Navigating Financial Hard Times For Military Families

Your spouse is serving overseas in the U.S. military, and there is no shortage of stress on you and your children. As if a loved one serving in combat were not enough, there are the everyday pressures to cope with as well.

More and more, a stay-behind spouse must confront the financial and organizational strains that befall military families when the military member is gone to war. This has proven especially true with mobilized reservists and National Guardsmen forced to leave higher-paying civilian jobs for a DoD paycheck.

What can you, as the embattled spouse at home, do to safeguard your family's financial security? More than you may expect.

Many who find themselves suddenly besieged with bills and creditors have sought shelter in the bankruptcy laws. A surge of cases were filed before the expected change in bankruptcy laws that is expected to favor large corporate creditors. Some people may move in with family members and live on a cash basis only, dodging creditors until the storm blows over.

But it has become sadly commonplace to see military families struggling not only to survive the stress of prolonged separation, but also the possibility of financial ruin such as the loss of a house that has been their primary investment.

What can you do?

Seek out trustworthy information and someone with whom to test your ideas for a financial survival strategy. Let's clear one thing up: There is no shame in your situation, other than acknowledging that many serving members of the U.S. armed forces must worry about their family's financial solvency while battling abroad.

There may be some humbling moments to face if you are like many Americans, spending money for emotional comfort instead of thinking it through. Well, join the club, because people in every walk of life do that. Even if that is your situation, it is never too late to dispel fear and start forming a plan for reaching financial independence. Let's talk about some smart moves you can make right now.

For members of the military, the Pentagon Federal Credit Union Foundation, the Pentagon's non-profit arm, offers help to military families who need financial counseling and guidance. Go to the Pentagon FCU Foundation , and click on "Financial Literacy," or "Money Matters." Read the Stark Asset Recovery Kit fact sheet to get financially grounded alternatives to payday loans. Then make your way to the National Military Family Association's website here .

At these websites, read the sources slowly, deliberately and carefully. Find a contact email, save the links on these pages to your Favorites, and use the phone number and get a referral to a financial planner or advisor (who works on a salary, not commission). If you are not a USAA insurance or banking customer like many armed services members, join USAA , or contact them here . While out, get The Wall Street Journal and read over it, paying special attention to the personal finance section and economic news. This is what business students are told to read every day as a sort of informal business school lab. Keep a dictionary nearby to look up the terminology.

Why do I say "read slowly, deliberately and carefully"? Because the large majority of financial problems are exacerbated by anxiety that goes nowhere and derails improved performance by frustrating your ability to think and get the bottom-line information that is valuable to you.

Feeling economically powerless is emotionally taxing, frustrating, and tempts us to get down in the dumps as everything seems to take longer for those who have little money. But it isn't what we lack that matters. It is who and what we do have, and what we invest in tomorrow's crop.

We all have to slow down to speed up. We can build on what we know, and get specific about what we want to learn and improve on each day. Keep track of your financial goal achievements while setting other goals, like family, fitness and spiritual goals. Disregard speculations, especially whether it is fearing someone may judge you, your appearance or the fact you seek out assistance. That is the beginning of taking control of your finances, and exorcising whatever ghosts bother you as you take on the unique challenges of being a military family with a deployed spouse.

Two of the biggest sources of anxiety for people in financial difficulty are collection agents and communication. Let's call it C-2 for short. First, collection agents: If they're polite and informative, get them to disclose the specific account number, name and creditor they are calling about, but do not volunteer any information to them. Then ask them to provide their company name, their state of incorporation and their mailing information. Tell them that before you will be able to talk to them, you must verify their identity with the Secretary of State and attorney general's offices in their state of incorporation. You may want to check with the State's Attorney General's office or the Federal Trade Commission to find out if they have a history of unfair debt collection practices or a disciplinary history.

In the meantime, tell the collection agent that you want them only to contact you in writing, and that you read your mail, but you do not want them to phone you.

Why the precaution here? You have no way of knowing for sure who it is that is calling you unless they verify their identity using a written form of identification provided by the state government in which they are incorporated. A mailing is not enough, and a phone call is definitely not enough. Why should it be? Anyone could use software to make a convincing looking mailing, or pretend to be whoever they want to be on the phone.

If you do decide to talk with collection agents, do not, under any circumstances, lose your cool or use abusive words with them, however tempting it may be. Resorting to emotion (abusive language) is a mistake in that it gives collection agents a hook into your feelings. It also gives them a sort of moral leverage they do not deserve, claiming that you were abusive with them first. Most of these companies are required to record events on their calls in an electronic record or transcript. Later, if the situation develops into a collection lawsuit, these transcripts could wind up being evidence against you.

The same situation could apply if you sick the Attorney General of your state or their home state, or the Federal Trade Commission on them (the agencies that investigate patterns of debt collection abuse). The creditor company could then send such transcripts or recordings to defend themselves. So the first rule is for you to stay calm and professional. If the collection agent tries to goad you into an ugly exchange, politely decline and tell them exactly when you plan to terminate the call before gently hanging up.

The next step is for you to look for their correspondence in the mail and make a file for it until you can verify their assignment to the debt with your original creditor. You may find your creditor will deal with you directly, or that there is an error. If not, and the collection agency is legitimate, then consult a financial planning professional and/or your spouse's JAG office on how to get your budget "squared away" before allocating and negotiating a monthly payment arrangement that you can handle. It may be that you will be advised to seek bankruptcy protection by a lawyer.

By financial planning expert, I mean a certified financial planner working for an institution with whom you already have a membership or association, preferably one of the sources listed in this article, or obtained through your lawyer. (I do not mean a consumer credit counseling company, unless you reach the conclusion that such a move would be best for you and your family credit picture.)

Finally, there are some simple steps you can do to be a more effective financial communicator, which is the key to negotiating and resolving economic issues.

1. Create a filing system for every piece of paper that comes in and goes out of your home, including the "round file," i.e. the wastebasket. Every time a piece of creditor mail comes in, open it, skim it, make a file for it, chuck the envelope and insert it in your file.

2. Get as many (or few) plastic file boxes and hanging folders as you need, and label the files and boxes. Be sure they have good latches on them so they don't fall open easily, and are waterproof. Use them to pull the most recent bills when communicating with an advisor or creditor.

3. Frequently call creditors, the earlier the better before accounts may go into collections, and work out arrangements when you know you can't pay the whole amount, or, notify them if you have no income to pay and estimate when you will be able to do so. Always use their local or 800 or 888 numbers to keep them posted. They may mark you late, or they may have an option for a payment arrangement that keeps you from being reported late.

4. If you regularly call and send small payments you can handle each month, it will help keep you on a negotiable footing in most cases. It also dispels anxiety. Write down each creditor's name and the last date you talked to them on your bill or on a word processing sheet you save to your desktop, including what you negotiated or said. Also note all names and dates. If you are earnest and friendly with the creditor, the people who work with you may route you to low interest programs more readily.

5. Get a contacts list program for your computer or a personal organizer book and write quick contact information down about each creditor so that you will be able to communicate whenever needed. Do that with emergency help contacts also.

6. Get a paper shredder if possible to dispose of any documents that you would otherwise throw away that have personal information on them.

7. If you have email access and use it more readily than you read mail, consider letting your creditors (not collection agencies) communicate with you through that medium and respond in kind.

By using these techniques and contacts, you can take charge of matters in your daily financial life, and begin solid steps toward good control and organization. While you do this, remember that there is one virtue that puts out many fires before they begin: your ability to decide to be patient, no matter what comes, while you work out these problems. It will give you an amazing strength.

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