Research shows that veterans and active duty service members tend to carry more debt than their civilian counterparts, and getting out of that debt can be quite the challenge. Difficult transitions into military life, the VA disability claims backlog and a lack of budgeting assistance all contribute to this troubling epidemic. By following these five tips, however, veterans can go on to lead fulfilling and debt-free lives.
Take Advantage of Veterans Scholarships
Student loans can take years to pay off, so it will be well worth your time to seek out as many military educational benefits as possible. Eliminating tuition costs will allow you to focus on paying off your other debts and will increase your chances of landing a financially stable job. In addition to private and federal scholarship opportunities, veterans are eligible at many institutions for military discounts. College programs such as Vista Military offer support for a variety of tuition assistance programs for veterans. Military-friendly colleges such as this one provide financial help for veterans of all ages and backgrounds. For example, the Veterans Retraining Assistance Program (VRAP) provides up to 12 months of GI Bill Benefits to older veterans facing unemployment. If you are between the ages of 35 and 60, you may be able to receive as much as $17,600 per month toward your educational pursuits. Taking full advantage of these opportunities will be an important step toward eliminating your debt.
Debt consolidation is frequently used as a means of lowering the rate of interest paid by combining all debts into one loan. Veterans have an advantage in this department, as they may be eligible for loans through the VA. VA loans come with lower interest rates, more flexible repayment policies and higher loan amounts. In order to consolidate your loans through the VA, you will need to refinance your mortgage with a cash-out option. Additionally, you must meet certain qualifications, and lenders will consider income and credit score when determining eligibility. While the process is somewhat involved, loan consolidation through the VA can make paying off your debt much simpler in the long run.
Student Loan Forgiveness
The Huffington Post reports that one of the biggest challenges veterans face is coping with student loan debt they already have. Scholarships do little to help veterans with existing debt, and many former service members are left feeling stuck. If you are already facing massive student loans, you may be able to receive student loan forgiveness through the VA. The Public Service Loan Forgiveness Program may fully cover all student loans for qualifying veterans. To qualify for this program, veterans must have been employed by the military or a qualifying public service job for the last 10 years. Service in occupations such as law enforcement, public safety, and early childhood education are considered public service jobs, and may qualify you for student loan relief.
Implement a Realistic Savings Plan
Forming money-saving habits is essential to getting out of debt, and implementing a savings plan that you will be able to stick to is equally important. For example, rather than planning how much you will save based on a desired or potential income, work with what you are earning currently. Don’t plan to save $200 per month if you know that simply isn’t possible with your current income. It is also important to be realistic about which cutbacks will actually save you money. According to Forbes, while many people declare that they will stop eating out or buying coffee as a means of saving money, it is more beneficial to start by cutting out the big costs. While eliminating smaller expenses may be helpful, reducing the amount of money you spend on things such as transportation and housing will give you the big and fast savings you need to get out of debt.
Pay Above the Minimum Payment
It can be difficult to willingly pay above the required amount when managing your monthly bills; however, this can significantly expedite the payoff of your debts. Paying only the minimum amount prolongs the payment period, resulting in more of your money going toward interest rates rather than paying off your debt. Consider making weekly rather than monthly payments, and put any unexpected money that may come your way toward eliminating your debt.
You have worked hard to serve your country through military service and deserve to lead a financially secure life as a civilian. Consider implementing these five tips in order to achieve financial freedom and success.
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