Navy Announces Personal Financial Management Program - Brief Article

All Hands, Feb, 2001

Recently, a 25-year-old Jacksonville, Fla.-based Navy aircraft mechanic needed an extra $300 to pay for unexpected expenses, so he went to a well-known local company for a loan to cover him until payday. On payday he did not have enough money in his paycheck to cover his regular bills plus this cash advance. He could not let the check to the original lender bounce, so he went to yet another local company for an additional loan and wrote several more checks totaling $390 to cover the original $325 advance plus fees.

He ended up starting a trend that went pay day after pay day until five months later, he was writing checks totaling $2,950 to cover the "floats" created by the original $300 loan.

According to the Navy and Marine Corps Relief Society, millions of Americans every year are targeted by lenders who market to the young, under-informed and under-privileged. These "lending predators" seek out vulnerable citizens who feel that they have limited lending resources available and are unwittingly and, more often than not, led down the road to financial ruin.

To better protect Sailors from these "lending predators," Comptroller of the Navy Charles Nemfakos announced Nov. 14 that the Navy is initiating a new Navy Personal Financial Management (PFM) program starting this fiscal year. The new PFM curriculum is designed to develop good financial habits early in the training of officers and enlisted personnel and prepare them to avoid these "lending predators."

The Navy's initiative will provide two days of professional non-military instruction at "A" schools and apprentice training for nearly 57,000 boot camp graduates; a PFM undergraduate level education for Naval Academy midshipmen; and expanded Bureau of Personnel outreach to junior Sailors, spouses and command financial specialists.

The need for financial advice to junior Sailors was felt by one squadron commander, CAPT Andy Anderson, commanding officer of Patrol Squadron (VP) 30 at NAS Jacksonville, Fla. Back in 1993, he was CO of VP-16, also in Jacksonville, when a young Sailor approached him and asked for advice on how to best invest $500.

"So I asked him, how much do you have in savings? How much do you have in life insurance?" Anderson inquired. "So I started talking to him. Within a few minutes, I had an audience of about 20 guys standing around me with their mouths open. So I knew I had a market."

Anderson started a financial planning seminar for his squadron. It was just a two and a half hour talk about buying used cars, homes and how personnel can get into trouble with credit.

"It almost became a full-time job," Anderson explained, "and I knew the Navy needed it."

The Navy is making sure that the same sort of financial skills training that Anderson gave to his squadron will now be given to junior Sailors while they're still young.

"There is considerable evidence of the importance of providing our Sailors with a sound foundation of personal financial management skills early in their careers," Nemfakos said. "Providing such a foundation would result in reducing disciplinary problems in the fleet and domestic problems at home; failing to provide it would contribute to the erosion of the Navy family."

The Navy budget for the PPM initiative includes $6 million this fiscal year for startup costs and a six-month development period, and $8.9 million in FY02. The Chief of Naval Education and Training (CNET) has developed an implementation plan which includes awarding a contract in Spring 2001, followed by a pilot program, and commencing training as early as August 2001.