7 Tips for Student Veterans Handling Debt Management
Managing debt can be challenging, especially when transitioning from military service to student life. However, with a strategic approach, student veterans can take control of their finances and avoid future debt burdens. Here are seven tips to help you manage and reduce debt while focusing on your financial health.
1. Prioritize High-Interest Debt First
Not all debts are created equal. High-interest debts, such as credit card balances, can quickly spiral out of control. Prioritize paying off these debts first, even if it means making larger payments. Reducing high-interest debt will free up more cash for other essentials. If possible, consolidate high-interest loans into one with a lower interest rate to make payments more manageable.
2. Understand GI Bill®️ Benefits
As a student veteran, you may have access to the GI Bill®️, which covers tuition, housing, and additional expenses. Utilize these benefits by choosing a degree program that fits the covered costs, avoiding unnecessary loans for educational expenses. Be sure to reference the VA for more information on scholarships, grants, and financial aid programs designed for veterans. Every dollar in free aid is a dollar you don't have to borrow.
3. Avoid Lifestyle Inflation
One of the easiest ways to accumulate debt is by increasing your spending when you experience a bump in income, such as VA housing allowances. Stick to a modest budget that reflects your long-term goals rather than increasing your spending. Limit unnecessary purchases, and avoid taking on debt for luxuries you don't need. Keeping your lifestyle inflation in check will help you build savings and avoid financial pitfalls.
4. Leverage Credit Counseling Services
Veterans can access several financial counseling programs through the Department of Veterans Affairs and nonprofit organizations. Use these resources to gain advice tailored to your specific financial situation. Credit counselors can help you develop a debt reduction strategy, negotiate with creditors, and create a realistic repayment plan. This guidance can keep you on track and give you a clearer picture of your financial future.
5. Build an Emergency Fund
An emergency fund can keep you from falling into more debt when unexpected expenses arise. Start by saving a small portion of your monthly income, even if it's just $25 or $50. This fund will be a safety net for car repairs, medical bills, or unforeseen personal costs. An emergency fund minimizes the need for credit cards or loans to cover sudden expenses, helping you avoid new debt.
6. Explore Side Hustles to Boost Income
If you're looking to avoid debt or pay off existing loans faster, consider taking on a side hustle that fits around your school schedule. Many student veterans can work flexible jobs like freelance writing, tutoring, or delivery services. These extra earnings can help you chip away at debt without relying solely on student loans or credit cards. The added income will also allow you to save more and create a buffer for future expenses.
7. Set a Realistic Repayment Schedule
When tackling debt, set a repayment schedule that aligns with your income and financial goals. Avoid aggressive repayment plans that strain your budget. Instead, opt for a balanced approach that allows you to meet your monthly obligations while setting aside money for savings and future investments. Automate your payments to avoid late fees, and regularly review your debt strategy to adjust for any changes in your financial situation.