ELLSWORTH AIR FORCE BASE, S.D. --
Financial readiness prepares Airmen for more than just paying their bills on time. It enables Airmen to plan for the future in addition to removing financial distractions that may hamper their ability to support the Air Force mission.
When thinking about the Air Force mission, finances may not be the first thing that comes to mind. However, with recent changes within the Department of Defense, being financially unfit has the ability to jeopardize security clearances. Airmen can now expect their credit reports to be monitored regularly throughout their careers.
“It’s important that we’re protecting our credit scores and credit histories so that we can make sure our jobs are secure,” said Jeffery Hollinshead, a 28th Force Support Squadron Airman and Family Readiness Center (AFRC) community readiness consultant. “Additionally, if you’re worried about your finances – how you’re going to feed your family, or pay bills – it can be a huge stressor for people performing critical jobs for the Air Force.”
Being financially ready begins with a healthy budget and understanding the difference between needs and wants.
“A simple mathematic formula is A-B=C or income minus expenses equals surplus,” explained Hollinshead. “It takes discipline to follow a budget. We have to understand the difference between wants and needs. People get frustrated when they look at their budgets and it doesn’t meet their expectations.”
Hollinshead recommends carrying a small notepad to record spending habits and to practice using cash rather than a debit card.
“[Using a notebook] is very old school; it’s very simple but think about the psychological effects,” said Hollinshead. “You’re physically writing it; you’re physically seeing it every time you spend. People don’t realize how much that $5 cup of coffee costs, five days a week, times 30 days a month. It’s hugely important for individuals who want to start saving money to track spending.”
Following a budget is critical when trying to get on the right track financially, but having an emergency savings is equally vital. An emergency can happen at any time and without an emergency fund, the cycle of debt will continue.
“Focus on having three to six months of living expenses in emergency savings,” suggests Hollinshead. “It’s OK to pay down debt, but what if an emergency happens and you don’t have the money? Your debt just gets extended again.”
When it comes to paying down debt, Hollinshead has a method he calls the power pay technique. It starts with a budget and can be accomplished a number of ways.
“You can tackle your highest interest rate, tackle your highest balances, or you can go by lower balances to show success,” said Hollinshead. “Another important factor is to make sure [Airmen] are using the Servicemembers Civil Relief Act (SCRA). If they’re paying interest rates over 6 percent, it’s important to call creditors and make sure that it’s reduced. The SCRA can only be used on debt that was acquired prior to joining the Air Force.”
The SCRA can help to relieve debt, but there are other uses as well. SCRA benefits can help Airmen get out of a home or vehicle lease early and without penalty but only if they have orders to deploy for over 90 days or if they’re relocating due to a permanent change of station (PCS) move. Additionally, if an Airmen PCSs out of their cell phone carrier’s coverage area, their carrier is required to drop their service without any termination or cancellation fees.
“You just have to figure out what works for you,” said Hollinshead. “I think that most financially successfully people are intentional about their finances. They follow a process in which they manage their debt. They make sure they have liquid assets available. They have an emergency fund and a goal savings fund. Being intentional means knowing your financial status at all times.”
Hollinshead has found through his years of counseling people that finances are extremely personal.
“People are uncomfortable talking about their finances,” said Hollinshead. “Society teaches us that we’re valued by our finances. When people are not doing well [financially], there’s a sense of embarrassment. I end up working with people that are desperate by the time they get to me. If I can encourage people to do one thing, it would be to come by and see one of us here at the AFRC – let us help you.”
For more information about financial readiness, contact the AFRC at 605-385-4663. For more information about the protections offered by the SCRA, visit https://scra.dmdc.osd.mil/