Get Out of Debt

Roughly one in six Savers has selected paying off consumer debts as their wealth-building goal. That does not come as a surprise since, along with modest incomes, large consumer debts are the most important financial reason that people have trouble saving and building wealth.

The good news is that there is hope. With planning, discipline, patience, and maybe some outside help, almost anyone can reduce their debts and start to accumulate wealth.

Are you in Trouble?

If you answer “yes” to any of the following questions, then you probably need to get your debts under better control:

1. Can you only afford to make minimum payments on your credit cards?
2. Do you worry about finding the money to make monthly car payments?
3. Do you borrow money to pay off old debts?
4. Have you used a home equity loan to refinance credit card debts, then run up new revolving balances on your cards?

Why too much debt is Costly?

Borrowing more money than you can afford is costly in many ways. Americans spend well over $75 billion a year just on credit card interest and fees. That means that families who revolve credit card balances pay an average of $1,500 a year in interest and fees. If they saved that $1,500 in an account with a five percent yield, in 40 years they would have nearly $200,000! Taking on too much debt also lowers your credit score. That means you will end up paying higher interest rates on all your consumer and mortgage loans. A low credit score can also make it harder to rent an apartment, get utility services, and even get a job.

Too much debt isn’t just expensive. People with lots of debt often say they lack peace of mind. They worry constantly about paying off debts and making ends meet. The stress of these worries affects their family life, work performance, and other areas of their lives.

How to reduce your Debts?

The first step in getting out of debt is to stop borrowing. To do that, you have to stop spending more than you earn. So, make a budget and cut out any expenses you can. It may help to cut up your credit cards or lock them away in a safe place.

While you are making a budget, figure out the most you can afford to pay each month to reduce your debts, then make those payments without fail. If you have debts on more than one credit card, either pay off the card with the highest interest rate first and work your way down to the card with the lowest rate, or pay off the smallest loan first and work your way up to the largest. Once you’ve paid off your debts, don’t give in to the temptation to start over-spending again. Instead, take the money you were paying each month on your debts and begin to save it. That will give you a financial cushion the next time an emergency strikes.

Where to get help?

If you are located at a military installation you can get assistance at the Family Readiness Center for free.  Personal Financial Managers and Counselors are there to help and can be a great asset in getting a debt repayment plan in order.  Another resource is MilitaryOneSource they also offer free financial counseling.  Visit their website or call 1-800-342-9647 for more information.

In most communities, there are agencies that can help you manage your debts.  The most helpful and most widely available are non-profit Consumer Credit Counseling Services (CCCS). CCCS counselors can work with you privately to help you develop a budget, figure out your options, and negotiate with creditors to repay your debts. Call 1-800-388-2227 to locate the office nearest you.  There are also many Cooperative Extension offices in communities across the United States who offer workshops, home-study courses, and other services to help people manage their money, including their debts. Cooperative Extension offices are listed in the blue pages of the phone book under county government.

More Helpful Links:

Importance of Credit History

Tip of the Day

  • 3 reasons to save for emergencies this Military Saves Week! http://ow.ly/C7q4f

Pledge to Save

I pledge to save money, reduce debt, and build wealth over time. I will encourage my family and friends to do the same

Pledge to Save

Saver Stories View all »

Savers Pledge Leads to Savings Success

My name is Rob and I am a Staff Sergeant in the Marine Corps Reserve. My financial success is a huge result of the Military Saves Campaign.

My journey began five years ago after marrying my wife, Lisa. We entered our marriage with no savings plan in sight, carrying debt and living in a tiny apartment. After seeing an advertisement for Military Saves, we decided to grab the reigns of our finances and implement a positive financial plan.

Read more...

Meet Wacinque BeMende

Meet Wacinque BeMende. He’s so passionate about encouraging savings and promoting financial literacy, he’s established his own Kid’s Savings Program. Wacinque donated $15,000 to the Community Action of Laramie County in Cheyenne Wyoming to begin the Wacinque “ Rhino” Fund Endowment to help kids open savings accounts.

Read more...

Money on the Side

Camp Arifjan, Kuwait -- A colonel in the 1st Theater Sustainment Command has money on his mind.

Army Col. George Fields, the Chief of Intelligence, or G2, has been teaching a free "Managing Your Money" class here in his spare time. More than 400 students have attended his six week-long class to learn more about increasing their own finances.

"All I did was sit down and listen to a guy one day who showed me what he was doing" said the colonel as he explained how he became interested in what he calls, "becoming financially free."

Read more...