Before You Take on Debt
Debt isn’t something you jump into blindly. To make sure you consider all the variables, grab a pen and paper, and analyze its RIFF (Repayment Terms, Interest Expense, Future Income, Future Situation).
Repayment Terms
How long will it take to pay off? Will it travel with you to your next duty station? If you need to stretch out the repayment terms just to afford the payment, it’s probably not a good idea. Usually, the longer you pay, the more you pay.
Interest Expense
What’s the total cost of the debt going to be by the time it’s paid off? Compare the purchase price to the total of your future payments and you will probably be astonished at how much interest you’re actually paying.
Future Income
Even if you can afford your payments today, you should be fairly certain that you will be able to continue making them until the debt is paid off. What will you do if you can no longer afford the payment some day?
Future Situation
What looks like a good decision today might not look so good three or four years from now. For example, before taking on loans for cars, motorcycles, ATVs, boats, etc. as a military family, think about how you might handle a PCS to a location where the vehicle isn’t practical; especially if you might owe more on it than it’s worth at that time.
MilLife Milestones
Financial Readiness
Before You Take on Debt
Debt isn’t something you jump into blindly. To make sure you consider all the variables, grab a pen and paper, and analyze its RIFF (Repayment Terms, Interest Expense, Future Income, Future Situation).
Repayment Terms
How long will it take to pay off? Will it travel with you to your next duty station? If you need to stretch out the repayment terms just to afford the payment, it’s probably not a good idea. Usually, the longer you pay, the more you pay.
Interest Expense
What’s the total cost of the debt going to be by the time it’s paid off? Compare the purchase price to the total of your future payments and you will probably be astonished at how much interest you’re actually paying.
Future Income
Even if you can afford your payments today, you should be fairly certain that you will be able to continue making them until the debt is paid off. What will you do if you can no longer afford the payment some day?
Future Situation
What looks like a good decision today might not look so good three or four years from now. For example, before taking on loans for cars, motorcycles, ATVs, boats, etc. as a military family, think about how you might handle a PCS to a location where the vehicle isn’t practical; especially if you might owe more on it than it’s worth at that time.
MilLife Milestones
Financial Readiness
Our Blogs
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Insurance and Estate Planning for Your Peace of Mind
Insurance protection and estate planning are key to your family’s financial peace of mind. Insurance protects you from serious financial loss and provides for your family, and estate planning ensures your wishes are carried out in case you are no longer there. Protect Your Stuff Homeowners and Renters Insurance: Both homeowners and renters insurance cover…
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PCS Finances for MilSpouses: In Their Own Words
Did you set financial goals earlier this year only to have a permanent change of station (PCS) threaten to derail your family’s budget? You’re not alone. Other MilSpouses have learned how to keep their family finances intact during a move — and so can you! Here is valuable advice from their experiences. PCS-proof Your Finances…
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