. Pay your rent and other housing-related costs on time. Related expenses include utilities such as electricity, water, and gas.

Make sure you have enough food to keep you going until you get your next payment. It may be prudent to reduce your food budget by eating cheaper meals. It is also vital that you stock any prescription medicine you need and renew your health insurance if it is due.

Pay for Your Transportation

You need to keep making the little money you are making to stay in the black. This is why your ability to get to work is a close second to food, shelter, and health in priority. Ensure you have enough money for gas to last you until the next payday. Make payments for your car on time as there is no grace period for repossession. You should also ensure your vehicle is insured. Ensure you are paid up if there are licenses or affiliations you need to renew to remain eligible to work.

Alimony and Child Support

Alimony and child support attract debilitating reprisals if you fall behind. Failure to pay can cause your driver’s license to be suspended in all 50 states. This would devastate your efforts to make a living.

Besides having your license suspended, the government can also take your pay to provide for the child. Having your paycheck garnished makes it impossible for you to pay your other bills. The government may decide to seize your tax returns, leaving you in trouble with the IRA.

Alimony and child support debt can lead to a felony charge if it gets to $10000. You can renegotiate payment terms until you are more financially stable. If you owe both alimony and child support, pay child support first.

Pay Loans and Tax Debts

The next thing you need after you have taken care of your bills is your debts. Loans often keep accumulating interest that becomes a significant burden later. Pay the loans with the highest interest rates first and renegotiate terms for the ones you can renegotiate. Personal loans have such high-interest rates; you should pay them off first.

If you have student loans, remember you owe the government, and the state is often more lenient than other lenders. Some payment terms for government student loans depend on your income. Thus, the more money you make, the more you will need to pay. While the terms of payment for student loans can be flexible, your creditor has the power to garnish your wages.

Pay Your Unpaid Bills

Earlier, we mentioned that you could hold off paying utility bills for up to a month without consequences. If there are any late bills, pay them up as soon as you get the money.

We have listed the bills above in their order of priority, and you should treat them as such. It will help you stay afloat until the effects of the Covid-19 pandemic are no longer felt.

Covid-19 and your credit?

As the country faces an economic crisis, the coronavirus pandemic has left many citizens with a lot of questions. They believe that the effects of this pandemic will be felt for many years, even after the virus has been contained.

One thing that might be disturbing you is how your credit score will be affected by this pandemic. Here we discuss how you can safeguard your credit score and the steps the creditors and lender are taking to make things easier for borrowers.

Q: What are the steps you can take as a consumer to protect your credit score in the face of the coronavirus pandemic?

The following practices can help you minimize the negative effect of Covid-19 on your credit score:

  • Pay what you can afford: If you have a source of income, do not stop repaying your loans. Pay the little you can manage, depending on how you agree with your creditor or lender.
  • Seek help: Creditors and lenders are a bit understanding now. If you cannot make repayments on your loans, reach out to them and see if there’s any way they can help you.
  • Add consumer statement to credit reports: It is good to explain your situation by adding a brief statement to your credit reports.
  • Keep checking your credit reports: You can get your credit report for free from the credit bureaus. Checking these reports can help you know which areas need urgent attention.

Q: What steps can you take to prevent getting into a debt trap during this coronavirus pandemic?

The reasons to get into debt are plenty; pressing bills to settle, medical loans, and student loans are just a few of them. To mitigate the situation, observe the following:

  • Talk to your creditor and lenders: Don’t shy away from talking to your lenders. Some can agree to defer your payments, while others may offer you better loan terms like lowering the interest and extending the payment period.
  • Budget well: Keep your credits as low as possible. Budgeting means you only spend on what is necessary and also live within your means.
  • Keep repaying your loans: It is easier to negotiate with your lender if your repayment history is good. Failing to submit your monthly loan repayments can lead to higher interests and penalties, which will affect your credit score.

Q: What if I have been laid off or I am facing a temporary closure, or I have fallen into debt because of coronavirus?

If you are facing a financial hardship caused by the coronavirus, the first thing to do is to discuss with your creditors and lenders and see what they can do. Fortunately, these lenders and creditors already know that many people are in financial crisis and are already taking steps to help consumers face their financial burdens.

  • FHFA (The Federal Housing Finance Agency): Freddie Mac and Fannie Mae (both overseen by FHFA) recently directed mortgage servicers to set up a moratorium on all evictions and foreclosures for borrowers who are facing financial problems caused by Covid-19. If you have experienced a financial crisis, report to your lender and you can be relieved for some time. For more information, visit and
  • The education department: If you have a student loan, you can stop repaying it for a period no less than two months. For more information on this, visit and

Q: How are missed payment allowances, deferred payments, and other actions taken by issuers of credit cards reflected on your credit card reports?

