Volume 1 Number 43
October 25, 2004

















Military service comes with its own degree of stress. Add financial mismanagement and poor planning to the mix and a tough situation can be worse for those lacking knowledge and experience. In an effort to better protect those who serve and defend our freedom, the Florida Department of Financial Services has been working with military bases throughout the state to provide basic financial information to junior enlisted service members and their commanding officers.

One base that department staff is actively involved in is the Naval Air Station in Pensacola. NAS Pensacola -- fondly known as the Cradle of Aviation -- began as a navy yard in the early 1800s. Two years after the first aircraft carrier was built, the navy yard at Pensacola became an aviation training station, and it remained the only naval air station in the country until the United States entered World War I. After World War I, approximately 100 pilots per year graduated from NAS Pensacola. By the time the United States was involved in World War II, NAS Pensacola was training 1,100 cadets per month. Thousands of pilots still train there today.

Not everyone stationed at NAS Pensacola is an officer training to become a pilot. Thousands of junior enlisted come through NAS Pensacola every year. For some, Pensacola will be a temporary duty station where they will receive a few months of training before being stationed elsewhere. Others will call Pensacola home for two or three years.

Junior enlisted service personnel are typically between 18 and 25 years old, and earn the least amount of money in the military. Most are single. While their base pay, along with benefits like housing, meal allowances, and medical care can be enough to make ends meet, many find themselves in financial trouble. One unwise financial decision can prompt them to head straight into the clutches of an unscrupulous predatory lender.

Without the proper budgeting skills necessary to make their money last, junior enlisted are prime candidates for a payday loan when faced with an unexpected bill. In Florida and other states, payday lenders have sprouted along the roads leading to the gates of military bases. Many who use payday loans can’t explain how much it actually costs them in terms of fees and interest charges. Another option that appeals to the desperate is the title loan, where the lender takes ownership of the car title in exchange for a cash loan. Defaulting on a title loan could mean losing a primary means of transportation.

Used car lots are another area where military personnel should be cautious about financial transactions. Some lots sell cars to the junior enlisted at inflated prices. They know exactly how much these men and women earn and structure loans “on paper” to appear to be an affordable monthly car payment. In reality, the loan may include other fees and charges that result in a payment far beyond the value of the car. It’s no coincidence that these businesses are set up just outside the base, and many will pay cab fare in order to get the first time car buyer on the lot. Many of these companies also run ads in the local base newspaper, leading many service members to believe that the base officially sanctions the companies.

According to Nina Lohr-Valdez, Director of the Navy Marine Corps Relief Society at NAS Pensacola, the biggest problem facing the typical junior enlisted service member is lack of knowledge and little experience in managing personal finances. Lohr-Valdez says many have just graduated from high school, and have never set up a monthly budget.

Unfortunately, targeting the military is not a problem unique to Pensacola. All over the country, and in some cases, overseas, our service members are being targeted. Unsuitable offers of insurance, investments, car loans, computers, and frozen food plans, just to name a few, are pitched specifically to the military, usually in the guise of some sort of military affiliation. Offers seem more legitimate when they come from one of their own.

The Department of Financial Services is working closely with bases throughout Florida to help educate our young service men and women. In fact, a brochure has been specifically designed for consumers between 18 and 25 years old entitled Wheels, Deals, and Spiels: A Financial Guide for Young Consumers. It contains information about car loans, insurance, credit cards and scoring, predatory lending, and identity theft. Find it on the Web at http://www.MyFloridaCFO.com/Consumers/publications.htm.

In June, Florida’s Chief Financial Officer Tom Gallagher urged state regulators to require insurance companies operating in Florida to give special consideration to service personnel who experience lapses in their insurance coverage due to deployment overseas.

The skyline for October is Daytona Beach, photo courtesy of the Daytona Beach Area Convention & Visitors Bureau.