Wipe Out Debt During Deployment

Q: I am trying to clean up my credit report. My credit is not that good so trying to consolidate my debt is hard because no one will finance me. I don't know what other way to do it. I'm currently deployed in Iraq so I'm trying to take care of it while I'm here. Please help.

-Armando

A: I like the way you think. Cleaning up your finances during your deployment is definitely taking a glass half-full approach! Plus it's smart. Expenses should be down and income is up (no taxes, additional monies such as hazardous duty pay, etc.) which could be a great combination when you're focused on becoming debt-free. It sounds like you're going to have to tackle them one at time. This may be the best — albeit the most painful — approach. You'll remember how hard it was to get out of debt and will be less likely to get in that trouble again. A lesson learned. Your task is to put together an action plan to get this done in an orderly and efficient fashion. First step: rack and stack your debts by interest rate. Attack the highest interest debt you have with all the money you can put together to knock it down while making the minimum or required payment on your other debts. Pay that one off, and then put that money with the minimum payment you were making on the next highest interest rate and zero it out. And then work your way down the rest of the list with the same approach. For more detailed information, check out the March webcast on usaa.com entitled Wiping Out Debt: Your 2008 Action Plan. Thanks for your service and be safe.

Comments

[Nancy]

You can also go to: http://cgi.money.cnn.com/tools/debtplanner.jsp

and plug in your credit card debt... It gives you three options. One will tell you how long it will take you to pay your debt off with only making minimum payments and how much interest you will pay at the end. It also allows you to make a fixed payment and it tells you how long it will take you to wipe off debt. The third choice you can choose in how long you want to be done with debt and it will give you the amount you need to apply to each card, each month. It's great!

[Jason]

Remember when you deploy to contact your lenders and ask them to lower your interest rate (including your car insurance company). Most of the time they will lower the interest with a copy of your orders for the duration of your deployment.

[njasso]

I am on the same boat... I used a different approach and is working great for me. I divided the total balance of each account by the minimum balance... those that would take me longer to pay are at the bottom of the list, in a sense is the same thing the lady above did, except you could choose to pay more to another card. In the end, it doesn't really matter, what matters is that you have a plan and stick to each religiously each month. I've knocked out over $8500 in the past four months... Yeah, I was really over my head... I have $16000 more to go and then I start tackling down on the car balance!!! Use an excel spreadsheet if you can, it helps wonders and you can even track where you started and how much you have paid off to date... It's an amazing feeling to see the debt balance decrease dramatically.

Good luck!!

[amanda]

When my husband was in Iraq we were able to pay off $20,000 in debt in just under a year. I went to the website bankrate.com and they have a debt pay off schedule there were you enter the number of debts, interest rates, current min. payment and balances and then it gives you a schedule to pay it off based on how long you want to take to pay it off. I taped mine to my refrigerator and followed each month.

[Sara]

My Husband and I are using a similar approach. We also had too much debt to consolidate and are now attacking them one by one. Rather than paying off highest intrest, we're attacking lowest balances first. I did the math and there was a $1000'ish difference. But this way, you see your bills dissapear faster, and it encourages you to keep it up!! In the last 6 months we've paid off 8 credit accounts($200+ of monthly payments), and only have a few larger ones left! Then we'll get to work on those car loans :) We will also be applying extra $$$ from my husbands up-coming deployment to help out!