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Getting Started

November 14th, 2012 at 04:42 am

Currently I'm deployed in Afghanistan and I'm working on reducing my debt. I currently have approximately $8,000 in medical collections. I've already paid off some medical collections already but I saved the biggest one for last. I know that they'll settle for less than the amount that's owed altogether.

Since my pay has been messed up for a year I will be receiving a sweet little backpay amount. Exactly when I'll receive this, I don't know. But when I do my plan is to pay off the medical account and be done with it.

I haven't looked at my credit report since last year since I've been in the military. Why you ask? Because we don't have access in basic training and there was limited access to the internet when i was in AIT (job training). I then went to my unit and within a month I was deployed (a lot of prep goes on while getting ready to deploy). So I'm working on looking at my reports while I'm here.

But last time I looked at my report, there were only medical collections that reflected negatively. Hopefully I can get the last of it paid off while I'm deployed and by the time I get back home my points will have increased and my report will pretty much look a LOT better.

So far since I've been deployed and since I started on debt reduction over a year ago, I've payed off:

4 medical collections
3 out of 5 credit cards (I closed two of them because they had annual fees)

What I have left is:

1 medical collections
2 credit cards
1 private student loan
approximately $25,000 in student loans and counting (hopefully I have less then 2 years until I get my BS)
1 car loan (HAD to buy a used car because my car literally wouldn't run)
Alimony for ex (I actually have it stipulated in the separation papers that I can "pay it off" early).

I have been saving monies as well as paying things off. I currently have approximately $3,000 in savings and by the end of the deployment I'll have another $2,000 added to it at the least.

I took the opportunity to add monies to a Security Deposit Plan (SDP) which you can only do when you're deployed. It compounds 10% interest with a maximum amount of $10,000 that can be contributed to it. I add $250 each month so I know that I'll have $2,000 in it and whatever interest that it would have earned by then.

I know that I'll have to pay taxes on the interest earned but I'm hoping that I can roll that monies over into a CD or something like that so I won't have to pay taxes on it.

I really don't have any money saved for retirement although I have monies here and there even though I'm older. But my plan is to have those monies when it's time but to also have a little side business goin on so that I have my assets working for me (passive income).

By the end of this year I should either have one more credit card paid off or almost paid off by the end of the year. My last credit card won't be paid off by the time I get back home but I'll have it close to halfway paid off so that'll make my minimum payment lower and therefore I'll be able to put more towards the interest.

By the time I get back home I'll have a better credit score. Which is my ultimate goal so that I can refinance my auto loan (it's currently 11.5%) for a lower interest and eventually get my parents off my loan as co-signers.

My ultimate goal is to be mostly debt free in another 6 years because I want to purchase a house.

5 Responses to “Getting Started”

  1. creditcardfree Says:
    1352901671

    Welcome to SA! I'm a spouse of an Army officer, so I do know about this Army pay stuff. Problems with pay are soooo frustrating. Sorry that is happening to you now.

    The interest you will earn on your $2000 SDP WILL be taxable. There is no way to avoid the taxes. You likely will earn $200 or slightly less since you aren't putting it all in at once. Of course, putting it all into a CD later to earn more interest is a great idea.

    You may be able to lower your interest rate on that car loan while you are deployed down to 6%, under the Servicemember's Civil Relief Act (SCRA). My understanding is you need to write a letter to the creditor requesting it, along with your orders. Your parents may be able to assist. If there is a legal representative at your duty station, contact them for a possible form letter.

    Thanks for your service! And best wishes in meeting your goals.

  2. Sian Says:
    1353067514

    I tried lowering my interest rate to 6% because of the SCRA. Unfortuntately they stated that since I'm not National Guard and in the regular Army I'm not eligible for the 6% rate. But I DID get my private student loan down to 6% interest. YAY ME!! But currently it's deferred because I'm overseas. I'm getting my other student loans deferred right now as well because I'm back in school for more than half time. Lucky me.

    I didn't want to really avoid paying taxes, I just basically wanted to delay it. I know that as long as I keep rolling over a CD then I won't pay taxes until I actually take it out of the CD for a certain amount of time. I'm looking into the logistics of it. I wanted to do 3month, 6month, 9month and 1yr CDs at the same time. That way my money is liquid and I'll have access to it every 3months.

    Thanks for the advice. If you have anything else to add please let me know. I'm more than willing to take sound advice on money matter.

    BTW, thanks for the welcome. I've actually been a member but just lurking in the forums taking good advice when it applied to me.

  3. creditcardfree Says:
    1353071945

    Interest on CD's will always be taxable unless you own them within a retirement vehicle that defers your taxes until retirement. The bank will issue you a 1099INT each year to report on your tax return.

    Glad to have you blogging!

  4. Sian Says:
    1353074963

    What type of retirement vehicle are you speaking of?

  5. creditcardfree Says:
    1353075135

    Your CD would need to be titled/labeled an IRA, or within an employer plan(not an option in the military though).

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