How to Prioritize Bills and Debt

Strategies for chipping away at what you owe.


Laura Gariepy

Decorative, illustration of a person balancing spheres labeled "Debt" and "Bills" on a large scale | By Kyle Duong

When money’s tight, it can be tricky to figure out which bills to pay and which to put aside for later. Staring down a long list of expenses when you can’t cover them all is an overwhelming and frustrating experience. Unfortunately, there’s no simple or one-size-fits-all solution. But, we’d still like to offer some tips for prioritizing your bills and debt - including how to take care of yourself in the process.

Prioritize Health and Safety Costs

Your health and safety come before everything else, which means that’s where your money should go first. To maintain your well-being, focus on covering your everyday essential expenses, like housing, utilities, food, transportation, medicine, and insurance. Then, make at least the minimum payments on your credit cards and other short-term debts that are due now (mortgage, car loan, student loan, etc.). Doing so keeps your accounts in good standing (goodbye debt collectors) and can improve your credit score over time, so your future self will thank you!

Choose Your Debt-Payment Strategy

If you have money available in your checking account after you’ve paid for your must-haves and made your minimum payments, you have some options. Consider tucking some or all of the extra money into a savings account. That way, you have the resources you need to cover things like an unexpected car repair, a trip to urgent care, or the next holiday celebration in cash. For more tips on staying ahead of your finances, read our article on How to Prepare for Unexpected Costs.

Or, you could put some or all of those funds towards your long-term debt (think getting rid of those past-due accounts or getting ahead on your current expenses and debt payments). There are two main debt payoff strategies to choose from: the debt avalanche and the debt snowball. We’ll explore both so you can see which one might be right for you.

Pro Tip - If you don’t have at least a small financial cushion in the bank, consider building up your savings account before aggressively paying off your debt. That way, you won’t have to depend on your credit card next time you have an unplanned expense.

Illustration by Kyle Duong

Debt Avalanche

When you follow the debt avalanche method, you pay off your debts in order of interest rate, starting with the highest one first. 

For example, if you have a car loan at 7% interest and a credit card at 19.99% interest, you’ll focus on paying off the credit card in full as soon as possible (while making the minimum payments required on the car note). Then, once your credit card has a zero balance, you can put your extra money (including what would have been another month’s credit card payment) towards paying off your car.

Bottom line: By following this strategy, not only will you start paying off your debts, but you’ll also save money on interest over time. If you’re a numbers person, this method could work for you. 

Illustration by Kyle Duong

Debt Snowball

On the other hand, when you follow the debt snowball method, you pay off your debts in order of account balance, starting with the smallest amount first. 

For example, if you owe $100 on a credit card and $1,500 on a personal loan, you’ll focus on paying off your credit card first (while making the minimum payments on your loan). Then, once your card is paid off, you can funnel your spare cash (including the money you would have used to pay on your credit card, but don't have to anymore) towards your loan.

Bottom line: By following this strategy, you’ll get quick wins in your debt payoff journey, which can help motivate you to continue the process. If you need the momentum boosts to stay engaged, this method could be your key to becoming debt-free.

Illustration by Kyle Duong

Debt Snowflake

With the debt snowflake strategy, you throw every extra dollar you find at your debt. 

That means the $5 you saved by skipping the drive-through or the $20 you pocketed from walking your neighbor’s dog get put towards the debt you want to pay off the most. 

This method might not move the needle as fast as you’d like on its own, though, so it’s best paired with the debt avalanche or debt snowball method if you’re able to make additional payments.

Remember: Even if you can only afford to make $5 worth of extra debt payments each month, you’re still making progress. So be proud of your effort and commitment to the process.

Take Care of You

No matter what debt method you choose, let's face it, managing money can be stressful! Did you know that stress can actually make you feel depressed, anxious, or physically sick? That's why it's so important to be gentle with yourself and remember: you're aiming for progress, not perfection.

Taking care of your mental and physical health will go a long way towards keeping that positive, forward momentum going, even when you feel like throwing in the towel. Here are some self-care ideas you can try:

Jot it down: Write about your worries in a journal to get your thoughts out of your head and onto paper. Being able to visualize what’s stressing you out may help you come up with new solutions that address your concerns.

Let it out: Talk to a loved one for advice or moral support. Chances are, someone you  know has been through something similar. Sometimes, it helps just to have someone listen to you vent.

Lean on a friend: Remember, you can always ask for help. Managing your finances can feel lonely sometimes, and if you have someone in your circle who wants to support you, don’t hesitate to reach out. The worst they could say is no.

Search the web: Learn about personal finance and debt - knowledge is empowering. There are countless blogs, podcasts, videos, and apps available, so you can learn the way that works best for you. Other than Junction (obviously (;) these are some of our favorites: The Balance, The Penny Hoarder, Napkin Finance.

Stay healthy: Eat nutritious foods, drink more water, and get enough rest. These tips may seem small, but more often than not, treating your body right can  give you the energy you need to get through the tough times.

Sweat it out: Exercise regularly to stay fit, release endorphins, and blast through some of your stress. Put on a motivating playlist and get some cardio in! You may be surprised how much it energizes you, both body and mind.

Find your Zen: When it’s time to pay bills, find a quiet spot, light some candles, grab a glass of your favorite beverage, put on comfortable clothing, or do anything else that helps you unwind. That way, you’re in a calm place as you tackle this task.

Go Forward with Confidence

Paying your bills can be a daunting experience, and it can be tricky to come up with a game plan. Now that you’ve learned some strategies for prioritizing your expenses (and ultimately paying off your debt), you’ll be better able to make the best choices for your situation.

Remember: At Mission Lane, we’re on this journey with you. We’re here to help you build your credit and feel empowered to manage your money.