Do You Have What it Takes to Survive Civilian Life?

Brad Pagano and the San Diego Financial Literacy Center recently published a military impact study, demonstrating how many transitioning military families are ill equipped financially to transition well.

Divorce, depression, homelessness all can stem from not having financial stability upon exiting the military.

Did you know that a large percent of our military families spend more than they earn driving them in unrecoverable debt? The average number of credit cards used by military personnel is 5.5 and 90% carry balances. The average credit card debt is over $11k. No wonder tens of thousands of our military families receive food from the San Diego food bank each month.

Here are some statistics from their recent study:

According to a recent National FINRA Foundation Capability Study (Skimmyhorm, 2017) 54% of Military families have a “rainy day” fund and 43% do not and it mirrors rank: o E1-E9 52% have fund / Officers 69% have a fund

29% of military personnel that make less than 25k a year spend more than they make

21% that make between 25k and 75k spend more than they make

13% that make more than 75K spend more than they make

Obviously, one of the key components to a successful transition is having enough capital and money saved to incur any delay in employment or to offset lost wages. Their data has found that in San Diego “rainy day” funds are tougher to come by for lower earners and cause a high level of stress. A big component to the financial stress has to do with the higher cost of living in San Diego compared to other military locations throughout the United States (Expatistan, 2017)

Credit Card Debt is higher in San Diego.

When asked why credit card use was so prevalent; top responses include cost of living, lack of cash flow and unexpected expense.

· 92 % of service members surveyed used credit cards in the last 12 months

· Average number of credit cards in use by personnel in San Diego is 5.5 with the extreme being 27

· 56 % have more than 5 cards

· 90 % carry balances month to month

· Average credit card debt is $11,223 with a high of over $33,000

Comparative Data from NFCC and Blue Star Families

· 80% of service members surveyed used credit cards in the last 12 months

· Average number of credits cards in use by military personnel is 3

· 20% have more than 5 credit cards

· 60% carry balances month to month

· Average credit card debt is $10,000

But wait there’s more! How about rent vs homeownership?

Over the past two years we have experienced many active, transitioning and veteran constituents who are struggling with increasing rents. With the average rent in San Diego for a 3 bedroom domicile around $2,700 (Rent Cafe, 2017); SDFLC has partnered with several organizations to further education on the VA Home Loan Benefit. A key cog in affording a home is the ability to save money that can be used to cover the ancillary costs associated with ownership. As the fiscal responsibility of ownership shifts away from the landlord it is imperative to have a fund to handle these contingencies. The SDFLC has found that over half of transitioning personnel are unaware of the myriad costs associated with home ownership and often times rely on credit cards or loans from financial institutions to handle basic maintenance. Moreover, about 25% of transitioning and veteran personnel have concerns with not only affording a home/mortgage but also in covering basic household needs (NFCC: National Foundation for Credit Counseling, 2014). “We feel it is important for our transitioning personnel to be adequately educated on the benefits of home ownership but also on the perils of home ownership. Allowing the service member to determine a rent vs. buy scenario empowers them to make smarter financial decisions for themselves and their families.”

Conversely, the SDFLC has also found that those personnel that have adequately prepared for the transition and are able to afford a home are able to exponentially increase their net worth. The average net worth of a homeowner is $225,500 vs $5,000 for a renter; a 45 x increase (Federal Reserve, 2016).

If you or someone you know needs financial assistance, guidance and or financial education, connect with Brad Pagano and his experienced and caring team at the San Diego Financial Literacy Center today.

The complete results of the above-quoted study can be found at

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