Leaving the military and entering civilian life can be a difficult transition. Adjusting to a new lifestyle, finding work, and managing finances are just some challenges former service members face. One of the biggest issues veterans face is dealing with debt after their service ends. Some common questions among most veterans are how to deal with debt and what to know before tackling post-military debt.
6 Tips For Eliminating Debt After The Military
Learning how to handle your finances is crucial to your debt-elimination process. In this piece, we will provide insight on how to maneuver debt after military service and steps to get rid of debt and set your finances right.
1. Get Familiar With Your Finances
The first step in managing your debt is understanding what you owe and who you owe it to. Take time to review your bills and list everything that needs to be paid off. Knowing exactly how much you need to pay and how much you have available will help you create a realistic plan for getting out of debt. It’s also important to know what types of debts you are holding, such as secured or unsecured loans, credit cards, student loans, etc., since different types of debt require different strategies for paying them off.
2. Know Your Rights
The Service members Civil Relief Act (SCRA) offers certain protections for active duty service members who are struggling with debt. These protections include reducing interest rates on mortgages, credit cards, and other loans up to 6%, postponing court rulings during active service, and preventing repossession of property. These rights apply for as long as you remain in active service, so it’s important to understand your rights under this act before attempting to tackle any debts.
3. Prioritize Your Debts
Once you’ve reviewed your finances and created a list of all your debts, the next step is prioritizing which ones should be paid off first. Generally speaking, it’s best to focus on high-interest-rate debts first, as they can accrue more interest over time than other types of debt. Paying off high-interest rate debts should also free up more funds each month that can then be used towards paying off lower-interest rate debts quicker. Additionally, suppose any of your creditors are willing to negotiate terms or offer payment plans or settlements on their terms. In that case, those should also be considered when prioritizing which bills should be paid first.
4. Stay On Track
Once you have created a plan for getting out of debt, you must stick with it! Make sure that every penny allocated towards paying down your debts is put towards them instead of used elsewhere. Additionally, try setting aside funds each month or paycheck so that when unexpected expenses arise, such as car repairs, money is already saved instead of relying on credit cards or other forms of financing, which could add more to existing debt. It’s ok if progress isn’t made quickly – remember that any progress made toward getting out of debt is better than none.
5. Create A Budget
Creating a budget is one of the first steps you should take when trying to manage your post-military debt. A budget allows you to track how much you have coming in versus how much money is going out each month. You can easily create a budget by recording your monthly income and expenses, such as rent/mortgage payments, groceries, utilities, and loan payments, in an Excel spreadsheet or online budgeting software like YNAB (You Need A Budget). It will help you determine exactly where your money is going to make adjustments if necessary.
6. Seek Professional Help
If you find yourself overwhelmed by high amounts of debt after leaving the military, it may be time to seek professional help from a financial advisor or credit counselor. They will be able to guide how best to manage your debts and offer advice on other options available to help improve your overall financial situation, such as debt consolidation or refinancing loans at lower interest rates. A financial advisor will also look at any investments you may have made while in military service and offer suggestions on how best to manage them to maximize returns and minimize losses.
Wrapping Up
Dealing with debt after leaving the military can be daunting, but with the right information and tools, it doesn’t have to be overwhelming. These tips can help make managing and paying off post-military debt easier and less stressful. Taking these steps now will ensure that you are better prepared for whatever comes next in life.