naval financial management

8/8/2019 Naval Financial Management

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UNIT 3 TOPIC 4

PERSONAL FINANCIAL MANAGEMENT

General Military Training

Personal Financial Management

LEARNING OBJECTIVES:

3.4.1 Explain the Navys Personal Financial ManagementProgram.

3.4.2 Explain personal and family spending plans.3.4.3 Explain the basic uses of credit.

3.4.4 List appropriate and inappropriate uses of credit.3.4.5 Calculate debt-to-income ratios.3.4.6 Explain the warning signs of too much debt.3.4.7 Identify three sources of help in answering questions

about credit and managing personal debt.

REFERENCES:

1. OPNAVINST 1740.5A (Draft)2. U.S. Navys Personal Financial Management Standardized

Curriculum (PERS 662)3. OPNAVINST 1740.1 Fleet and Family Support Center4. Command Financial Specialist Training Manual5. Navy Legal Services Office6. www.lifelines2000.org7. www.moneycentral.msn.com8. UCMJ Articles 123a and 1349. http://www.a-home-mortgage-credit-card-debt-loan.com/

SLIDES:

3-4-1 Personal Financial Management3-4-2 Navys PFM Program3-4-3 Spending Plans3-4-4 Example Spending Plan

3-4-5 Elements of Financial Planning3-4-6 Income Planning3-4-7 Debt-To-Income Ratio3-4-8 Credit Card Facts

3-4-9 Credit Example3-4-10 Appropriate Uses of Credit3-4-11 Inappropriate Uses of Credit3-4-12 Motivations to Abuse Credit3-4-13 Warning Signs of Too Much3-4-14 Debt Warning Signs

3-4-15 More Warning Signs3-4-16 Indications of Serious Proble3-4-17 Consumer Credit Protection 3-4-18 Dealing with Creditors3-4-19 Things Not To Do3-4-20 Sources of Help3-4-21 Core Values and Financial P3-4-22 Summary3-4-23 Thrift Savings Plan I3-4-24 Thrift Savings Plan II3-4-25 Thrift Savings Plan III

3-4-26 References

CASE STUDIES:

1 through 4

NOTE TO THE FACILITAT

The main points of this topic are:

The Navys Personal Financial M

Personal and family financial pl

How to use credit

Appropriate and inappropriate u

The effect of debt-to-income rat Warning signs of too much cred

Where to get help


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DISCUSSION POINT RELATED FACILIT

I. DIRECTIONS FOR FACILITATOR

A. This lesson guide is just that a guide. It is desiredthat the assigned facilitator personalize the lesson to

produce a training session that is fluid and interestingfor the intended audience. Ensure all the learningobjectives are met. Do not read the lesson word forword.

B. The PowerPoint slides are to be used as a referencefor the facilitator and the audience. The lesson willnot have as deep an impact or make sense if taughtdirectly from the information on the slides.

C. Facilitator must maintain eye contact with theaudience.

D. When discussion questions appear in the lesson, askthe question then allow for a response and discussion.Do not continue until either the correct response or anacceptable response is provided. Guide the discussionas necessary to encourage audience participation.

E. Prior to conducting the lesson, ensure training aids areset up and functioning properly. Practice the deliveryof the lesson.

II. INTRODUCTION

A. Management of personal finances is becomingincreasingly difficult for the military in todayscomplex and sophisticated marketplace.

B. Approximately 50% of all military have some form of

SHOW SLIDE 3-4-1 PE

MANAGEMENT

Facilitator Note: Begin


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financial trouble at one or more times in their career.C. Bottom line begin planning now to avoid placing

yourself and your family in financial difficulty, particularly bankruptcy. Successful management of

financial and personal affairs requires careful planningand budgeting.D. There are many other information resources available

to help keep your finances on track. The CommandFinancial Specialist (CFS) is an excellent starting

point for information.E. This lesson will present an overview of points to think

about and helpful hints in managing your finances. Itwill also focus on types of credit, appropriate uses ofcredit, how to tell if you have too much debt, and how

this affects your life.

III. THE NAVYS PERSONAL FINANCIAL

MANAGEMENT PROGRAM

A. The Navy cares about its people.1. It is committed to providing you with proper

financial responsibility training. However, personal finances require individual commitmentand knowledge of the professional ramifications.

2. The Navys Personal Financial ManagementProgram includes training at accession pointtraining sites and continues through to thecommand General Military Training Program.

3. The Command Financial Specialist Program was

discussion about the imfinances. Point out that:

1. It is a leading caumilitary member

financial difficulty2. Navy is committedit takes individualthing.

3. There are counselFleet and Family S


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established by OPNAVINST 17450.5A to providefinancial education training.

B. Three reasons to be concerned about your finances:1. To keep money in your pocket (by developing

good spending and saving habits).2. Navy policy requires you to stay financially afloat,the NAVPERSCOM Manual Article 6210140states financial mismanagement and/orirresponsibility are grounds to:a. Lose a security clearance.

b. Be removed from NEC (Navy EnlistedClassification Code).

c. Affect duty assignment and cause failure toscreen for overseas duty.

d. Have wages garnished from paycheck.e. Lose reenlistment privileges and Selective

Reenlistment Bonus (SRB).f. Have disciplinary action taken by the

command.g. Be administratively discharged.

