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When you are in financial trouble, it can be difficult to decide which obligations to pay, and which to let slide. In a perfect world, of course, you wouldn’t have to make this decision. But many are finding themselves in this heart-wrenching situation — even if they made all the right moves before buying a home. The economic climate has led to a lot of reductions in income due to fewer hours, fewer benefits and even outright job loss. As emergency funds (for those who have them) run low, and as the bills pile up, which of those bills to pay becomes a matter of serious thought. One thing to consider, though, is that you should put your mortgage payment near the top of that list.

Do you want to keep your home?

One of the first questions you need to ask yourself before you make your bill payment priorities is whether you plan to fight to keep your home. This is a very serious consideration. But an important one. Do you think that you have the resources to keep your home? If you have an emergency fund, and some income, and can maybe even get some through one of the loan modification programs available, and you want to keep your house, it becomes your main priority.

You will need to decide what you are willing to do to keep your home, and focus your payment priorities around that. Talk to your lender to see what you can work out, and then look for opportunities to earn income that can help you in your goal to keep your house. If you decide that strategic default is out of the question, deciding against foreclosure and even deciding against trying for a short sale, your efforts should focus on keeping your home.

Setting up payment priorities

One of the first things you need to do when setting up payment priorities is to consider your needs vs. your wants. The obligations you pay should hinge first on your needs: mortgage payment (shelter), groceries (food) and the necessities of life, like electricity and heat. You should practice frugality in these areas, such as buying food ideal for preparing homecooked meals and conserving energy where you can. Items that are wants should be moved toward the bottom of the list. Entertainment, unnecessary clothing and even some activities need to be cut.

Another concern many have is their credit card debt. Should credit card payments be made instead of mortgage payments? Actually, no. If it comes down to a decision on making your mortgage payment or making the credit card payment, make the mortgage payment. Your credit card debt is unsecured, so companies can’t take your home in order to recoup some of their losses. They can sue for the amount you owe down the road, but they can’t take your house. If you miss a mortgage payment, though, the bank can take your home. If you have decided that you want to do what you can to keep your house, that means that when a payment decision has to be made, you make your mortgage payment. And you make it in full.

A general rule of thumb is this: If you have to make the decision, pay the secured debt first. Secured debt can lead to the loss of property that you rely on, so your obligation to it should be discharged first. Unsecured debt is not so attached to property, and if you have to let something slide, that’s what it should be. (But, of course, it’s always best to try to avoid debt — and to pay all of your obligations.)