Growing List of Financial Problems Plagues Military Members

Lynnette Khalfani-Cox -- Military financial problemsWhen aggressive bill collectors recently targeted members of the military with scams and over-the-top collection techniques, New York's attorney general this month issued a stern warning to debt collectors.

Unfortunately, debt collection abuses are not the only financial hazards facing military personnel and their families.

Here are four other money woes confronting those who sacrifice and serve -- and what's being done to help.

1) Housing

Even though the U.S. Department of Veterans Affairs reported an 18% decrease in the number of homeless veterans in 2010, the issue remains a major challenge.

"Over the course of a year, 200,000 veterans are homeless," says Christine Truhe, founder and president of Bonds of Courage, a Summit, N.J.-based non-profit that provides educational, career and financial services to post 9/11 troops, veterans and their families.According to the National Coalition for Homeless Veterans, about 56% of all homeless veterans are African-American and Latino, despite accounting for roughly 13% and 15% of the U.S. population, respectively.

VA Secretary Eric Shineski in 2009 made a pledge to end homelessness among veterans within five years. Following that pledge, the VA spent about $3.5 billion on homeless programs in 2010 and has asked for $4.2 billion for 2011. The VA also has a toll-free National Call Center for Homeless Veterans (877-424-3838), with trained counselors staffing the phone lines 24 hours a day, 7 days a week.

2) Re-Entry

It's widely known that people who serve in the armed forces experience a wide range of emotions upon returning home. Some are relieved to re-connect with family members; others feel edgy or distracted and may yearn to return to active duty.

No matter what the case, the transition back to civilian life presents its own mental and psychological challenges. Yet, what isn't often discussed is that the emotional process of re-entry carries with it financial implications as well.

How does a father who hasn't regularly seen his children in a year or two refrain from over-indulging them, especially if his kids are asking for all sorts of toys, clothes or electronics? Or how does a wife who was previously deployed now manage to juggle financial responsibilities such as paying the mortgage, car payment and other bills, when those were duties that she didn't previously have to worry about?

If financial problems emerge -- namely a lack of money -- many veterans won't reach out for help, in part because their training teaches them to be self-sufficient and to handle problems on their own.

But even when a lack of resources isn't an issue, trouble can still be brewing. For example, young, single service members who may have banked a decent amount of money while enlisted -- including active combat pay -- can face difficulties of their own.

While they were enlisted "they didn't have the time or interest to do a lot of spending," Truhe notes, adding that "their world in the military was so busy and highly-structured."

"Now they're in this big, unstructured world where there a ton of choices, and lots of decisions to make about housing, transportation, and more -- yet they really don't have much guidance on how to spend their money," Truhe says.

"While all their friends have moved on financially and socially, they have to re-build a network in their community, as well as find jobs. With so many things to do, it often causes a period of crisis for a few years," during the re-entry transition, Truhe adds.

The VA does offer a range of benefits, such as health care and housing assistance, for veterans, their dependents and survivors. But the overwhelming majority of federal resources are spent on the 30% of troops who are either killed in action or who return home with physical injuries or conditions such as post-traumatic stress disorder. The other 70% -- who don't have injuries or a diagnosed mental condition resulting from their service -- must largely rely on faith-based groups, local community organizations, non-profits and family support.

3 Jobs

Even though the national unemployment rate recently ticked down to 9%, the jobless rate among young veterans of the wars in Iraq and Afghanistan is surging and stood at 15.2% in January 2011, according to the Bureau of Labor Statistics.

That's the highest level recorded since the government began tracking unemployment data for these veterans in 2005. As recently as November and December 2010, the jobless rate for these veterans was 9.4% and 11.7%, respectively. The overall unemployment rate for all veterans is 9.9%.

One major obstacle to landing gainful employment is that it's sometimes difficult for members of the armed forces to translate their military background or technical training into civilian jobs that require comparable expertise.

To help combat high joblessness, the Department of Defense has beefed up its Transition Assistance Program. It's also launched a website with a major section that features employment-assistance and career-building tools.

Local programs, such as Bonds of Courage, also help.

Truhe founded Bonds of Courage in 2004, when her son, Michael, was deployed for the first time to Iraq. He served two tours in Iraq, recently turned 30 years old, and is happily married with a 1-year-old daughter. After leaving active duty, he also moved to Connecticut, where he joined the Connecticut National Guard.

4) Payday Loans

As the economic downturn intensified, payday lenders increasingly set up shop near military bases, hoping to capitalize on the fact that many young, enlisted personnel get paid very low wages and their loved ones are often cash-strapped.

But one of the dangers of payday loans is that they come with a high price: annual interest rates of 400% or more. Even though there are other, better alternatives to payday loans, the lure of quick cash can be tempting to someone who's financially struggling.

Congress has mandated that payday loans extended to military members carry interest rates of no more than 36%. Nationwide, 17 other states have imposed similar caps on payday loans. And where such changes haven't yet taken place, in Illinois for instance, local groups are lobbying state officials and others to implement similar reforms.

One consumer advocate, Kathleen Day, of the Center for Responsible Lending, thinks payday loans everywhere to all consumers should be limited to a maximum of 36%.

"If it's not good for the military," Day asks of high-cost payday lending, "why is it good for anyone else?"

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