“Have no anxiety at all, but in everything, by prayer and petition, with thanksgiving, make your requests known to God” (Philippians 4:6).

Do you ever feel like you are drowning in to-dos, all with substantial financial implications? How do you manage it? How do you decide which task to do first? How do you pay for everything? The adage “when it rains, it pours” seems to affect our finances at times when we get bombarded with lots of expenses all at once. How do we decide what to pay for first—or how to pay for it all at once if necessary?

I propose the following steps:

1. Make a List

First of all, brain dump! Write down everything that needs to happen. Then, wait a day or two and add to the list if anything else comes to mind.

This first step will accomplish a few things. First, it should alleviate some stress by freeing up some space in your brain. It will also help you become more organized and see things a bit more clearly. Rather than trying to mentally run through a list, you can visually see everything and make notes about the details for each task. Finally, it will help you make a plan and understand the next steps to take.

2. Add Estimated Costs

Once you have your list, add the approximate cost of each item. Depending on how familiar you are with each item, you can estimate yourself or search online for estimates. Using a spreadsheet for your list and costs will enable you to total the costs later through the program rather than needing a calculator.

3. Prioritize

Next, take a close look at your list. Using highlighting or another column, prioritize each item as either high priority (red/pink—needs to happen now), medium priority (yellow—needs to happen within the next year), or low priority (green—would be nice to happen, but it does not matter when).

Now, sort your list based on the priority level. You should have three lists: one for each priority level.

4. Total the Cost in Each Priority

Now that you have three groups, what is the total cost for each?

5. Brainstorm Funding Options, Obtain Quotes, and Analyze Them

As you look at the numbers and the timeframe for each item, there are different ways you can pay for them. For your high-priority items, do you have cash available? Maybe you have an emergency fund, investment account, or high-yield savings account that you can use. If not, what loan opportunities are available? Could you take out a home equity line of credit on your home? Do you qualify for a low-interest loan? Is there a credit card or other loan offer with no interest for six months or a year?

If you are in a place that requires you to take on debt to fund your high-priority items, there are a few important considerations to keep in mind: interest rates, fees, terms, whether you can afford it, and how much you will pay throughout the duration of the loan. We established that these are high-priority items that need to happen now; however, it is still important to look at how you can best afford them. Every loan is different. (It is important to note that this process can become complicated, and seeking the advice of a financial professional is a good idea.)

Interest Rates

Compounding is working against you when you take out a loan, meaning that even though payments will be higher, shorter terms are better. For example, for a $10,000 loan at a 5% interest rate over three years, you would pay about $300 per month or about $10,800 over the three years. For a $10,000 loan at a 5% interest rate over five years, you would pay about $189 per month or about $11,340 over the three years—$540 more. Even if you had a higher interest rate of 6%, you would still end up spending less money in the long run with a three-year loan: For a $10,000 loan at a 6% interest rate over three years, you would pay about $304 per month or $10,944 over the three years, which is still $396 better than 5% over 5 years. It is great to save that money over the long term, but if you cannot afford the monthly payments, you’ll need to go with a longer period and lower payment option.

Fees

A loan may be associated with many fees. The origination fee, late payment fee, failed payment fee, and prepayment penalty are the big four, but there could be others, so make sure you understand the terms.

The origination fee is the cost to process the application. Often, lenders offer to wrap this fee into the loan for a no-cash-at-closing deal. The problem with this approach, however, is that you also must pay interest on the fee. If the origination fee on a $10,000 loan were $100 and was wrapped into the loan, you would actually have a $10,100 loan.

The late payment fee is a charge if you do not make your payments on time, and the failed payment fee happens if you do not have the money in your account to cover a payment you make. The prepayment penalty is a fee for paying off the loan before the term ends. This fee ensures the lender receives their interest payment even if you pay off the loan early. In order to review all these items, you will need to see quotes. Like anything, it is important to request more than one to be sure you find the best option for you.

Terms and Conditions

Everything discussed above and more will be included in the terms and conditions of the loan. It’s incredibly important to read, review, and understand the terms and conditions before you take out a loan. Usually, we need loans in a high stress environment, meaning that we sometimes forget to look at the details. Take a deep breath, step back, and ask questions before signing anything.

What About Medium- and Low-Priority Items?

Your funding options are similar for your high-priority items, but you have more time on your hands. In these situations, it’s a good idea to carve out as much saving room in your budget as possible so that you take on as little debt as possible. There are ways to use debt well and effectively, but it is usually good to avoid it. If you are interested in using it when you don’t need it, reach out to a professional to see how it works and if it is right for you.

For your low-priority items, saving is your best option. They are typically luxuries, meaning you have the time to wait for them until your budget has more room. While we all want the latest and greatest, it is best for your finances if you wait until the funds are available. (It also teaches you patience!)

6. Take Action

You have looked at what you need, prioritized it, and thought through how to pay for it. The final step is to take action, whether it’s applying for the loan, increasing your savings, hiring contractors, or something else.

Don’t dwell too much on this step. You have determined these things need to happen, so make them happen! The more action you take, the less stress you will feel. It is hard when you feel like the rain is pouring down, but you can manage it. When it feels like you are in over your head, take a deep breath, make a plan, and reach out for help if you need it. You can do it. Soon, the sun will come back out!

Erica Mathews is a CERTIFIED FINANCIAL PLANNER™ Professional with Financial Counseling Associates, a small, family owned, independent, financial planning and investment management firm. She is passionate about helping families and individuals build their wealth so they can live out the calls God has places on their hearts. As a wife, mom of four, and businesswoman, she understands the complexities of family life and helps relieve the burden of financial stress with organization, a plan, and automation so her clients hit their goals. She lives in Colorado with her husband and four kids. They love everything outdoors including gardening, hiking, biking and simply exploring nature. If you would like to reach out to Erica, her email is erica@fca-inc.com.