Soldiers’ and Sailors’ Civil Relief Act Provides Umbrella of Protection

American Forces Information Service

If you’re a reserve component service member called to active duty, you’re protected by a law that can save you some legal problems and possibly some money as well.
Under the provisions of the Soldiers’ and Sailors’ Civil Relief Act of 1940, you may qualify for any or all of the following:

• Reduced interest rate on mortgage payments.
• Reduced interest rate on credit card debt.
• Protection from eviction if your rent is $1,200 or less.
• Delay of all civil court actions, such as bankruptcy, foreclosure or divorce proceedings.

“Although all service members receive some protections under the SSCRA, additional protections are available to reserve components called to active duty,” said Lt. Col. Patrick Lindemann, deputy director for legal policy in the Office of the Undersecretary of Defense for Personnel and Readiness. Most active duty service members are familiar with the provisions of the SSCRA that guarantee service members the right to vote in the state of their home of record and protect them from paying taxes in two different states.

One of the most significant provisions under the act limits the amount of interest that may be collected on debts of persons in military service to 6 percent per year during the period of military service. This provision applies to all debts incurred prior to the commencement of active duty and includes interest on credit card debt, mortgages, car loans and other debts. The provision, Lindemann emphasized, applies to pre-service debts, and the interest rate reduction doesn’t occur automatically — service members must request it.

Once a service member requests the rate reduction, the creditor must either comply or apply for court relief. The SSCRA puts the burden on the creditor to show that military service has not “materially affected” a member’s ability to repay the debt. The court generally grants relief if the creditor can make his case.

Lindemann advised that service members notify lenders of their intent to invoke the 6 percent cap in writing, along with proof of mobilization/activation to active duty and evidence of the difference in the member’s military and civilian pay. This could prevent creditors from attempting to challenge interest rate reduction requests in court.

The interest rate cap does not apply to federal guaranteed student loans. However, according to Lindemann, the Department of Education has in the past deferred or suspended payments on student loans for reserve component military members called to active duty. Service members should contact their lenders or schools to determine if such a program has been implemented and its eligibility requirements.

Another key provision under the SSCRA protects your dependents from being evicted while you are serving your country. If you rent a house or apartment that is occupied for dwelling purposes and the rent does not exceed $1,200 per month, the landlord must obtain a court order authorizing eviction. This provision applies regardless of whether quarters were rented before or after entry into military service.

In cases of eviction from dwelling quarters, courts may grant a stay of up to three months or enter any other “order as may be just” if military service materially affects the service member’s ability to pay the rent. This provision is not intended to allow military members to avoid paying rent, said Lindemann, but rather to protect families when they cannot pay the rent because military service has affected their ability to do so.

Another significant protection under the act relates to civil proceedings. Service members involved in civil litigation can request a delay in proceedings if they can show their military responsibilities preclude their proper representation in court. This provision is most often invoked by service members who are on an extended deployment or stationed overseas. “I would recommend a service member contact the unit or installation legal office immediately if they receive notice of court proceedings against them,” Lindemann said. “Civil court proceedings can involve very complex issues and no one should do anything, including requesting a stay of proceedings, prior to seeking legal advice.”

To learn more about these or other provisions of the Soldiers’ and Sailors’ Civil Relief Act, contact your unit or installation legal assistance office.

View a brief history of the Soldiers’ and Sailors’ Relief Act of 1940

Your rights regarding credit card debt under the Servicemembers Civil Relief Act

Frequently Asked Questions

I have an existing credit card balance. Can I get any relief from the finance charges?

You have rights. As a general matter, when you enter active duty, you should notify your card issuer. The maximum interest rate you can be charged on any amount you owed before entering active-duty service is 6 percent. For this purpose, interest includes not just periodic interest charges, but also other finance charges and fees related to the debt. One such fee is an annual fee.

For members of the full-time active-duty military, SCRA protections begin the day you enter military service. For a Reservist or Guardsman, SCRA protections begin the day you receive your mobilization orders.

To get the benefit of the SCRA, you must notify your credit card company of your active-duty status in writing. You must send a written letter to the card issuer and include a copy of your orders. Include in your letter a request to reduce your interest to 6 percent while you are on active duty.

