If you are in debt and want to avoid bankruptcy, you may be considering working with your budget to start paying down your debts as quickly as you can. How you decide to do this can affect the outcome significantly.

Knowing which debt to pay off first may help you obtain your financial freedom faster. For instance, if you always pay for your necessities first, you’ll never have to worry about going without a place to live, finding something to eat or deciding if you can afford utility bills. Always pay your necessities first, since these directly impact your life. Make the minimum payments on these recurring expenses.

Next, look at your legal obligations. If you owe child support or tax collections, now is the time to add them to the budget. You should never default on these debts. If you’re falling behind, discuss payment plans with those you owe money to.

Finally, look at your other outstanding debts. If you have three credit cards, start by paying the minimum on each. Then, add additional payments to the one that has the highest interest rate. This saves you the most money over time. If you don’t feel like that’s the best option for you, consider paying off the lowest balance, then the next lowest balance and so on until you’re out of debt. It may cost more in the long-term, but it gives you a sense of accomplishment much earlier in the process.

If this solution doesn’t work for you, bankruptcy is another option. Before you choose that, look into other legal avenues that could help you get out of debt.

Source: FindLaw, “Which Debt to Pay Off First,” accessed Jan. 19, 2018