Story by Erin Wittkop, Defense Media Activity
Managing your finances takes time, effort, education, patience and perseverance. Perseverance especially pays off if you’re managing debt during a particular moment in your financial lifecycle. Managing debt can be relatively easy or extremely stressful depending on the type of debt you’re working with.
In the case of certain types of loans, say auto or student loans or a mortgage for example, slow and steady wins the race. Establishing a regular payment plan when taking on this type of debt and sticking to it is usually the best way to approach paying it off. You can always add extra money to your payments if you find yourself with a windfall and have the extra funds to dedicate towards paying down the balance.
Credit card debt is another story, however. Credit cards are notorious for carrying high interest rates and usually the types of purchases made of them aren’t working to build you equity or increase your earning potential. Carrying revolving credit card debt can also have a negative impact on your credit score and, in extreme cases, put you or your spouse’s security clearance at risk. These facts alone increase the urgency for paying down this type of debt.
Regardless of the reasons credit card debt developed, it needs to be paid off one way or another. Here are a few tips for getting it under control:
1. Acknowledge that your debt is a burden.
Barbara Thompson, the Defense Department‘s Office of Family Policy, Children and Youth director, says that like any challenge the first step in overcoming debt is acknowledging that it’s become a problem.
2. Set a goal to pay it off.
She says setting a goal to pay off your debt is a necessity when trying to overcome it and establish a financially secure future.
3. Seek help in creating a debt management plan.
She recommends service members and their families look to Military OneSource for help in managing debt. “Military OneSource has excellent resources on their podcasts, there’s a c.d., there’s articles on how to be financially fit as a military member or family member of a military member. They have certified financial counselors available online or face-to-face to help you manage your debt.”
4. Watch your credit scores.
Thompson says your credit score can take a hit when revolving debt is a regular part of your financial reality and you need to be very proactive in ensuring the information on them is accurate.
“Watching those credit scores [is] important because it takes a while for the records to show that you are on a path of good credit and good financial habits. It’s really up to the service member to become savvy on what goes into those reports and how to make sure that it’s correct information.”
She recommends working with installation personal financial managers to learn more about your credit score, how to manage it effectively and how frequently you should be engaging with it.
At the end of the day, the Defense Department’s goal is to make sure you’re meeting you’re financial obligations without much stress. They believe that financial readiness equals mission readiness and want to know that service members are at the top of their game.
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