01.31.2022 By Breanna Johnston, AFC® Candidate & Amelia Simons, Communications Coordinator at America Saves

Tips For Military Members To Help You Reduce Debt and Pay it Off For Good.

One of the greatest contributors to financial stress is debt. If you're having a tough time financially, it can feel isolating, but the truth is, you are not alone. A recent survey found that 27% of service members had more than $10,000 in credit card debt compared with just 16% of civilians.

Written by Breanna Johnston, AFC® Candidate and Amelia Simons, Communications Coordinator at America Saves.

Tips For Military Members To Help You Reduce Debt and Pay it Off For Good. 

One of the greatest contributors to financial stress is debt. If you're having a tough time financially, it can feel isolating, but the truth is, you are not alone. A recent survey found that 27% of service members had more than $10,000 in credit card debt compared with just 16% of civilians.

While debt is completely overwhelming and isolating, the only way to relieve financial stress is to make a plan and work your way through it. But to make that plan, you'll need to understand the type of debt you have, your best-case scenario to pay down your debt, and how to leverage your knowledge so that you can maintain or increase your credit score.

When you reduce your debt, you save in the long run — on late fees, interest, and a higher credit score, which will lower interest rates.

Get A Clear View Of Your Finances

You thought we'd say budget first, didn't you? While creating a spending and savings plan (our preferred term over "budget") is essential, the true value in having a plan is clarity. When you know your exact income and expenses, you can better steward the discretionary income left over after your bills are paid. It will become easier for you to decide how much to spend, if you can put more toward debt, what goes into savings, and whether to begin making investments. Your spending and savings plan will also highlight areas that need attention.

For example, is your grocery allocation adequate? Are all of your subscriptions and recurring monthly expenses still necessary, or can any be canceled? Knowing where all of your money is coming from and going to helps you build financial confidence and shows you where you can afford to reduce your debt and begin building wealth.

If you need support with making a spending and savings plan, we've created a straightforward tool that will help!

Work With What You Have

When you're paying down your debt, one conscious decision to adopt is to stop adding to your debt. This step may seem intuitive, but there are circumstances where the urge to just "charge it" may arise.

Many "Buy Now, Pay Later" options are becoming increasingly popular. Though it may feel like it is not, options like Klarna, Afterpay, and Affirm are debt and should be treated as such.

As you work to pay off your credit cards, here's a word of advice: do not close your credit cards! Closing your credit card accounts may reduce your credit score, as the "age" of your credit factors into your FICO score.

By keeping your card open with a $0 balance, you'll have a longer credit history and a larger amount of available credit. The only time you may want to consider canceling a card is if it has pricey annual fees.

Increase Your Income 

If you can, consider increasing your family's income, even if temporarily, allowing you to put more money towards your debt. This could be through you, the servicemember, or your spouse or partner, if applicable.

There are more options than ever to get a quick cash injection or additional income in today's economy. Some ideas include selling items around your home you no longer use, purging your family’s closet on sites like thredUp, leveraging a talent or skill you have, like tutoring or singing, to offer as a service, or taking advantage of the booming gig economy.

Paying It Off For Good Starts With A Decision

There are many strategies to use when working toward paying off your debt. The most popular strategies include the snowball method or the avalanche method. By deciding which method you want to use beforehand, you will reap the benefits of paying it off faster.

  • Snowball method 

"Snowballing" your debt is a type of accelerated debt repayment plan. First, list all of your debts from the smallest balance to the largest balance. Next, make the minimum payment on all your debt except the smallest one. With your smallest debt, you will put as much money as you can toward the balance. Once the smallest debt is paid, take the amount you were putting towards that debt and apply it to the next smallest. With this method, interest rates are not the focus.

  • Avalanche method

With the "avalanche" method, you will still make the minimum payments on every source of debt, but you apply the remaining funds toward the debt with the highest interest rate. By paying off the debt with the highest interest rate first, you reduce the overall amount of interest you pay. 

Making extra payments allows you to pay off your loan(s) more quickly when paying toward installment loans, like your car payment. Just be sure to specify that any additional funds outside of your monthly payment go toward the principal. Before you begin making extra payments to installment loans, check the terms of your loan to determine whether additional fees or prepayment penalties may apply.

Another program available to servicemembers is the Servicemembers Civil Relief Act, or SCRA. The SCRA, which was formerly known as the Soldiers’ and Sailors’ Civil Relief Act, is a federal law e that restricts or limits actions against military personnel currently serving on active duty, designed to ease the financial burden for active-duty service members, Reservists, and Guard members. The SCRA 

Includes a long list of protections for the servicemember, including but not limiting to – credit card interest rates capped at 6%, termination of rental agreements, mortgages, and deferred income tax payments.

Regardless of how you decide to reduce your debt, let Military Saves be your savings accountability partner! Take the Military Saves Pledge and choose “reduce debt” as your savings goal. We'll support you by sending email and text reminders, resources, and tips to keep you on track towards paying down your debt.


Are you trying to save money? Let Military Saves help you reach your savings and debt reduction goals. It all starts when you make a commitment to yourself to save. Take the first step today and take the Military Saves pledge to save money, reduce debt, and build wealth over time. And it doesn’t stop there. Military Saves will keep you motivated with information, advice, tips, and reminders to help you reach your savings goal. Think of us as your own personal support system. 

TAKE THE PLEDGE