- I inherited $ 110,000 in student debt when I married my husband and knew we had to pay it off.
- As a bimilitary couple, we live a salary level below our current level and use the rest to go into debt.
- We also use only one of our basic housing allowance to pay off our mortgage and save the other.
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When I married my husband, I inherited a sizable debt in the form of his student loans. I accepted that this was pretty much normal for the course; almost everyone I know has student loans (I was fortunate enough to graduate without them). But our number horrified me.
After a bloody dissection of our finances, it turned out that we owed $ 110,000, all in student loans except $ 5,000 in credit card debt. And even though we are both active duty military, my husband would not qualify for the Civil Service Loan forgiveness because the majority of his loans are Parent Plus loans in his father’s name, not his. .
I figured that between our two salaries and military benefits, we could pay it all off in five years. But then we found out that we were expecting our first child. Suddenly, the “money thing” took on a stronger sense of urgency.
We’ve created a tight budget, itemized every dollar spent, created spreadsheets to track our progress, and ditched all unnecessary spending. I read several books on personal finance (which I borrowed from the public library for free) and scoured Military OneSource for opportunities to save more money.
A year has now passed since my husband and I had that first painful conversation about our finances, and we have paid off over $ 40,000 in debt – double what I predicted. We now plan to pay the remaining balance around the same time next year.
Here are some of the main ways we have maximized our balance and military benefits to speed up debt repayment.
We live a salary level below what we currently earn and save the rest
Basic military pay is determined by rank, rank and length of service. The Defense Ministry publishes tables that show how much service members are expected to receive each month based on this information. My husband and I use this chart to see what we would earn on the next lower level and plan our budget with that number in mind so that saving the rest is automatic.
My last manager gave me this advice and it saved my family hundreds of dollars a month. In addition, we only use one of our income for living expenses. The other goes to savings and debt repayment.
We use our Basic Housing Allowance (BAH) to our advantage
BAH is a tax-exempt housing allowance in the United States for the military. The amount varies by geographic location and pay level, but is usually enough to cover the cost of rent and more.
For my husband and I, part of my BAH alone covers our mortgage. We use the rest, and my husband’s full BAH, to pay off student loans and save for housing expenses like maintenance, repairs, and utilities.
We put our pay raises on our debt
Military salaries increase each year on January 1 in line with the growth in private sector wages and salaries. Over the past 10 years it has grown an average of 2.1% per year, which translated into an extra $ 80 per month for me, or almost $ 1,000 per year. I invested this extra money in student loans and I never miss it.
We buy smart
We buy almost all of our meat from the commissary’s freezer, where prices are heavily discounted on inventory the store couldn’t sell, and our meal plan revolves around what we find there each month. This saves us at least $ 150 per month on groceries.
We also shop at BJ’s and Sam’s Club to purchase basic items that we frequently use in bulk, such as beans, rice, yogurt and eggs. BJ’s offers discounted memberships for the military, so the savings are worth the small annual fee.
We are also buying the “free and for sale page” of our Facebook base for things like tools and housewares and have saved at least $ 1,000 on the items needed for that. These pages are easy to use and there is at least one in every military installation.
We use free tax filing software
The Department of Defense provides MilTax, free electronic filing software that is “fit for military life,” according to the MilitaryOneSource website. Through the site, military personnel can connect 24/7 with military tax advisers, a huge deal for large families and those facing complex tax situations.
We asked for help with the costs
Child Care Aware of America offers cost assistance programs that help military families find affordable and reliable child care. The Child Development Center (CDC) on base closed temporarily due to the pandemic, so we enrolled my son in daycare off base – at more than twice the cost. Once our request is processed, the program will release an additional $ 500 to repay the loans.
We always ask for military discounts
Many places offer military discounts if you ask, and the little money we saved is well worth it. We adopted the mindset that every penny counts, and it did more than we expected.