Some credit card issuers may even be willing to reduce your interest rate further than the SCRA requires.

I have been on active duty and have returned home. I just learned that I could have gotten a reduction in the interest rate on my credit card while I was on active duty. Is it too late for me to get this reduction?

You have up to 180 days after you are released from active duty to let a lender know that you were on active duty.

You should write your credit card company and send a copy of your military orders. If you do so within this 180-day time period, you are entitled to have your interest rate reduced to 6 percent. This reduction is effective for the period from the date you entered active duty through the date you were released from active-duty status.

If I ask my credit card company to reduce the interest rate on my balance while I am on active duty, can it close my account or reduce my credit line?

No. Under the law a lender cannot revoke or reduce your credit because you have exercised your right to a reduced interest rate under the Servicemembers Civil Relief Act.

If I ask my credit card company to reduce the interest rate on my balance while I am on active duty, can that hurt my credit rating?

No. It is against the law for a lender to make an adverse credit report because you exercised your rights under the Servicemembers Civil Relief Act.

Can I get any reduction in the interest rate I am charged on any new purchases I make using my credit card while I am on active duty?

The law regulates only the interest rate on amounts that you owed at the time you entered the military service or were called up to active duty.

If you make purchases with your card while on active duty, you can be charged your regular APR on this new balance. However, your card issuer must apply towards the new balance any monthly payment you make that exceeds the minimum amount due. This will reduce the total amount of interest you pay on the card.

Some credit card companies may give you a reduced interest rate on new purchases as well as on the balance you owed when you went on active duty. You should check with your credit card company to see what, if anything, it will do for you.

I believe that my rights as a servicemember have been violated by my credit card issuer. What should I do?

You should contact the nearest Armed Forces Legal Assistance Program office.

Dependents of servicemembers can also contact or visit local military legal assistance offices where they reside. You can get help online to find an office, whether you are within the continental United States or anywhere else worldwide. Another potential source of assistance that may be helpful even if you are no longer on active duty is the American Bar Association.

What is an active duty alert for members of the military?

The Fair Credit Reporting Act allows members of the armed forces who are on deployment to place an “active duty alert” on their credit reports. This can help members of the military on active duty to prevent identity theft. The alert requires creditors to verify your identity before granting credit in your name.

Identity theft occurs when someone uses your personal information – like your name, your Social Security number, or your credit card number – to commit fraud. Identity thieves may use your information to open a new credit card account in your name. Then, when they don’t pay the bills, the delinquent account is reported on your credit report. Inaccurate or fraudulent information could affect your ability to get credit, insurance, or housing, now or in the future. People whose identities have been stolen can spend months or years cleaning up the mess the thieves have made of their names and credit records.

If you are a member of the military and away from your usual duty station, you may place an “active duty alert” on your credit report to help minimize the risk of identity theft while you are deployed. When a business sees the alert on your credit report, it must verify your identity before issuing you credit. The business may try to contact you directly, but if you’re on deployment, that may be impossible. As a result, the law allows you to use a personal representative to place or remove an alert. Active duty alerts on your report are effective for one year, unless you request that the alert be removed sooner. If your deployment lasts longer, you may place another alert on your report.

To place an “active duty” alert, or to have it removed, call the toll-free fraud number of one of the three nationwide consumer reporting companies: Equifax, Experian, or Trans Union. The company will require you to provide appropriate proof of your identity, which may include your Social Security number, your name, address, and other personal information.

Contact only one of the three companies to place an alert – the company you call is required to contact the other two, which will place an alert on their versions of your report, as well. If your contact information changes before your alert expires, remember to update it.

When you place an active duty alert, your name will be removed from the nationwide consumer reporting companies’ marketing lists for prescreened offers of credit and insurance for two years – unless you ask that your name be placed on the lists before then. Prescreened offers – sometimes called “preapproved” offers – are based on information in your credit report.

Pre-Deployment Tips

You can take steps to protect your finances and credit while you’re protecting our country.  Before you ship out on a military deployment, read these tips and talk with your family.

Get your financial house in order

Make sure your financial records are accurate and up-to-date. This means giving your husband or wife (who will be paying the bills for the next several months) all bank account and credit card numbers, a record of assets and outstanding debts, a list of typical expenses such as rent and utilities, and all phone numbers and addresses necessary for dealing with financial matters.

