Budgeting with Debt: What to pay first!

I understand the struggle of budgeting with debt, trying to prioritise payments and making the right choices for your finances over your spending habits.

Until recently, I spent most of my adult life living paycheck-to-paycheck while trying to pay off what felt like a mountain of credit card and store card debt. So, I understand what it’s like trying to budgeting with debt; the ongoing struggle with prioritising payments and making the right choices for your finances over your poor spending habits.

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Priorities when Budgeting with Debt

In this post, I’m going to breakdown the way I prioritised my budget while I was paying off my debts and some ways in which you can save money in some areas. Please keep in mind that everyone’s life and work situations are different, and this priority is based on my needs and priorities as a mother and a remote worker. You should always prioritise your bills and payments based on your situation.

Related: Beginners Guide to Budgeting


Housing / Accommodation

Your rent/mortgage should always be at the top of the list; this is essential that you need to keep yourself safe, dry and warm. Please do not take it for granted. Also, take into account any council tax and home insurance costs.


Ensure you are allocating yourself enough in your budget to feed your family from one paycheck to the next and stock up on any household essentials such as toilet roll, cleaning products, toothpaste, etc.


Utilities (Gas / Electricity / Water)

Paying your utilities should be high on your list. These services are what enable your home to stay warm and safe. Water is essential for life, so it goes without saying that this should be a top priority.

Keep in mind that if you are in financial hardship the living expenses we’ve looked at so far are considered essential, creditors must allow you to cover these costs when calculating how much you can afford to pay them. For more information on dealing with creditors please speak to Citizens Advice or StepChange.


If transportation is required for you to get to work every day, you should consider it an essential cost. If you find yourself unable to get to work, this could lead to losing your job. However, evaluate if you are getting to work the most cost-efficient way. 

Would public transport be cheaper? Could you ride a bike to work? Could you share the driving with a local colleague? 

Back in 2018, I car shared with a colleague for six months we each took it in turns to drive our cars picking the other up along the way, which meant each of us cut our weekly fuel costs in half!

If driving is your transportation of choice, make sure you include annual costs such as Car Insurance, MOT & Servicing in your transportation costs.

Internet & Telecommunications

Internet Service is quite high on the list for me because I now work remotely, and since my job involves a lot of web & cloud-based computing tasks, I would not be able to do my job without a consistent, fast broadband connection. If I lost my internet access, I would undoubtedly lose my job, and my side hustles would also grind to a halt. However you should judge the priority of this bill based on your circumstances, if you don’t use the internet at home much or can rely on your phone’s 4G then, this could be a lower priority for you.

With regards to telecommunications, last year we ditched our landline, as it had become an unnecessary expense, we were paying for a service we never used. We do payout for mobile phones, but since I mostly use wi-fi calling, I could probably reduce my package to a lower tier. 

Evaluate your phone and internet services regularly; are you using all your allowances every month? If not, contact your service provider and ask about downgrading to a cheaper package. It’s always worth asking.


Again, this cost is particular to your situation; if you need childcare to continue to work, then it is essential.

Clothing and Personal Care

This is a very personal element of a budget. For some people having new clothes every month or season is very important while for others, like myself, I’m happy to live in the same few pairs of jeans until they fall apart and only buy new ones when I have to. Personal care purchases such as cosmetics and skincare are the same; some will place them high in their priorities; for others, they’re practically non-existent.

If you are a prolific clothing shopper and need to save some money, look at switching to a capsule wardrobe. There are many great articles out there on how to create a fashionable capsule wardrobe on a budget.


Once the above items are covered, then consider your credit obligations. Give priorities to loans that have been secured against something you own such as a house or car, although you’ve likely covered the mortgage and car payments in housing and transport costs already.

Unsecured loans are next; credit cards, store cards, personal loans, etc. It would be best if you tried to pay as much as you can against these, more than the minimum payment when possible. Paying only the minimum will leave you paying more money back in total, over a more extended period.

This example was calculated using the MoneySavingExpert’s Minimum Payment Calculator based on a credit limit of £1200 and an APR of 34.9%

I know it’s hard but these really need to be your priority over and above any of your ‘wants’.

Importantly, make sure you are not using the cards any longer, cut them up, and check they are not linked to any subscriptions or recurring payments. You don’t want to put in all that effort to paying them down only to fill them back up before the month is done.


The following items are all luxuries that should only be paid for when you can comfortably afford them, do not confuse ‘wants’ with ‘needs’, if you can live without them, do so. I could happily move clothing and cosmetics into the ‘Nice-to-haves’ if I needed to. I’d much rather increase my savings over having new clothes.


Entertainment purchases such as TV packages, streaming services, trips to the cinema, days out are all luxuries you can forego during times you need to tighten your belt. Many streaming services are on a month-to-month basis and can be deactivated and re-activated when you can afford them again. If you’re not under a contract, look at re-negotiating your TV package with your provider, but be careful you might end up locked in a new contract.

Eating out

Much like entertainment, should not be prioritised ahead of bills or debts. Save money by planning your meals, creating a shopping list based on that plan, sticking to it and cooking meals at home. 

Gym Memberships

As much as I would like gym memberships to be a priority, they are not. There are so many affordable and free alternatives for keeping fit. There are thousands of home workouts available on YouTube, Instagram and other apps. Go out and try running; it is a great free way to keep fit; all you need is yourself and a pair of running shoes, they don’t have to be expensive or fancy. I started running with a free ‘Couch to 5K’ app on my phone and haven’t looked back since; it started with short runs of less than a minute at a time, with walking intervals.

Related: How to Stick to Your Budget with Ease

Things to remembers

  • Everyone’s life and work situations are different. You should always prioritise your bills and payments based on your individual situation.
  • Never pay anyone for help with your debts.
  • If you are struggling to pay all your creditors contact Citizens Advice or StepChange to get FREE debt advice.
  • Please, please, don’t suffer in silence, if you’re struggling financially talk to someone, anyone, a friend, or a family member. A problem shared is a problem halved!

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