CoRC: Being financially responsible

  • Published
  • By Tracie Faulk
  • Community Readiness Consultant
MALMSTROM AIR FORCE BASE, Mont. --  Editor's Note: This is the second article in a series of articles that will address the wide array of CoRC topics. The next article will appear Sept. 26 and will focus on domestic violence.

How much are you really paying? Have you ever added it up? American's tend to be impulse buyers. We don't hesitate to buy the much-needed coffee at $3.50 a day or the $3 magazine in the store with the latest celebrity gossip. We see the $1,000 flat screen television we must have and we buy it without a second thought. 

What about making responsible choices? How about saving each month and paying cash for the TV? Or not buying the magazine or coffee? What about paying debt on time or saving for an emergency? 

Making responsible financial choices is essential to military careers. The Rand Institute conducted a study which showed that 65 percent of security clearances were denied to enlisted military personnel because of bad finances. Airman need to be aware of dangerous financial situations and the resources available to them. 

Unstable course of action
Predatory lending is a practice of lending money at extremely high interest rates to people who are unable to attain financial assistance through other means. Predatory lenders prey on individuals who are already in financial distress. Predatory lending companies manipulate clients into believing it is an easy and sound decision. A payday lender typically charges a fee of at least 15 percent of the amount of the postdated check. The borrower receives the net amount and the payday lender holds the check until the customer's next payday. The reality is the fee is equal to an annual percentage rate of between 360 percent and 2,700 percent, depending on the number of days the check is held. Due to the extreme charges and fees, the borrower is often forced to borrow money again to make up the extra expense, thus the borrowing cycle begins. 

On Oct. 1, 2007, the 2007 National Defense Authorization Act (32 CFR Part 232) was implemented to help protect service members against high interest loans or predatory lending, and the never-ending borrowing cycle. This predatory lending regulation limits the annual percentage rate on payday loans, vehicle title loans and tax refund anticipation loans to 36 percent for active-duty service members and their families. Since implementation of the new law, most local payday lending institutions have refused to do business with active-duty members. Options are available to help prevent active duty members from getting caught by payday loan hunters. 

Safe alternatives
Since 1947, the Air Force Aid Society has been available to help Airmen who find themselves in a pinch. If someone in your family has passed away, or is seriously ill, or your vehicle needs to be repaired, or the rent is due, the Airman and Family Readiness Center provides no-interest loans through the Air Force Aid Society for emergency situations. The Air Force Aid Society recently started the Falcon Loan Program. Instead of seeking a payday loan, active duty members can apply for a Falcon Loan, which is a no-interest loan of up to $500 with a payback of $50 each month for 10 months. Currently, active members can receive up to two Falcon Loans in their career. For more information on Air Force Aid and Falcon Loan please contact the Airman and Family Readiness Center at 731-4900. 

A second option, developed by First Liberty Federal Credit Union, is a two-part program called "Alternative to Predatory Lending." This program requires financial counseling and offers a maximum loan of $500 with a current rate of 15 percent and no fees. Each pay period an electronic payment of $49 will be made; $44 will be put towards the debt and $5 will be put into a savings account. The savings account belongs to the member and will earn interest. Once the loan is paid off, all of the $49 will continue to go into the savings account. By providing financial counseling and establishing the member's savings account, the credit union hopes to help end the cycle of living from pay day to pay day. 

Be a good Wingman
Help your fellow Airman. If you know someone is experiencing a financial issue, encourage them to call the Airman and Family Readiness Center. Don't pressure them to go out to lunch. Encourage them to eat at the dining hall or bring a lunch from home. Think about the savings by not eating out. Fast food meals cost, on average, $6 a day. That's $2,190 a year. Make responsible choices. Ask yourself if you can afford the $3.50 coffee ($1,278 per year) or the $1,000 television or should you save the money for an emergency or pay a bill instead. 

Educational classes being offered
The Airman and Family Readiness Center offers one-one-one financial counseling and classes, to include budget analysis, debt elimination and investment counseling. Upcoming classes include: 

Bundles for Babies (Critical baby information and how to budget with a new bundle of joy) - Sept. 8 from 1:30 to 3:30 p.m. 

Who's Keeping Score (Information on the importance of credit, how to rebuild credit, and identity theft) - Sept. 10 from 1 to 2 p.m. 

Personal Financial Management - Sept. 12 from 9 to 10 a.m. 

Living Within Your Means (Learn strategies to cut unnecessary debt) - Sept. 17 from 1 to 3 p.m. 

Car Buying Class - Sept. 18 from 11 a.m. to noon 

Marriage and Money - Sept. 22 from 11 a.m. to noon. 

Disability Transition Assistance Program (Financial disability information) - Sept. 24 from 10 a.m. to noon 

Small Business Workshop -Sept. 25 from 8 a.m. to 4 p.m. 

Build a Better Budget- Sept. 29 from 12:30 to 1:30 p.m.

Helpful Web sites
www.finance.yahoo.com: easy to navigate, watch list, market information, useful articles, personal finance section, expert opinions, investing ideas and more 

www.moneycentral.msn.com: easy to navigate, watch list, market information and useful articles 

www.personalbudgeting.com: budget process and sample budgets 

www.kiplinger.com: tools, calculators, informational drop downs (your money, spending wisely, retirement, investing), financial articles 

www.tuliptreepress.com: easy to navigate, basic budget information, how to develop a budget (individually or as a couple), list myths associated with budgets 

www.choosetosave.org: brochures, calculators, resources, saving tips, America/Military Saves Campaign information