More than a quarter of military families carry credit card debt over $10,000, a Finra Investor Education Foundation survey found. In addition, a third of those surveyed found it difficult to make ends meet, and half of them had no emergency savings. Active duty service members and discharged veterans face a number of factors that may case financial insecurity, but you don’t have to suffer with debt. There is help available.
Resources for Those Who Serve
Stressors of military life that can aggravate debt include loss of spousal income due to frequent moves, the inability to sell a home when the serving partner is transferred to a new base, low salaries of junior enlisted troops and the lack of employer reimbursement for military moves.
However, you and your family enjoy some debt protection while you are serving, thanks to the Servicemembers Civil Relief Act. Interest is capped at 6 percent for debt the service member incurred before going on active duty, and you can cancel a lease with no penalty. In most cases, your property can’t be foreclosed on while you are on active duty.
Discharged veterans have to resume debt payment within 30 to 90 days after discharge. After leaving the service, vets may need to find new housing, purchase a car and support their family while job hunting, on top of having to pay back old debt. Federal VA benefits may help vets obtain prescription medication, take out or refinance a home loan, receive educational scholarships, take advantage of tax credits or exemptions and receive job training. It can be hard for newly returned vets to get back on their feet, particularly when they no longer receive protection from the Servicemembers Civil Relief Act.
Like all other Americans, veterans enjoy the protection of the Fair Debt Collection Practices Act, which states that creditors cannot publish your name, threaten you with harm, repetitively telephone you in an attempt to goad you into answering the phone, or call you without identifying who they are. The Consumer Finance Protection Bureau provides free resources for veterans who are being harassed by debt collectors. These can offer you peace of mind and help you formulate a debt repayment plan.
On Your Way to Financial Health
After looking into the resources listed above, the next step is to calculate your total debt and income. This can be scary, but you will need to know how much you owe in order to achieve financial health. Make a plan for paying down bills.
You might look into selling stocks and bonds or cashing in a lump sum annuity. You won’t receive the full annuity amount if you cash in early, but if you can use the lump sum to achieve financial health, it may be worth it.
You can also work with a debt consolidator to lump all your debt into one mass amount, obtain a lower interest rate and lower your monthly payments. Reducing your interest rate fast-tracks debt repayment, because more funds go to the principal.
About the author: Roseanne Sutton is an former Army brat who’s now married to a career Marine. A stay-at-home mom to two boys, she writes about parenting for a variety of blogs.
