How to Manage Debt While in the Military

Use these tips to manage your debt while you are in the military and learn about the different options available to help you manage your debt.

Written by: Craig Richardson

Home » Military Debt Forgiveness & Programs for Debt Relief » How to Manage Debt While in the Military

For better or worse, borrowing money and taking on debt is a way of life for Americans. We take out loans for big-ticket items like houses, cars and college educations. Most of us have a credit card (or two) that makes it easy to rack up debt for costs ranging from gas to clothing to a vacation or a night on the town. But when all those bills roll in at the end of the month, complete with interest charges, can your income hold up?

Financial responsibility and discipline are essential for military personnel. In fact, the Department of Defense says financial readiness is one of the major components and obstacles of operational readiness, yet junior enlisted servicemembers typically struggle with financial stability.

Overcoming debt anxiety and putting your financial house in order may seem daunting, but there are countless options for taking control. In fact, servicemembers have a number of laws, programs and tools designed to work in their favor when it comes to managing and tackling debt. It’s really just a matter of knowing where to start, whom to ask for help and what to avoid.

Tips for Military Debt Management

Managing debt in order to achieve a healthier financial outlook calls for a plan —  and the discipline to stick to it. At the outset, you will need to calculate how much you owe and how that holds up against your income. Successful money managers always set up and adhere to a budget, an important tool for tracking the current state of a financial picture, any wanted or unwanted changes, and the progress toward the overall goal. You can also weigh strategies for how to pay off your debt and even seek help from resources exclusively available to military personnel. Beware of scams and supposed shortcuts like payday loan outfits and non-bank check-cashing services that target military borrowers. Finally, consider the assistance of nonprofit credit counseling agency that can help you sort out your financial picture and even work with your creditors to adjust the rates and terms of your debt.

1. Get a Grasp on Your Finances

A good first step for successfully managing your debt is to always know the answers to two basic questions: How much money do you earn? How much are you spending? To figure out if you will be able to make ends meet on a monthly basis, try writing down what you owe. Include everything, like your rent or mortgage, car payment, revolving debt (credit cards), utilities, student loans, or other bills or debts, and then weight that against your income to get a sense of your financial health. Also, check your credit report and be sure to regularly monitor your credit score.

2. Create a Budget

A healthy financial picture is always aided by sticking to a budget. Itemize your necessary debts and expenses (food, shelter, transportation costs) with your optional spending (restaurant and bar tabs, hobbies, etc.), and then analyze how you can improve the picture. Can you push extra money toward a credit card in order to pay it off and then use that money for savings? How much can you set aside every month for an emergency fund? Creating and sticking to a budget will shed light on what’s possible and empower your financial health.

3. Use a Debt Repayment Strategy

True financial freedom happens when you pay off your debt, and there are several strategies that can help you cross the finish line. For example, a Debt Avalanche strategy calls for paying off debts with the highest interest rates first and then working down to the lowest. A Debt Snowball calls for the opposite approach: paying the smallest debts first, then working up. The Debt Sanity method directs you to tackle the debt that bothers you the most in order to gain a sense of satisfaction over the process.

4. Use Your Military Resources and Benefits

Serving in the military gives you access to benefits and programs that can help you manage your debt and improve your financial picture. For example, the Public Service Loan Forgiveness Program can cancel student loans from federal programs for servicemembers who meet certain criteria, while the College Loan Repayment Program could pay up to $65,000 toward federal student loans. The Servicemember Civil Relief Act offers a range of protections, including the option for reducing rates to 6% on debt incurred before an enlistment. Finally, the Military Lending Act increases certain protections, including prohibiting lenders from securing a loan by holding a check or car title, while also capping rates at 36% annually.

5. Avoid Payday Loans and Financial Scams

There’s no shortage of scams aimed at separating you from your hard-earned money, and many of these target military personnel. Payday loans, for example, are so easy to obtain yet so burdensome that the Department of Defense classifies them as a threat to military readiness. Why the worry? Payday loans carry high interest rates, unreasonable repayment terms and aggressive collection tactics. What’s more, the penalties should you need to extend the repayment terms can be extreme.  Other services to avoid include use of non-bank check-cashing services or taking loans from a pawn shop.

