Getting Out Of Debt While Stationed In Korea


Living overseas as a service member is the best time to get out of debt!

Money Museum

As a little background we are a family of 5 living in Area 1, on the Korean economy. We have been on a get out of debt plan since January 2014. Our goal was to be debt free by August 2017, but PCSing to Korea allowed us to move that date up to December 2016! One more year!

How can we make such a major change? Because living on the Korean economy has increased our income by 62%. Now this is extreme because we live in Area 1, meaning we get money for utilities, Hardship Duty Pay (HDP), and COLA. Many families in Korea live on a post so they don’t get that utility or HDP but COLA is still a big chunk of change that can help speed up your financial plans.

Why should you take advantage of this duty station to get started on a debt free plan? There is extra money on the table to get the ball rolling! And why should you want to get out of debt? Well, being debt free as a service member means financial stability, in a lifestyle that is ever-changing and creating unexpected expenses.

Korea -- Finances When PCSing Home 4 --

If you have been through a PCS before, you know the expenses that are included in this process, and if all your money is tied up in payments then there is less money to pay for the move and the temptation to get a credit card, going more into debt. It is even more important now to have flexibility in your budget because now the Army will not pay you DLA upfront. You need to have money ready for the move, or be forced to get a credit card or borrow money from the Army, and pay it back through each paycheck (which is interest free but do you really want to owe the Army money?)

Let’s look at two scenarios pertaining to a PCS.

Scenario #1: A family is moving from Georgia to Washington. They are going to drive their two cars cross-country with three kids in tow. They have two car payments, two credit cards, and one student loan (pretty typical, right?) All this takes $1,000 per month in minimum payments. That doesn’t even include groceries, gas, utilities, etc. They have little to no money left at the month, no money to put into savings. The service member got orders for this move three months out. If they aren’t going to get DLA up front and have no money to set aside each paycheck for the move they will be forced to take a loan through the Army or use a personal credit card.

Scenario #2: A family of five, same move, and time frame, but: no car payment, no credit cards, and no student loan. Now instead of $1,000 in minimum payments they put away $1,000 per month for three months. So they have $3,000 to travel cross-country and don’t have to borrow any money.

Which scenario looks better? We all know how stressful a move can be. Money stress can make everything else seem ten times worse. So why not eliminate one stress that you can control: your finances. Not having to worry about where the money is to move can make the adventure enjoyable, or at least less stressful.

Korea Finances When PCSing

A PCS is just one of the more common stressors for the military family, but there are other good reasons for becoming financially stable/free. With the cuts being made of even the good service members, being debt free can make the transition from military to civilian less stressful if you did get the pink slip. Having no debt would mean no worries about getting behind on payments if you didn’t find a job right away. Other reasons include: government shutdowns, death, family emergencies, and others that I may not have thought about.

So now that I have laid out why I think it is important as a military family to be debt free, let me share how it can be done while living overseas.

The first step is to have a plan. It doesn’t take a plan to get into debt but it does take a plan with clear goals to get out of debt. Our family found our plan through Dave Ramsey’s Financial Peace University (FPU). There are other programs out there, just do your research. His principles gave direction to our desire to get out of debt. My advice here is based on what we are doing, so it will lean heavily towards the Dave Ramsey teachings.

So once you have the desire to be debt free, write out a budget (a Dave Ramsey thing but also anybody will tell you that’s the 1st step). You need to know where your money is going. You may notice you make more than you think, you just didn’t know where it was going! We sure did! The next, but probably obvious, step is not to accrue any more debt. How can you get out of debt if you are still using that credit card? I believe that is called going in circles, or chasing your tail?

Korea--Korea to China

Being in a foreign country makes it tempting to go out a lot and explore all that the country has to offer. That’s great! But if you seriously want to get out of debt, you will have to curtail that temptation. I will be honest, it has been a difficult battle in our family to resist eating out a lot because there are so many great local places right outside our apartment, but we are getting better and refocused on our goal. It is cheaper to eat out here in Korea but it adds up over time (we were not eating out at all before coming here in order to put more money towards debt).

Let’s face it being in Korea is a unique opportunity that shouldn’t be squandered. The key is to find a balance between enjoying the experience and still working towards being debt free. So we limit our eating out and activities through our budget. We set a certain amount for dining out per paycheck, usually about $100 a month. When that money is gone there is no more eating out that month, simple. Same goes for any outings we want to do, we plan for it in the budget ahead of time.



A great thing about being stationed in Korea is that there are many cool things here with out spending a lot of money, if any at all. Just use your resources like the MWR, KoreaYe, and other websites like it to find things to do. Maybe plan one or two big things to do like a ski trip or a trip to Jeju Island. If you are really serious like we are, don’t travel outside of Korea; that gets expensive. That may be too extreme for some, but just remember the trade off is that you will be in debt longer.

Another way to save money I have learned is to buy certain things on the Korean market, such as eggs and produce; this stuff is much fresher and cheaper than in the commissary. Try to use the train more than your car, kids under 7 ride free, and you will save money on gas!


This falls under the category of do not accrue any more debt, but do not be tempted to get a brand new car through the service on post. It may be tax-free, but adding $20,000 or more to your debt will be going backwards. I only mention this because we were tempted to do this when the car we brought over (that was paid for) needed a new transmission that would have cost more than the car was worth, so needless to say we junked it and are now without a car. Being desperate, we seriously considered getting an auto loan, but we remembered our goal and resisted. So for now we use the train system and taxis, and bought a hooptie for about $1,000.

The process of getting out of debt is by no means easy, but nothing worthwhile ever is. I will say with each debt paid, we feel a little lighter. When we are done we will have paid off $125,000 (knock on wood). And thanks to Korea it will be a year early! The next time we live overseas, maybe Germany, we will not have the burden of debt to hold us back from truly exploring the region. Yes, it may be a sacrifice now, but it is one worth making in order to change our lives and our kids’ lives for the better.

So whether you are really gung-ho or just want to stop the bleeding, take this chance at the beginning of 2016 to start out right financially in Korea. Make a budget. Put fun into your budget! If it is in your budget then don’t feel guilty about spending that money (with in reason of course). Korea is a lot of fun and cheaper than Europe so enjoy but know this could be a great opportunity to jump start your financial stability.

Editor’s Note: When your Overseas Yes managers PCSd from Okinawa back to the US, we learned quickly how expensive it is to live in the US. We wrote an article about finances when PCSing back to the US that’s still applicable today.

Korea Ye also has information about the Servicemember’s Civil Relief Act, which may  help you get the debt-free ball moving in the right direction if you qualify. Check it out!

Editor’s Note: The teachings of FPU are based on a common sense approach to personal finances with Biblical perspectives as his basis for why. Though many of the references throughout the self-directed course are Christian in nature, this program is applicable to anyone. Your Overseas Yes managers have both gone through FPU separately, and we apply its debt free principles to running this network, though we are not associated with Dave Ramsey or the Lampo Group in any way.

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