The rich get richer and the poor get poorer. It’s an old aphorism, but for many Americans — especially if they struggle to keep up with bills — it has a new meaning.

In 12 states and the District of Columbia, local governments can seize a homeowner’s property, along with any equity they may have built up if they fail to pay their property tax bills.

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And those tax bills aren't getting any easier to pay. The latest data shows the median tax bill rose more than 8% in 2021 compared with 2019, The Wall Street Journal reported in February.

A recent study from Pacific Legal Foundation dug into the numbers of this issue of “home equity theft.” The report found that between 2014 and 2021, 7,900 homes were taken as payment on property tax debts. While the debts made up about 14% of the home’s value, governments and private investors were claiming over $777 million in life savings.

The researchers point out that in many of these cases the owner’s equity is usually much more than the tax debt. In one example the report cites, a homeowner in Michigan lost his home over an $8.41 underpayment.

It’s a scary prospect, but one that hopefully can be avoided with some awareness and planning ahead. Here are three ways to protect yourself and your finances.

Make that budget, finally!

So many articles out there tell Americans to create a budget if they want to stay on top of their spending and bills. Yet how many of us actually do it? According to one study, only about 32% of Americans have a monthly budget prepared. The rest of us are merely flailing in the wind.

In another survey, of those who have budgets in place, 73% admitted they don’t stick to it. And that’s the key — if you really want to stay on top of bills and keep your home under your name, the first thing you should do is make a budget — and then stick to it.

There are plenty of budgeting tools you can start for free online, and the rest you can hammer out with your financial adviser.

Pay off other debts

To stop yourself from falling behind on monthly bills, after you’ve created your budget, your next step should be to pay off your debts.

Many Americans carry multiple types of debt, ranging from the long-term like student loans and mortgages, to more short-term like credit card debt. If you’re dealing with a few balances, it can be overwhelming to decide what to prioritize.

A great way to chip away at it is to line up your debts from highest interest rate to lowest. In your budget, you should have a section specifically for paying down debts, reflecting the most you can afford to put aside each month.

While you should always meet the minimum payments of your other loans, plan to put the rest of what you’ve budgeted for against the loan with the highest interest rate first.

Once that loan is paid down, move to the next on the list. In no time, you’ll be feeling much more financially stable.

If you're juggling multiple high-interest debts, you might consider consolidating your debts into a single loan to help simplify your monthly payments. You would be making one payment every month with one interest rate instead of dealing with multiple lenders and interest rates.

Read more: 3 big mistakes people make with cash back credit cards that cost them every time they swipe

Create an emergency fund

Another line in your budget should be for an emergency fund. This fund could be used specifically to address an issue like paying off property taxes, and could be the line between losing your home or holding onto it.

Ideally, an emergency fund should include about three months worth of wages. While 76% of Americans say they have some funds set aside for emergencies, 39% have less than a month of income in savings, according to a survey from the Consumer Financial Protection Bureau.

And of course this fund can help you out of all kinds of jams — not just overdue property taxes. If you lose your job, go through an illness, or run into any other type of emergency, you’ll have it on hand to help you through the tough times.

Your savings don’t have to just sit in a savings account — you could always choose to invest with help from your adviser, creating even more funds for future use. Just make sure it’s easily accessible if you need to pull any money out in an emergency.

You're probably overpaying for this too

Those aren't the only things you can do to help shore up your finances.

The average price of a home insurance policy in 2023 is $1,516 — nearly 40% higher than it was 12 years ago.

If you want to get the best deal possible on coverage for your home — no matter where you live — you’ll need to comparison shop multiple home insurance companies.

Local homeowners in Washington state, for example, often save close to $1,000 or more per year by shopping around for their insurance — according to the nonprofit consumer group Puget Sound Consumers’ Checkbook.

Normally, shopping around for insurance quotes takes forever and it's a hassle to field multiple phone calls from different insurance agents. But nowadays you can compare rates online in just a few minutes.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.