At Operation Financial Forward we use the "Financial Flanking Manuever" to pay our debt off as quickly as possible. This method for reducing debt is a six-step process. The method incorporates popular repayment techniques and is specifically tailored to the unique circumstances and challenges facing Service Members and their families. The Financial Flank will help you pay your debts off quicker.
The first step is understanding your income. This might sound obvious, but military pay can be complicated. You need to verify that your base pay is accurate; confirm that your entitlements are accounted for; and understand your Basic Housing Allowance (BAH). OFF offers a module for selecting appropriate housing and understanding BAH. Utilize MyPay to access your Leave/Earning Statement. If something is wrong with your pay; let your leadership know!
The second step is checking your budget for accuracy. It is critical that your budget is accurate before you begin this process. If you do not have a budget, click this link for our budget tutorial. Reach out to a coach so that we can help you create a budget; a good budget includes every penny of income and has expenses until reaching "$0." The budget is reassessed monthly or whenever inflows (income) or outflows (expenses) change. Rule number one of finance: outflows can not exceed inflows!
During this step, we scrutinize every expense and divide them into two categories "necessary" and "unnecessary." If an expense is necessary, we ensure we are getting the best rate/value for that service. If an expense is unnecessary, we consider eliminating the expense. This step is critical and you will increase your cash flow. If you are a meal cardholder; eat all of your meals in the DFAC (at least during the working week). If you are missing meals; get a voucher.
The average energy drink costs $4.70 at a gas station. This comes out to $145.70/month. Energy drinks typically cost less than $2/can if purchased from a grocery store. Purchasing from a grocery store can save you $83.70/month.
The average cup of coffee cost $4.90 at a US coffee shop. This equates to $1,274 over a year's worth of working days. OFF estimates that a home-brewed cup of coffee costs roughly .30/serving.
A 2021 study shows that close to 1/3 of consumers underestimate how much they spend on subscriptions by an average of $150/month or $1800/year.
During this step, you list all of your debts, organize them in alphabetical order, and list the remaining balance, interest rate, and monthly payment. We use the OFF calculator to assign a score for each of our debts. Make sure to write these scores down.
In Step Five, we begin to mass our fires. We make the minimum payment on all of our debts except the debt with the smallest OFF score. All remaining cash at the end of the month goes to that debt. This process continues monthly until the debt is paid off. Paying off this first debt should help give you the confidence that your goal is obtainable.
During Step Six, we start to really gain momentum. In this step, we attack our debt, one by one, going from the lowest OFF score to highest. This process continues until our debt is paid off. Chances are you will PCS, reenlist, or receive a tax refund during this process. All three of those events typically include lump sums of cash that will help you pay off debt quicker.