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Military Affinity Businesses1/26/2016
Caveat Emptor, let the buyer beware, bottom line is, itís your responsibility to determine if you are getting a good deal, or if you can afford to make a purchase. Just because a business is on a military base doesnít mean they are looking out for your best interest, bottom line itís up to you.
Too often service members are unaware there are financial predators on their own base installation. Banks and other financial institutions have sales quotas, oops, the secret is out. Many of these affinity businesses are on base giving seminars, promoting their products and services. These affinity businesses make service members feel confident they are looking out for their best interest. They provide marketing and power-point presentations showing their financial expertise of how much a car, or mortgage payment can be. Their information is seldom supported with sound financial facts, itís a sales pitch. This is not to say they all are predators, itís up to you to do your homework and decide.
Itís very common for a bank or credit union on base to promote their special car, or mortgage financing deal to service members. Convincing service members a car payment can be 30% of their income. They show how to qualify for a VA home loan with a Debt-to-income ratio up to 43%. They tell you a consolidation loan will solve all your financial problems by paying off your credit cards, so then you can afford to purchase the new house or car. Yes, these examples all happen on military bases daily.
Why do we never hear about these on base predators? There is no secret this is happening, but few will talk about it, or write about it.
Service members must be aware and seek sound financial advice, always get several quotes from sources on and off base. Always double, triple check all financial offers before you sign on the bottom line. Just because you watch a flashy presentation on base from someone with a ďbig threeĒ financial institution logo on their shirt, doesnít mean they are looking out for your best interest, or know what they are talking about. Trust your gut, double, triple check everything. Car payments shouldnít exceed 10% to 12% of your income. A mortgage payment should be around 25% of household income. Check your debt-to-income ratio, are you over 32%. If you canít continue to meet your savings and investing goals after making a long-term financial commitment, then you canít afford it, period. Never deplete your cash emergency fund to purchase a car or house. Your TSP isnít an emergency fund, and never take loans from your TSP.
Find a trusted financial counselor on or off base, someone without a vested interest in your purchasing decision, double check with them, if it sounds too good to be true it is. You donít need a new car or house to look successful, you already are by serving your country, driving a new car doesnít change that. Donít put yourself in a bad financial position and file bankruptcy, which may impact your future military service, or civilian career.
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