Soldier of Finance (5 page)

As my dad got older, the constant stress of struggling with money started to wear on him. I can remember visiting his house and seeing that next to his computer in his home office was a list of all his credit card debt. Each one of them was in the 20% to 30% APR range. He constantly worried about how to make the minimum payments. Often he used one card to make a payment on another. He took cash advances to pay credit card bills. It was a vicious cycle and he never seemed to understand the problem.

In spite of his own financial stress, his was the strongest voice encouraging me to open my first credit card. Throughout my teen years, that was what I believed I needed to do. Soon I had the same kind of debt he struggled with. He genuinely believed it was a good thing for me, but his advice was not in my best interest.

In time, as I began to recognize how poor his spending habits were, I changed my own. However, that didn't automatically eliminate him as a Blue Falcon in my life. When I was 24 years old, my grandmother passed away and my father and I both inherited some money. My dad wanted to borrow my share of the inheritance in order to pay off his debt and get out from under the load he was carrying. He planned to pay it back in monthly installments.

My girlfriend, who later became my wife, proved the value of a good Battle Buddy. She reminded me that he already owed me money from previous loans, and he wasn't paying that back very consistently. “You can't do this,” she confronted me. “It won't help him and it won't help you.”

That was the first time I ever said no to my dad. I remember the day clearly. It was the hardest thing I had ever done. I sat in the car, cell phone in hand, ready to go to the center where I worked out. I told him no, hung up, and started crying. The emotions of that moment were intense, draining, and disturbing. It was more than the difficulty of saying what needed to be said to a close relative; it was the recognition that he should never have put me in that position in the first place. Blue Falcons set you up for failure if you let them.

You are probably surrounded by Blue Falcons. Most of them mean well, but they don't share your goals. They are the people who influence your behaviors and habits away from where you need to go.

Let's say you make a commitment to budget in order to save some money and take care of a specific debt. This means controlling your spending by watching how many times you eat out each week, what you do for recreational activities on the weekend, and how much you spend on things you don't necessarily need, like new designer clothes.

Blue Falcons in your life are people who pull you away from that commitment. They might be coworkers, or they could be friends or family. As soon as you decide to stop eating out, a Blue Falcon will suggest having dinner at your favorite Mexican restaurant, the one you go to every Thursday night. As soon as you decide to cut back on buying new clothes, a Blue Falcon will invite you to go to the mall, the one with your favorite stores. Blue Falcons will provide you with constant temptations to break your commitment. Battle Buddies will do whatever they can to encourage you to keep your commitment.

Understand that people only qualify as Blue Falcons if you have communicated to them what you are trying to accomplish. If they don't know you are trying to get out of debt, they won't be aware that anything has changed, and they won't do anything different. Being a Soldier of Finance requires that you communicate with people. If they know your goals and still try to influence you to do other things, they are Blue Falcons. If your friends know you have bad spending habits, and they still tell you to charge just one more pair of shoes, they are not Battle Buddies. They are Blue Falcons.

Choosing Battle Buddies requires that you identify the Blue Falcons in your life. Once you know who they are, you will need to either cut ties or at least reduce the amount of time you spend with them and minimize their influence on you. I cannot stress enough how important this is. Be honest with yourself. If you are easily influenced, you will have to admit it to yourself enough to step back and make some changes.

We've already covered several extremely important points and we haven't even started the training yet. We've defined why you're here and taken steps to build a reliable support system around you. This will pay important dividends down the road. Success starts with having the right attitude. You are in this to succeed, so lay the right foundation for success. Give yourself the best possible chance of winning. It does matter. It matters to your family, your true friends, and your future. As Vince Lombardi said, “
If it doesn't matter who wins or loses, then why do they keep score?
”

Go / No Go

• The Soldier of Finance Oath is an act of commitment to make a change.
  
• The Soldier of Finance Creed is a statement of personal values and of your mission in life.
  
• You need a Battle Buddy, someone who will give you encouragement to achieve your goals and also give you honest advice, even when it's unpleasant.
  
• Blue Falcons are those friends or family members who distract you away from your goals. You need to be aware of who they are.
  

Phase One is designed to gain control of your financial life. The Initial Training Phase involves analyzing your situation and abolishing negative influences. You will identify your weaknesses, bad habits, and debts, and change or eliminate them. By the end of this section, you will be prepared to get yourself out of the red and into a positive cash flow.

