Know What You Owe

By Meghan Northcutt, AFC® Candidate, FFC Candidate, FINRA Military Spouse Fellow

The average American household is nearly $16,000 in debt with $7,400 owed on credit cards. Military families have seven percent higher unsecured debt, such as credit cards, and 15 percent higher monthly debt-related expenses. It’s important to take a realistic look at your debts and create a plan; understanding your household’s debt is imperative to your overall financial state.

Build Awareness

Create a list of all your debts. This list should include the debtor, balance owed, minimum monthly payment, interest rate, and the number of months remaining to be paid. Such a list builds awareness regarding the obligations for repayment and helps to ensure regular monthly payments are met to maintain a positive relationship with the lender; not only will this help with financial maintenance but will help improve your credit score. Knowing what you owe will help you be realistic about the level of debt your family holds and your household’s financial well-being.


Make a household budget and be sure to include all your minimum monthly debt payments. Plan to make an extra payment or pay more than the minimum toward one targeted debt. To choose the debt you want to target for pay-down first, it would be helpful to reference the list of all your debts as described above. A common method of targeting debts is known as the Snowball Effect, which allows you to focus on ridding yourself of debt expenses by targeting one debt at a time. Be patient; this process may take quite some time, but take notice of your successes by crossing paid off debts from your list. The budget will help keep you on track and keep you moving toward the goal of becoming debt-free.

Military Effects

A servicemember’s security clearance could be revoked due to debt and poor credit management. Nonpayment of financial obligations, financial breaches of trust, inappropriate financial schemes, inability to repay debts, and unwillingness to repay debts could lead to a revoked security clearance or denial of a security upgrade. The military places a significant importance on finances in regards to security clearances as those who are overextended have an increased risk of partaking in illegal activities to maintain their lifestyle or repay debts.


Military families are never alone to face the battle against debt; there are places to turn for help. The Servicemember Civil Relief Act (SCRA) may be useful in reducing the interest rate owed on pre-service debts. Simply contact the lender regarding qualifying debts and provide them with the date of activation to have interest rates capped at six percent. In an emergency, financial assistance in the form of interest free loans may be provided through the Air Force Aid Society (AFAS)Army Emergency Relief (AER), Navy-Marine Corps Relief Society (NMCRS), Coast Guard Mutual Assistance (CGMA), and various state specific programs for National Guard families. One-on-one Financial Counseling services are provided through your installation’s Family Readiness Center or by phone through Military OneSource.

Through building awareness and budgeting, your family will be better equipped to reach financial goals and avoid security clearance turmoil. Assistance offered through military programs can be a great benefit as you navigate the debt minefield. With time, these tools will help you conquer your debt.

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