Consider granting a power of attorney

Granting a power of attorney to your spouse or another trusted family member will allow that person to handle financial matters in your absence. They’ll have the legal right to sign important papers and take other actions on your behalf. Military installation legal assistance offices can help service men and women set up a power of attorney.

Power of attorney gives the person considerable authority to spend your money and take on new debt in your name. If you are not comfortable granting that much control, the power of attorney can be limited to a specific area of your financial affairs. It can also be limited to a certain period of time. A limited power of attorney can be revoked by you at any time by filing notice with the county Register of Deeds.

Take care of taxes

Before deployment, decide how your taxes will be filed and who will file them. If your spouse will be taking on tax duty for the first time, make sure he or she has all necessary documents. The IRS also allows military personnel to file for an extension by using Form 2350.

Watch out for scams

Military spouses should be especially careful while their husband or wife is away on active duty. Beware of work-from-home scams and home repair scams.

Guard your identity

There’s another threat that you may face while serving your country—the threat of identity theft. The risk of ID theft can be higher while you’re on active duty because it can be more difficult to watch over your credit. Take steps to protect your identity, like getting a free security freeze. A security freeze stops credit reporting agencies from releasing any information about you to new creditors without your approval. That can stop identity thieves from getting new credit in your name.

An Active Duty alert is another way of getting protection against ID theft while you are away from your usual duty station.

Protection for Military Who Rent

Both you and your landlord have rights and responsibilities. By law, your landlord is required to keep your unit in good and safe working order and to follow relevant state and local codes. When you discover that something needs to be fixed, let your landlord know about the problem immediately over the telephone or in person. Your landlord doesn’t have to fix the problem until you tell him about it in writing, so follow up with a written request and keep a copy for your files.

If your landlord does not respond in a reasonable amount of time, you may decide to pay to repair an emergency problem yourself. Be sure to keep copies of all receipts so that you can seek reimbursement from your landlord.

Don’t withhold rent to convince your landlord to make repairs. Instead, try to work out a cut in your rent. For example, the landlord may allow you to pay to fix a broken refrigerator and then subtract the cost from your next month’s rent. Or, the landlord may agree to reduce your rent for a month during which you could not use one room because of a leaky roof.

If the landlord fails to fix something that puts your safety at risk or violates local codes, report it to local authorities. Local building, health, fire and safety inspectors can take action to ensure compliance with the codes.

If you and your landlord aren’t able to settle your disputes, file a complaint with the Consumer Protection Division in your State.

Additional Information

Many States have laws that  sets a limit on the amount of rent owed by military personnel who end their leases early because of premature or involuntary discharge or due to a permanent change in duty station that requires a move of more than 50 miles.

Under the circumstances specified in the law, military personnel can break their lease by giving written notice to their landlord at least 30 days in advance of their move date. The notice must include a copy of their official military orders or a written verification signed by a commanding officer.

Military personnel are responsible for paying rent until their move date.

Finally, if your monthly rent is $1,200 or less, the federal Soldiers’ and Sailors’ Relief Act (SSRA) can stop your family from being evicted while you are serving active duty.

Don’t Get Taken For a Ride When You Buy That Car

In February of 2010, Undersecretary of Defense Clifford Stanley reported to the US Treasury Department that nearly three out of four military financial counselors had provided advice to service members on issues related to abusive auto financing. Pentagon officials are concerned that service members’ worries about finances, which frequently include auto loans, are having a negative impact on military readiness. They also see patterns of unfair business practices that frequently target military personnel.

In one common scam, called the Yo-Yo, unscrupulous car dealers use trickery to try to squeeze more money out of car buyers. After the buyer signs a sales contract that includes the terms of their loan, they drive their newly purchased vehicle off of the sales lot. But a few days or weeks later, the car salesman calls the buyer back to the lot and claims that the loan financing has fallen through.

The salesman says the buyer will need to pay more cash in order to keep the car or renegotiate the loan with a less favorable interest rate. If they refuse, the buyer may find that their new car has been blocked in on the sales lot so it can’t be moved. The buyer may be told that their trade in vehicle has already been sold. Some dealers may also try to refuse to return the buyer’s down payment. However, the buyer has a legal right to request that the original deal be “unwound” if the financing falls through, and that all of their money be refunded.

