Did you look for a fireworks display this Fourth of July? Light the fuse to your financial future!


According to FINRA's Military Survey on Financial Capability over one-quarter of credit card holders report that they owe more than $10,000 in credit card debt, and that more than one-third of respondents (36 percent) reported having trouble keeping up with monthly expenses and bills. Those numbers are some serious "duds".

Just over a month ago my husband and I paid off his truck. It was quite a display when we received the title from USAA. We both sat there staring at it in disbelief. We had accomplished our goal! Oh what a feeling - it was like Independence Day!


Now, before you get all excited and start telling me I don't understand what it's like to have debt. Let me share. In that moment of celebration, we made a decision that we needed to get serious. Paying off the truck was only focusing on a little over $2,000. We knew we had much bigger picnics to crash. I knew we would need some help formulating a plan. Fortunately for you (and me), I knew where to find the experts. Cue: USAA Certified Financial Planner Joseph "J.J." Montanaro.


Tara: Why is it so important to be debt free?


J.J.: Most Americans are going to make purchases that will require the use of debt - cars and houses for example. But when debt is used to live beyond one's means you will start to head down a destructive path. Debt, and the increased worry around it, can cause issues in your work, family, even spirituality. In the end, being debt free means increased freedom, flexibility, and control over one's life.


Tara: J.J., if I have debt, what is the first step I need to take to being debt free?


J.J.: The first step is to make a firm commitment to making the changes necessary to becoming debt free. It has to be more than just a thought but a goal that drives your behaviors and decisions.


Tara: And it's important to note, right J.J., that this is a team decision and there is no "I" in team.


J.J.: When it comes to eliminating debt, it is not a one man or one woman show. It takes a commitment from both spouses and even awareness of the effort on the part of your children.


Tara: Once the team has made that decision, then what?


J.J.: You have to know where you stand. Lay out everything on the table. List all of your debts and associated interest rates and payments. Then map out your strategy to knock down all of the debt. In most cases this will start with a bare bones budget where cuts have been made to free up additional cash flow. Remember, if you don't have a roadmap - and a budget represents just that for your spending - you will never get to where you want to go. Without a goal(s) you have no destination.


Tara: What is the best way/easiest way to pay debt down?


J.J.: In order to pay the least amount of interest you should pay minimum payments on all but the highest interest rate. All of the monies freed up through implementation of your budget should be directed towards that debt. Once paid, you would work your way down to the next highest interest rate. On the other hand, starting with the smallest balance could allow you to see the fruits of your efforts and give you the encouragement you need to continue the program.


Tara: I've always been curious, how much does debt affect my credit score?


J.J.: Take a look at the Education Center at www.MyFICO.com for a nice summary of what impacts your credit score. According to the folks that invented credit scoring the amount of debt you owe represents 30% of your score. However, the reality is that what you owe can impact a lot more than that by virtue of its impact on other areas. For example, too much debt can impact your ability to make timely payments or could cause you to seek new credit which both impacts your score.


Tara: Do you have any personal advice to share when it comes to becoming debt free?


J.J.: It may sound cliche but it's true. The path to being debt free may look like an insurmountable mountain, but there is only one certainty: if you don't take the first step, you'll never reach the top. You don't have to do this alone. Having an accountability partner beyond that of your spouse can be key to success. As a military member you have access to installation counseling or you can find a counselor affiliated with the National Foundation for Credit Counseling.


Tara: Ah, thank you J.J.. As with most anything in military life the key is finding a "battle buddy".

Look, Live Better
Frequent Visitor
Financial Freedom is something we all dream of one day, to spend Quality time with our Families and friends when we want too. The ability to take a vacation where and when we want to go. Being brought up in a Military family, all of the above have never been seen. I have only dreamed of such a thing. Times are even harder now. My Father retired From the USMC after serving close to 30 years, and 2 tours of Vietnam. I was Lucky to spend as much time with him as we did and that he came home mostly in one peice aside from bullet wounds and the mental stress of Combat most Military families deal with and the Wives of military Husbands or vice versa being gone for deployment is hard. These families need resources to lean on for help and support, both financially, and physically. I LOVE USAA, and the support they have provided for all of their community members. Our Church also has a Military Support Network that gives back to Military Families, all year long, and I as a Coach Give back where I can. I help Military families learn how they too can gain Support. Thank you USAA for your professionalism, and always finding New Ways to offer conitnued Support to our Military Commiinuty!
Occasional Visitor
If you are reading this article than you are already heading in the right direction. Just keep it up. If you want true freedom, then start working to be debt free--it is so rewarding spiritually.