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Financial Management Takes Dollars and Sense

By Paul Stone
American Forces Press Service

WASHINGTON, Dec. 29, 1998 – When you've spent your paycheck, is there still a stack of bills waiting to be paid? When the phone rings, is the caller more likely to be a creditor than a friend? Is a savings account something you're still planning to open instead of something you put money into each payday?

If any of these apply to you, you're not alone.

That's the bad news.

The good news is, help is available and more is on the way.

First, The Bad News

Recent surveys aimed at gauging the personal financial health of enlisted service members confirmed what DoD officials suspected and field commanders regularly witness: For many lower-ranking service members, financial management is more likely to be a contradiction in terms than a plan of attack.

The results of a 1997 study recently released by the Pentagon show that more than half of all enlisted service members are experiencing some type of financial difficulty. To see if you're one of them, check out these results:

  • 27 percent reported having trouble paying their bills.
  • 21 percent said they had received pressure from bill collectors.
  • 19 percent said they had trouble making ends meet.
  • 9 percent had pawned valuables.
  • 4 percent were behind in their rent or mortgage payments.
  • 4 percent reported "serious" difficulties, such as having utilities shut off, repossession or bankruptcy.

In addition to the results cited above, the survey found that first-term personnel with children are more likely to have financial problems than single service members -- by a margin of 36 percent to 27 percent.

See It, Want It, Gotta Have It

If you're pulling the plastic out of your wallet more than cash to pay for purchases, chances are you're one of the people DoD is concerned about. During the study, supervisors, NCOs and commanders at all levels consistently cited easy access to credit as a problem -- especially for young personnel, whose salaries cannot support a lot of debt.

DoD family policy officials agree. They say the availability of credit, combined with a generation of young service members raised in an era of unrestrained consumerism, is an increasing concern.

"This is such a growing problem," said Iris Bulls, a DoD family policy specialist. "We're in an instantaneous society. We're used to instant e-mail and voice mail, and cell phones make us accessible 24 hours a day. So the question becomes, why can't we have everything we want right now? We don't have to wait and save. We can have it today."

Bulls pointed out that credit card companies are now targeting young people with incomes of less than $25,000 -- a large shift from 20 years ago when "you had to have a certain income level and a valid credit history to get a credit card."

"Now it's offered to almost anyone," she said. "And Americans generally may not think about the interest rate, only what they have to pay from month to month. We have to get service members and families to think about the long- term cost."

Here's an example of just how expensive it can be:

Let's say you owe $3,500 on a typical high-interest credit card. And let's say you decide to never use it again and pay it off by making the minimum monthly payments. It will take you 40 years to pay it off. And it will have cost you $13,000 when you're done.

Not Just A Personal Issue

Bulls said the problems associated with service members' finances extend well beyond personal lives, affecting their leaders, readiness and sometimes, security.

"If a service member has personal financial problems, at some point it's going to become the commander's problem, because commanders will be notified and will have to take time out to deal with it," she said.

Bulls' statement is backed up by a service-specific study published in 1997 that demonstrates just how deeply personal financial problems can affect the service as a whole. Results showed:

  • The service was processing more than 123,000 letters of indebtedness each year.
  • The service's exchange system was processing an average of 99,000 bad checks per year and its commissaries another 75,000.
  • An estimated 35,000 of the service's personnel had their wages garnished in 1995.
  • Of all the security clearances revoked, an average of 60 percent involved financial reasons.

The study estimated members' financial problems cost the service a whopping $172 million annually in lost productivity, and it concluded financial difficulties had more impact on operational readiness than housing, child care or health care.

Now The Good News

The good news is, help for service members is available, is increasing in all the services, and DoD initiatives planned for release early in 1999 will make it even easier to manage your finances.

Here's how the services are dealing with the problems:

As of this fall, Army personnel receive a personal finances training package at their first duty station. The Army is also developing a training package on the financial impact of relocation.

The Navy has increased its financial management training from two hours to 14 during recruit and basic military training.

