Paying Off Debt

List any debts you’re currently paying off — things like credit cards, auto loans or personal loans. For each, determine the:

• Current balance
• Minimum monthly payment
• Interest rate
• Due date

Review your earnings and expenses from the past 30–60 days to get an accurate picture of your finances. Look at all your accounts, including financial statements, credit cards, loans and your pay statements.

• Add up your monthly income (including allowances).
• Subtract the cost of your essentials (housing, utilities, food, etc.)

Create a plan for your money to keep yourself accountable.

• Draft a monthly spending plan with guidance from DOW’s Financial Readiness program to identify ways to cut costs and use spending money wisely.
• Review and update your spending plan regularly and as life events occur, such as deployments, career changes, travel or changes to child care.

Set up automatic payments to avoid late fees.

• Schedule autopay one to two days after payday to ensure you have enough funds to cover the payment.
• Keep a cushion in your checking account so autopay doesn’t trigger overdrafts.
• Set text, email or calendar reminders for automatic payments so you can catch errors or unexpected charges.
• Regularly review autopay settings after moves, rate changes or card replacements.

• The Servicemember’s Civil Relief Act establishes an interest rate cap of 6% on eligible debts incurred before entering active duty — including credit cards, auto loans, mortgages and student loans.
• The Military Lending Act limits eligible loan costs to no more than the Military Annual Percentage Rate (36%) annually.

Using credit for everyday expenses can quickly pull you deeper into debt. Military families, in particular, should watch out for costly borrowing options such as payday loans and high-interest credit cards.

Paying off debt is important, but so is building your savings — to help you handle unexpected costs without relying on credit. Start small and work up to larger goals as you go. Setting up automatic transfers to a dedicated savings account is an easy way to consistently contribute. When setting up a savings account, look for an account that provides easy, penalty-free access to your savings.

Pro tip: A solid emergency fund should have three to six months of expenses set aside to help you combat emergencies like unexpected travel, car and home repairs, or medical bills.  

Your credit score plays a major role in your financial life, shaping how lenders see your reliability and affecting what you pay for loans, credit cards and even insurance. A strong credit score can help with:

• Security clearance reviews
• Lower interest rates
• Rental approvals
• VA and civilian home loans

Payment history and debt-to-available-credit ratio have the biggest impact on your credit score. Keeping utilization under 30% is a good starting point — meaning if your total credit limits are $10,000, you should aim to carry a balance of $3,000 or less.

Pro tip: Check your credit report regularly to ensure accuracy and help monitor for potential fraud or identity theft. Credit reports are now available for free on a weekly basis, making it easier to stay on top of your financial picture.

If you’re married, treat debt management as a joint operation between you and your spouse. Make decisions together, check in regularly and have a plan in place for handling setbacks.