Maintaining a high level of financial fitness is a big part of personal readiness to meet the Navy's mission, whatever and whenever duty calls. Taking the steps to remain financially fit helps develop the character and habits that can keep Sailors and their families financially secure the rest of their lives. Buy not knowing how to manage money effectively can lead to stress and poor decisions.

One of the worst decisions a Sailor can make in a time of need is to turn to a lender which preys on those who tack savings in the bank or a credit card to handle unexpected expenses such as car or home repairs. These predatory loan outlets, often located just outside the gates of our bases, offer quick, no-questions-asked, short-term loans for Sailors to carry them to the next payday--but for a hefty price.

Sailors often find themselves on a course of spiraling debt that is very difficult to recover from. If a Sailor lacks the cash to stretch between paydays, it is unlikely that Sailor will have the cash to stretch to the next payday--and pay off a super-high-interest loan as well.

The fees these tenders charge can add up quickly, but the lenders have an easy answer for that by rolling over those fees into a new loan. In doing so, a Sailor will find paying an annual percentage rate in some cases of more than 2,00 percent. As a result of turning toward the predatory lenders, Sailors often end up far worse off financially than before.

While junior Sailors with families often are easy targets for these predatory lenders, more senior Sailors have been caught in the spiraling interest trap of payday loans. In one survey of aspects of financial fitness in San Diego among our military members, 21 percent had used a predatory lender for a short-term loan, and 80 percent of those who did were in pay grades E-4 to E-6.

There is no doubt Sailors and their families who turn to the easy loans of payday lenders often suffer personally from the extremely high interest rate and fees charged on these loans. But there is a bigger concern in light of the long war in which we're fighting; Sailors performing the important missions we do shouldn't be distracted by the debt incurred from predatory loan establishments. In fact, the biggest factor in Sailors losing security clearances crucial to doing their jobs are financial problems.

Fortunately there are alternatives to predatory lenders for Sailors and families who find themselves in need. There is help available and Military One Source (www.militaryonesource.com) has some great tips and advice an how to handle being overextended with unexpected bills without turning to a payday lender. In addition, your local Navy/Marine Corps Relief Society can help with Low interest rate loans and grants when the financial need is most urgent. These should be a first resource, not the last resort. Payday loans are worse than a last resort, and are never a smart option.

Another way Sailors and families can avoid the temptation of turning to a predatory lender is building and maintaining an emergency savings account to help meet those unexpected expenses. While it may be challenging to save a small amount from each payday on a regular basis, an emergency fund also offers the peace of mind that comes with knowing you can weather a financial emergency. This could also prevent many Sailors from turning to a predatory lender in the first place.

To build an emergency fund, Sailors have to involve their whole family, explain the importance of emergency savings and have everyone help contribute in whatever way they can. Not only will that help you handle those emergency expenses, but it helps build a sense of teamwork in handling your financial fitness and a sense of confidence and freedom you and your family will enjoy.

Master Chief Petty Officer of the Navy MCPON (SS/AW) Terry D. Scott

COPYRIGHT 2006 U.S. Navy
COPYRIGHT 2006 Gale Group