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What Is The First Bill You Pay Each Month?

first bill you pay

Bills – we all have them and we all should be paying them, but I’m not naïve enough to believe that everyone is. I believe that how people manage, or mismanage, their money tells you a lot about who they are as people.

Do you have everything automated so it comes out of your bank account each month, or are you struggling to make sure your bills are paid each month? Of course, those are extremes and there are many shades of gray in between.

I was reading this article on Yahoo Finance recently and it was discussing what bill people pay first and what it may reveal about our priorities.

So, what bill do most people pay first each month?

Drumroll please…the winner is the car payment.

When comparing credit card payments, mortgage payments, and car payments, the latter of the three comes out as the clear winner.  According to the Yahoo Finance article, the 30 day delinquency rates are as follows:

  • .88% for auto loans
  • 1.82% for credit card payments
  • 1.91% for mortgage payments

Just to give you a little context, those numbers have improved from 2009 when they were 1.34%, 2.82% and 3.83% respectively. Having the historical numbers does show that delinquency is going down which is good, but I find it very interesting that people consider their car payment to be their most important bill.

Is it “Bad” to Have Your Car Payment Be the First Bill You Pay Each Month?

I’m not going to discuss the wisdom behind having a car payment or even buying a new car vs. a used car as that has been done to death and the answer really depends on the specific situation of the individual making the decision. Personally speaking, we’ve had car payments in the past and are going to do everything we can to avoid having one again in the future. I believe that there can be instances where it might make sense to have a car payment, like if you can get a great rate and make more money elsewhere, but personally I don’t believe we want a car payment again as it’s just a drag on the budget.

What is behind the urge to make car payments first, before other obligations, each month? According to the article it shows the “freedom” that we view having a car gives us. Many people love their cars and view it as a necessity and for many it is. After all, how can you get to work if you don’t have a car? Public transportation is great, but many cities do not offer it at an adequate level and biking to work may also not be a viable option for everyone, thus leaving a car as the mode many need to get to work.

With all that in mind, it can be easy on one level to see why so many people make their car payment be the first bill they cover each month. On one level, I think what bill you pay first, especially between mortgage and car can be a bit of a chicken and the egg situation, but on many other levels there is some skewed thinking.

What Should Your Priority Be?

The problem I see with making a car payment the first bill you pay is that it’s not a necessity on many levels. Yes, you may need a car to get to work and I cede that point, but if given the choice between my car and my home I’ll let you guess as to what I’m going to choose every time – my mortgage payment as I view it as a necessity for my growing family.

Once the mortgage, or rent, is covered along with other necessities then I believe a car payment should be dealt with. Of course, my priorities may be different than what yours may be, but unless you plan on living in your car then I’d think this would fit many. :-)

The thing to remember, is that both a car payment and mortgage are considered secured debt, going back to the fact that either can be taken from you if you’re delinquent. I’m not certain what the delinquency time frame is for car payments, but I know that for mortgages you’re generally looking at 60 to 90 days depending on where you live.

At the end of the day I think it’s important to see what value you’re deriving from the payments you make and more importantly breaking the cycle of a payment mentality. That really goes back to why we no longer want car payments in our home. We want our money working for us and not obligated to going to different “things” each month. Instead, we want our money going to areas that will bring us value like our home, investing for retirement and growing our business. Your values may be different from ours but at the end of the day, your values, and not a monthly payment mindset should be at the heart of your personal financial strategy. Having a values-based strategy will help keep you focused on wealth building as opposed to pure consumption.

What is the first bill you pay first each month? In what order would you make your mortgage, car and credit card payments?

 

Photo courtesy of: Nanny Snowflake

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I'm the founder of Frugal Rules, a Dad, husband and veteran of the financial services industry. I'm passionate about helping people learn from my mistakes so that they can enjoy the freedom that comes from living frugally. I'm also a freelance writer, and would love to help out if you have the need. If you're wanting to grow your blog, check out my blog coaching services to see how I can help you take your site to the next level.

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74 Comments

  • MMD says:

    The first bill I pay each month is my Kids! What happens is my 529 college plan deduction is set to automatically transfer the funds over on the 1st of every month. That’s been a great system to help me stash money away for them.
    MMD recently posted…Did I Just Find Another Great Retirement Saving Strategy? Understanding the SEP IRA RulesMy Profile

  • kathryn says:

    I pay our mortgages first. Yes, we have several, as we are landlords. From the landlord perspective, half of our tenants pay their rent on time, and the rest sometime within the month.A couple will bounce cheques, to buy some time.This month we are in the process of evicting 2 families. I don’t know what their priorities are, but paying rent wasn’t one of them.