Another tactic involves loading up the loan financing contract with expensive options. These include theft deterrent systems, vehicle service contracts, extended warranties, extra insurance to cover loan payments if the vehicle is involved in an accident, and even credit life insurance and disability insurance policies for the buyer. These unnecessary items can cost buyers a lot of money over the life of their loan.

That vehicle looks great on the car dealer’s lot and you know you’d look great behind the wheel. But when you go car shopping, don’t be in a hurry. Make sure you’re getting a fair deal, especially if you’re buying a used vehicle. Research the car’s history and get a mechanic to look it over before you sign anything. And remember, a used car is usually sold “as is.” If it breaks down after you drive it off of the lot the dealer isn’t responsible for fixing it. 

“It’s a fact that military personnel love their cars. Sadly, many of them end up paying far more for them than they should.” Holly Petraeus, wife of General David Petreaus and Director of the Council of Better Business Bureaus’ Military Line, which provides consumer education for service members

Scams That Target Military Personnel and Their Families

Scam artists who prey on members of the military and their loved ones have no shame. But there are ways to avoid getting ripped off by these heartless crooks. 

Never pay up-front to get a loan or a credit card

You may have seen advertisements promising easy access to loans, even if you have bad credit. These =advance fee= loan scams try to get you to pay for their help getting a loan, but once you pay, the loan never materializes. To steer clear of advance fee loan scams, watch out for loan brokers who promise or suggest that they can get a loan for you if you pay a fee first. In many States, it’s illegal for a loan broker to charge an advance fee to obtain a loan or a credit card for a consumer.

Legitimate lenders will not charge you money upfront. Typically, advance fee loan schemes claim that you must make the first and last monthly payments or pay five percent of the principal so that you won’t lose the loan to others who are competing for it. Don’t agree to pay anything until after the loan has closed. And steer clear of advance fee credit card offers, too. Scammers may offer credit cards with a pre-approved limit and low interest rates for an upfront fee. They’ll ask for your bank account information and so they can authorize an electronic draft to pay the fee. In most cases, they simply take money from your account and you never get a credit card. 

Watch out for people who try to exploit a military connection

Scammers are always looking for ways to get a potential victim to lower their guard. Some will try to gain your trust by claiming a connection to the military. Just because a business puts a military reference or term in its name doesn’t mean it provides good service to military personnel. If someone seems to be using your shared military service to get you to purchase a product or make an investment, be wary. Don’t let anyone exploit your patriotism or cause you to set aside your healthy skepticism about spending or investing your money.

 Avoid self-serving “Financial Planners”

Deployment pay… a reenlistment bonus… retirement pay. Any event that puts cash into the hands of a service man or woman represents an opportunity for an unscrupulous investment advisor. Despite recent crackdowns on companies that target members of the military for investments that carry high fees, military personnel remain at risk. Roth IRAs and the military’s Savings Deposit Program are among the safest ways to protect your hard-earned dollars. 

Get insurance you need, not what someone wants to sell you

Some insurance agents try to use high-pressure tactics to maneuver military personnel into purchasing insurance they don’t need. Agents are now barred from trying to sell insurance at mandatory-attendance meetings on base, and they can’t use senior personnel to help them pitch their policies. But outside the gates, many insurance agents still try to convince service personnel to buy inappropriate insurance. Instead, max out your government-provided insurance. The Servicemember’s Group Life Insurance (SGLI) provides outstanding insurance at a great price.

Avoid Impulse Buying

Impulse buying makes you spend money on items you may not really need or want. It is buying something that isn’t within budget or a part of a monthly spending plan.  It’s a purchase that isn’t necessary, and one of the largest causes of consumer debt each year. To avoid impulse buying you need to ask yourself if you really need the item or just want it. When the temptation for a big impulse buy strikes, take a step back to evaluate the situation. There are a number of ways to stop impulse buying if it’s causing problems for you.

Have a budget made up and don’t spend over this amount.

Have a list of items that you intend to buy and stick to it.

Take 24 hours, a few days, or even a week, to determine if it’s truly a need.

Compare prices between sellers. You may find that someone is selling an item a lower price.

