When you’re trying to get out of debt, it’s important to assign priorities to your creditors and pay them off in that order. The general order should be (in order of highest priority to lowest):

1. Mortgage
2. Car
3. Utilities
4. Credit Cards

In the past, I didn’t do it that way. Of course, my mortgage, I knew, always must be paid on time, every time. But I’m guilty of neglecting my utility bills and coming home unable to take a shower or watch TV a time or two. It’s easy to have tunnel vision when you’re so desperately trying to get out of debt, but in reality, credit cards should really come last on your list of obligations.

The first two are obvious; your house and car are secured debts, therefore, if you fail to pay for them, the bank has the power to repossess or foreclose. Where it got tricky for me was deciding between keeping up with utilities or putting everything I had towards paying off my credit cards. I usually chose the credit cards.  I’d promise to catch up my utilities payments next pay cycle, but more often than not, I would simply forget. And then, by the time I remembered and checked my balance, the amount had doubled and the statement would include a past due balance carried over from last month. The thing with utility bills (that I mistakenly thought was convenient) is that they don’t report it to the credit bureaus when you’re a couple of days late. Some don’t even charge late fees.  It sounded to me like something to take advantage of, but I now see that there were some serious flaws in that mentality.  I think of the likelihood that one month I may just forget altogether, and it’s already late, and they decide to report it. That’s scary, but totally possible.  Or I think about how much harder it is to catch up with payments once they’ve doubled in size — a couple of times I fell into the cycle of only paying off the past due balance every month, never bringing the balance to zero.

With credit cards, when you’re late (hopefully not more than 30 days), they just hit you with a late fee. They can’t take any assets, they can’t turn off your water, they can’t disconnect your satellite subscription. Of course, this isn’t an issue as long as you pay your bills on time.

So, like I was saying, today we finally got paid.  $1600. I put $600 back into my emergency fund so, to my relief, the balance is back to $1,000.  I then caught up with all of my utilities. That totaled $600 for my electric, phone, internet, and both of our cell phones.  If that sounds kind of ridiculous for one month’s worth of utilities, you’re right. Like I said, I was catching up.

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