Military Strives to Maintain Financial Readiness Among Troops

By Donna Miles
American Forces Press Service

Aug. 15, 2008 - The economic downturn that has hit many Americans appears to have had less impact on U.S. servicemembers, partly because of the nature of military service and partly due to the vast network of programs and services available to help them, defense officials said. The latest annual Defense Department status of forces survey conducted in April by the Defense Manpower Data Center supports that assessment, said Navy Cmdr. Dave Julian from the Pentagon's new Office of Personal Finance and Transition.

When junior enlisted members in grades E-1 through E-4 were asked to describe their personal financial situation in the anonymous survey, 3 percent said they are "in over my head" or "having difficulty making ends meet," he reported, citing the yet-to-be-published results.

"Those levels have been declining over the years," he said, from a high of 5 percent in 2002.

Another survey question asked servicemembers if they or their spouse had missed a rent or mortgage payment during the past 12 months. Again, the number responding yes was 3 percent, down from 4 percent in 2007.

"I was very surprised," said Army Col. Shawn Shumake, a legal advisor in the Pentagon's personnel and readiness office. "If they'd been like anyone else [in the general public], you would have expected it to go up 50 percent."

He cited record-high foreclosure rates nationwide, with reports that the number of households receiving foreclosure notices is up 50 percent or more over past year.

Julian said there's no question that soldiers, sailors, airmen and Marines feel the pinch of spiraling gas, grocery and other prices. "The things that affect the general public are the things that affect our military, as well," he said. "But they do have some stopgaps in place to help them, more so than the average citizen."

Because servicemembers have secure full-time jobs, commissary and post exchange privileges, free medical care and cash for housing if the military doesn't provide it, they're less likely to be as financially stressed as some of their civilian counterparts, he said. In addition, troops on deployments benefit financially from tax-free earnings in combat zones, hazardous duty pay, and if they're married, family separation pay.

Another big factor is the fact that three-quarters of troops who live off base rent their homes, so they're not as hard-hit by the depressed housing market, Julian said.

They have been affected, however, when they've had to scurry to find local housing when their landlord's lender repossessed the property they were renting, officials said. Until recently, servicemembers stuck in these situations had to pay for the move themselves.

No more. A new change to the Joint Federal Travel Regulation authorizes the military to pay for local moves when a landlord defaults. Bill Carr, deputy undersecretary of defense for military personnel policy and chairman of the Per Diem, Travel and Transportation Allowance Committee, approved the change Aug. 8, Eileen Lainez, a Defense Department spokeswoman, said. The change is retroactive to July 30.

One segment of the military population likely to be hardest hit by the housing downturn is the 25 percent of servicemembers who own their homes, Shumake said. "If people bought high in 2005 and have to move now, they may be caught with negative equity in their house because the value has started to fall," he said.

If individuals are unable to sell their houses for what they owe and can't get enough in rent to cover the mortgage, they're likely to feel the pinch, he conceded. That's especially true if they're reassigned from a high-cost housing area to a lower-cost one where their housing allowance is reduced, sometimes by more than half.

A provision in the Joint Federal Travel Regulation offers a protection Shumake said many servicemembers don't know about: They can elect to leave their family at their old duty stations as they move to a lower-cost area and continue to draw their housing allowance at the higher rate where their family lives.

It's not an ideal circumstance, Shumake conceded, but could be a lifesaver to some families facing a financial crisis.

Julian and Shumake pointed to the broad array of services available to help servicemembers and their families avoid financial crisis and get help when they encounter one. Personal financial counselors and legal assistance staffs provide free services and can steer troops in financial difficulty to the help they need, they said.

"We have resources available, and encourage members to take advantage of the financial services and counseling available through their installation," Julian said.

Julian's office is putting together a financial road show -- technically "financial readiness challenge events" -- to take that message directly to the troops. The program, expected to kick off by October, will bring financial experts to military bases, where they will present a full day of seminars and one-on-one sessions to help servicemembers better manage their personal finances. Each session will be tailored to specific installation's needs, based on input from commanders and senior enlisted leaders, Julian said.

Meanwhile, troops not comfortable with the idea of a personal meeting can take advantage of financial counseling over the telephone through military One Source, he said. The program, in place about six months, enables callers to talk about their personal financial situation with a trained counselor who can offer advice and help. That service is provided by calling toll-free 800-342-9647.

Ultimately, servicemembers' financial readiness boils down to a military readiness issue, Julian said. Worrying about whether they are going to be able to pay their bills or are about to lose their homes distracts troops from concentrating on the mission and can put them and their buddies at risk, he said.

"We want to keep our men and women overseas, especially the ones in harm's way, concentrating on the mission at hand and the important tasks they have to accomplish, rather than their financial situation at home," he said.

"They're not going to be keeping their eye on the target if they're worried about stuff back home," Shumake agreed.

Helping servicemembers get a handle on their finances reduces stress on the entire family, and that, in turn also helps readiness, Julian said.

"We look at the family and the servicemember as a team," he said. "So this is really a matter of allowing the servicemember to focus on his job, and allowing the spouse and the family to focus on their job so together, we can accomplish the mission."