5 benefits of debt consolidation for veterans

By Lindsay Vansomeren

Reviewed by Jill Cornfield

May 20, 2024

Read time: 4 min

Veteran mother and husband smile as they watch their two boys laughing and wrestling on the living room floor.

Key takeaways:

  • Veterans often struggle with higher rates of debt than the general public.

  • Debt consolidation could help you simplify your debts, save on interest, and free up cash flow.

  • Organizing your debts could help you manage your finances more efficiently in civilian life.

You’ve given a lot to your country. But if you’re like many veterans, you may struggle with making your debt payments each month. It’s not your fault, especially since money management in the civilian world can be far different than in your active duty years. You also face unique challenges that people outside the military don’t have to worry about, such as dealing with aftereffects from your service. 

There’s a lot of room for hope. Your time in service taught you how to identify challenges and come up with creative solutions, and that’s what you’re doing now by looking into debt consolidation for veterans

Debt consolidation is a way to roll multiple debts into one loan, often with a lower interest rate or different term length. That could help you pay down the debt faster, or reduce your monthly payment amount and free up cash that you could use toward other money goals. 

1. Jump-start your civilian life

Debt consolidation loans can be used for more than one purpose. If you can afford to borrow a larger amount, you could consolidate your debts and also use some of the loan funds to help you transition into the civilian world. 

For example, you could use the additional funds for career training. Student loans and the GI Bill don’t always cover the full cost of going back to school, and a small loan may give you just enough of a nudge to help you grow your skills to access new possibilities. 

2. Upgrade your housing

A debt consolidation loan could help you get better housing for you and your family in several ways:

  • Free up cash flow so you can afford rent more comfortably, or even save up to buy a home of your own.

  • Borrow additional funds to help you modify your home for your needs. 

  • Build good credit with on-time payments and a smaller credit card balance. 

If you’ve struggled to qualify for a mortgage because of your credit score or high debt payments, a debt consolidation loan may help. That’s partly because credit card debt could hurt your credit standing in ways that a loan balance doesn’t. It’s also because mortgage lenders look at your total required debt payments to determine how much of a mortgage you can afford. If your consolidation loan gives you a payment that’s lower than what you’re currently paying on your debts, you could have an easier time qualifying for a home loan.

Even though you have access to a no-money-down VA loan, it’s still wise to make a down payment if you can, and there are other home-buying costs to consider too. So if a debt consolidation loan helps you get rid of your debt faster, save up a down payment, or both, that’s a good thing. 

For those who already have a home, you may be able to use a home equity loan to consolidate your other debts and catch up on repairs or renovate your house for better livability. This can be especially helpful if you need to modify your home to accommodate disabilities resulting from your time in service. 

3. Smoother transition to civilian money management

Many veterans struggle with managing multiple debts at the same time after they leave their service. After all, you’ve got a lot going on. Between starting a new career, ensuring your family is taken care of, and possibly even moving across the country (or the world), it’s easy for ongoing debt payments to fall through the cracks. 

Putting all of your bill payments on autopay can help. But if you’re still tired of logging into multiple accounts on a regular basis and could benefit from streamlining your finances, consider taking out a debt consolidation loan. You could reduce multiple payments to one. 

The VA can be slow to process ongoing benefits that you’re entitled to. A debt consolidation loan could be a good idea if you can afford to borrow additional funds that help you bridge the gap and cover your expenses while you wait.

4. Expand your travel horizons

You may have seen many parts of the world during your time in service, but those weren’t exactly vacations. Depending on where and how the military sent you abroad, you probably also spent a lot of important time away from your friends and family. 

Streamlining your finances with a debt consolidation loan could help you finally save up for a vacation. This can open the door to:

  • Visiting old friends from your time in service

  • Catching up with relatives from across the country

  • Taking your spouse on a long-deserved getaway

  • Strengthening your relationship with your kids by taking them on fun trips

5. Build your family’s mission readiness

You don’t always have to struggle financially. A debt consolidation loan could help pave the way to a better financial situation if you’re able to lower your monthly payments, save on interest, or both. 

Here’s how a debt consolidation loan could help boost your financial resilience:

  • Handle surprise expenses more easily if you have extra wiggle room in your budget.

  • Save up an emergency fund with extra cash left over from having a smaller monthly payment. 

  • Build a strong credit profile that helps you access more affordable loans when you need them.

What’s next?

A debt consolidation loan might be a good move. But just as you wouldn’t be facing an enemy without a lot of advance planning, it’s also wise to consider your options before you tackle your debt. Here are a few tips:

  • Use a debt payoff calculator to see how much, if anything, you may be able to save by consolidating your debt. 

  • If you’re still using credit cards, stop until you have a solid plan for your debt. One thing a debt consolidation loan could do is help you get financially organized. Part of that process is creating a budget and learning how to avoid new debt. 

Talk to a debt expert about your situation to learn about your options.

Lindsay Vansomeren

Lindsay is a writer for Achieve. She's passionate about helping people learn how to manage their money better so that they can live the life they want. She enjoys outdoor adventures, reading, and learning new languages and hobbies.

Jill Cornfield

Jill is a personal finance editor at Achieve. For more than 10 years, she has been writing and editing helpful content on everything that touches a person’s finances, from Medicare to retirement plan rollovers to creating a spending budget.

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