    • John says:

      I can only imagine that it can be a pain, to say the least, to have to deal with situations like that. I can understand that with having properties getting the mortgages handled first is of priority.

  • We have our banking set up so that the day after our paychecks get deposited, our savings deposit and our accelerated student loan payment and mortgage payment go out. Even though this is technically considered payments to our creditors, we consider it payments to ourselves since our net worth goes up every time our debt decreases! We don’t have car loans thank goodness.
    Dee @ Color Me Frugal recently posted…Finding Our Road to Financial IndependenceMy Profile

  • Honestly I couldn’t tell you what order I make my bill payments, except for the fact that I pay my mortgage in about the middle of the month. I make a few credit card payments a month as I like to keep the balance low or near-zero as often as possible. Most of my payments are automated so they are paid whenever they are due!
    DC @ Young Adult Money recently posted…5 Creative Ways to Pay for TravelMy Profile

  • Most of my payments are automated as well. I think my credit card is my first bill each month that I pay since it is the one with the earliest due date. I think most pay their car bill each month because it is a smaller bill as opposed to a mortgage payment. With a credit card, it is easy to just slide by and pay the minimum.
    Jon @ MoneySmartGuides recently posted…How To Become A Stock Market MillionaireMy Profile

    • John says:

      I think that’s part of it Jon, though I think for many they’re still stuck in the payment mentality and it can end up biting them in the butt.

    • JMK says:

      With the exception of our mortgage, propery taxes and electric bill everything is automatically charged to the credit card which I pay off every Friday. The mortgage comes out of the account every other week, the property taxes on the 1st and the electric bill is emailed to me and I schedule an autopayment for 3days before it’s due in week 4/5 of each month. I don’t really think of our finances in terms of months like flipping the page on a calendar. Instead we have a spreadsheet that has rows running off into the future, usually a year out, with all the scheduled paydays and known scheduled mortgage and bill payments. I plug in a standard weekly amount for gas and groceries and replace my estimated numbers with the actuals as the weeks pass. It’s more of a spending plan or cash flow projection. Seeing the bank account balance on any given day tells me nothing about our financial situation, A huge balance sitting there this minute means nothing without having the projected future spending laid out as well. You need to see the big picture and understand the current balance in the context of the entire cash flow picture. Because we have our spending planned out in advance, it means that every Friday when the weekly transactions are done (pay in, mortgage out, credit card cleared) I can assess how much of what remains it truly excess not required for next week, next month or beyond. Then I transfer out the excess and either make an extra mortgage payment or contribute to our retirement funds. I like to get that money working for us ASAP rather than collecting dust sitting in our bank account. I do keep a minumum of $1000 in the account so we never pay fees, and have easy access to a small emergency fund, but anything over that which isn’t required to cover future scheduled spending is moved out on a weekly basis.

  • Interesting, John!!! We would definitely pay our mortgage payment over a car payment, and it amazes me that people do otherwise. Then again, maybe it doesn’t. :-)
    Laurie @thefrugalfarmer recently posted…Credit Cards: Did You Know These Truths?My Profile

    • John says:

      I agree, it amazes me too. Then again, few things surprise me these days so i guess it shouldn’t. ;)

    • JMK says:

      My initial thought on the low rate of car payment defaults was, don’t you have to set those loan payments up as automatic withdrawals? If so, you’d have to physically put a stop payment on them in order not to have the payment go out at the scheduled time. Most people pay their credit card bill on the day of their choosing, so you could easily choose to send the payment a few days late to have it fall after payday if things were that tight. Our mortgage payments are set up to be pulled automatically from our account every other week, but maybe other people have different arrangements where they control the day the payment goes out? I’d have to really think about how to be “late” on a mortgage payment. I suppose if there simply isn’t enough in the account to cover it and the attempt to withdraw it fails and has to be reprocessed that would cause a late payment.

  • Kathy says:

    Since we have no debt of any kind, the first bill I pay each month would be whatever utility bill comes first. Many of my bill are on auto-pay so on the first of the month I record those payments like insurance in my checkbook with the date they will be deducted from the checking account. When we had a mortgage, it was always the first thing I paid….again through auto-pay but I always recorded it first.

