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By Barbara O’Neill, Ph.D., CFP®, [email protected].

Like many Americans, it is not uncommon for military families to have leftover holiday debt still hanging over their heads like a big dark cloud. What can you do to help these clients?

There are a number of time-tested ways to dig out from under a pile of debt and free up money to save. Below are 7 time-tested debt repayment steps to consider using with your clients:

Debt Repayment Steps

1. Know What You Owe

First of all, have your client make a list of outstanding consumer debts that need to be repaid. This includes various types of loans and credit cards. Ask the client to include the names of creditors, balances owed, the number of monthly payments remaining , and the dollar amount of monthly payments. Identifying how much he or she owes and who it is owed to is the first step to developing an action plan to get out of debt.

2. Decide What You Can Repay

Ideally, your client will pay at least double the required minimum monthly payment. This would be 6% of the outstanding monthly balance instead of the typical 3% required minimum payment. This one simple step can save hundreds, even thousands, of dollars of interest and years of debt repayment. Online credit calculators and the debt payoff table in credit card statements are useful tools to estimate how long it will take, and how much interest it will cost, to repay existing creditors.


3. Increase Income and/or Reduce Expenses

Have your client track current living expenses for a month or two and identify spending leaks. Leaks can be plugged through reduced spending and the newly found money earmarked to repay debt. Clients can increase income via a second job, working overtime, or freelancing side hustles. An occasional way to raise income is through the sale of possessions online or at garage sales.

4. PowerPay Your Debt

PowerPay is a free online Utah Cooperative Extension program that works by adding the number of monthly payments from paid off debts to monthly payments for existing debts. As each creditor is repaid, remaining creditors receive larger payments with freed up cash, which results in time and interest savings. To generate a PowerPay calculation, help your client prepare a list of creditors and the outstanding balance, monthly payment, and interest rate for each debt.

5. Consider Refinancing

Have your client look into refinancing existing debt, like balances on credit cards, if current interest rates are lower than the rate currently being paid, and if the client has the willpower to not run up credit card balances again. Before refinancing, work with your client to check fees to make sure that the interest savings is not offset by closing costs, application fees, and other expenses.

6. Borrow Cheaper Money

Consider talking to your client about transferring high-interest credit card debt to lower-interest loans and credit cards. Other relatively inexpensive borrowing options are cash-value life insurance policies, family loans, and credit union loans. Advise your client to avoid high-cost borrowing from payday lenders and car-title loans.

7. Earmark a Windfall

Ask your clients about preparing their income tax return as soon as possible during tax season. Doing so can help them know what they owe.  If there is a tax refund, encourage your client to earmark all or part of it for debt repayment. Common sources of additional income for military families that can provide money for debt repayment are enlistment and re-enlistment bonuses, combat pay, assignment incentive pay, and hazardous duty pay.

Left-over holiday debt does not have to become “perma-debt.”

For more information, read How to Get Out of Debt from the University of Georgia Extension. A PDF of the publication is available at


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