Blogging for Change

When the income decreases, it is pays to set priorities

by Kim McGrigg on
8/13/2008
in Personal Finance

The number of people filing for unemployment benefits is on the rise.  In fact, the recent increase left claims at their highest level since late March 2002. If you experience a loss or reduction in income, you may have to set some financial priorities.  Not all of your debts equally impact your family.  For example, it is important to pay your rent or mortgage.  You must also make arrangements with your utility companies and you must provide food for your family.  Please do not be tempted to allow your insurance to lapse. (If you become unemployed, you may have the right to extend your medical coverage through the Consolidated Omnibus Budget Reconciliation Act (COBRA)).

The following is an example of how you might prioritize your financial obligations:

*First priority debts likely include your rent or mortgage, tax liabilities, insurance premiums, auto loans and utilities.

*Second priority debts may include secured loans through finance companies.

*Third priority lenders may include retailers, hospitals, doctors and credit cards issuers.

Remember, each person will have their own unique list of priorities.  Realize that just because a category of debt is listed as a third priority, does not mean it isn’t important. It simply means you need to contact the higher priority creditors first.

Kim McGrigg is the former Manager of Community and Media Relations for MMI.

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