Impulse buying can rob you of your financial security if it goes unchecked. All of those “little” purchases can add up.  Be wise enough to thoroughly think over the necessity of each purchase you make. Though lower price or free shipping may seem attractive and beneficial, make sure to spend time comparing the price to that of other sellers, and thinking of whether that purchase is really what your life lacks. It is best to avoid impulsing buying as much as you can.

DMCC is a 501 (c)3 nonprofit organization committed to educating consumers on financial issues and providing personal assistance to consumers who have become overextended with debt.  Education is provided free of charge to consumers, as well as personal counseling to identify the best options for the repayment of their debt. To speak to a certified credit counselor, call toll-free 866-618-3328 or email

Budget + Investment = Reward

If you find yourself using your savings account to pay bills or prevent your checks from bouncing, then its time to reevaluate your spending habits. This may seem like a difficult task at first, but after a short period of time, saving money should become a breeze. To better reap the rewards of a savings account, update your budget on a regular basis and become familiar with your banking options.

It seems tedious and time consuming to keep track of every dollar you make, but starting now is better then walking a tight financial rope. Once you have figured out how much you can safely deposit into a savings account, then your next step is to make the most out of what is being offered by financial institutions. Interest bearing savings accounts are offered with most major banks, but how would you know if there are better rates being offered elsewhere?

The easiest method is researching and comparing rates through the Internet. If you are computer savvy, jump online and check out local banks as well as This one stop shop offers comparisons between many of the local, national, and virtual banking institutions and even includes current promotional information. Linking an existing bank account with a savings account offered by another bank can be tricky, but many of the virtual banks allow you to make deposits and withdrawals as often as you need to. You have completecontrol of your money. Virtual banking is no different then banking online with the traditional bank; both financial institutions offer all of the same benefits. When looking at banks, be sure to compare virtual banks with the standard “brick and mortar” banks. Virtual banks do not have the costs of maintaining physical locations so they can provide their customers slightly higher returns on their investments.

As with budgeting, when you put your money into a savings account, it is a good idea to review your financial goals. What do you have planned for the next 5, 10, or 15 years? When you figure out an amount you wish to save each pay period and a specific goal to achieve, you can safely make timely deposits into and watch your money as it works for you. This can be done through a regular savings account, by purchasing a certificate of deposit or committing to a retirement fund.Before you open a bank account, take the extra time you need to get all of your information. First, make sure that you know exactly what fees they charge and how they assess them. No matter what type of account you open, you want to make sure it is free of monthly service fees and, unless you have enough saved elsewhere, that they do not require a minimum balance. If an emergency comes up that requires you to withdraw an amount that would lower the balance below what they require, being penalized will do you little good. Also be certain to review the banks history, credentials and make verify that it is FDIC insured. Lastly, pay attention to the customer service you and others have received. This will give you an idea of what type of service you can expect to receive in the future. If you are not content, take your money and business to another bank.

Once your strategy for savings is put in motion, the most important thing to do is keep yourself motivated. Dipping into a savings account is tempting and, all things considered, cheaper then using a credit card. If you decide to take out money from your savings account, be sure you set a limit on how much you are going to spend and plan for how you can put additional money into the savings account to cover the withdrawal. It is all too easy to use the money you work so hard for on items you may not need. If you notice the amount in your savings account dropping and havent set up a good plan to put the money back in, then get creative. Bake cookies, paint a picture, write a poem; these are not only great gifts for the holidays are very rewarding activities too.

DMCC is a 501 (c)3 nonprofit organization committed to educating consumers on financial issues and providing personal assistance to consumers who have become overextended with debt.  Education is provided free of charge to consumers, as well as personal counseling to identify the best options for the repayment of their debt. To speak to a certified credit counselor, call toll-free 866-618-3328 or email

The 4 Steps to Budget Your Paycheck Starts Today!

Your Guide to Debt Freedom

Why budget your paycheck today?4 Steps to Budget your Paycheck

It is important to manage your money. It enables you to meet your monthly financial obligations on time. Managing your finances also help increase your capability to save for your retirement, education funds or by simply having extra sitting in the bank.

Budgeting your paycheck is an art. It is designing and planning the future of your wealth. Your financial plan is showing you the direction of your finances and will help you maneuver within your means.