6. Consider Credit Counseling

If making sense out your finances and how to improve your credit feels overwhelming, it might be time to contact a nonprofit debt management program and work with a trained credit counselor. For example, a certified financial counselor can design a tailored debt management program that may allow you to pay off your debt faster and more efficiently. Borrowers may also receive forgiveness of some fees and lower rates, meaning you will save money over the long haul.

Debt Management Options for the Military

When you reach a point where you are ready to tackle your debt and improve your financial outlook, then it’s time to create a plan. You will have options and tools for how you approach the task. You can opt to go it alone with a do-it-yourself plan, simplify your payouts (and maybe save some money) with a debt consolidation loan, or explore options that might save you money but may have long-term impact on your credit score like personal bankruptcy or a debt settlement plan.

Do It Yourself Debt Management

Those with a bit of financial discipline may find the simplest and least expensive option is to do it yourself. A winning DIY plan requires you to make minimum payments on time without continuing to charge debt. In fact, you can set up automatic monthly payments through online banking tools, which will streamline the process and allow you to track your progress.

Debt Consolidation

If you are juggling multiple credit card accounts or loans, it might be time to consider debt consolidation. Debt consolidation loans, available from banks and credit unions, allow for rolling various debts from credit cards and loans into one loan or monthly payment. Besides having to manage fewer payments, you might also save on interest and fees and pay less money over the life of the loan.

Debt Settlement

Debt settlement is another option that may carry mixed results for a borrower. Debt settlement allows a borrower to settle with creditors for amounts less than the full value of the debt, a process that is typically managed by a third-party firm that negotiates on the borrower’s behalf. Here’s where things can get complicated: Many lenders refuse to work with settlement firms, and the process has even been banned in some states. What’s more, some settlement firms may encourage a borrower to stop making payments to the original lender so the debt will be moved to collections or sold to firms who may be willing to negotiate a settlement, a process that further damages a borrower’s credit.


If you feel like your debt is not manageable and you want a fresh financial start, you might also consider personal bankruptcy. Personal bankruptcy comes with its own challenges and consequences, and there are two options for an individual who chooses to file: Chapter 13 or Chapter 7. A Chapter 13 bankruptcy is a reorganization of your debts that allows you to keep your assets while also requiring you repay the debts over a specific period. A Chapter 7 allows for the discharge of certain types of unsecured debts like credit cards. It requires that you sell off certain assets to repay your creditors, and some debts (taxes, student loans, child support) will not be wiped out. A Chapter 13 filing will show on your credit report for seven years, while a Chapter 7 will show for 10 years.

Military Resources for Managing Debt

Military personnel have access to a number of resources that are designed to support financial stability and mission readiness.

  • is a government-run website that outlines, explains and links to loan programs and options for financial support and guidance available to military personnel and veterans.
  • Open to all military personnel, myPay is the Defense Accounting & Finance one-stop website where personnel can manage nearly any aspect of their income to include managing pay allotments, managing and viewing tax withholdings and documents, setting up direct deposits, and even adjusting options for retirement savings plans.
  • The Department of Defense offers an option to help you search and explore the various financial programs and services available on or near any military installation through its website.
  • The three nationwide credit reporting agencies (Equifax, Experian, and TransUnion) offer free credit monitoring for military members. Once you set up the service, you will be notified of changes to your file that may impact your credit score.

About The Author

Craig Richardson

Craig Richardson is a military veteran who started his journalism career while serving in the Navy. Following overseas deployments to the Med and Middle East, including service in Operation Desert Storm, he left for the private sector but continued with journalism. He has worked for several publishers and news organizations over nearly 30 years and continued to cover stories with ties to veterans and military affairs throughout his career.


  1. N.A. (2022, January 12) Military Families and Financial Readiness. Retrieved from
  2. Sheridan, P. (2022, November 3) What is a credit score? Retrieved from
  3. Jackson, T. (2022, February 9) How To Manage Debt For Active Duty Military, Veterans, & Their Families. Retrieved from
  4. N.A. (2022, September 23) What do I need to know about consolidating my credit card debt? Retrieved from
  5. N.A. (ND) The 3 Faces of Debt. Retrieved from
  6. N.A. (ND) Know Your Options to Get Out of Debt. Retrieved from
  7. N.A. (2022, August 24) What are debt settlement/debt relief services and should I use them? Retrieved from
  8. N.A. (2023, February 22) What Happens When You File for Bankruptcy? Retrieved from