They specifically tell you to wear underwear…And to bathe, or shower, the night before. That may seem trivial, but I suppose when they get to the part of the exam where they tell you to strip down to your boxers, they don't want any surprises. Before they're done, even the underwear won't keep anything hidden.

That is my primary memory of MEPS, the Military Entrance Processing Station. Before they administer the oath, the Army wants to know everything about you. Try to hide anything and you'll either end up heading home or sitting in jail. They take it pretty seriously. Skeletons in the closet won't necessarily keep you out of the Army, but trying to keep them secret definitely will. The recruiter will have already asked a truckload of questions; if there was anything you didn't want them to find out, something you had done in your past, they would find out anyway.

That worried me. I had always thought I had flat feet or kind of low arches. People had warned me it could be a problem. To cover it, they recommended that I stand with the pressure on the outside of my feet, creating the illusion of natural arches. I tried it, but honestly, I don't think it made much difference. If it were really a problem, they would have seen it.

First came the Medical Questionnaire, with questions about everything that had ever happened to me, every broken bone, every serious cut, every disease—everything. That was before the physical.

We were given blood and urine tests, hearing tests, and eye exams. We were weighed to ensure that we were within the accepted standards. If we had anything in our blood system, from alcohol to HIV, they found it.

About thirty of us were herded into a room and told to strip down to our boxers. At that point they would know if we had neglected to put on underwear, and they would probably know whether or not we showered.

They inspected us for scars or skin abnormalities, deformities, pelvic tilt, scoliosis, leg length discrepancies, and flat feet. Apparently I didn't have any.

We were guided through a whole range of odd exercises—making full arm circles, flexing our elbows, touching our thumbs to our shoulders, and bending over to touch our toes. They watched carefully, ascertaining whether we had a normal range of motion and flexibility. Any signs of pain or discomfort from the movements and they would know something was wrong. Having us raise one leg in the air or stand on our toes and walk around tested our balance.

Once satisfied that we weren't crippled in any way, they moved us on to the next part of the physical. A doctor interviewed each one of us, complete with poking and probing into every cavity he could find.

I hated it at the time, but I recognized that the Army needed to know if there were any potential problems. They were about to invest a lot of money and time into training me, and did not want to get six weeks in and find out I had a back problem that would keep me hospitalized for the duration of my enlistment.

As a Soldier of Finance, you must complete a thorough examination of your current financial status. You can't plan your future without understanding your present. If you have financial skeletons in your closet, you need to acknowledge them now. You have to swallow hard and admit that you made some poor financial decisions. If you have a lot of student loan debt or high credit card balances and no savings, it's time to stop being in denial.

Don't run from your financial skeletons; embrace them before they ruin your future. Instead of living in dread of them, use them as inspiration to push you to where you need to be.

I am consistently amazed how often people don't know how much debt they have. Not long ago, I met with a couple planning for retirement. They were about five to ten years out with plenty of time to prepare and I was impressed that they were thinking ahead. Many people wait until it's too late to do much for them. I happily sat down to help them plan their financial goals.

I met with the wife, since her husband was working that day, and started with a few basic questions, to get an idea of what we had to work with. It was all fairly routine.

“How much debt do you have?” I asked.

“Oh, we don't have a lot of debt,” she responded.

“How much do you have?” I continued, trying to get a specific amount nailed down.

“Oh, I don't know exactly, our house is paid off and we don't have much else.”

I began to get excited. As a financial planner, when someone tells me that their mortgage is paid off and they have minimal consumer debt, I start thinking the possibilities are really good. We looked at their savings, and while I would have preferred a little more, it looked like they were in good shape. I thought,
“This is impressive.”

I needed more precise figures, however, to really plan, so I sent her home with an assignment to gather all the information on any debt they still had. Then the truth came out. I opened her e-mail and was floored by what she thought was
“not much debt.”

First she listed their car loans. Not one, but two, totaling about $15,000. Then she said they also had a camper on which they still owed $10,000. To top it off, they had credit card debt totaling $25,000. Altogether, that amounted to $50,000 of consumer debt, hardly a small amount! To make it worse, some of the credit cards were from department stores where they paid interest from 18% up into the 20% range.

Suddenly the conversation went from
“not much debt”
to
“a lot of debt.”
To make matters worse, the husband didn't know how much debt they had, given his wife took care of the bills. He was working at his job, dreaming of retirement in a few years with plenty of savings and no financial worries. Suddenly that was in jeopardy.