    • John says:

      That’s an awesome situation to be in Kathy! I like how you deduct it at the first of the month as well, I’m sure that gives you a better picture of what you’re dealing with each month.

  • I pay my mortgage first. Most of my bills are automated too so they are paid when they’re due.
    Raquel@Practical Cents recently posted…There’s Nothing Wrong with RentingMy Profile

  • Nice post John. It depends really. I will either pay my credit card bill first or mortgage. Both are due on the same day and I use my credit card for all of my other bills. So, it depends on which website I log into first :)

  • We pay a series of bills on the first of the month, but if I had to choose, I would absolutely choose my mortgage over my car any day of the week. Providing a home and security for our family is our number one priority.
    Shannon @ Financially Blonde recently posted…Music Mondays – Open Your HeartMy Profile

  • I honestly don’t know what order I pay my bills. A lot of them are automated and they are paid when they are due. Generally, I think I pay rent first since they always send it even before the first of the month. And I don’t have the option of making automatic payments. I don’t have a car payment so that’s definitely not first.
    Andrew@LivingRichCheaply recently posted…Are You (Financially) Better Off Than Your Parents?My Profile

  • It used to be our Debt Management Plan payment – because it was our largest bill of the month. yep, that’s right, bigger than even or mortgage! Now it’s our mortgage….because it’s due on the first of the month, and it’s our largest bill. It just seems right……the first and most basic thing you need for life is shelter. Mortgage it is!
    Travis @debtchronicles recently posted…Want To Achieve Your Goals? Improve a Little Each DayMy Profile

    • John says:

      I remember those days Travis. I was in the same boat when I was paying off my debt and before getting married. My payment was more than my rent and I hated sending it in each month because of what I thought I could be doing with that money. But, that’s how it goes. :) Completely agreed though, mortgage is generally where it’s at…unless you plan on living in your car. ;)

  • I pay rent first because without a place to live, the other bills (utilities/netflix) are moot.
    Leslie Beslie recently posted…January Books: Colum McCann, Bill Bryson, David B.My Profile

  • I’ve seen articles that stress paying your car payment first because if you can’t get to work you lose everything else, and I believe the repo man comes for your car before you’d ever lose your house. If you don’t pay your credit cards, you get lots of calls and a bad credit score, but they essentially can’t take away anything you own. When my in laws refinance their house and rolled all their debt into the mortgage, that was the killer when they couldn’t make the payment anymore. Don’t ever put unsecured debt on a secured asset!

    That being said, if I was in a position where I knew I couldn’t make all my payments, I’d be getting rid of the car for a beater, calling a debt consolidation service, or listing my house for sale. Being proactive when things go bad saves lots of heart break down the line.
    Kim@Eyesonthedollar recently posted…Luxury Trip For 3 To Hawaii For $500My Profile

    • John says:

      I saw that same thing when I worked at the bank Kim. It killed a number of people I helped and it was always sad to see.

      That said, I’d be doing the same thing – cutting down as much as possible beforehand…assuming you have the time to of course. :)

  • Matt Becker says:

    In terms of actual date, the rent is the first bill we pay every month. But in terms of first after the paycheck comes in, it’s all our different savings. I think it’s incredibly important to have savings come out first, but then you already knew that.

    • John says:

      I definitely get that mentality Matt, and it’s one we have ourselves. :) Unfortunately many don’t see that as a need and just further shoot themselves in the foot by making other things a priority over the necessities in life like housing.

  • My mortgage is drafted on the first of the month, however, I consider that the last thing I am paying from the previous month. My bills are all automated to various credit cards or my checking account. I pay off my credit cards throughout the month. I try very hard to transfer money into my taxable investment account right after I get paid each month.
    Cashville Skyline recently posted…Am I Being Too Cheap?My Profile

    • John says:

      That sounds like a great approach, especially the transferring to a brokerage account being the first thing. That’s taking the pay yourself first ideal to the next level in my opinion.

