Get prepared: Steps toward financial readiness

  • Published
  • By Lt. Col. Lester Weilacher
  • 31st Comptroller Squadron
If you know what triple witching hour is, you can probably feel comfortable skipping this article. On the other hand, if you think triple witching hour has anything to do with Halloween or an afternoon spent with your mother-in-law and spouse's sisters, you might want to read on. 

In a recent Letter to Airmen concerning personal financial management, the Secretary of the Air Force and the Chief of Staff of the Air Force remarked, "Although we often see our professional life in a very disciplined way, we sometimes don't realize how our personal well-being affects our job performance. Being on solid financial footing is one way you can positively affect your life." 

Being on shaky financial ground can have disastrous and distracting effects. Consider these facts from 2004 compiled by Paul Bannister of Bankrate.com: In some 1.6 million U.S. households, one of every 73, filed for bankruptcy in 2003. 

Some 40 percent of American families annually spend more than they earn. Average credit card debt among people who have at least one card is $9,205, triple what it was in 1990. 

Beyond the numbers, being on shaky financial ground affects your personal life.
According to Dr. Phil, and who doesn't trust Dr. Phil? "Money can ruin your marriage. In fact, it's the number one problem in marriages and the number one cause of divorce."
As Air Force members, we're kidding ourselves if we think personal financial issues don't spill into the workplace. Compound these stressors with force shaping, deployments and transformation, and the need for personal financial planning becomes clear. 

Basic financial planning is not difficult. The road to solid financial footing begins with these simple steps. 

Spend less than you earn. If you currently spend more than you earn, you have two choices. Earn more or spend less. I don't know about you, but between work, family, off-duty education, deployments, professional military education and fitness I don't have much time for a second job. What I earn is pretty much set in stone. 

On the other hand, my wife has control over how much we spend. Our cars aren't new because they are cheaper to insure and our TV was made before the youngest Airmen in my squadron joined the Air Force, so I don't have a $4,000 plasma TV on credit. Even though I readily admit to battling a $35 per month cappuccino addiction, we consciously decide to spend less than we earn. You can too. Your secret weapon is the very discipline you employ daily in adhering to our Air Force core values. 

Once you are spending less than you earn, put the "extra" towards paying down high interest rate credit card debt. According to cardweb.com, the average interest rate on credit cards in the U.S. is 13.37 percent. Not paying 13.37 percent is about as good as earning 13.37 percent. There is simply no better deal for your "short term" money. The only thing that comes close is the Savings Deposit Plan with its 10 percent annual rate of return but you can only use the deposit plan if you are deployed in a hostile area.
Build an emergency savings fund. Most financial planners recommend a minimum of three to six months of salary stashed away in a federally insured bank or credit union account. You need this because the moment you deploy, the used BMW's transmission will fail or the family dog will need surgery or the hot water heater will die. 

Without cash to fall back on, you're forced back into the credit card game. 

For further study on these fundamental topics or help with more advanced financial topics, the experts at the Airman and Family Readiness Center have a variety classes and programs to meet your needs. They can be reached at Ext. 5407. 

By the way, triple witching hour is the final hour of the stock market session the third Friday of March, June, September, and December, when option contracts and futures contracts expire on market indexes used by program traders. The simultaneous expirations often set off heavy trading of options, futures and the underlying stocks, which can cause large fluctuations in the value of their underlying stocks.
And for the record, I love my mother-in-law and my wife's sisters!