The money that you own and can spend anytime is what you will be able to include in your budget. There are many ways to do your budget but I will show you the 4-steps on how to do budgeting effectively.

The 4-steps to budget your paycheck effectively:

Know how much is your paycheck, after tax deduction
Identify your fixed expenses
Identify your variable expenses
Monitoring and Strategy

Making a financial plan can be seen by many as a balancing act. These four steps on how to budget your paycheck will also help you design your safety nets while walking in a tight money rope. It will allow you to plan in advance if you need additional sources of income or if you need to make a temporary loan to make ends meet.

Without a written budget, you have a very high chance of overspending your money and not knowing what are the consequences that lies ahead. This is what we are trying to avoid here. We know that the effects of overspending or being cash strapped places a heavy toll in our health, wealth and relationships.

Step 1: How much money do you bring home?

You need to know how much income you earn in a weekly, bi-weekly or monthly basis. Knowing how much is your paycheck, after deducting taxes, is the first step in creating your budget.

If you have been earning for a period of time, you already have a fair idea of your average income. To the person who just got its first paycheck, your take home pay is the gross salary minus the federal and state taxes that are deducted from it. Your federal tax rate ranges from 15%-35%, depending on your income tax bracket. Your state tax deduction rate also depends on which state you live in.

Step 2: Identify Your Fixed Expenses

Fixed expenses are your monthly financial obligations that you need to pay on a consistent basis, whether you like them or not. Regardless of your financial activity, fixed expenses are awaiting payment from you every single month.

This means that even if you lose your job or your income, you are still obligated to pay them. During the recent economic recession, when millions of jobs were lost, the way of life of many Americans were affected drastically. Many could not afford to meet their ordinary fixed expenses anymore.

Suggested Examples of Fixed Expense:

House Rental or Mortgage – This is the monthly payment to your landlord or mortgagee
Car payment – It refers to your your monthly car amortization to your lender
Insurance – It includes insurance on your car, health, life and property
Electricity Bill – This is the electric power you use normally around your house. It includes the appliances, furniture and electronic gadgets you use at home
Water and Gas Bill
Telephone and Cellphone Bill
Cable and Internet
Medical and Prescriptions Costs – Your monthly medical needs that your doctor has prescribed for you.
School expenses, tuition fees and books – Yourself and/or your dependent’s K-12 and college school fees, supplies and books.
Grocery – Your food and basic household supplies.
Gas – This expense is a vital part of your car amortization expense. It cannot run without gas.

Fixed expenses are mostly fixed in dollar value on a month-to-month basis.This is not usually affected significantly even if your income increases or decreases at the end of your pay period.

Step 3: Identify Your Variable Expenses

Variable expenses are your expenses that you have full control. This type of bills are your spending habits that you can probably live with or without for a period of time.

Simply put, your controllable expenses are expenses that you can decide based on your wants and not on your basic needs. As brandrocker states, this behavior is also related with your happiness, passion, and impulse. You are likely to spend more during an emotional outbreak – both on its high and low end.

Your variable expenses is directly related to your income. As your paycheck increases, your variable expenses increases along with it. The same is true if your salary decreases, your controllable expenses will decrease too.

Step 4: Monitoring and Strategy

Now it’s time to make the computations on your budget. First, subtract your fixed expenses from your paycheck. The difference between your paycheck and fixed expenses will be the money available to pay for your variable expenses.

Next, you deduct your variable expenses. The difference from deducting your fixed and variable expenses from your income will either be a positive or negative number. A positive number will tell you that you have extra money to save or spend. A negative difference will tell you that you are in trouble.

Budget Example:

Paycheck $2000

Less: Fixed Expenses $1800

Difference $ 200

Less:Variable Expense 350

Shortage on paycheck ($ 150) based on budget

The concept of breaking down your expenses is to emphasize the fact that if your salary or paycheck cannot pay all your fixed and variable expenses, there is data available for you to analyze your spending pattern. You will be able to identify specifically which part of your budget is doing okay and which part has gone wrong.

You have two immediate options to solve your budget shortage or lack of money thereof. The first option is to increase your income or salary by the amount you need. Increasing your income is usually the first choice that you will make. This way, it doesn’t affect the dollar value you have placed on your budget’s fixed and variable expenses.

