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.

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.

Credit Card Debt

Credit cards are very common as they are easily accessible for secure purchases of goods and services. Credit card users enjoy many perks such as travel points, spread the cost of purchases, and reap discounts. However, the major challenge comes when managing credit debt. If card debts are not managed correctly, even the avid credit-card user can encounter a financial meltdown. Nonetheless, by learning the common mistakes that credit card holders make, you can develop ways to manage the debts better.

Continue reading “Credit Card Debt”