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Consumer Watch: Personal debt crisis? Check out aid options - now

Jul. 28, 2011 - 11:13AM   |   Last Updated: Jul. 28, 2011 - 11:13AM  |  
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Whether it's the debt ceiling crisis or a personal budget issue, you have some options if you're worried about being able to pay your bills.

At this writing, politicians were still battling over what to do about the looming Aug. 2 deadline to raise the federal limit on how much the government can borrow. It was unclear what might happen to military pay and benefits if the limit isn't raised.

Military and retired pay will reach recipients by Aug. 1, before the government would default. And if the worst does happen, the default would have to last almost two weeks before it would affect military pay, for Aug. 15 paychecks.

In the meantime, it doesn't hurt to check with your bank or credit union for any special provisions to help you get through any pay delays — perhaps a no-interest loan, or low-interest loan.

Randolph-Brooks Federal Credit Union, for example, will provide its members with a one-time "provisional credit" of their direct-deposit paycheck or benefits check, if they are government employees or benefit-payment recipients. There would be no interest or fees on the provisional credit.

Other tips:

• A number of military-affiliated banks and credit unions offer small loans at reasonable interest rates that can help you get through a tough spot.

• If your paycheck stops and you have trouble making a payment on your mortgage or other loan, contact your lender immediately to see whether loan officers are willing to work with the many people in this unusual situation.

• If you're having trouble paying for necessities such as food or gas, contact your military relief society, which has offices on military installations. Visit the following websites for contact information: http://www.aerhq.org">Army Emergency Relief; http://www.afas.org">Air Force Aid Society; http://www.nmcrs.org">Navy-Marine Corps Relief Society; and http://www.cgmahq.org">Coast Guard Mutual Assistance.

While the relief societies aren't able to "backfill" the entire military payroll, they can help with quick loans for emergency necessities on a case-by-case basis.

Retired Army Col. Andy Cohen, deputy director for finance and treasurer for Army Emergency Relief, said AER is dusting off contingency plans to expedite help for those who need it for emergencies, similar to the preparations made in April when a possible government shutdown threatened to interrupt government pay.

These scares bring home the wisdom of trying to put aside some money for a rainy day, even if it's a few dollars from each paycheck.

Yes, the military owes you that paycheck. And no, it's not fair when bad things happen — like when cars and washing machines break down at the same time.

Sometimes things happen that are out of your control. Sacrifice a few things you don't need in the short term — such as that candy bar every other day or the $3.50 coffee. In the long run, you'll have so much less stress knowing you've got a stash of cash in the bank equal to a month or two of expenses.

It's even better to work toward stockpiling at least three to six months of expenses in an emergency fund. But even if you can't build a cushion like that fairly quickly, there is peace of mind in knowing about some backup options.

Answers by RallyPoint

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