Financial and Housing Strategies Every Veteran Should Know

11/1/2024

For many U.S. veterans, transitioning out of military service brings significant personal and financial changes. Whether it’s relocating, starting a new career, or managing essential needs, like housing, that were previously covered by the military; it’s crucial to get a handle on your financial situation early. Understanding the benefits available to you can make these transitions smoother and help you build a stable financial future. 

Before you’re discharged

As your military service draws to a close, there will likely be many tasks on your to-do-list. Only half of military members report having enough savings to cover three months of expenses in case of emergency. If you’re among those without a solid emergency fund, now is the time to consider boosting your savings. After leaving the military, you’ll be responsible for covering living expenses, like housing and healthcare, on your own. Having an emergency fund provides a safety net, giving you extra time if needed to secure a new job or manage unexpected costs.

Taking the time to estimate your post-military income and expenses can reveal areas where you may need to cut back. While creating and sticking to a household budget can be challenging, it’s key to building financial stability. A well-crafted budget ensures that you have enough to cover your expenses while allowing room for savings. It also helps you track your finances and gives you a clear picture of how much money is flowing in and out. Once your budget is set, it becomes a roadmap that guides your daily financial decisions and helps you plan a secure future.

Read More: Managing Military Finances

Transitioning to Civilian Life

When leaving the military, many service members experience financial shock if they haven’t planned ahead. When in the military, you may have only paid federal taxes on your base salary, with your housing and subsistence allowances being tax-free. In civilian life, however, you’ll need to cover housing and food with post-tax income, which means you may need to earn a higher salary to maintain the same lifestyle.

Additionally, while active-duty service members are covered by valuable TRICARE health benefits, you might not be able to keep the same coverage after discharge. However, the military offers transitional health insurance programs that can cover you for up to 180 days post-discharge. Once those benefits expire, you can apply for temporary coverage through the Continued Health Care Benefit Program. Be sure to compare your transitional benefits with potential employer health plans from your new job or your spouse’s employer to choose the best option for your needs.

Read More: How to Manage Your Finances While in the Military

If you have outstanding debt, such as credit card debt or loans, it’s crucial to prioritize paying it off as soon as possible. Debt can negatively affect your credit score and make it harder to reach your financial goals. Accumulating credit card debt and spending beyond your means can lead to an unstable financial situation. If you’re facing challenges with debt, consider reaching out to a non-profit credit counseling agency like Navicore Solutions. We can help veterans regain control of their finances. Click here to get started with Navicore.

Housing Options for Veterans

While in the military, you receive a Basic Allowance for Housing (BAH) to help make housing more affordable. As a civilian, however, you’ll be responsible for covering all of your housing costs. Unfortunately, many veterans struggle to find affordable housing due to disability or other factors. If you’re a veteran seeking low-income housing or assistance with housing expenses, several resources are available to help, provided you know where to look.

Transitioning to civilian life can also be an exciting opportunity to settle down and purchase a home. The U.S. Department of Veterans Affairs (VA) offers a mortgage program with competitive rates, allowing veterans to buy a home without a down payment. A VA loan provides favorable terms and financing for veterans and servicemembers through private lenders like mortgage companies and banks.

VA home loans can be used to purchase various types of properties, such as single-family homes, condominiums, multi-unit properties, manufactured homes, or even new construction. Since 1944, the VA has guaranteed more than 28 million home loans as a part of the original GI Bill of Rights. One of the most significant benefits of VA loans is the ability to purchase a home without a down payment. For many veterans, saving for a typical down payment- often 15% or more of the loan amount- can take years. The VA loan program makes homeownership more accessible and affordable by eliminating that requirement. Whether you’re just starting your search or looking to buy a home, consider the VA loan program as a valuable resource to help you achieve homeownership.

Read More: Mortgage Basics: Understanding the Terminology of Buying a Home

Predatory Lending

Lending and mortgage origination practices become predatory when a borrower is misled into a transaction that is not what they expected. Predatory lending typically involves imposing unfair, deceptive, or abusive loan terms on borrowers. These loans often come with high fees and interest rates, strip the borrower of equity, or place creditworthy borrowers into more expensive, lower-rate loans-all for the lender’s benefit.

Military personnel and veterans are prime targets for predatory lenders due to their limited financial experience and lack of financial safety net for emergencies. Predatory lenders often use aggressive sales tactics to exploit borrowers’ lack of knowledge about financial transactions. Through deceptive or fraudulent practices and lack of transparency, they entice borrowers into loans that they’re unlikely to repay.

As a veteran, you can protect yourself from predatory lending by being cautious when a company makes an offer that seems too good to be true. Always look for the hidden costs before signing any agreement- what may appear as speed and convenience could come with high fees, a cycle of debt, or the loss of assets.

Lenders who offer loans without performing a credit check are especially risky. These lenders don’t assess how you’ve handled debt in the past or consider the impact of new debt. To compensate for the risk, predatory lenders charge extremely high interest rates, often exceeding 100% APR, and structure loans with large upfront fees. Consumer advocates view such rates and fees are predatory because they increase costs significantly and make it difficult for borrowers to repay the loan within the agreed term.

Many veterans spend their military careers receiving financial and health benefits within the military system. Transitioning to civilian life can bring a host of new challenges, with different rules and opportunities. After years in the military, adjusting to civilian life may feel overwhelming, but making informed financial and housing decisions can help set you up for long-term success. The key to effective financial planning is to stay informed, being proactive, and making the most of the resources available to veterans. Navicore thanks all veterans for their service and is here to support you in the transition to civilian life. 

 

 

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