ALISON ST. JOHN: This is KPBS Midday Edition, I am Alison St. John. San Diego's community is closely quite tied to the military with just about hundred 40,000 active duty service in town. Many are married with children and starting military salaries are not easy to live on. They have to budget carefully to make ends meet in a town like San Diego, where costs are high. A new report shows that most military families are managing expenses but many of them are not making it and are falling into debt. In a report 25% of individuals in the military have overdrawn their checking account. How surprised are you by these results? ED OLANDER: Not really surprised because we do counseling for a lot of service members, we see a lot of the issues going on. A lot of the Navy ñ we are a most of the bases are high cost of living areas. Cindy was not a cheap place to live especially a young service. The average age for military as nineteen and many of our employees have no prior financial education. ALISON ST. JOHN: They do not have of background on learning how to manage finances. When you are in the military, there was presumably not much education, correct? But now you are professional credential manager. Have things changed a lot? ED OLANDER: I think the only financial education that I ever got was my boss telling me not to blow my check in on one weekend. When they get to their ultimate command squadrons, that the Navy makes it mandatory. Every command has to have financial counselors. For every seventy-five people of the command they need additional counselors. These are people trained and they receive counseling on how to counsel people and trained them. They are the first line of defense here. They need to make it so that they know that there are resources available for married and single sailors out to buy their first car. ALISON ST. JOHN: If you're listening and have a have a story to tell or if you have stories about how someone has helped to sort out his financial situation for a military service member, please call in. When you are in the military having a financial problem it does not just affect your finances, it also affects your career. ED OLANDER: The number one cause of security clients is still financial mismanagement. It's around 61% to 62% of financial risks. People at financial risk are more at risk to be compromised by bad financial decision from anything to drugs to foreign governments. There checked on this in their part of the background check is looking at finances. We do deal with quite a few service members who come to see us to try to maintain their clearance and get them out of debt, and to prevent it from happening in the first place. We need to help fix the problem. ALISON ST. JOHN: Tell us more about the type of people that are coming to you. You mentioned the first car and that may be the first thing they would think of when they get their first paycheck, how often is a problem? ED OLANDER: The best looking car, they are always the junior sailors. Often they buy nice cars with high interest rates because they don't have good credit interest interest rate. There are car dealers where they will charge them such high interest rates as high as 36%. And a lot of them also have a lot of credit card payments and the interest rates are so high that they have several credit cards maxed out and then they like what they would thousands of dollars in debt. We do sign up with a debt management companies that and we work with those to give us a way to get put them on a budget and track their spending and let them realize where there money is really going. Making changes in lifestyle. Don't be out as much, but it budget a certain amount of money for recreation but start putting some money into attacking the debt. Most of the time is putting your cutting back your spending. See where your money is really going. ALISON ST. JOHN: Awareness. Eighty percent apparently living within their means, but that does mean that 20% are not living according to the needs. What is this doing for military service and the families? ED OLANDER: You have military families and the spouses and that move along the lots of getting a good paying job can be difficult, we do have a career service service center to help spouses get higher, but there's a high turnover with movie red light having kids is also expensive, so want them to try to make sure it that there are resources available if they need to rely on us for food and stuff like that. Let the commence now and we do have resources and nonprofits at work with the military that provide assistance with necessary. service members are often told that the time they joined the service they need to solve problems that are set themselves. But we know that when you need help you should ask for it. Gets you up on your feet and ask for help. ALISON ST. JOHN: I know that payday stores have been a problem in the past, but the law has changed. Is it true to say that is now illegal for payday loans to sell a loan to a member of the military? ED OLANDER: The law that passed in 2007 that in store rates are capped at 36% to the military. Also tax companies and auto title loans, only affected the in-store rates. What a lot of companies are doing now are directing people to go online. There is no On interest rates online. Some of the bigger interest companies charge three digit interest rates. ALISON ST. JOHN: It's almost criminal what you find out the interest rates on these loans. You have to do some back to figure it out to we have a caller on the line. And our guest hung up, but our caller was saying that he was someone who'd fallen into the trap of the payday loan and he's asking how can he get out of the cycle of that? ED OLANDER: Again the payday loans are normally $3-$500 and they are supposed be paid off by payday. If you pay back immediately the interest rate is very low. But if you are $300 short this payday you will have the money by next payday, that is where the interest rate start going up with a late step. Budget your money and sit down and fit them where your find out where your money is going with recreational spending your dining out and going to the movies and the envelope and that it's a good way to start off. Have a certain amount of cash in an envelope and for that month that is your that month money for going out. He teaches you to have a fine enough money. Look for ways for coupons and going out eating places go for two-for-one deals. Make your money last longer. Until you start tracking it, you have leaks. The average person is leave losing the couple hundred dollars a month that way. ALISON ST. JOHN: Our caller might met benefit from that but it may be too late for them, is there any way that you can get out of this or does it end up with lawsuits and the people have to leave the military because of problems they get into with payday loans? ED OLANDER: Normally they have to pay them back and come up with the money