How Can I Get Out of Debt?


Military families face particular challenges with debt. Compared to civilian families, they have a higher rate of credit card debt, because their costs are often higher. Frequent moves become expensive, so while the job is steady, many families struggle to make ends meet.

However, there are also specific advantages for military families. While tracking your spending, creating a budget and financial discipline are the foundation for getting out of debt, military families can also use the many discounts available to help them tackle debt. Finally, try limiting your credit card use and relying on cash to help your finances.

The Basics of Getting Out of Debt

Debt reduction isn't an overnight process. Begin with tracking your spending (you can use an online tool like this one), creating a budget, and getting in the habit of making regular payments on your debt. Even if you can only make a small payment towards your debt with each paycheck, that's better than nothing. Tackle debt in steps: pay off either the loan with the highest interest rate, or the smallest loan (regardless of the interest rate). Either way, you'll feel a sense of satisfaction knowing that you are in control of your debt.

Unfortunately, as so many service members join young, they often fall prey to predatory lending practices and high interest rates. This is best countered with personal finance education. CredAbility Reconnect provides free personal finance counseling and resources for servicemembers and veterans to help them manage their finances and understand their needs.

Military Discounts and Freebies

Even in straitened circumstances, it's not realistic to expect that you'll never buy anything. This is particularly true of military members who are on the move constantly. Take advantage of the many military discounts available to servicemembers and their families. They will make it much easier to stay within budget.

Although discounted is great, free is even better. Ranging from educational software to meals, military freebies can help extend the tightest budget. For instance, the Department of Defense provides free membership to childcare middleman Sitter City. Another fantastic freebie is the annual America the Beautiful national parks pass, giving military members free access to 2,000 federal recreation sites. Check out this list for a good introduction to what's out there for military families.

Finally, there are two great resources for free items and household goods: Freecycle and the free section of your local Craigslist. Freecycle is particularly useful because you can ask for specific things, and more often than not, someone else is looking to give that item away.

Limit Your Credit Card Use and Rely on Cash

Because military members face a larger-than-average credit card debt burden, it's essential to use credit cards wisely. One way to do so is to cut credit card use to a minimum and go all cash on your budget. The trick to this is to budget wisely so you'll have enough cash throughout the month. Once it's gone, it's gone.

Why go cash-only? The average person saves about 20 percent on their finances by switching to cash. Credit makes it easy to part with money because it doesn't seem real. A swipe here, a swipe there, and before you know it, you've received a statement that seems unreal. Paying with credit has been shown to result in larger purchases. If you switch to cash, you'll be forced to consciously make financial decisions rather than relying on spending patterns and impulse buys. Do you really need it? Many times, the answer will be "No." And if you have extra cash at the end of the month, you can use it to make another payment on your debt.

By paying off debt, you're taking control of your financial life. And a good financial life often makes for a better soldier. So start today with your debt. It certainly takes discipline, but military members are no strangers to discipline and more than up for the challenge. If you want more tips, check out our article on How to Get Out of Debt.

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