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Quick cash a way to financial pain
by Tech. Sgt. Steven Wilson
28th Bomb Wing Public Affairs


10/26/2006 - ELLSWORTH AFB, S.D. -- It's close to pay-day and the bills are piling up. Creditors are bugging an Airman at work. He can't concentrate on his job because every time the phone rings he cringes, hoping it's not a collection agent. At night he can't sleep. He simply tosses and turns worrying, "What if my unit finds out I can't pay my bills?" 

There's no escape. Bill collectors are burning up the phone line, demanding he pay a bill and he knows that, at least in this moment, it's simply impossible. After all, he has to eat; he has a family to take care of. 

The next morning, he hears a jingle on the radio for a pay day loan company. They promise a quick fix, sure-fire solution to all his problems ... they'll hold his check until pay day. 

The best thing for this Airman to do is stop and do a function check before he actually pulls the trigger on something that might worsen his problem. 

Pay day loans have the attention of leadership at all levels. 

The Under Secretary of Defense (Personnel and Readiness), The Honorable David S.C. Chu, testified before Congress Sept. 14, 2006 concerning "lending practices that prey on servicemembers and their families." 

He said a study on these practices partially sought to decrease the prevalence of predatory financial practices that seek to deceive servicemembers or take advantage of them at a moment of vulnerability. 

The report Mr. Chu delivered to the Nation's lawmakers noted predatory lending companies actively target military personnel. 

Another common tactic by predatory lenders mentioned in the report was seeking out young and financially inexperienced borrowers who have bank accounts and steady jobs, but also have little in savings, flawed credit or have hit their credit limit. 

The types of lenders provide loans based on the borrower's assets and not necessarily on the ability of the borrower to actually repay the loan. 

Instead, Mr. Chu's report added, the predatory business will take advantage of the servicemembers inability to pay the loan in full when due and encourage extensions through refinancing and loan flipping. These refinances often include additional high fees and little or no payment of principal. 

Mr. Chu reported to the body of lawmakers some chilling accounts of military members being pounced on by predatory lenders. 

In one example, he noted a Senior Airman behind in car and rent payments. She went to a payday loan company and took out a $500 loan with an agreement to pay back $600 in two weeks. When she couldn't repay the original $500, she took out other payday loans and had to do multiple rollovers on each one. To pay off these loans she contacted an installment loan company who provided her with a $10,000 loan at a 50 percent annual percentage rate. The total cost to pay off the payday loans was $12,750. She still owed the installment loan company $15,000. 

That's an awful long way from the original $500 problem.
It got worse. 

"Her financial problems were a contributing factor to her pending divorce," the report concluded. 

Ellsworth's command chief, Chief Master Sgt. John Gillette, offered his own perspective on predatory lenders. 

Chief Gillette said as he and his family were coming through the enlisted ranks, they made a conscious effort to live within their means without accumulating credit card debt and big car payments. 

"Our motivation was simple," he said. "We did not want to be a slave to the material world. 

(Pay day loan businesses) feed off our society that desires instant satisfaction," the chief said. "I would ask our Airmen who are tempted to patronize these businesses to look at the entire bill they will pay when they take out that loan." 

Ellsworth and the Air Force has many other sources specifically geared for servicemembers and their families in a time of need, he added. 

Master Sgt. Jon Vance, 28th Aircraft Maintenance Squadron first sergeant, agreed.
"Everyone gets in a tight spot at some point," he said. "The first sergeant is the key to the helping resources available." 

Sergeant Vance explained there are never career implications in asking for help and sometimes potential problems are best avoided before things spiral out of control. 

"The Airman and Family Readiness Center (formerly Family Support Center) offers financial counseling for troops and their families if they need it," said Maj. Melanie Stewart, 28th Mission Support Squadron commander. 

Sergeant Vance also touched on other programs available to Ellsworth Airmen
"Air Force Aid can help with everything from money to help with car repairs to bills, under special circumstances," he said. 

He said the Diamond Mart, run by the first sergeants, can help with food, toys for the kids, uniforms, etc. 

Operation Warmheart can help members financially and this is also administered by the shirts, he added. 

"The key to unlock all these resources is to think of your family," Sergeant Vance said. "You wouldn't hesitate to ask your mom or dad for help, would you? We're here and ready to take care of our own; just get with your supervisors and the shirt."
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