• Debt can cost service members more than $

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  • Rodney S. Morris | Special to the Fort Leavenworth Lamp
    Americans carry more debt today than at any point in U.S. history. Increases to mortgage loans, auto loans and credit card loans have caused the total household debt in the U.S. to increase by $82 billion in the second quarter of 2018, meaning Americans now collectively carry $13.29 trillion in debt. According to a recent federal report, total debt in American households has increased in overall debt by $618 billion over its previous peak. What is more alarming is that military members appear to get into debt problems at a faster pace and higher rate than their civilian counterparts.
    VeteransPlus, whose motto is “Helping Heroes Afford Life,” said in a NBC News article that approximately 36,000 active-duty military members are seeking financial help to prevent loss of clearances and ultimately loss of careers. Of the nearly 2.1 million active-duty, National Guard and Reserve members currently serving, it is estimated that about half of them hold some form of a security clearance with the majority holding a secret-level clearance.
    The Department of Defense cites “excessive and delinquent indebtedness” as the No. 1 cause for denying or revoking security clearances. The article also referenced the 46.5 percent debt-to-income ratio for military members, which is about 10 percent higher than the national average.
    There are many reasons for the increased debt for military members, including low salary, frequent moving, late or forgotten payments, easier access to credit, and poor decision-making. While military members enjoy steady, reliable income, the amount of income earned is not substantial in most cases and therefore makes it harder to make ends meet, particularly when taking care of a family is involved.
    In many cases, there is more month left than there is money, which prevents saving. When there is difficulty in saving, any emergency can require additional household expenses, which leads to additional debt and exacerbates an already poor financial position. Then debt just spirals and creates a major family debt problem.
    Frequent moves make it harder to prevent or reduce debt. Frequent moving is expensive. While the military supplements moves with financial support, it rarely covers all of a military family’s moving expenses. The service member and his or her family make up the difference.
    Often moving requires selling a home. Selling a home can be difficult in a housing market that is still attempting a recovery, especially on short notice, which is often the case for military members. Attempting to sell a home in an area of an increased depressed market makes matters worse. Frequent moves make it hard for spouses to obtain or maintain employment. For those who aren’t able to transfer, it can mean starting all over again or not being able to find timely employment. These issues place an added burden on the financial situation and debt can start to pile up.
    Page 2 of 3 - Deployments affect other things as well. When a service member is preparing for deployment, his or her time is taken up by unit preparations and this most often leaves the service member significantly less time to prepare the family for his or her absence. Often when the service member leaves for long durations, the spouse is left in charge of everything and that includes the finances. If the spouse is not normally the primary finance caretaker in the family, he or she can make mistakes that negatively affect the debt problem. Furthermore, he or she often is not aware of the mistakes and the mistakes become compounded over time.
    Military members are targeted by creditors more aggressively than most civilians. The consistent paycheck that comes on the first day of each month ensures service members can obtain credit rather easily. The willingness of military members to agree to automatic drafting of payment also encourages aggressive lenders to seek them out because lenders know they will get their money. Consolidated localities of military installations makes it ideal for lenders to pinpoint potential military clients. The youth and inexperience of a large number of military personnel makes them an easy target as well.
    The underlying reason military members get into debt is because many were not taught money management skills. There is no real, formal personal finance education during military training and most service members were not taught properly how to manage money by their parents because their parents did not receive any formal personal finance education in school either. This is no one’s fault, it just is.
    Then, the draw to purchase that shiny new toy with wheels is too great for some and they succumb to the average monthly debt of $523 for 60 or 72 months to purchase that shiny new vehicle. That decision, in turn, minimizes the ability of those service members to invest in the Thrift Saving Plan (military’s version of the 401k) or something equivalent. As a result, service members are simultaneously investing in a depreciating asset while not investing in an appreciating asset. Simply said, a decision heading them to financial disaster.
    There are nonprofit agencies available such as VeteransPlus and the Military Debt Management Agency who work to make it possible for military members to address their debt issues and put them behind them.
    VeteransPlus can be contacted by e-mail at headquarters@veteransplus.org or toll free at 1-888-488-8767 and the MDMA can be reached at www.militarydebt.org or by dialing toll free 1-800-323-3343.
    The local Fort Leavenworth personal financial counselor is Tyler Landes at 684-1717, cell (319) 371-5280. The local Army Community Service Financial Readiness Manager is Brian Wheeler at 684-2800 or 684-2852. There is no better time than right now to reach out and get help with your debt issues and build a more stable financial path into your future.
    Page 3 of 3 - Editor’s note: When he’s not sharing financial advice, Rodney S. Morris is an assistant professor for the Advanced Operations Course, Department of Distance Education, Command and General Staff College.
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