Despite discharging your military duty with discipline and honor, you might still find yourself struggling financially.
US Military Veterans are at an even more precarious position because they might have a hard time transitioning to civilian life. To fully benefit from debt relief, you must understand the causes of financial liabilities and how to handle them.
Debt Relief Initiatives
The federal government has various programs meant to protect military members from predatory creditors. They include:
- Servicemembers Civil Relief Act: This law prevents lenders from harassing you or your family while you’re deployed. It puts severe restrictions on landlords and creditors keen on subjecting service members to evictions, repossessions, penalties, and foreclosure.
- Military Lending Act: Predatory lenders readily provide loans such as car title, tax refund, payday, and home improvement loans. Sometimes creditors deceive you into taking them, only to hit you with exorbitant interest rates. This particular law caps interest at 36% for loans advanced to military members.
- Homeowners Assistance Program: It assists military members who want to sell their homes but would make a loss at prevailing market conditions. If you qualify, you’re eligible for some monetary relief. The benefits are also applicable to wounded, injured or ill members as well as any surviving spouses.
- Joint Travel Regulations: They’re a raft of laws relating to travel allowances such as per diem and relocation. The cash allowances make these activities more affordable, which helps in tackling your overall debt.
Other than government-led initiatives, various non-profit credit counseling services exist. They’ll provide you with free, actionable advice on the best way to get out of debt.
There are also lenders who offer low or affordable interest rates to military personnel. Examples are the Navy Federal Credit Union, LendingClub, Avant, and Citizens Bank. One way of reducing debt is by using one low-interest personal loan to clear various smaller, higher interest ones.
Debt Consolidation Options
The only way to successfully pay off debt is to stay ahead of it. According to statistics, 36% of military families can’t meet their financial obligations. This is just one of several unfortunate numbers. Chronic debt could cost you future financial opportunities.
Jobs that require security clearance consider various aspects of your life to determine whether you’re fit for that career. One of these is your credit report. If it’s negative it might affect your security clearance which will deny you better-paying jobs.
To consolidate your debt, implement the following tips:
- Know exactly how much you owe, and have a concrete payment plan. You could weigh between the debt avalanche and snowball methods and pick the one that works best for your situation.
- Apply for a debt consolidation loan. Based on your credit score, you could qualify for personal loans with as low as 3.99% interest rates. Remember, even in extreme circumstances, the Military Lending Act forbids lenders from charging you more than 36% interest.
- Connect with Debt Relief Programs: There are a variety of experts that can help with a game plan for debt relief and financial freedom. Most help with a strategy, debt counseling, and even legal help. This can be especially helpful when negotiating lower rates, lower amount owed, or even tax debt.
Although somewhat high, it’s better than what most loan sharks charge. Focusing on paying one loan is easier than grappling with several smaller ones.
- Check your spending habits to avoid being in a vicious debt cycle. Ideally, you must spend less than you earn. Having more than one revenue stream also helps in reducing your debt. The skills you learned in the military could come in handy in earning extra income as a freelance contractor.
The GI Bill is one of the most effective debt relief solutions for military members. It gives you the chance to pursue higher education at subsidized rates which makes you more competitive in the job market.
If you put the tips outlined above into practice, your debt problem will soon be a thing of the past. As with military service, debt reduction requires a disciplined approach. The feeling of having this load taken off your back is only comparable to that of winning on the battlefield.