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Living in the red: struggling with checks, credit and overspending

ELLSWORTH AIR FORCE BASE, SD -- Every year, millions of Americans spend more money than they make. Loans, credit cards and poor budgeting have created a crisis of debt. A large number of those living in debt don’t even know the first steps to take toward living life in the black.

Luckily for Ellsworth members, there’s a plethora of resources available.

An Airman’s “first line of defense” in the event of financial crisis is his squadron’s unit financial specialist.

“The unit financial specialist (UFS) is in place to provide a first line of defense for the people in the squadrons,” said Mr. Mark Kjellerson, 28th Mission Support Squadron Family Support Center community readiness consultant. “The basic theory behind the UFS is to have someone close to the Airman for financial assistance, budgeting, checkbook balancing and other such assistance.”

With UFS in place, Airmen don’t have to take as much time out of their schedule to make appointments and travel to the FSC.

“The UFS save a lot of time for the Air Force,” Mr. Kjellerson said, “and often the person feels a lot more comfortable dealing with someone they know and trust a bit more. Less productivity is lost in general.”

“It was Ellsworth that started the UFS concept a few years ago,” Mr. Kjellerson said, “Ellsworth was picked to be the pilot base, and it was so successful that Air Combat Command ran with it.”

Of course, when finances are concerned, people can get touchy and some don’t want to talk to someone they know about their personal money matters. That’s okay; the FSC is still available to anyone who wants assistance.

“Wherever they feel comfortable is where we can help them out,” Mr. Kjellerson said. “The UFS is the first line of defense, but if they don’t want to talk to a person they know in their squadron, we’re always here. And if they want to deal with someone outside the Air Force, the Consumer Credit Counseling Service of the Black Hills and Sentinel Federal Credit Union are always there.”

Services

One of the major services the FSC provides to those in dire financial straits is a class about the proper use of credit.

The class, “Credit when credit is due” is taught by experts who are brought in from CCCS of the Black Hills and Sentinel FCU.

The 12-part class will be taught March 9 from 8 a.m. to 3 p.m. in the FSC.

“We used to teach the class in sections, but we’ve found that we can do it in a one-stop shop,” Mr. Kjellerson said. “Whether we do it in parts or all at once, the participant gets the textbook, and we’ve received grants to purchase the books for our people. So everyone who attends the class gets the book for free.”

Throughout the course, each section has a test, and the results are sent to Consumer Credit Counseling. If the scores are high enough, participants receive a card that can help them get a reduction in loan rates and rent, as well as other financial benefits.

“One of the biggest benefits of the course is that a passing score gets placed on one’s credit report,” Mr. Kjellerson said. “A positive mark on your credit report can be a significant boost to get your credit going in the right direction.”

Anyone on base is eligible to take the course, including dependents, spouses and contract workers. For more information about the course, the official Web site is www.creditwhencreditisdue.com.

Checking accounts

Even those with no credit probably have a checking account, and as many know, a checking account is all it takes to get into financial trouble.

As Base Exchange general manager, Mr. Andy Louder is a man who’s come across a fair number of “rubber checks,” and he has the unfortunate job of having to penalize those who write them.

“The key to writing checks is to simply make sure you have money in your account before you write a check,” Mr. Louder said. “Often, people will write checks when they know the money isn’t there because they think they can deposit money before the check is cleared.”
”In the past,” Mr. Louder said, “you could write a check Wednesday and it wouldn’t clear until Friday, but in this day and age, checks clear very fast.”

Part of the reason for this is the passing of recent legislation — referred to as Check 21 — which made it legal for businesses to use electronic means to clear checks automatically.
“It’s kind of like using your debit card so that things clear automatically,” said Ms. Kathy Mroczkowski, personal finance officer at Sentinel FCU.

“All businesses have to do is purchase and install the appropriate software, and they can then use the routing number on the bottom of the checks you write to instantly transfer money from your checking account to their savings accounts,” Ms. Mroczkowski said. “Just as a guess, I would say that most businesses will have implemented the change within the next couple of years.”

GAP and WalMart are among the local businesses that already use the automatic check-clearing software. 

Credit reports


Legislation was also passed recently that allows everyone to get a free credit report each year at www.annualcreditreport.com.

The report compiles information on personal credit including the names of all companies that have collections out on an individual. The report will also tell people what loans, credit cards and accounts they have open, as well as the amount of any balances due.

The report should also include contact information for all companies the individual owes money to. Getting the report is quick, easy and useful.

“The entire process takes about five minutes of your time,” said Ms. Mroczkowski. “You just have to enter information like your name, birthdate, social security number, address and telephone number.”

An annual personal credit report is an important piece of paperwork that should be kept with other documents such as tax returns. Such information can be confusing the first time you have to deal with it, but Ms. Mroczkowski said Sentinel is available to help.

“You can print out the credit report and bring it in, and we can go over it with you,” she said.

Paying down debt

Ms. Mroczkowski also suggested that if the problem is credit cards, it can be more effective and more satisfying to focus on paying them off one at a time.

“… for example, if you have four credit cards that are practically maxed out you can pay the minimum payments on three of them and focus on paying off the fourth,” she said. “Then you can close the card when it’s paid off and focus on one of the remaining cards until all of the cards are paid off or closed. It feels like you are getting somewhere faster.”

Ms. Mroczkowski also suggested military personnel set up an allotment and plan to save any yearly pay raise rather than spend it.

“For folks in the military, you can’t go wrong with an allotment. You can send an allotment to savings and the rest of your paycheck to checking,” she said. “The beginning of the year is a good time to start something like this because you can start saving your pay raise before you get used to having it as a part of your budget. That way you won’t even miss the amount you’re saving.”