Strategies to increase your income:

Work overtime
Get a second or third job
Have a part-time work
Put up a garage sale
Start up a small business at home that you are passionate about. Adjust your schedule so that you can work on it at night, during weekends or on your free time.
Turn your hobby into an income generating activity. Usually, your hobby is your craft that you really enjoy doing and is good at it.

The second option is to reduce, constrict, eliminate or sacrifice your Variable Expenses. You can use the trial-and-error approach, adding or subtracting dollar amounts from one controllable expense to another until you arrive at your desired result. The bills you identified as variable expenses are the ones that you can manipulate to make your budget work.

Tips to manage your Variable Expenses:

Bundle your cable, television and telephone lines to get the cheaper upgrades for the services. Most of the these companies have business ties with each other that they offer cheap bundled products. Be aware that their promotion runs for 12 or 24 months only and you need to renew them to keep on paying the promotional rates.

Decide on your vacation plans based on three factors: Affordability, Worth and Priority

Affordability – The question is, can you afford this vacation? Have you been saving up for this trip? Don’t sacrifice your basic needs for a lavish activity that you cannot afford to pay.

Worth – Is the trip worth it? Don’t rely on what you read on the advertisements for your vacation destinations. Do your own extensive research before making your decision.

Priority – Do you have to go on vacation now, or next year, or the year after next? Which of the many vacation plans you have should you do first? Your trips should not have a negative effect in your financial health when you come back home.
Plan recreational activities inside somebody’s house. Getting together with friends and family to spend weekends in a house is cheaper than somewhere else.

Your budget does not have a mind of its own. You have to constantly check your actual expenses versus your budget. Monitoring your expenses ensures that your money is on the right track.

DMCC is a 501 (c)3 nonprofit organization committed to educating consumers on financial issues and providing personal assistance to consumers who have become overextended with debt.  Education is provided free of charge to consumers, as well as personal counseling to identify the best options for the repayment of their debt. To speak to a certified credit counselor, call toll-free 866-618-3328 or email

Reference :

Things To Know About Debt Consolidation

Debt consolidation is a way to collect all your individual debts and lump them into a single loan. It works well to combine overdraft, credit card, and automobile loans. By consolidating your debt you only make one payment to one creditor. Usually, you can negotiate better terms, a lower interest rate, and quicker payoff times. But is debt consolidation always the best idea for you?

When you consolidate your debt make sure you know if it is an unsecured or a secured loan. An unsecured loan is like a signature loan or a good will loan from a friend. You are not required to put anything on the line to guarantee the loan in the event you don’t pay. Money is loaned to you solely on your ability to repay. A secured loan requires that you offer a piece of collateral as insurance, in order for the bank to lend you money. That collateral could be your house, your boat, or a sum of money in an account. If for any reason you don’t pay the loan back, or default,  the bank has every right to take whatever you may have secured the loan with.

It is also important to know whether the interest rate on your loan is fixed or variable. A fixed interest rate remains the same until the loan is paid off. The interest rate you start out with will be the interest rate you end with. If the lender’s rates go up and down, it doesn’t matter, because you will have a fixed interest rate. The other type of loan is the variable interest rate. These usually have an introductory offer. The offer can last anywhere from three months to five years. After the offer expires your rate will adjust to a new rate. These loans are popular because the introduction rate is so much lower than other rates. It’s tempting to get a variable rate, but it’s a risk because ultimately you can be negatively affected by rate changes. Consider these carefully.

When you consolidate your debt, look at the bottom line. Many people don’t realize that their debt can cost them 200% more after they’ve made payments over time. The car you bought for $15,000 could end up costing you $45,000 in the end. If possible, get an amortization table on your loan. This will tell you how much interest and how much principle you are paying with each payment. If you can make more than the minimum payment on your loan, you will get out of debt quicker and cheaper.

As with many life choices, the more you know about your financial options, the more likely you’ll be to make the right decision.

DMCC is a 501 (c)3 nonprofit organization committed to educating consumers on financial issues and providing personal assistance to consumers who have become overextended with debt.  Education is provided free of charge to consumers, as well as personal counseling to identify the best options for the repayment of their debt. To speak to a certified credit counselor, call toll-free 866-618-3328 or email