  • So people would rather lose their house over their car. Interesting. I guess if that happened they could find themselves in a situation like motivational speaker Matt Foley from SNL…living in a van down by the river.
    Brian @ Luke1428 recently posted…The Basics of How to Pay for CollegeMy Profile

  • E.M. says:

    All my bills are automated, but we pay our rent first as it’s due on the first of the month. We actually write out a check for this, so it’s imperative that we actually remember! Our landlord’s are pretty laid back, but I would just feel horrible paying it late even by a day. We need a place to live! After that, most of my bills are due in the middle of the month. My student loans go through last, but I like to make extra payments throughout the month.
    E.M. recently posted…What Are Your Distractions?My Profile

    • John says:

      I can imagine that having to write a check makes you “feel” it more and being more on top of paying your rent. I know it was that way for us when we paid via check glad we don’t anymore so I don’t forget. :)

  • Catherine says:

    Honestly I don’t know….all of our bills are automated, including debt, so i just monitor that the money is taken out….Our mortgage comes out on the 25th of the month. I think our cable and cell phone bill is the first bill due in a day 1-30 month being due on the 3rd.
    Catherine recently posted…Sometimes We Have To Spend a Little Money On FunMy Profile

  • Most of our bills are automated too, so I can’t say they are paid by priority but if I were manually writing checks, my mortgage would come first. We don’t have car payments. so it’s not completely apples to apples, but if we did, it would be paid after the mortgage. It is interesting that car payments are the first bill paid as I thought mortgages would be since people wouldn’t want to lose their homes. I suppose another reason car payments may came first is that is probably a cheaper bill. So if they can’t afford everything, the car payment is probably the bill they can pay and takes them to their job where they earn money. So maybe that is part of their rationale. I definitely agree we need to move from a payment mindset to a value mindset.
    Shannon @ The Heavy Purse recently posted…Couples Financial Therapy: 4 Keys to a Happy MarriageMy Profile

    • John says:

      I found it interesting as well Shannon. I think you have a point that it’s generally cheaper and thus easier to rationalize paying first, but not at the expense of losing a home. :)

  • Our mortgage is definitely the first bill we pay each month. I can’t imagine paying a car payment first, if I had it. To me, having a roof over my head would be the most important thing. Having a car isn’t even all that important to me; if I didn’t need it for work, I would ditch it.
    Daisy @ Prairie Eco Thrifter recently posted…Frugal Valentine’s Day Ideas for Kids and CouplesMy Profile

    • John says:

      I couldn’t imagine paying for our car first either. That’s the nice thing about working from home, we don’t even need a car 99% of the time. :)

  • We have our utilities and mortgage automated. No car payments!! The mortgage payment comes out on the 1st! If I were writing a check each month I would still pay the mortgage first! :)
    Stephanie@Mrs.Debtfighter recently posted…Propane Price PainMy Profile

  • I agree, rent is to be paid first. My rent is due on the first of every month so it goes without saying that’s the first bill I pay. Next is utilities and then cell phone bill — purely based on when those bills fall. I don’t have a car and when I did it was bought in full so I’ve never dealt with a car payment. Perhaps I’d sing a different tune if I did.
    Broke Millennial recently posted…Being Debt Free: The Story of How I Have Minimal Credit HistoryMy Profile

    • John says:

      We’re the same way Erin, other than the mortgage comes out a few days after the first. The fact that you bought a car in full, in the past, tells me you wouldn’t likely be dealing with a payment anyway. :)

  • All our bills are automated except one. The water company is still in the dark ages. Our mortgage and cars all paid off, so we are in a sweet spot right now. My husband makes sure they are well maintained to make them last as long as possible. We always choose vehicles based on their record for longevity and we usually get 10 years out of them. That saves money big time!
    Maggie@SquarePennies recently posted…Perfect Strawberry Pavlova for Valentine’s DayMy Profile

  • Michelle says:

    I actually set all of my bills to be during the first week of each month so I do not have any surprises throughout the month. But our first technical bill is our rent! HA!
    Michelle recently posted…The New Business Chronicles: The IdeaMy Profile

  • For me, I would pay the utilities and mortgage first, then after that the car payment. I know someone that he would prefer to pay first his car debt, maybe he just really loves his car? :)
    Clarisse @ Make Money Your Way recently posted…It’s Time to Move on (Breaking Up With Your Freelancing Clients)My Profile

  • I pay rent, followed closely by health insurance. Whew! Good to know I have my priorities straight. :) I actually don’t have a car payment either so that’s pretty nice!
    Tonya@Budget and the Beach recently posted…The Hidden Cost of Big Fitness Goals/GiveawayMy Profile

