While we all hear that it's important to get our finances in order, motivating ourselves to tackle our finances can be a struggle at times. If you're preparing for deployment, now may be the time to begin because there is a law that may allow you to reduce your interest to as low as 6 percent. Organizing your finances before you deploy can save you money and prevent some financial headaches. These tips can help you get financially ready before you deploy:
- Get started early
- Check out the tools to lower that interest rate
- Reach out to your creditors
- Send a protection request letter
- Send a protection request letter late if you have to
- Encourage your creditors to go lower
- Learn about other benefits
Finances are the last thing you want to worry about when you get your orders. Fortunately, you do not have to figure things out by yourself.
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Perhaps the only thing worse than paying bills every month is paying late fees and high interest rates. Make sure you pay your bills on time every month. When you receive orders to deploy, it may become difficult to keep track of your bills and maintain your finances — so plan ahead and make this part of your deployment preparation. Take advantage of an act that allows active-duty service members to reduce the interest owed on certain debts to as low as 6 percent. Organizing your finances before you deploy could save you time and money if you:
- Get started early. "I was late on my payment because I was out protecting your freedom." This may sound like a good excuse, but unfortunately, your creditors still expect you to keep up with your mortgage, car payment and credit card bills while you are deployed. Get organized early to make sure you pay your bills on time each month. Set up automatic bill pay, or give your spouse, partner or a trusted family member power of attorney to handle your finances while you are deployed.
- Check out tools to lower that interest rate. The Servicemembers Civil Relief Act, or SCRA may be able to reduce the interest on liabilities you incurred before you entered active duty service to 6 percent. This reduction applies to mortgage debt, credit card debt, car loans, business obligations, fees, service charges and more. But know that your creditors can challenge your request if they believe that your military service does not materially affect your ability to pay higher interest rates. Also, remember that this protection covers debt incurred before you enter active-duty service. It does not apply to additional debt incurred while you are on active duty.
- Reach out to your creditors. While most everything is automated today, unfortunately, protection under the SCRA is not. Your debts will not automatically reduce to 6 percent when you are called to active-duty service. The only way to get this protection is to contact your creditors and request it.
- Send a letter. It may be old school to send a letter, but you can save money by informing your creditors about your rights under the SCRA. In your letter, explain you have been ordered to active-duty service and you are requesting the interest on your obligations be reduced to 6 percent while you remain in active service. Remember to emphasize that your active-duty service materially affects your ability to meet high interest debt obligations and remember to include your account or loan number.
- Send the letter late if you have to. Even if you are late requesting protection under the SCRA, you have 180 days after termination or release from active military service to send your request letter. After you provide notice, your creditor can retroactively reduce your interest rate to 6 percent for your entire period of active service.
- Encourage creditors to go lower. While this act requires your creditors to reduce your interest rate to 6 percent, this rate is the highest interest that they can charge you. Nothing prevents you from requesting a lower rate.
- Learn about other benefits. A lower interest rate is great, but the SCRA also provides you with other financial and legal protections including stays of certain legal proceedings, protection from eviction and protection from termination of leases without repercussions. The act protects active-duty service members, including National Guard and reserve members activated by the federal government. Many of the SCRA's protections also extend to family members, but this provision varies from section to section.
Your nearest legal assistance office can help you understand all the legal provisions of the SCRA and your installation's Personal Financial Management Program can help you save for the future, improve your credit, resolve financial problems and keep your finances in good shape. If you prefer to discuss your finances from the comfort of your home, you can schedule a personal financial counseling session through Military OneSource or by phone at 800-342-9647. You do not have to sort out your finances alone.