This couple illustrates the problem, but they are hardly alone. An amazing number of people are in the same position. I frequently hear young people in college talk about their student loans. “Oh, I only have $15,000 in debt.”

“Only”
$15,000? That's a lot of debt! And for most students it's even higher. They often have credit card debt and a car loan on top of that.

If you have any consumer debt at all, it's too much. Take the steps to eliminate as much of it as you can, as fast as you can.

 

The Army physical was not pleasant. No one likes having everything about them exposed, even to themselves. But it is absolutely vital to success. You can't fix something if you don't know it needs fixing.

If the Army finds something wrong, you're sent home, and that's it. Fortunately, as a Soldier of Finance, you get the opportunity to correct the problem before it creates greater hardship. Living in denial won't get you anywhere. If there are skeletons in your financial closet, you need to know they're there. Debt is an enemy to your future, and you need a plan to combat it.

The most important ingredient of a tactical or strategic decision is information. A general cannot coordinate the movements of an army without knowing where the enemy is, how strong he is, and the direction in which he is moving. What that means is that one of the most important things a soldier can do is report information. When I was on duty in Iraq, most of our patrols were for the purpose of keeping track of what was happening around us, so that information was as accurate and current as possible. We were trained from the beginning to observe and report.

The basic form we used was called a Spot Report, or SPOTREP for short. A SPOTREP was a report we were expected to submit within five minutes of observing enemy activity. We were trained to use the SALUTE format to make sure we didn't miss anything important. SALUTE is an acronym for:

 

 

With the Spot Report in hand, officers could make informed decisions about how to handle enemy movements. Since debt is the enemy of the Soldier of Finance, our goal is to gain a clear understanding of what we face.

A Soldier of Finance needs accurate information. At this point, we are going to create a variation of the Spot Report, which we'll call the Debt Situation Report. We'll shorten that to the SIT Report, to make it easy to remember. That stands for:

 

 

In order to complete this report, list every debt you have. Begin with the size of the debt and include the amount you owe on it and the interest rate you're paying. You might be shocked when you see how much you're paying every month beyond the principal. Include the amount of your monthly payment, to make sure you know how much is going out every month. (If you want to insert “Payment” into the acronym, that would make it a SPIT Report, which could be more appropriate.) Finally, list the type of debt—credit card, car loan, student loan, etc.

Your SIT Report should include every debt you write a check for each month. If you're making a payment, it's a debt. Your goal here is to answer questions you've avoided for too long:

• How much debt do you really have?
  
• How many credit cards do you have?
  
• What are the interest rates on those cards?
  
• Do you have a student loan, and what is the interest rate on it?
  
• How much is your mortgage, and what interest rate are you paying?
  

Jotting down all of your debts and all of your interest rates will give a clear snapshot of your current position. Step one in training is to look at the real picture. Don't worry about how to fix things. We'll get to that soon enough. First, uncover the truth. Just as the Army physical reveals every flaw, you need to be brutally honest and transparent as you examine your financial situation. You don't have to physically stand naked in front of a doctor, but you do have to take a hard look at your reality—no matter how embarrassing it might be.

 

In October 2008, Steve Burton, an information technology specialist at a bank in Palm Springs, attended his twentieth high school class reunion. He walked in the door like a conquering hero, decked out in a Marine dress uniform with lieutenant colonel insignia and a mass of medals, including a Purple Heart, a Bronze Star, the Legion of Merit, and the Navy Cross, the highest medal awarded exclusively by the Navy.

A year later, he was in U.S. District Court, charged with impersonating a U.S. Marine and with wearing unauthorized medals.

As it turned out, Burton has never served in any branch of the military. The medals had been purchased on eBay and at military surplus stores. He had a picture taken of himself in the uniform on the beach at Coronado Island. He blogged extensively about service in Afghanistan and Iraq, although he had never been there.

Everyone was deeply impressed at the reunion, and Burton was the center of attention; a little more attention than he bargained for, as it turned out. A woman who actually was a Navy commander knew how rarely the Navy Cross is awarded. It is only given for
“extreme gallantry and risk of life, beyond the call of duty, performed in combat with an enemy force.”
She was a little suspicious, so she asked Burton if he would pose for a picture with her.