How To Manage Debt For Active Duty Military, Veterans, & Their Families

Joining the military means sacrifice. It shouldn’t mean you give up financial security and end up in debt.

Unfortunately, service personnel often struggle more than civilians with paying bills. A 3.4% pay raise in the 2020 Department of Defense budget will help, but it won’t solve the problem.

Despite the unique challenges, debt relief for military personnel is available. That’s good news to the almost 93% of service members who have some form of debt.

Almost 60% don’t have three months of living expenses saved for emergencies, according the annual survey by the Military Family Advisory Network 2018.

“It affects them emotionally and physically,” the report said. “It interferes with their relationships, quality of life, and work life.”

They often fall back on high-interest loans or credit cards to make ends meet. That’s a recipe for financial disaster, but service members are not doomed to fall into that hole. And if they do, there are ways to dig out.

Allow us to show you how.

Review Your Finances

You don’t have to be a member of the Joint Chiefs of Staff to know the importance of preparing a battle plan built on solid information. In your personal war on debt, you need to start with basics.

How much money do you make? How much do you spend?

The revenue question should be relatively simple. Expenditures can be trickier.

Write down all the entities and people you owe money to – mortgage, credit cards, student loans, car payments, utilities, etc. Verify that by checking your credit report, which comprehensively covers your monthly expenditures.

About 25% of consumers find errors on their credit report. So checking it is also a handy way of ensuring there aren’t any mistakes that are costing you valuable points on your credit score. If you do find errors, be sure to dispute your debts with the credit bureaus.

Create a Budget

Once you have the raw financial info, you need to tailor it to your financial goals. What do you want to achieve in the next year, 5 years, 10 years? And how can you achieve those goals?

Create a budget by itemizing your necessary monthly expenses (food, shelter, transportation, etc.) and optional expenses (pedicures, chocolate-chip lattes at Starbucks, tango lessons). See how much you can really put toward getting out and staying out of debt.

A top priority is coming up with an emergency fund of at least $1,000. Many experts recommend you squirrel away six weeks of take-home pay for an emergency.

A lot of people don’t have six days of take-home pay saved. A 2019 report from the AARP Public Policy Institute found that 53% of American households didn’t have an emergency savings account.

Do you have kids? If so, you should set aside money for a college. Student loan debt in the U.S. hit $1.6 trillion in 2019, and college isn’t going to get any cheaper.

Look into a state 529 college investment plan. The Thrift Savings Plan offered to military and government employees is also a good way to prepare for both college expenses and retirement.

Debt Repayment Plan Strategies

Everybody agrees a key part of any budget is getting out of debt. However, there’s a lot of disagreement on the best way to do that.

  • Debt Avalanche – that’s when you pay off your debts with the highest interest rates first, down to the lowest.
  • Debt Snowball – that’s when you pay your smallest debts first, then work your way up.
  • Debt Sanity – that’s when you pay off the debt that’s driving you most crazy. It’s totally subjective, but having the right frame of mind is crucial in any battle.

Study the methods and figure out which would work best for you.

Take Advantage of Resources & Military Benefits

The 2020 defense budget is $738 billion. The bad news is, as usual, that doesn’t include money to pay off the credit cards of every member of the military.

The good news is the military offers benefits and programs not available to the average civilians swimming in $6,849 of revolving credit card debt.

Among programs that can help military members with debt:

  • Public Service Loan Forgiveness Program (PSLFP): This cancels student loans taken from federal programs. Private student loans don’t apply. To be eligible servicemembers must make 120 on-time payments and meet other criteria.
  • College Loan Repayment Program (CLRP): The military pays up to $65,000 toward federal student loans. If you take it, be advised you will no longer be eligible for G.I. Bill benefits.
  • Servicemember Civil Relief Act (SCRA): This provides active duty personnel various and financial protections. A dandy feature is service members can have interest rates reduced to 6% on debt created before they enlisted.
  • Military Lending Act: This increases protections to active duty personnel. Among them, lenders are prohibited from securing a loan by holding a check or car title or obtaining access to a bank account, and interest rates are capped at 36% annually. Thirty-six percent interest? You don’t have to be a Gomer Pyle to get stuck with such an obscenely high rate.

Let’s explain why such protection is even necessary.

Avoid Predatory Loans & Military Financial Scams

Predatory lenders prey on the service members. That’s why you see so many payday loan and check-cashing businesses near military bases.

Almost 45% of active duty personnel received a payday loan in 2019, according to a study by Javelin Strategy & Research. More than 50% used a non-bank check-cashing service and 57% used a pawn shop.

Identity theft scams are also prevalent. A 2018 study from the Consumer Sentinel Network Data Book found the median losses for such fraud was $699 for military members.

Financial hardships can make people desperate for quick relief. Just remember, avoid military scams and look for legitimate programs to help you dig out of debt.

Consider Nonprofit or VA Credit Counseling and Debt Management

The VA offers free financial advice through its Beneficiary Counseling Program. Its Career Center helps military personnel transition into careers in the public sector.

Millions of people, in and out of the service, have gotten their financial houses in order through debt management programs that consolidate your credit card debt into one monthly payment with a lower interest rate.

Among the advantages are paying off debt faster and more efficiently, and having the guidance of certified financial counselors.

The downside is you must stop using credit cards (except for real emergencies) and it typically takes three to five years to complete a debt management program.

The VA doesn’t offer military debt management programs, but service personnel are free to investigate them in their quest to get out of debt. That 3.4% pay raise is more of a catch-up than a solution.

Military households that couldn’t pay their bills went from 16% in 2014 to 34% in 2019, according to a Harris poll sponsored by Wells Fargo and the National Foundation for Credit Counseling.

Men and women in uniform face many challenges and daily sacrifices while serving our country,” said NFCC President Rebecca Steele. “Financial concern shouldn’t be one of them.”

With a proper debt management plan, it won’t be.

Tom Jackson focuses on writing about debt solutions for consumers struggling to make ends meet. His background includes time as a columnist for newspapers in Washington D.C., Tampa and Sacramento, Calif., where he reported and commented on everything from city and state budgets to the marketing of local businesses and how the business of professional sports impacts a city. Along the way, he has racked up state and national awards for writing, editing and design. Tom’s blogging on the 2016 election won a pair of top honors from the Florida Press Club. A University of Florida alumnus, St. Louis Cardinals fan and eager-if-haphazard golfer, Tom splits time between Tampa and Cashiers, N.C., with his wife of 40 years, college-age son, and Spencer, a yappy Shetland sheepdog.

Military man holding out money in front of flag


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    1. Carrns, A. (2019, October 29) Even in Strong Economy, Most Families Don’t Have Enough Emergency Savings. Retrieved from
    2. Epperson, S. (2019, May 25)  Military families say this is their top concern. Retrieved from
    3. N.A. (ND) Harris Poll Shows Military Service Members, Spouses and Partners Rely on the Gig Economy to Supplement Household Income. Retrieved from
    4. Fox, M. (2019, July 30) Predatory lenders prey on military members. Here’s how to avoid being victimized. Retrieved from