  • Jason B says:

    I pay my rent first then other utilities.
    Jason B recently posted…Careers in Transportation for Youth InternshipMy Profile

  • David says:

    The first payment must be rent, otherwise you wouldn’t have a place to be and live comfortably. That is a huge issue. But, I see where you are coming from for the car payments.
    David recently posted…Is there a relationship between Life Span and GDP per capita?My Profile

  • Mel says:

    I pay my rent first, because it makes me the most anxious. I always try to keep the payments a month ahead. Then then internet, because I’ve got a little bit of an addiction there…
    Mel recently posted…Sell Your Junk: How to Make Money on eBayMy Profile

  • My mortgage is definitely the first bill that gets paid each month. Not only is it the largest bill, its also the most important! I can’ imagine prioritizing an auto payment as #1, but I guess for most people if they lose their car, they have no way to get to work and it snowballs from there.
    The First Million is the Hardest recently posted…myRA: What You Need To Know About The Newest Retirement PlanMy Profile

  • Claudia says:

    Rent is my upmost priority. If I didn’t pay that I wouldn’t have a roof over my head. Then come credit cards, then phone and then utilities. Thank goodness I’ve cut right back on my expenditures now though so all in all I can’t really get into too much trouble at the moment. And I should be debt free in two months, so hooray it was worth it! :D
    Claudia recently posted…The C25K Challenge Begins!My Profile

    • John says:

      I agree, if you don’t pay rent then you might as well kiss that roof over your head goodbye. Congrats on being so close to debt freedom, that’s awesome! :)

  • Interesting enough the first bill paid is the money transferred to my retirement account! If it wasn’t automated at the beginning of the month I would completely forget about it and find other ways to spend it.
    Amanda @ Passionately Simple Life recently posted…One of Those Long Days…My Profile

  • Marvin says:

    We pay our mortgage first and foremost because that’s the only bill we have =)
    Marvin recently posted…Financial WisdomMy Profile

  • J. P says:

    Completely agree with u John.We pay the credit card bills & mortgage first at the begining of each month,as we want to enjoy a debt free life.We bought a car too bt we dont have any car loans because its a very simple model yet very useful as in our city we dont get adequate public transportation.
    One thing we should always have to remember before buying a car that its all about necessity not about luxury..
    J. P recently posted…Comment on Priority Boarding Promises: They’re not what you think by BenMy Profile

  • hannah says:

    Rent is the first paid, and the only reason for that is because it’s due on the first. I pay all my bills online through my bank, and while the various account information is all in there, I still receive and review the bills, then enter amounts and send payments.
    I like to live off last month’s income, it’s truly the best way. So for March, I already know all my expenses – rent, utilities, car, food, and savings accounts for various things ( such as insurance which is paid every 6 months). By March 1st I already have all the money in my account that is needed for all of these things, money is automatically moved to savings accounts, and then I am free to pay bills as they come.
    By April 1st, the income we’ve made through March is in the account ready to repeat the process. The nice thing about doing it this way is you also create at least a one month buffer should something happen, besides emergency fund of course.

  • Everything is on automatic payment AND my first bill payment is to myself!!!

    In order of importance though, regardless of due date: savings, taxes, shelter, good food, transportation, other stuff (no credit card balance).

    Take care of your body first, then the extra “stuff”. If you can’t afford good, healthy food, but you have a car payment, something is very wrong!

  • Ellen says:

    The first bill that I pay every month is the rent, second is my electric bill, third is two credit cards. I need to organize my budget and watch what I am spending my money on since I plan to buy a car next year. I have some money saved, but I need to start disciplining myself more so that I can put money towards a down payment on a car, and even toward retirement. Most of my (excessive) spending goes on my credit cards, which is why I have the credit card payments. I would like to try to have it where only a few monthly expenses would go on my credit cards. For one of my credit cards I was using it primarily for paying my auto insurance (every three months), internet bill, and two automatic payments. The second credit card is for miscellaneous expenses and it usually gets paid off every month, unless a larger purchase/expense comes up, then I need to budget to get it paid off. I give myself three months to pay it off when I have a large expense put on the credit card.

    When I do get ready to purchase a car next year, naturally that will be my second payment every month (depending on the due date that I have). If I save enough money for a down payment, I will have a smaller car payment when the time comes. There are some expenses that I can reduce if I need to such as eating out, and some entertainment.

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