What debts and bills should you pay first?

Dealing with debt can be overwhelming, especially when faced with multiple bills and limited financial resources. The Players Foundation can support current and former professional footballers’ in prioritising which debts to pay off first. This is crucial to managing your finances effectively and working towards financial freedom. The guide below will also discuss the debts and bills you should prioritise paying off first to regain control of your finances.

1. Essential Living Expenses: Before tackling any debts, ensure you cover your essential living expenses, such as rent or mortgage payments, utilities, groceries, and transportation costs. These are the fundamental necessities for maintaining your quality of life and should take precedence over other debts.
2. High-Interest Debts: High-interest debts, such as credit card balances and payday loans, should be prioritised next. These debts typically come with exorbitant interest rates, making them costly to maintain in the long run. Focus on paying off the debts with the highest interest rates first, as they accumulate the most interest over time.
3. Secured Debts: Secured debts are loans that are secured by collateral, such as a mortgage or car loan. While it’s essential to stay current on these debts to avoid the risk of repossession or foreclosure, they often come with lower interest rates compared to unsecured debts. However, falling behind on secured debts can have severe consequences, so prioritise making payments to avoid losing your assets.
4. Utility Bills and Tax Debts: Utility bills, such as electricity, water, and internet services, are essential for daily living and should be prioritised. Similarly, tax debts, such as council tax arrears, should be addressed promptly to avoid penalties and legal consequences.
5. Unsecured Debts: Unsecured debts, such as personal loans and credit cards should be addressed next. While these debts may not carry the same immediate threat of repossession as secured debts, they can still impact your credit score and financial stability if left unpaid. Consider negotiating with creditors to establish payment plans or explore debt consolidation options to make repayment more manageable. The Players Foundation can support beneficiaries in this process.
6. Collections and Judgments: If you have outstanding debts that have been sent to collections or resulted in judgments against you, prioritise addressing these debts to avoid further damage to your credit score and potential legal action. Consider negotiating settlements with collectors or seeking professional advice from a debt counsellor. The Players Foundation Debt & Insolvency advisor can support beneficiaries with this process. Don’t ignore things like CCJs. Did you know? If you pay a CCJ in full within one month, you can get the judgement removed from the register preventing a significant impact on your credit record.
7. Emergency Fund: Once you’ve addressed your immediate debts and bills, prioritise building an emergency fund to cover unexpected expenses and financial setbacks such as emergency car or boiler repairs. Aim to save three to six months’ worth of living expenses in an easily accessible savings account to provide a financial safety net during challenging times.
8. Long-Term Financial Goals: Finally, prioritise saving for long-term financial goals, such as retirement, homeownership, or education expenses. Allocating a portion of your income towards these goals can help you achieve financial security over time.

By addressing essential living expenses, high-interest debts, secured debts, and unsecured debts in order of priority, you can effectively manage your debt and pave the way towards a brighter financial future. Remember, seeking assistance can be the first step. The Players Foundation can provide the services of an independent Debt & Insolvency advisor to beneficiaries. There are also other organisations such as Citizens Advice or Step Change who can provide additional support and guidance on your journey to debt-free living.