I just got my tax refund and have it headed toward the retirement fund. But since I’m not quite ready for a walker yet, maybe a little chunk of it will go for something special.

My refund also got me thinking about my younger (and maybe a few not-so-younger) Sailors out there and what they plan to do with their tax refunds. I’m sad to say many will be applying it toward overwhelming debt. 

Too many Sailors continue to overextend themselves. Some because of a series of tough breaks, some because of a series of bad choices or mismanagement.

How do you know if you are or could be in trouble? Some good clues are:

- 20 percent or more of your take-home pay goes to installment debt payments like credit cards,

- You are habitually late-paying bills, and

- You have completely lost track of what you owe and how much it is actually costing you,

- You are living from paycheck to paycheck.

So you are hopelessly in debt (at least you think you are) or quickly headed that way. Creditors are calling, there’s a tow truck suspiciously following your car, and you are completely stressed out.

Here’s what do to.

First and foremost, go see your command financial counselor. These folks are trained to help you out of these problems. Another option is to go to the local Fleet and Family Service Center and talk to their financial counselors. They are there to assist you!

Make yourself a list of what you currently owe, to who, and what the monthly payment is. This gives you the reality of your situation and helps you figure how much work you have to do.

Next, prioritize the debts. Loans that might result in repossessions or foreclosures need your immediate attention. Debts with the highest interest rates will probably come in second.

Now comes the part everyone seems to have trouble with—budgeting. At first you need an emergency plan to get your debt under control. This puts more income toward debt reduction and less toward things you thought were more important.  As you develop your budget, you’ll start to see where the money is going and nine times out of 10 you will realize you’ve been wasting a lot of your money.  Now you need to get a hold of your creditors and tell them what the deal is and how you want to fix it. Most of them will work with you to help pay off your debts. It’s cheaper for them in the long run to work with you. 

Listen to their proposals and negotiate a workable solution. Talk to them about partial or smaller payments.

Now comes the really hard part—breaking out the scissors and getting rid of the plastic. Using the cards only increases your debt so live on cash or checks for now. Live without whatever you were going to buy.

The best idea is to give yourself a small allowance in favor of using credit cards. Once that runs out you’re done spending. If you have leftover allowance, it should go to debt reduction or savings, not into the next week’s allowance.

So, you now have a plan and it’s working.

You’re done right, well not exactly.

You’re doing great to work yourself out of the problem, but now you need to train yourself not to get back into the same one.

You need to learn how to spend smarter. That budget you worked up? It needs to change into your everyday spending plan so you can now manage your money more effectively. There are some other things you can do to help yourself:

- Control spending. Stop impulse buying, it really adds up. And don’t use the credit cards just because you don’t have cash.

- Get the most for your money. Get something that has a real purpose and will last.  Use coupons and wait on the sales. If there’s a rebate, take it.

- Create a cash reserve and then leave it alone. This is for emergencies, illnesses, unforeseen bills, etc. 

Start saving. You need to remember to pay yourself, and that means saving.  IRAs, savings accounts, TSP, investments are good ways.

- Plan for the future by saving consistently in small amounts.  As your income increases, increase your savings. I know it’s not cool or fun to hear about dull things like savings or IRA accounts, but trust me they’ll become really cool in a few years.

- Live within your means. Do you really need that 72-inch big screen that costs $5,000?

I’ll get off the soapbox now by just saying that we can’t always afford what we want. But if we focus on the needs now, the wants will probably come along a little bit later. 

But for the here and now, if you are in over your head, your Navy is standing by to help you out. Go see that CFS or financial counselor at the FFSC and get back on track. 

And while you are at FFSC, try out some of the investing, home buying, and retirement planning classes they offer. I know your bank account will be better off for it.