It’s worth remembering that even a single missed or late payment will impact negatively your credit score. These missed and late payments will be reflected on your credit reports for 7 years.

It will take at least 30 days for late payments to reflect on your credit report. This means making payments within 30 days after the due date can stop the late payment from reflecting in your credit report. However, you will still have to be charged interest for the late payment.

What matters most is that when you are facing financial hardship due to coronavirus, is not hesitating to discuss with your lenders and creditors. They will definitely find ways to make things a little more bearable for you. They can even waive the interest for late payments or change your loan terms to make them friendlier.

How Much Credit Card Debt Is Bad?

Credit card debt is one of the most common forms of debt for Americans – in fact, more than half of all credit cardholders have credit card debt! And while other forms of debt, such as a mortgage or car payment, may be manageable, credit card debt, because of its high interest rates, can be one of the most difficult forms to pay off. But how much credit card debt is actually bad?

Everyone’s finances are different, and while some people may be able to pay higher credit card balances, the general rule of thumb for credit use is keeping it below 30% of the credit you have available. For example, for a credit card holder whose lines of credit total $3,000, they should only carry about $1,000 worth of credit card debt. However, just because you can carry that much debt doesn’t mean that you should.

Here are a couple of things to consider about determining how much debt is too much:

  • You can’t pay off the balance of the card each month if you can only make the minimum payment, then you’re spending too much money.
  • You feel stressed out about the credit card debt you have. If the amount of debt is stressing you out, then it’s time to reevaluate your budget and credit card usage.
  • You use credit cards for general living expenses, or to make up for what you can’t afford with your budget. If you’re relying on your credit cards to pay your monthly expenses, it’s time to reevaluate your overheard and income. Plus, you’re quickly building up high-interest debt without a way to pay it off.

Keeping Your Credit Card Spending Under Control

The first step towards responsible credit card spending is to set a monthly budget of your expenses, using just the income you bring into the home – not supplementing the expenses with a credit card. If you note that your expenses exceed your income, then it’s time to trim the fat from your budget. You may be able to trim yo entertainment expenditures, such as reducing take-out deliveries or limiting the streaming services you subscribe to, or cutting your grocery bill. However, you may need to generate more income, either by securing a higher-paying job or taking on a “side hustle.”

If you’ve analyzed your budget and cut expenses and are still overwhelmed by credit card debt, however, you may need the services of a professional credit counselor. A nonprofit credit management company is a great starting point. These agents represent their clients – you – to debtors, including credit card companies, and negotiate terms of settlement that may reduce the interest and balance of what you owe. Often, these agents will also work with you to establish a budget you can stick to, including budgeting for repayment plans for your credit cards.


So, much much credit card debt is bad? That depends on your individual financial situation and the income you bring into the home. Furthermore, having a large credit card balance may be manageable for some people, but if you’re considering buying a home in the near future, or even a car, it’s wise to try to pay off as much credit card debt as you can, boosting your credit score and making you look like a more reliable borrower to a mortgage bank. Knowing the warning signs of too much debt, and the implications for your financial health can make it easier to determine if you have too much debt.

What is Unsecured Debt?

Most loans and other financing plans fall into two main categories: secured and unsecured. Secured debts are backed by collateral, which acts as security in case the borrower defaults. It is the primary difference between secured and unsecured debts, which are loan/credit offers without collateral. This raises the counterparty risk, explaining why unsecured loans often carry higher interest rates. Here’s a brief overview of unsecured debts, including how they work, the caveats and key differences with other offers.

Unsecured vs. Secured Debts

Common types of unsecured debts include credit cards, medical loans, payday loans and some personal loans. On the other hand, secure loans include mortgages, car and yacht loans, or any debt without a form of security, such as collateral. Borrowers can put up various assets as collateral, including physical property, like a house, car, piece of land, or stocks and shares. There’s no good or bad to either loan. However, it is essential to understand the caveats that each carries.
In unsecured debts, the creditor awards the loan based on the borrower’s creditworthiness. There’s no security if the borrower cannot repay the loan, significantly raising the counterparty risk. This increased risk results in higher interest rates and shorter repayment periods. Credit cards carry interest rates around 15.07%, while personal loans can claim up to 36% in interest. Payday loans have the highest interests, up to 391%, which is their main demerit.

Secured debts have collateral as security, which means the creditor can claim the asset and use it to repay your outstanding loan. These debts also carry lower interest rates and significantly longer repayment periods. Creditors also review creditworthiness, but the minimum score is lower than what unsecured debt creditors require. If you default on your unsecured debt, the creditor may hand you over to debt collectors or sue you for the outstanding amount.