As of February 1997, the Air Force requires all personnel to receive financial management training at their first duty station, including instruction on checkbook management, budgeting and credit.

Marine Corps recruits receive financial management planning during basic training, and efforts are under way to increase the number of trained counselors available to instruct and help those experiencing difficulties.

In addition to the services' individual efforts, DoD will unveil two new initiatives in January and February -- both aimed at helping service members prevent financial problems.

The first initiative is a CD-ROM called, quite simply, Personal Financial Management. About 4,000 each will be distributed to the services beginning in February and will be available at installation family centers worldwide.

Developed by DoD's Office of Family Policy, the CD-ROM is a highly interactive, multimedia program on basic financial principles -- " a kind of financial management 101," according to Bulls.

"This is an entertaining and educational CD aimed at young service members ages 18 to 25," Bulls said. "It has all the basics they need. But we're hoping it will also whet their appetites to learn even more about financial management." She emphasized the CD is in easy-to-understand language, and even the most computer-resistant service member will find it easy to use.

The CD contains 11 self-paced lessons on such topics as budgeting, banking and checking accounts, understanding pay and allowances, insurance, and using credit wisely. It also teaches how to plan for and buy big-ticket items, such as furniture and cars. One lesson on the CD will alert you if you're financial habits are pointing you toward trouble.

Bulls pointed out that the CD even has a lesson on the financial implications of moving, which includes information on entitlements and allowances, and a calculator to project out-of-pocket costs.

In addition to the CD, beginning in January, service members will have access to an Internet-based software system known as Military ACCLIMATE. Bulls said major corporations use the same system to assist their executives when they are transferred to a different geographic area.

"This system allows you to do cost of living comparisons between just about any two locations so you can see what various items will cost you at a new duty station," Bulls said.

She emphasized the site contains highly detailed information. For example, service members will be able to plug in the square footage they need for housing and obtain a listing of how much it will cost either to purchase or rent at their new duty station. Listings on the site compare costs of just about every consumer item service members would be concerned about, right down to the price of a gallon of milk, Bulls said.

"We've done some field testing on ACCLIMATE, and service members love it," Bulls said. "It's also great for people who are separating or planning to retire."

Service members who want to use the system will be required to obtain a password from their installation family center. Then they'll be able to access it from any personal computer with Internet service.

Bulls said that with the financial planning tools being released in the next couple months, combined with efforts of the individual services to improve financial management training and counseling, all will benefit. Service members will have a solid base of information from which to begin or improve their financial management. Supervisors and commanders will likely see a decline in the number of financial issues that cross their desks and task their time.

"Service members have a lot going for them," Bulls said. "They're smart, they're educated, and at least until the end of their service, they have steady income. The right tools and resources are there to help them get out from under their financial problems."


  • Pay yourself first. Put away 10 percent of your take-home pay in a savings account. To accumulate wealth, you must understand the "time value of money" and the impact of compounding interest.
  • Establish financial goals. Set immediate, intermediate and retirement savings goals for yourself and your family. Review and update your goals annually.
  • Establish a budget and stick to it. Track your expenses -- small purchases add up quickly. A daily cup of snack-bar coffee can cost you $200 a year.
  • Use credit sparingly and wisely. Plan for large purchases or gifts. Credit should be for emergencies only.
  • Never use your government credit card for personal or other unauthorized purchases.
  • Learn the principles and types of life insurance available. Buy only what you need. Remember, the primary goal of life insurance is to replace family income in the event of a breadwinner's death.
  • Beware of scams and rip-offs. If it sounds too good to be true, it probably is.
  • Stay financially current by reading and taking courses.
  • Set aside money for unexpected events, such as deployments, car repairs, or extra medical and dental expenses.
  • Know your rights under the Fair Collection Practices Act and Soldiers' and Sailors' Relief Act of 1940. Information on these laws is available through your installation legal services office.

Compiled by the DoD Office of Family Policy

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