Survey reveals troubling numbers of military personnel in debt

Michelle Singletary
Wednesday, October 13, 2010; 8:32 PM

Whenever I'm traveling and I see uniformed military personnel, I can't help but become a little teary-eyed.

I worry that the service members may be shipping out to Afghanistan or Iraq. I appreciate the sacrifice those in the military make, especially the many who are in combat zones.

So it's with no less concern that I'm troubled about the percentage of servicemen and women who are struggling financially. A new survey focusing on the financial capability of military personnel has found that while many in the armed forces are handling their finances fine, an alarming number aren't doing so well.

It's important that military personnel not be weighed down with money issues. Their financial stability is directly linked to their military readiness, according to studies by the Defense Department and the Government Accountability Office. Service members with severe financial problems can lose their security clearances, and bad money management can also result in sanctions, impair career advancement or lead to a discharge.

To gauge the financial health of service members, the Investor Education Foundation of the Financial Industry Regulatory Authority (FINRA) developed a military survey in consultation with the Treasury Department and the President's Advisory Council on Financial Literacy. FINRA regulates securities firms.

"The most troubling aspect of the survey was the amount of debt members are carrying," said John Gannon, president of the FINRA Investor Education Foundation.

The military survey is one of three associated surveys that constitute FINRA's National Financial Capability Study. The surveys are being done to assess the financial capability of all U.S. adults, Gannon said.

Military personnel and spouses are generally heavier users of credit cards than civilians, the survey found, and they are more heavily indebted to credit card issuers.

In online polling of 700 current members of the U.S. armed services and 100 spouses of current members, more than one in four respondents reported having more than $10,000 in credit card debt. Ten percent of respondents said they were carrying $20,000 or more in such debt. The percentage of those who made minimum credit card payments, took out cash advances and paid fees was highest among families of enlisted personnel and junior noncommissioned officers.

More than one-third of the military respondents said they had trouble keeping up with monthly expenses and bills. Many service members have gotten payday or auto title loans. Members of the military use payday loans three times as often as civilians, a separate Defense Department study found. With a payday loan, you borrow against a future paycheck. On an annualized basis, I've seen the interest rate on such loans range from 400 percent to more than 1,000 percent.

Although there are many similarities in how they handle their money compared to the civilian population, military families have unique issues such as frequent deployments, said Holly Petraeus, wife of Gen. David Petraeus, the commander in Afghanistan. Holly Petraeus is the director of BBB Military Line, a Better Business Bureau program that provides consumer education and advocacy services for military personnel and their families.

"Being in the military may be a secure job, but for many the paycheck is small," Holly Petraeus wrote me in an e-mail. "It's not hard to end up with 'more month than money,' especially if you are young and have little experience of managing finances. And the military does have special challenges with frequent moves that always end up costing money."

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