Benefits of Unsecured Loans

Unsecured loans have various merits and can provide enough to take care of your financial needs. They are much easier to qualify for and often disbursed on the same day. Payday loans, for instance, can be disbursed within 24 hours of requesting. Other advantages include:

    • None of your assets is on the line
    • The loan limit increases significantly every time you pay on time
    • Fewer requirements other than credit checks
    • You can complete the application online
    • You can apply from multiple creditors


Unsecured debts aren’t all that great, especially when it comes to repayment. Interests are already high and can soar if you delay repayments, resulting in more debt. Unsecured loans also push more people into a cycle of debts that are hard to exit. You only have a few days or weeks to repay the loan, so it is essential to make sure you can raise the loan plus interest before the due date. Failure to pay on time will increase your debt and damage your credit score.

Reducing the Burden of Unsecured Debts

Unsecured loans can leave you unable to get out of debt without aggressive measures. It is advisable to avoid these loans because you pay a lot more in interest than secured loans. However, many people rely on such credits, which can come in handy when you need cash fast. Here’s what you can do to avoid falling deeper into debt:

    • Pay multiple times during the month to offset your debt
    • Build an emergency fund to take care of instances that make you resort to unsecured debts
    • Design your bare-bone budget and stick to it. You should also ditch some expenses and habits
    • Transfer your credit card balance to one with lower interest

Unsecured debts are great when you need cash urgently, but you should ensure you have the means to repay the loan before its due date. You should also compare existing options to find the ideal loan product for your needs.

How Medical Bills Contribute to Rising Debt

Millions of Americans have credit card debt. For many who struggle with chronic or unexpected medical problems, credit cards are an unfortunate last resort when bills begin to pile up. Even healthy Americans may accrue credit card debt simply trying to pay for medical premiums or deductibles for routine care. Learn how medical bills can lead to credit card debt.

6 Medical Expenses that Increase Credit Card Debt

Healthcare is supposed to keep you healthy, but the costs associated with having health insurance and actually using it quickly add up. Take a look at the most common types of medical expenses that contribute to high credit card debt.

Medical Premiums

Premiums for health insurance vary greatly. Higher premiums may be associated with choosing a PPO instead of an HMO. Also, purchasing health insurance yourself instead of through an employer-subsidized benefit program may lead to higher costs.

Health Plan Deductibles

Deductibles are the price you pay for medical and pharmacy services before your benefits actually begin. That means you may be responsible for thousands of dollars in medical costs even if you pay your health insurance premiums on time.

Cost Shares for Medical Services

After your deductible is paid, you will still be responsible for copayments and coinsurance for services received. If you were in the hospital or had a complex procedure, your share of the cost may be more than you can pay.

Uncovered Services

Health insurance covers a variety of services, but not everything. If you need a service that is not covered or your provider didn’t follow plan rules, like completing a prior authorization, you may be responsible for the full cost. Common services not covered by health plans include alternative therapies, acupuncture, and fitness programs.

Health Plan Changes

When changing jobs or moving from one plan year to another, you may experience a temporary lack of coverage or suddenly discover that previously covered services are no longer paid for under your new plan. These health plan changes lead to additional, unexpected out of pocket costs.

Prescription Drug Costs

Costs for prescription drugs are overwhelming as some drugs can be in the thousands per month. But without the drug, your health may suffer. Many people choose to pay for their prescriptions by adding to their credit card debt.

If you’re not financially prepared to pay for the above costs, paying with a credit card may seem like the only option.

Financial Hardship: 3 Reasons Medical Credit Card Debt Rises

In addition to the medical bills discussed above, credit card debt can begin to accrue rapidly after a significant medical event or during chronic illness. Consider the following examples:

  • Time away from work. When you’re unable to work due to a medical issue, you may suddenly need to pay for living expenses without having an income.
  • Medical supplies and durable medical equipment. Certain medical supplies and durable medical equipment may be required for your condition, but may not be covered by your plan.
  • Caring for family members. If you’re caring for a child or family member who has an illness, it’s tempting to cover basic expenses with your credit card while you’re unable to bring in extra income.

You Can Overcome Credit Card Debt

Whether you’re just starting to accrue medical debt on your credit cards or feel like you’re drowning in debt, it’s important to know there is a way out.

A solid financial plan, the development of a reasonable budget and credit counseling are all bankruptcy-free solutions that will get you out of debt over time.

The quicker you pay down your medical credit card debt, the less interest and fees you will pay in the long run which means you keep more of your hard-earned money.