Not All Debts are the Same

This is a tricky decision! You have to decide which debts get paid first because of what might happen if you miss or skip a payment. Other debts are less important or can be put off. 

1. Necessities: You should pay for basic needs first! Get groceries, essential medical aid, and other things you need to stay healthy.
2. Shelter: This means your home. Pay the mortgage or rent.
3. Utilities: Electric, water, gas or other essentials are a must. Cable, satellite, internet, or other services can wait. Call 2-1-1 if you need help with these!
4. Vehicle: Transportation is very important to get back and forth to work or school. 
5. Court Fines, Fees, Costs or Child Support: Failure to pay these could result in a warrant for your arrest. However, many courts will consider changing your payment plan if you are in need. 
6. Tax Debts: If you do not pay this when due you could face huge penalties. The IRS may let you file taxes later (a filing extension) or make a payment plan if needed. 

Do’s:

• Keep track of all your debts.
• Review bills before paying—there may be unexpected charges!
• Look for discounts, financial assistance, or services that can help pay your bills. 
• Check your credit reports regularly:
  • www.annualcreditreport.com
• Look for nonprofit financial planning services in your area. Some Oklahoma counties offer this for free. 

Don’ts: 

• Never move a debt up in importance because of something a debt collector said or threatened. 
• Never ignore debts. Pretending it does not exist will only make it worse.
• Do not borrow money to pay debt. This is just using debt to pay debt and can end up costing you more in the long run. 
• If you are on Social Security then you may be “collection proof” for some debts.  

Pay Day Lenders: Quick money with a high cost!

• Look like small businesses.
• Fee for service may look small, but is actually a huge interest rate.
• “Easy Cash” but it’s also easy to get stuck in a pay day loan cycle. This happens when you keep taking out pay day loans instead of living directly off your paycheck. 
• Rollovers—where you keep rolling over the debt to the next pay period. The fees rack up quick!

Paycheck Advance Apps/Services: This are all over the internet. They offer to advance you a small amount of your paycheck for no fee or a low fee.

• Nothing is free! They are waiting for you to over-spend and pay a huge financial penalty.
• Just like pay day loans, you can get stuck in a cycle where you’ve spent your paycheck before it arrives and have to take more quick loans to pay bills. 
• If you don’t pay for a service or product—you are the product! Someone is making money somewhere.

• Debt: Money owed. 
• Debtor: A person who owes money.
• Creditor: A person or company money is owed to. 
• APR: Annual Percentage Rate - usually the interest rate charged on a debt. APR is what you pay the Creditor for a loan.
• Unsecured Debt: Debt that does not have collateral associated with it. Some examples are traditional credit cards, personal loans, or student loans. 
• Secured Debt: Debt that has collateral associated with it. Some examples are car loans and home mortgages. 
• Lien: When a secured creditor makes a claim on property. This ensures that the creditor is paid first if the property is sold. 
• Revolving Debt: Open-ended credit like a credit card and usually unsecured debt. This is a line of credit that stays open as long as the account is in good standing. The creditor will set a credit limit and the available credit remaining can change every month as you spend or pay off the debt. 
• Installment Debt: Closed-ended debt where the limit is fixed and is paid down in pieces until paid off. These debts can be secured or unsecured.