Prioritising your Debt: What Should I Pay First?

When it comes to managing your debts, it’s important to understand that not all debts are created equal. Some debts are classified as priority debts because the consequences of not paying them are far greater than the consequences of not paying others. To make sure you’re managing your debts effectively, it’s crucial to know which debts should have priority over others.

Which debt should be a priority debt?

If you’re wondering which debts should be a priority, start by considering the type of debt you have. Generally, a secured debt will always be more of a priority than an unsecured debt. This is because failing to make repayments on secured debt can have severe consequences. If you don’t make repayments on secured debts, you risk losing the assets that they are linked to, such as your home or car.

To help you prioritize your debts, we’ve compiled a list of priority debts and their consequences. Keep in mind that this is just an example and may not accurately reflect your specific situation. It’s essential to analyze your debts individually and work out your unique priority list. By doing so, you can manage your debts effectively and minimize the impact they have on your financial well-being.

Priority List:

Debt                                                   Consequence

Should you consider the size of your debt?   

When prioritizing your debt, it’s crucial to consider the size of each one. Although it may be tempting to focus on reducing larger debts by paying more than the minimum monthly payment, this approach may not be the best long-term solution. Instead, it’s recommended that you pay off your smaller debts first, particularly those with higher interest rates such as credit cards and store cards.

By tackling these high-interest debts first, you can save money on interest charges in the long run and free up additional funds to put towards your larger debts, such as unsecured loans. These types of debts are designed to be paid off over a more extended period, so it’s okay to continue making minimum monthly payments on them.

However, if you come into some extra cash, it’s wise to use it to pay off smaller debts first before applying any additional payments to your larger debts. This strategy will help you save more money in the long run and pay off your debts faster. When prioritizing your debt, focus on paying off smaller debts with higher interest rates first. Then, once those are taken care of, you can allocate additional payments towards larger debts. Remember that paying off debt is a long-term process, and it’s important to be patient and persistent in your efforts to become debt-free.

What to do if you are fall behind on payments

If you are in a difficult situation where you simply cannot afford to keep up with your minimum monthly repayments for all of your debts, you need to seek debt help now. 

Consequently when debt is unmanageable, there are debt solutions that can help you to regain control of your finances. No matter what level of debt you are in, there is always a debt solution for you. Take a look at our website for information on the various options available to suit your needs or request a free callback for impartial debt advice.

At National Debt Support we know that bad debt happens to good people. Our goal is to help you move out of debt and become financially free. Our team has helped thousands of people become financially free. Request a free callback to discuss your debt.