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How to pay off debt as a first responder or military family



Debt. It’s something most Americans have and aren’t too happy about. It sucks your paycheck dry, leaving you with little left over each month to put towards things. Debt requires you to pay for past purchases and often keeps you from using your money to live in the present or plan for the future. It is estimated that approximately 77% of Americans have some form of debt. Let’s start by looking at the types of debt and then discuss how to get rid of them so you can live a better quality life.


Types of debt:

First of all, debt is simply owing anything to anyone. It is taking money from your hard earned paycheck to pay for the past. Some of the most common types of debt are:

  • Credit card debt

  • Car Loans

  • Personal Loans

  • Student Loans

  • Mortgage

  • Cell phone payments ( paying for the phone itself, not the service)



So how do you get rid of that debt once and for all? There are two methods commonly used to get rid of debt. They are the Debt Snowball and the Debt Avalanche and this is how they work.


Debt Snowball - With the debt snowball, you begin by listing all of your debts in order from the smallest to the largest. You pay the minimum balance on all these debts except for the smallest one. For the smallest debt you pay the minimum payment due plus anything extra you can throw at it. You pay that debt off as fast as possible. Once it is paid off, you take the extra money you were sending to the smallest debt and now throw it at smallest debt #2. You continue doing this until all your debt is paid off.


You can use this online tool to help you see when you will be debt free using the debt snowball method. Debt Snowball Calculator - Ramsey


The benefit of this Debt Snowball Method is that you gain momentum because you are paying things off quickly. It encourages you to see the momentum and pushes you to keep going as fast as you can.


Debt Avalanche - The Debt avalanche is superior in terms of paying less money over the long haul. For this method you list your debts in order from highest interest to lowest. You start by tackling the debt with the largest interest first while still making minimum payments on everything else. You put everything extra towards that debt with the highest interest and once it’s paid off you roll that extra money to the debt with the next highest interest. This method actually allows you to pay less money in the long run but for many it’s not as easy to accomplish because, oftentimes, you are tackling debts that are larger in size so it takes longer to pay them off and you can lose momentum and the excitement of seeing them paid off quickly. It is not for the faint of heart.


You can use the debt avalanche calculator here to figure out what method would be best for you. https://www.credello.com/debt/avalanche-payoff-debt-details/


So which method should you choose? That ultimately is up to you. All of my clients are on the debt payoff method because I think most benefit from seeing the quick positive outcome of paying off a debt. It makes you get excited about the process when you see real progress and helps to keep you motivated. But, if you know yourself well and have lots of extra money to throw at debt, don’t need the external motivation of crossing off the debts quickly, it could make sense to use the debt avalanche.



More important than anything though is to just get started. The longer you wait the longer you will be stuck putting your money towards debt instead of focusing on the future. You don’t have to live like this forever!


If you need help creating a customized plan to help you get out of debt, learning how to budget or get control of your finances so you’re not stressed about money for the rest of your life, book a free consultation so we can chat.




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