Setting debt priorities to avoid foreclosure

Spending habits are different for everyone, but saving your home should be a main priority.

When a financial hiccup or hardship happens or there’s an unexpected loss of income, using your mortgage money to cover expenses might seem like a good idea at the moment. Trying to catch up on that mortgage payment after the fact is another story. For most of us, the mortgage payment is the biggest payment we make each month. And though we call the house we live in ours, if we have a mortgage, then we owe money on that house. So, it needs to be a priority if we want to keep living in it.

There are wants and needs to consider when setting financial priorities. We need to eat, a place to live, transportation, heat, water, electricity and clothing. Those are the basic needs. Our wants include all the rest – phones, consumer debt, entertainment or other things we would like to have but aren’t necessities. When a household has a financial challenge, it’s important to set debt priorities to ensure that the needs are met.

Start with a spending plan to track where all of your income is going. There are many ways to track what income is coming in and what expenses are being covered. How you track is not nearly as important as tracking – period. Make sure you factor in how much you will need to get caught up on your mortgage payment! The next step is to determine if there are spending leaks that can be plugged such as eating out, entertainment or other non-essential spending.

If the priority is to avoid foreclosure, then focusing on the primary goal of catching up on the mortgage comes before eating out on the priority scale. Ask yourself if there are expenses that can be deferred or delayed to allow time to bring the mortgage current. One example may be a medical or dental bill that is moved back temporarily.

Once you’ve looked over your expenses, contact your mortgage company to talk about how they can help you get caught up. In addition, HUD certified housing counselors can assist throughout this whole process. Housing counselors can help identify the debt priorities with you and help determine your best course of action.

Michigan State University Extension offers financial literacy and homeownership workshops throughout the year to help you become financially healthy.  For more information of classes in your area, go to either or  Additionally, you can take the Financial Health Survey at MI Money Health to access if you’re financially healthy and discover more ways you can improve your financial health.  

Michigan State University Extension has released a new toolkit for homeowners who are experiencing or have previously experienced foreclosure. This toolkit will equip these individuals and families with tools to help them recover their financial stability, in the case that a recovery of their home is not possible. The toolkit is available to download free at

Did you find this article useful?