But too much debt can cause many problems for your military career. The two biggest issues that debt causes to military careers are with security clearances and readiness (ability to perform your duty without restrictions, including the ability to deploy).
Credit Checks and Military Branches
Excessive debt obligations that exceed half of the annual salary of the pay grade of the recruit can prevent enlistment. If debt includes mortgage debt, the total debt must not be more than two-and-a-half times the annual salary of the recruit.
Debt Help for Military Spouses
Spouses of active members of the military can get help paying their bills and loans under the Servicemembers Civil Relief Act. The law caps credit card and mortgage interest rates while on active duty and provides protections against eviction and foreclosure.
Here are 7 common mistakes military members make with their money and how to correct them:
Credit scores and military clearance
Some branches of the military will run a credit check on anyone who wants to enlist, as part of a standard background check, while some will only run credit checks on those individuals who require a security clearance in their positions or ranks.
Continuing to show a pattern of misconduct is when you can run into legal trouble with the military. Military members who repeatedly fail to make payments or honor their debts can receive various punishments up to and including being discharged.
The US Military cannot kick you out for having too much money but you can request a discharge if you came into so much money that it required your support.
The Servicemembers Civil Relief Act (SCRA) makes it possible for you to cap your interest rate on loans, including credit cards. Lenders must cap your interest rate at 6 percent on loans taken out prior to your becoming active.
A disabled veteran loan provides veterans who were discharged under honorable conditions with cash for anything, whether it is to upgrade to a handicap accessible vehicle, or to repay old high-interest loans through consolidating the debt. Borrowers can even use a single loan for multiple purposes.
Here are five programs designed to help active duty military and veterans with debt relief: Servicemembers Civil Relief Act – Regulates interest rates for credit cards, auto loans and other financial services for active duty military. ... Veteran's Housing Benefit Program – offers loans to veterans at very low rates.
The question you asked is this, "Is joining the military a good move financially?" The answer to this question is a flat yes. If you are good with your spending and have good savings habits, you will make good money and have excess to create a sizable savings account. Simply put that is your answer.
Frequent moves add expenses
Another reason for debt in the military is needing to move locations often. "Frequent moves can add additional expenses," said Detweiler. "And those moves can make it harder for a spouse to hold and advance in a good paying job."
All soldiers on active duty receive a basic pay. The Army ranks its soldiers from E1 through E6. E1s with less than two years experience earn an annual salary of $19,660. The wage is slightly lower for the first four months of service.
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