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Which bills to pay first when you can’t pay them all

HOUSTON – With layoffs and furloughs, and businesses closing for weeks, your income may be down, and unemployment is up. You may be worrying about how you’re going to pay the bills. We consulted Tiffany Aliche, a financial educator who calls herself the Budgetnista.

“Right now is the perfect time to drop down and get your frugal on,” Aliche said.

If you don’t have enough money coming in to pay all of your bills, Alcihe said to focus on your basic necessities first.

  • Food
  • Shelter
  • Utilities
  • Medicine
  • Childcare

“If your back is against the wall, what absolutely do you have to have?” Aliche asked. “You have to have food. You have to have shelter. You have to have water, which means utilities. The other one might be medicine. If you have children, you need childcare so you can go to work.”

Two questions to ask yourself when deciding which bills to pay:

  • If I don’t pay this bill, will I be unhealthy?
  • If I don’t pay this bill, will I be unsafe?

You won’t be unhealthy or unsafe if you don’t pay your car note or your credit card bill.

“I am someone who is a big proponent of getting debt free and paying debt back,” Aliche said. “But during a recession or prerecession, paying off debt should not be a priority.”

Don’t just stop paying

  • Make a list of every bill you pay each month. Then call and ask for assistance.

These businesses, lenders, and utilities are already deferring payments:

  • Until Sept. 30, there will be automatic payment suspensions for any student loan held by the federal government. It is hard to contact many of the loan servicers right now, so check your account online in the coming weeks. Once you are logged in, look for the current amount due. There, you should be able to see if the servicer has reset its billing systems so that you are showing no payment due.
  • The city of Houston has suspended disconnections of water and electricity to individuals who have lost their jobs during the covid-19 emergency at least through the end of April.
  • CenterPoint Energy told Channel 2 it is not cutting gas services for lack of payment at this time (no end date was given).
  • Fannie Mae, Freddie Mac will let borrowers facing hardship defer two months of mortgage payments
  • You can defer your auto loan payment for up to 120 days with Ally Bank. They won’t charge any late fees, but finance charges will still accrue for non-lease accounts. You must log in to defer payments.
  • Bank of America customers who need help making credit card and/or mortgage payments, you can submit an online request for a payment deferral.
  • Capital One customers’ options include minimum payment assistance, deferred payments on loans, and waived fees. Capital One, like many of its competitors, is handling things on a case-by-case basis, so you won’t know what kind of assistance you may qualify for until you call.

Cut unnecessary expenses

  • Put yourself on a noodle budget.

“Your noodle budget is if you cut off your cable, you learn to cut your own hair,” Aliche explained. “You’re not buying clothes and the kids are doing extracurricular in the backyard so there is no soccer practice. You cut off your subscription to the gym.”

  • Look at your credit card bill for recurring charges.
  • Cut all subscription services.
  • If you do have extra money after cutting all those items, then you can start paying off debt.