to pay them back. There are nonprofit debt management companies that can work and often credit unions and banks also have services with that. It depends on the company can be it what they want to do with it We often tell our service members to take that take the contract to the base legal office. Obviously we do not want to see going to collections or into court ordered payments. ALISON ST. JOHN: How is it for members of the military to ask for help when their financial trouble? ED OLANDER: And it depends on the person church we have senior personnel and junior personnel that give get themselves into trouble and is a pride issue. People don't want to admit when they need help for something your if you need help, come see us. In my office we deal in the current and the pet resin, we cannot change the past but we can try to make changes the way it does not happen again and try to change the behavior in the future so we don't run into these problems in the future. Why are you running into this that? Lets you away from the predatory lenders. ALISON ST. JOHN: And this is a free service so that is a big advantage for the military. ED OLANDER: We are confidential. We do confidentiality so we do not go the sense that payoffs here. They come and talk to us about financial problems in a more safe environment. ALISON ST. JOHN: That's talk about how the younger members are making it because how is anybody surviving on the entry-level wage? ED OLANDER: Usually they're very junior personnel right out of recruit training peer was of the time they're living on base. If they are based meals are provided and there's a place to live. The trouble is because of the recession we're getting personnel joining in because they lost their civilian jobs and they're coming in with families at young ages like that. It's very difficult. If there is housing and housing is paid for, because of that takes up huge chunk of money off of that for them. ALISON ST. JOHN: Even if they have served of 26 years they may not be making even $30,000 a year. At least 54% have set aside emergency funds. ED OLANDER: We do help them get a spending plan. We have people trade and commit command that are teaching them and a lot of commands with a report command, speaking to them and letting them know that how does this help setting up budget. We're getting them but they first come to us. This really helps out. ALISON ST. JOHN: Also I noticed that 38% are underwater on their mortgages. That is also worrying. ED OLANDER: Yes but that is comparable to a lot of civilians also because of the housing market, but that storm hit either working okay here a little bit over year we are inundated with housing problems because people think that they buy a house in San Diego never lose money that we were brought. A lot are now doing very well with their housing and it's impressive. Don't buy the house mom dad lived in. That was probably not their first house, make go small. Get a small house and make your way up to something larger. ALISON ST. JOHN: When you're looking at retirement accounts on the pieces of data here is 19% have taken a loan from retirement accounts which is a bit of the data. ED OLANDER: Taking a loan from your retirement is a bad idea. We try to to tell them not to that. Anybody that you put into retirement is not your money. It is the retired you money. You do not want the retired you upset with you now. Do not touch that money. You do need to pay them back. And you do get the interest back but it's just like a loan company. They try to make the bone difficult for people to get. It's the last resort. ALISON ST. JOHN: Records of the risk ponders who have 30% of that responders have retirement accounts. See to the face-saving program is on top of military department. ED OLANDER: You can put up the money into the plant. If you deploy it to a tax-free zone, for 50.50 3000 into it. The all mutual funds. They are tough. 50% of the Navy is in the success of their savings program. We're having with that. We're trying to be thinking better how it is being put into their heads if they get a pay raise let's increase their GSP money. ALISON ST. JOHN: These are all excellent tips. I want to thank you so much for coming in. Ed Olander is a financial counselor at the financial support center in San Diego and all of their services are free for active military.
When Ed Olander first started out in the military, the only financial advice he got came from his chief: "Don't blow your money on one weekend."
Today, Olander, now a financial counselor at San Diego's Fleet and Family Support Center, says financial education in the military is changing.
"It's starting at boot camp, all the way through school commands," the 20-year Navy veteran told KPBS Midday Edition. "The Navy makes it mandatory. Every command that has over 25 people has to have a financial counselor there."
Yet financial difficulties for people in the military are still common.
A new report out this week finds most military families are managing their daily expenses, but a troubling number of them are still struggling: Nearly 40 percent of families can't pay their bills. Additionally, 25 percent of those surveyed have overdrawn from their checking accounts and 19 percent have dipped into their retirement funds, the report shows.
Olander said he wasn't surprised by the results.
Starting military salaries are not easy to live on. Junior enlisted military personnel earn an average of $18,000 to $28,000 per year.
While those living on a military base or ship, usually have meals and housing covered, military families may still suffer.
"Trouble is now since the recession hit, we're getting a lot of personnel joining in because they lost their civilian job, coming in with young families," Olander said.
Military spouses may be unemployed due to relocating to the military base, and to stay up on bills, service members may take loans with high interest rates. Thus beings the cycle of debt, which can be exacerbated in San Diego due to the city's high cost of living.
Financial instability can be a devastating blow to one's military career, Olander said.
"The number one cause of pulling security clearances in the Navy right now is still financial mismanagement," he said.
Someone who is financially at risk is also at risk of making a bad decision or being compromised by someone else — "from drug dealers to foreign governments" — who wants information, he explained.
Olander said the first line of defense is preventing debt from happening in the first place, but because the military is a culture of "solve your own problems," service members don't usually come to financial counselors like him until after they're struggling.
Some basics he recommended involve developing a spending plan to "plug up the leaks," and setting money aside. Free financial counseling is available to active duty service members and their families at the Fleet and Family Support Center in San Diego.
