Best Bills to Pay Last

Pay 1st: Real Estate Taxes

If you own a home and you consider it your most important asset, you have to pay real estate taxes'or else! A municipality has the right to issue a lien certificate or property deed on your home if you're delinquent on paying your property tax, which is usually due quarterly. Failure to pay your property taxes is the quickest way to lose your home, more than being late on your mortgage, in fact, since tax liens takes precedence over a bank mortgage.

Next: Car Payments

Pay 2nd: Car Payments

Car loan defaults are up about 15 to 20% since last year. Seeing as how a car gets you to work and work brings in money, this is one debt you really can't afford to ignore. If you think you're going to fall short on money next month, call your creditor and see if it will temporarily ease your terms or help you refinance altogether. If you've got a parking ticket, make that a priority too. Failure to pay on the due date could get your car towed.

Next: Mortgage

Pay 3rd: Mortgage

First things first, if you think you're going to be late on your mortgage, call your bank and ask for some relief. Maybe the lender will help you refinance or cut you a break for the month. If you miss a payment one month, no one's really going to come after you right then and there. Most likely, you face a late fee plus last and next month's mortgage at the same time. Slip up more than twice and it gets ugly. Banks usually start foreclosure proceedings after three months of missed payments.

Next: Rent

Pay 4th: Rent

If you don't pay your monthly rent on time, the next day the landlord will likely send you a notice to quit and offer you just five extra days to come up with the money, plus any late fees. Otherwise, you're expected to move out. But realize that a notice to quit is not a court paper and legally speaking nothing will happen to you if you don't pack up and go. At that point, though, the issue gets more serious. The landlord will probably issue a summons and complaint letter, which legally starts the eviction process. You're expected to either defend yourself in court or do nothing and lose by default. Soon after a marshal will order you to leave.
Next: Store Credit Card

Pay 5th: Store Credit Card

A store credit card probably carries a higher interest rate than any other type of credit card. While creditors won't come to your house and take away that merino wool sweater you still haven't paid off using your Banana Republic (GPS) card, the interest and fees on that debt will fast balloon. Note also that being more than an hour late on these bills gets engraved on your credit report and knocks points off your credit score. At the least, pay 10% more than the required minimum payment so you're a) contributing to the principal and knocking down the balance and b) curbing phone calls from the collection agencies.
Next: All Other Plastic

Pay 6th: All Other Plastic

Bank-issued credit cards, like American Express (AXP), Visa (V), MasterCard (MA) and Discover (DFS), tend to carry lower interest rates than store-issued credit cards. That said, if you are late or only paying the minimum, expect that rates to jump, as well, and see your credit score undergo pain. When you've gotten calls from the collection agent, that's when you know your delinquency has hit your credit report. It will likely stay there for about seven years.

Next: Student Loans

Pay 7th: Student Loans

This is relatively "good" debt considering it carries a smaller interest rate than most other financial obligations and it won't harm your credit score. Plus, loan officers may allow you to defer payment on federal loans if your financial situation proves particularly dire.

Next: Phone

Pay 8th: Phone

It usually takes four or five months of non-payment for the cell phone provider to send the collection hounds after you. Until then, you face late fees and a bill that gets even scarier.

Next: Cable

Pay 2nd to Last: Cable

In the grand scheme of things (considering your house and car), how important is paying to watch the Tudors on Showtime? If you can't afford cable, quit while you're ahead. Before you actually need to miss a payment, just cancel it. Do what I do and download missed episodes for $1.99 on Apple's itunes (APPL). Or watch it on your rich friend's flat screen.

Next: Utilities

Pay Last: Utilities

If it's the dead of winter and you're experiencing financial hardship, know this: During the winter, utilities are prohibited from shutting off your heat. Further, if you're a senior citizen, are part of a low-income family with an infant or have a serious illness, your heat must stay on at all times, despite missing the payments. Also, in most, if not all states, if your landlord is behind on paying the building's utility bill, it's not your fault and you should still receive running water and heat. No matter what, call the utility company and explain your situation to get some assistance.

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