Dear Gene-Thomas,

Living from payday to payday has placed a lot of strain on our marriage. Do you have any tips on finances like you did on PCS moves? Patrice

Dear Patrice,

The two major problems that contribute to high military divorce rates are financial mismanagement and back-to-back long-term deployments. While most personnel cannot control their deployment schedules, they can learn to manage their finances. This requires discipline and teamwork in military marriages.

In so far as service men and women often risk their lives to protect their fellow Americans, you might think that civilian businessmen would not try to “rip-off” military personnel. Unfortunately, this is not always the case. How many used car salesmen sell cars to military personnel charging them high interest rates written in fine print that often lead to the cars being repossessed? How many furniture store salesmen sell items to military families with compounded interest charges that can more than double the advertised cost of the merchandise? How many credit card companies entice military personnel and families to use their cards only to have them end up paying huge interest charges?

My first recommendation is to avoid purchasing expensive items on credit. If you are going to use a credit card, use it only to purchase items you know you will be able to pay-off within a month before interest charges are assessed. If you can’t afford to have it paid off within a month, then don’t even think of buying it.  

My second recommendation is to put money aside in an interest bearing account for emergencies. You never know when a death or medical emergency in one’s family may require taking emergency leave that can prove costly, especially if one is accompanied by a spouse and one’s children. Even though one can apply to organizations like the Navy and Marine Corps Relief Society under such circumstances, wouldn’t it be better to have the money readily available and not be faced with having to pay off the loan with an allotment deducted from one’s future pay checks? 

My third recommendation is to avoid using financial advisors or companies that attempt to sell you insurance that you may not need or investments with high front loads. A load is nothing more than a commission paid to the salesman who advises you to buy the funds  -- a possible conflict of interest since the salesman is paid based on how much you invest in the mutual fund. Unfortunately, some companies are more interested in making money for themselves than for the military personnel and families they are claiming to help. In some cases, after one year, a financial advisor may end up making more money on the transaction than the servicemember may earn in interest off of his or her investment.

There are some advisors and companies that truly help military families who are not savvy when it comes to handling their finances and planning for the future. In this regard, I would recommend working with such firms only if the return you receive from the investments they recommend far exceed any profits they themselves make from the investment of your own money.
 
Ralph Nelson, a noted military financial advisor who has written a number of books on financial planning, recommends that military couples visit the Mutual Fund Education Alliance web site at www.mfea.com where they can find a list of good no-load mutual fund companies. After some research in this regard, Nelson further recommends starting an automatic savings allotment from one’s paycheck to a no-load mutual fund company that manages conservative and inexpensive mutual funds. 

In addition to a number of civilian organizations, various family support agencies and military relief organizations offer both budgeting and financial-management classes that can prove very informative. By attending such classes together, you can develop a joint vision about how much you want to spend and how you may wish to invest your money for a better tomorrow. 
 
Gene-Thomas Gomulka
“A voice for military families”
Columnist and author of works available at www.plaintec.net
Have a question? Write Gene-Thomas at letters@plaintec.net