On Veterans Day, when we think of the sacrifices made by those who serve in the armed services, we often think of the physical and psychological trauma associated with war. But one thing that’s often overlooked is the financial mess that many veterans face either during their years of service or afterward when trying to transition into civilian life.
Here are three ways military veterans and those currently serving are getting screwed financially, and how they can fight back.
1. Being targeted by sketchy lenders
It’s no coincidence that outside many major military bases there are rows of pawn shops, payday lenders and “buy here, pay here” car dealerships offering credit at horrendous interest rates.
Because they can expect a steady paycheck from Uncle Sam, many “alternative” lenders target military personnel, says Mechel Glass, a U.S. Army veteran and vice president of community outreach at the credit counseling nonprofit CredAbility.
“There are not just the check cashing places but there are a lot of car dealers that are there that have signs up — I just went recently to one of the bases and there were signs that said ‘We welcome the military here,’ trying to sell them cars because they know they have a steady paycheck coming in,” she says.
Many of those new to the military get into using such lenders in part because they don’t have the credit history necessary to qualify for more mainstream sources of credit.
“Many of them are going there because they’re avoiding going to a traditional bank,” Glass says.
How to fight back: Establishing credit by getting a secured card and building a relationship with a legitimate bank or credit union can help ensure military personnel can get decent rates on car loans and other types of consumer debt, Glass says. She recommends joining USAA, which caters specifically to military veterans.
The CFPB also has information for service members on how to weed out bad credit offers .
2. Racking up too much debt
The loneliness and emotional stress of deployment can often lead service members to seek solace in overspending, says Glass, causing some to fall into credit card debt. Those debts may also grow thanks to late fees and other charges, as deployment can make it difficult for soldiers to keep on top of their bills.
Compounding the debt problem is the fact that military homeowners who are transferred to another location sometimes have trouble selling their homes, so they can sometimes end up having to pay a mortgage payment in addition to paying to rent a house at their new location.
All that debt can eventually cause a member of the armed services to lose valuable security clearances and even get them kicked out of the military altogether because they’re seen as vulnerable to bribery, Glass says.
“The military wants to make sure you’re not a security hazard if you are carrying a lot of debt,” she says.
How to fight back: Setting up automatic billpay and using online banking can help service members stay on top of their bills even when they’re deployed overseas, Glass says.
To deal with the debt you already have, credit counselors that work for credible nonprofits can help you come up with a plan to curb your spending and get back on track. The military also offers free financial planning services through Personal Financial Management Program offices located at every Department of Defense installation.
3. Trouble getting back into civilian life
Challenges like finding a place to live and finding a way to pay bills without a military salary can hit veterans on the way out of the armed services, but the biggest issue can be finding a civilian job, Glass says.
“The No. 1 problem is finding employment. That’s one of the first challenges,” says Glass.
“It’s difficult because they’ve been doing a job for a number of years in a certain MOS, or whatever their job description may be, and trying to translate that over into civilian employment is sometimes difficult,” Glass says.
The other issue is networking. For civilians, professional networks of friends and colleagues can help those who lose their jobs find a new gig, but most military personnel don’t have those types of networks outside the armed services, she says.
How to fight back: The Veterans Administration has lots of resources for veteran job hunters, Glass says, so registering for jobs programs there is a good first step. Those with service-connected disabilities should take advantage of the Vocational Rehabilitation and Employment Program to train for new careers, and entrepreneurial types can also get support from some universities, such as Syracuse University , which offer programs to help vets start their own business.
Going to college on the G.I. Bill is another good option, Glass says. Veterans get up to 36 months’ worth of educational benefits that cover full tuition at public state universities. One thing to watch out for, though: Glass says for-profit colleges that are currently targeting veterans with expensive degree programs that may not do much to help them get a job.
What do you think? Veterans, are there any things I missed? What financial challenges did you run into as a result of your service?