Financial Guide for Paying Off Debt | Military OneSource (2024)

FAQs

Financial Guide for Paying Off Debt | Military OneSource? ›

Debt snowball: Starting small

The debt snowball strategy involves making minimum payments to all creditors and focusing all extra dollars on the account with the smallest outstanding balance. Once that balance hits zero, turn your attention — and the extra money — to the next-smallest balance and work on that.

Debt snowball: Starting small

The debt snowball strategy involves making minimum payments to all creditors and focusing all extra dollars on the account with the smallest outstanding balance. Once that balance hits zero, turn your attention — and the extra money — to the next-smallest balance and work on that.

Military OneSource offers telephonic counseling with certified financial planners who will help you review your options.

The Loan Repayment Program (LRP) is a special incentive that the Army offers to highly qualified applicants entering the Army. Under the LRP, the Army will repay part of a Soldier's qualifying student loans. Only specified Military Occupational Specialties (MOSs) qualify for the LRP.

The 50-30-20 budget rule states that you should spend up to 50% of your after-tax income on needs and obligations that you must have or must do. The remaining half should dedicate 20% to savings, leaving 30% to be spent on things you want but don't necessarily need.

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In addition, Military OneSource connects you to programs, services and products developed for military life. Turn to Military OneSource for tax services, spouse employment help, webinars and online training, relocation and deployment tools, and much more.

All active-duty service members, National Guard, reserve members and their families and survivors are eligible to receive this free service. Financial counselors: Are available for in-person, phone and video financial counseling.

Military OneSource is a 24-hour, 7-days-a-week, toll-free information and referral telephone service available worldwide to active duty, Reserve, and National Guard military members and their families; and to deployed civilians and their families.

Who qualifies for debt forgiveness? ›

If you have loans that have been in repayment for more than 20 or 25 years, those loans may immediately qualify for forgiveness. Borrowers who have reached 20 or 25 years (240 or 300 months) worth of eligible payments for IDR forgiveness will see their loans forgiven as they reach these milestones.

Veterans and active-duty service members might qualify for Public Service Loan Forgiveness. Under this program, borrowers can have their loans forgiven after working ten years for an eligible non-profit organization or government agency and making 120 qualifying monthly payments.

If you can afford to pay off your debt during the promotional APR period, a balance transfer card may be your best bet. For example, with $5,000 of debt, a six-month intro APR balance transfer card would allow you to pay off your debt interest-free with $833.33/month payments.

Another option is an Individual Voluntary Arrangement (IVA). Under an IVA you make smaller payments over several years and then the rest of the debt is written off. Full bankruptcy, which is also usually completed within a year, can result in you having to sell assets such as a house or car to pay your debts.

Pay off your most expensive loan first.

Then, continue paying down debts with the next highest interest rates to save on your overall cost. This is sometimes referred to as the “avalanche method” of paying down debt.