Financial housekeeping requires finesse
Army Community Service,
Directorate of Family and Morale, Welfare and Recreation,
U.S. Army Garrison-Hawaii
SCHOFIELD BARRACKS — On a typical day, the Directorate of Family and Morale, Welfare and Recreation’s Army Community Service supports more than 40 requests for financial and employment readiness program support.
The growing need for the most basic advice is being addressed. ACS’s Financial Readiness Program, or FRP, is designed to take a proactive approach to financial counseling. FRP is using accredited financial counselors and providing timely advice and support about new consumer protection programs.
“Before Soldiers and family members find themselves in a bad situation, our services are here to provide individual family counseling,” said Robin Sherrod, deputy director, ACS. “Five years ago, this was a huge problem, but education is now the key.”
Begin with a Budget
FRP counselors instruct everyone to begin with a budget. Establishing and maintaining a budget is priority one said Creva Rooney, financial counselor, FRP, ACS.
“Keep the budget visible, and be open about it,” she said.
Fellow financial counselor Jody Van Wyhe offered another tip to stay out of debt.
“Establish a $1,000 emergency saving fund, as quickly as possible, as a good way to stay out of trouble,” said Van Wyhe. “Emergencies are a part of living, and by having an emergency fund you will be prepared.”
Be on ‘Financial Guard’
Still, some unique longstanding financial challenges impact service members, Sherrod noted. Soldiers and family members are special targets for predators, both near their duty station and through online scams, she said. Support is available, though, straight from our nation’s capitol.
Recently, Mrs. Holly Petraeus, assistant director, Servicemember Affairs, Consumer Financial Protection Bureau, gathered feedback and offered advice during visits to more than 30 military installations, including Schofield Barracks. Her staff identified several recurring financial issues that plague service members.
Cramming. Most consumers don’t know when charges are “crammed” on their bills. Cramming is the illegal placement of unauthorized charges on a consumer’s monthly phone bill, and crammers often avoid detection by charging a small amount to each consumer, as little as $1.99 per month. These charges, for example, can be disguised as services from a phone company, such as voicemail or web services.
Get more details about cramming at www.fcc.gov.
Predatory Lending. The number of service members affected by predatory lending is hard to measure, partly due to the embarrassment that follows. Predatory loans are usually small, short-term arrangements designed to bridge cash-strapped borrowers until their next paycheck. These expensive, high-interest loans often cost $10 to $44 dollars, per week, per $100 dollars borrowed, plus fees.
When original payment due dates are missed and rolled-over to the next payday, multiple rollovers lead to a situation wherein many service members cannot pay off the loan.
The Military Lending Act, however, provides some protection against predatory loans. The MLA caps payday loans, auto title loans and tax refund anticipation loans at an annual rate of 36 percent for active duty military and their dependents. Yet, the average payday loan is actually about 390 percent, said Petraeus.
Payday loans are loans of closed-end credit, for 91 days or less and for less than $2,000; auto title loans are loans of closed-end credit for 181 days or less. Get details about each at www.consumerfinance.gov.
Car Loans. Petraeus advises military personnel to be on guard when they walk onto a car lot.
“You have these car places that spring up around military installations, selling used cars for a very marked-up price, and then putting high financing on top of that,” she said.
Military personnel can be especially vulnerable customers because they’re young and often have a limited or negative credit history. More information about purchasing a vehicle is available at www.edmunds.com.
Affordable Mortgages. Recent changes to the federal Home Affordable Modification Program allow military homeowners and others who are permanently displaced by a job-related move to still qualify as owner-occupants for a HAMP mortgage modification. New criteria states that a borrower may qualify if he or she meets certain criteria:
•Is displaced due to an out-of-area job transfer, such as a permanent change of station, and occupied the home as a principal residence immediately prior to the displacement;
•Intends to return to the home at some point in the future; and
•Does not own any other single-family real estate.
Military personnel and others may also qualify for a short sale through the Treasury’s Home Affordable Foreclosure Alternatives Program, or HAFA. Get more details at www.makinghomeaffordable.gov.
For-Profit Colleges. Military personnel and their families are finding themselves under siege from for-profit colleges, according to Petraeus. A number of universities focus on members of the armed forces with aggressive and often misleading marketing, she said, and then they provide little academic, administrative or counseling support once students are enrolled.
Colleges have a strong incentive to enroll service members and veterans, in large part, because of the “90-10 rule” created by 1998 amendments to the Higher Education Act. Put simply, the rule says that a for-profit college must obtain at least 10 percent of its revenue from a source other than Title IV education funds, the primary source of federal student aid.
Funds from tuition assistance and the G.I. Bill are not defined as Title IV funds, so they count toward the 10-percent requirement, just like private sources of financing. Get more details at www.consumerfinance.gov.
ACS conducts weekly First Term Financial Training and provides a variety of financial fitness classes for more than 1,600 customers, and more than 200 walk-in clients, every month.
To learn more about budgeting, credit and investing, talk with an accredited ACS financial counselor at (808) 655-4227.
Get more information about the Consumer Financial Protection Board at http://consumerfinance.gov.
Call ACS at (808) 655-4ACS (4227) or to see a listing of financial readiness classes, visit www.himwr.com/financial-management.