12 tips to help military families avoid financial rip-offs
Experts offer advice to troops on guarding their IDs, avoiding scams
Dean Taylor, a 71-year-old marathon runner, smiles sweetly to a classroom of U.S. Air Force trainees and dangles a carrot before their eyes.
Win a new iPod Shuffle, she says. All you have to do is fill out a form listing your name, Social Security number, address and telephone number.
MONEY AND THE MILITARY:
A SIEGE ON THE HOME FRONT
Service members, especially those returning from Iraq, face special challenges when it comes to their personal finances. In this series, we take an in-depth look at the issue, and at the steps soldiers can take to protect themselves.
There are about 30 men and women in the class at Lackland Air Force Base in San Antonio. Nearly all take the bait and eagerly give up their personal data. Just before the iPod drawing, Taylor spills the beans: "Just so you know. I'm going to have a great time shopping for Christmas presents because I've stolen all of your identities. Because you wanted an iPod Shuffle, you've ruined your whole life."
Around the room, there is stunned silence. "It's a huge awakening," says Taylor, a financial education director for the Council of Better Business Bureaus in central Texas. The BBB teams up with the U.S. Department of Defense to give soldiers and their families free financial counseling services and crash courses in smart money management skills through Family Readiness Centers at each military base.
Taylor repeats her "scam" to young service members at Fort Hood, Randolph Air Force Base and other military installations in her vast central Texas district. She gives a one-hour class -- called the "first-termers'" class -- which is mandatory for new service members. Taylor calls them a "captive audience" but admits that one class isn't enough to cover what could be a lifetime of lessons about money.
At the end of her class, Taylor shreds the entry forms with the airmen's personal data and hopes she is shredding a layer of ignorance about personal finance.
"Being in the military, they are so used to using their Social Security numbers for everything," says Taylor.
It's clear a uniform offers no protection from scammers, so from a variety of experts, here are a dozen financial tips for military families:
- Safeguard personal information. More so than civilians, military personnel have to recite their Social Security numbers to go about their lives. Don't make it a habit. In civilian life, only a select few need your Social Security number. Lenders can and should ask for it; others you do business with don't need to know.
- Avoid automatic payments. Be wary of automatic payment plans that deduct loan payments directly from your paychecks. "Once you set it up, it can take an act of God" to undo it, says Kevin Keith, an Air Force Aid Society officer and financial counselor.
- Seek help on base -- for free. The Family Readiness Centers at each military base offer counseling services to help sort through confusing financial terms and develop a family budget. Take advantage of it. "A lot of times they will go out the gate and pay somebody oodles of dollars for what they can get right here for free," says Della Gooding, a financial counselor at Lackland AFB.
- Get help from superiors. Don't be afraid to ask your commander for help. It's in the unit's best interest to make sure you are financially fit and ready to serve. Commanders can order soldiers to seek financial help, but financial counselors prefer families to be proactive and seek help before there's a crisis looming.
- Check your credit report regularly. Federal law requires each of the three major credit reporting agencies to provide a free copy of your report each year. Get yours at www.annualcreditreport.com. Jerry Jackson, another Lackland financial counselor, says many soldiers may have good credit and don't know it. They sometimes pay higher interest on loans than they need to pay, Jackson says.
- Check out the company. The Council of Better Business Bureaus' Military Line offers free financial counseling and assistance checking out potential lenders. "If you're a young family and you need to replace your refrigerator, then go online to BBB.org and check out the appliance dealers in your area," says Brenda Linnington, Military Line director and U.S. Army veteran. "You can pull up the complaints that have been filed and whether they've been resolved. There's no cost to it."
- Read the fine print. If you are contemplating a major purchase and don't fully understand the terms, call the financial counselors on base or the BBB's Military Line for help sorting through the fine print. Don't sign up for the deal until AFTER you have consulted with a financial counselor. "Read the fine print -- as painful as that can be on contracts," says Linnington."Some of the calls that I get are from people who are in legal contracts that are not beneficial to them. Had they read the fine print, they might not have entered into that contract."
- Plan for the future. Set aside money for an emergency fund to cover unexpected costs that may arise. "Even if it's just $50 or $100 each paycheck," says Joseph Montanaro, a retired U.S. Army Reserve officer and a certified financial planner with USAA Savings Bank, one of the largest lenders catering to military families. "There are financial emergencies that are going to come up. Cars break down." Having a savings account or emergency fund are "kinds of things that are going to keep you from going into debt should you have an emergency," he adds.
- Develop a budget.
Financial counselor Tony Davis helps a service member at Lackland Air Force Base.
Photo Credits: U.S. Air Force photo by Robbin Cresswell.
- Beware of lenders touting military connections. Unscrupulous lenders may market their services with photos of people in uniform or with signs saying "Military welcome." Some sales people may even be former service members -- or say that they are. "Don't assume that if they have military symbols hanging on a shingle that they are OK," said Chris Kukla, senior counsel with the Center for Responsible Lending in North Carolina.
- Don't be in a hurry. "The most effective negotiating strategy is to walk home," Kukla says. Although lenders may say, 'no questions asked,' and offer cash with no credit checks, service members should not be quick to jump at these offers. Many have hidden fees and other gotchas.
- Be careful of Internet lenders. "You don't know who is offering the loan or what rights you might have. Payday lenders can be offshore," says Kukla. "These folks don't care about the laws on debt collection in the United States."
A lot of times they will go out the gate and pay somebody oodles of dollars for what they can get right here for free.
|-- Della Gooding, financial counselor
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