Connie J. Schlosberg


With living expenses, credit card statements, medical bills, and student loans - managing your personal finances can be hard. Organizing your expenses into high and low priority debts can help you to remember to pay off debt on time and avoid unnecessary penalties. Learn which debts are high priority. 

What are high priority debts?

Prioritizing Debts

There are multiple methods for prioritizing your expenses and paying off debt. Consider these two methods, and decide which is best for you:

1. Start with the lowest balance first

The “snowball method" of debt prioritizes debt based on balance.

First, review your debt – all of it! This includes credit cards, medical bills, and student loans. Organize your debt from the lowest balance to the highest balance. Start with your lowest balance debt first, disregarding the interest rate. Once the lowest balance debt is paid, pay off the second-lowest balance debt, and so on until all your debt is paid off.

Numerous people struggling with debt have made significant strides in eliminating their debt by using this method. Paying off smaller debts is more achievable and inspires you to keep paying off the rest of your debt. Small successes can equal big payoffs on the road to becoming debt-free.

Tip! To fully understand how much debt you owe, try this debt analyzer tool.

2. Pay the highest interest rate first

Organize your debts from highest to lowest interest rates, and pay off debt with the highest interest rate. When that debt is paid off, tackle the debt with the second-highest interest rate, and so on.

By paying off the highest interest rate debt, you keep debt from ballooning to the point that it becomes harder to pay off. Paying off the high-interest debt first keeps you from owing more on the overall debt. From a total debt owed standpoint, this method is the most logical.

Caveat! If you continue to add to your debt while trying to pay it off, your efforts will be futile. Your first goal is to stop adding debt to the pile by minimizing spend.

Which expenses are most important?

If you at the point of no return with managing your debt, the two methods above will not be enough. In fact, these methods may not be possible at all. Instead, begin by immediately prioritizing your living expenses. These expenses are:

Food and Medicine

Are you familiar with Maslow’s Hierarchy of Needs? You need to take care of your basic needs first, above all else. These expenses are at the top of the list. Before paying off debt, allocate your income to buy food and medicine for you and your family.

Auto Leases, Loans, and Insurance

If you don't live near public transportation, having a car can be critical for getting to work. Make sure you stay current with your insurance payments.

Rent or Mortgage

Your home needs to be practical and affordable so that you can keep paying your rent or mortgage. For renters, paying your rent in full prevents landlord from turning off your utilities or even evicting you. For homeowners, mortgages, real estate taxes, and homeowner’s insurance are a priority. Likewise, homeowner association fees are a priority. Failure to pay these expenses means that you could lose your house and/or have a lien put on your mortgage.  

Utilities: Water, Gas, Electricity

In the U.S., the average household pays hundreds of dollars in utility bills each month. While costly, it is important that you continue to pay these bills. Call the utility companies to see if they offer budget billing or if you qualify for hardship assistance. You don’t want to your water, heat, or electricity turned off .

Income Tax

Founding Father, Benjamin Franklin, once wrote, “In this world, nothing can be said to be certain, except death and taxes.” Regardless of your debt situation, you must pay any income taxes you owe. This includes filing a federal income tax return even if you are unable to pay any tax due.

Child Support Payments

If you are obligated to pay child support, this debt is a must-pay. If you fail to pay, your wages could be garnished, and you may even get prison time for non-payment. We’re certain you don’t want that to happen!


Good financial management is the key to maintaining overall financial health. To get your finances in order, understand which debts are high priority. 

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