In an age when foreclosures are at a record pace, credit card debt is hitting new highs and personal savings are at an all-time low, thousands of Americans ‘ military are concerned about their financial future as they defend our Country. A lot resort to payday lenders with high fees and interest rates to solve their urgent financial needs.
Financial education – a skill young people desperately need – isn’t taught in high schools. So a lot of military personnel, go into the military without any knowledge on how to handle their finances. This can result in financial problems and military debt because it’s the first time a lot of them need to make financial decisions on their own.
This lack of financial education is evident in a recent Associated Press report saying that thousands of U.S. troops are being prohibited from serving overseas because they are deep in debt. Due to this high level of debt, they are considered security risks. On top of that, a lot of shady payday lenders are taking unfair advantage of many members of the military by charging them fees and interest rates that make it nearly impossible for them to get out of the hole.
You can become financially secure in the military with some basic steps. The advice below will put you on the path to financial freedom.
1. Cut your expenses
To pay for the items you would like to purchase, begin by listing everything that you want to purchase in the order you wish to buy them. This will help you focus your spending on the things you desire the most.
To get rid of needless waste, monitor what you spend money on for a few weeks. Determine where you spend your money by listing everything you buy. If you’re spending four dollars on a cup of coffee during the week that amounts to more than $1,000 a year. You’ll learn quickly that those small purchases accumulate fast.
Develop a military budget by documenting your take-home pay and noting your current expenses. If you’re spending more than you make, it’s time to cut those costs or work extra hard to receive that promotion.
2. Create a savings plan
The average American spends more than they make, so become a money rebel and save money. With a basic investment plan, just by saving $250 a month starting at age 18, you can reach millionaire status by age 40.
Get in the habit of paying yourself first. Have your bank automatically transfer a portion of your money from a checking account to a savings account or start an allotment directly to your savings account. Each time you deposit your paycheck, money is automatically transferred into your savings before you have a chance to spend it. That way you’ll have military money set aside for the long-term and available for the things you would like to buy now.
A lot of you are serving the country overseas now in hostile territory and earning hostile fire and imminent danger pay. You’ll find this is an ideal way to keep more money in your pocket. Take advantage of the military programs such as TSP (Thrift Savings Plan) and SDP (Savings Deposit Program) that permit you to save military money and earn a greater return when compared with most civilian savings accounts. By simply setting that military money aside, it will help you to have money in the bank and a way to treat yourself when you return for a job well done.
3. Have the government buy your home
You can become a homeowner utilizing the benefits the military offers. VA loans allow you to borrow 100% of the purchase price which means you won’t need money for a down payment in most cases. Combine that with BAH (Basic Allowance for Housing) for civilian housing and you can have your mortgage payments paid for.
This is a huge advantage because if you purchase a $100,000 home your property could be valued at over $570,000 in 30 years. The best part is using BAH you can not have even made a payment with your own money.
4. Invest in yourself
The military offers education benefits with the G.I. Bill, VEAP (Veterans Educational Assistance Program), LRP (Loan Repayment Programs), and TA (Tuition Assistance) may all help you to receive higher education. Just like in the civilian world the higher education you get the more likely you are to get promoted and paid more.
You serve America, preserve our freedoms; and you deserve to be financially free to live the life you want without having to worry about military debt. The tips above will help you avoid the shackles of lifelong debt and put you on the road to financial freedom.