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Readiness is key to financial fitness

By Lt. Col. Thomas Aranda 2nd Bomb Wing Chief of Safety

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Imagine a technical sergeant who retired after 20 years of service, had little to no savings, and the civilian job he had lined up before retirement was cut due to tightening federal budgets. He would be facing 70 percent pay cut without enough income to pay his mortgage.

Now picture a staff sergeant who is debt free and separating from the Air Force, with money in the bank, a bachelor's degree and solid plan to complete law school using the GI Bill without borrowing any money. Why did these two real people with similar incomes end up in very different places? One practiced financial fitness.

Unfortunately, many military families are struggling financially. According to a 2010 Financial Industry Regulatory Authority study, more than 36 percent of military families reported trouble making ends meet, and more than 27 percent of military households had $10,000 or more in credit card debt.

Other sources report food stamp use in commissaries nearly tripled from 2008 to 2011 and a 32 percent increase in military home foreclosures during the same period.

Secretary Panetta said, "The number one reason people in the service lose their security clearance is because of financial problems."

How does one conquer financial problems and achieve financial fitness? The answer is very simple to explain, but difficult to execute. The staff sergeant in our story became financially fit by spending less than she made. That's it. Through budgeting and hard work, she saved money instead of borrowing it. However, going on a spending diet is hard to do.

The best way to control spending is to create a detailed written budget where you spend every dollar on paper before you see a dime. Most Americans live paycheck to paycheck and many could not tell you where all of their money went at the end of the month. By simply planning your spending, you are taking control of your money and making it work for you. It will feel like you got a raise, and more importantly you, will have the peace and security of knowing you are in control of your finances.

When I did a budget, I quickly realized that spending $5 a day on coffee cost me $150 a month and $1,800 a year. That is the financial equivalent of a family vacation. Even more eye opening was the fact that $150 a month saved from ages 20 to 65 while earning the stock market average of nine percent per year would grow to $1.1 million. That is some expensive coffee.

If you are married, I strongly recommend you and your spouse discuss and agree on the budget. This will put both of you in control of your family's spending and improve your communication. The number one cause of divorce in America is financial problems.

Many of these problems can be avoided by cooperating on a spending plan.

Lack of financial fitness also affects deployment readiness. A financial consultant claims 55 percent of military spouses reported problems managing expenses during their spouse's deployment, and 17 percent reported major financial hardships or bankruptcy.

These facts really hit home for me as I prepare for my first deployment as a married man. Fortunately, my wife and I are in full agreement about our financial goals and how we should spend our money. She is confident she can handle any financial situation while I am away, and I do not have to worry about coming home to a financial mess. All of this peace stems from the fact that we agree on a detailed written budget every month.

What if you are in a serious financial hole? First of all, you are not alone. Americans who have at least one credit card have an average of $15,950 of debt on their cards. Many are there because unexpected events impacted their lives. The good news is that by following a detailed budget you can get out of debt. He claims most people take 18 to24 months to pay off their debts. Examples abound of people who have paid off $10,000 while only making $30,000 a year. Mathematically it can be done. The biggest factors are discipline, motivation and a willingness to sacrifice.

The Airmen and Family Readiness Center provides financial education, information and consultation to help military members and their families. They have counselors who can help you plan a budget and get out of debt. Like physical fitness, financial fitness is 10 percent knowledge and 90 percent effort. Only you can decide to do what it takes. If a life free from financial stress, peace of mind while deployed and a secure financial position in the future appeal to you, then take control of your finances today.