3. You need it (we all do)!a. This is a hard lesson to ask you to think about

how you spend your money and to task you to

think beyond this weekend. b. Those that get the message of this lesson aregoing to be light years ahead and have moremoney in their pocket.

SHOW SLIDE 3-4-2

FINANCIAL MANAGEM


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IV. PERSONAL AND FAMILY SPENDING PLANS

A. Developing a spending plan will help you:1. Live within your means.

2. Realize personal goals.3. Establish and maintain good credit history.4. Get more for your money.5. Reduce stress associated with financial problems.6. Achieve competence and confidence.

B. Developing a spending plan or financial planning isnot about telling you what to do with your money. Thehope is that it will challenge you to think before youspend and create a plan.

C. Here are some characteristics of a sound plan.

1. A spending plan is a guide and a servant, not amaster. Everything does NOT have to be figureddown to the penny.

2. It is unique to you and therefore reflects YOURneeds, wants, values, and goals.

3. Your plan should be based on your current incomeand expenses, but should be practical and realisticand still allow for future possibilities.

4. Times and circumstances change, so your plan

should be flexible enough to adapt.5. A reasonable plan should allow for pleasures aswell as necessities.

D. Elements of financial planning:1. Income your pay and allowances equal income.

SHOW SLIDE 3-4-3 PER

SPENDING PLANS

SHOW SLIDE 3-4-4 E

PLAN

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2. Expenses your family and personal expenses.3. Indebtedness the amount you owe to creditors.4. Savings once you have adequate income, a

spending plan in place, controlled spending and

insuranceyou are ready to save. The old adageall of you have probably heard, Pay YourselfFirst is essential to healthy finances.a. You can develop a savings plan around

establishing a reserve fund (expected expensessuch as a vacation), an emergency fund(unexpected breakdowns such aswasher/dryer), or simply a goal fund (new caror home).

E. Net Income Breakdown: The ideal planning

breakdown for using your total net income is70/20/10.1. 70% for family/personal living expenses2. 20% for indebtedness3. 10% for savings4. This is a guideline, not a rule and may vary for

different people based on unique family needs andlifestyle, but the model represents a sound

beginning for most people.

5. Obviously a single Sailor will likely have a lowerliving expense than a married Sailor with children.F. Debt-To-Income Ratio

1. Your debt-to-income ratio is simply the amount ofyour monthly debt payments (not including

FINANCIAL PLANNING

SHOW SLIDE 3-4-6 INCO

SHOW SLIDE 3-4-7


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mortgage payments) divided by your monthlyincome, times one hundred. Mortgage paymentsare not included because real estate is consideredan investment.

2. The debt-to-income ratio should serve as a guideto the wise use of credit.3. Re-compute your debt-to-income ratio each

month.4. Here is how to determine your debt-to-ratio rates.

a. Less than 15% = ok to add credit (withcaution)

b. 15 to 20% = fully extendedc. 21 to 30% = overextendedd. Over 30% = seek help immediately

5. Facing the reality that you are approaching orabove the recognized danger level for debt mayserve as an additional deterrent to unwise use ofadditional credit.

G. Keep Records1. A majority of spending is usually impulse

spending so tracking expenses can improve yourspending habits. Other benefits of using aspending record:

a. Provides a record of daily expenses. b. Identifies expenditure purpose.c. Identifies expenses by category.d. Provides figures to establish a realistic

financial plan.

RATIO

FACILITATOR NOTE:

Debt to income ratio formulMonthly debt payments/mo


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e. Allows for personal flexibility.

V. CREDIT CARD FACTS

A. VISA International has determined that just placing a

credit card in someones hand will cause an increaseof 2 % in spending.B. The average American family has nine credit cards

(1996 American Express survey). Three or four ofthose are used regularly; the average total balance onthose cards if $8,000 at an interest rate of 18%.

C. Nearly half of all credit card holders-43%-make onlythe minimum required monthly payments at least partof the time. (This number has been on the rise inrecent years. Incidentally, the percentage of smart

consumers who pay their credit card bills in full eachmonth has also increased from 29% in 1990 to 36% in1996).

D. Over 19% of Americans monthly income is noweaten up by debt payments.

E. For example, if you charge $500 at 24% and makeonly the 2% minimum monthly payment, it will takeyou 30 years to pay off this charge and you will have

paid $3,610.00 in interest over and above the $500 for

your purchases.

VI. APPROPRIATE AND INAPPROPRIATE USES

OF CREDIT

A. Appropriate uses for credit.1. The best use of credit is to purchase assets things

SHOW SLIDE 3-4-8 CRE

Facilitator Note: Ask the f1. How many of you 2. How many of you 3. How many of you

every month?

SHOW SLIDE 3-4-9 CRE

SHOW SLIDE 3-4-10 APP

CREDIT


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that will grow or increase in value over time, likeyour own business or buying a home or a rental

property.2. Credit is also useful for convenience avoiding

having to carry large sums of cash or as amanagement tool.3. Wise use of credit virtually always falls into one

of these two categories assets or convenience.4. Sometimes use of credit for major consumer goods

(so-called big ticket items) cannot be avoided;few of us can purchase our first car without a loan.This too is an acceptable use of credit.

B. Inappropriate use of credit.1. Credit becomes more dangerous when used to

purchase consumables. Furniture, clothing,sporting equipment, meals out, and vacations losemuch or all of their value immediately after

purchase.

VII. MOTIVATIONS TO ABUSE CREDIT

A. There are four factors that often motivate people toabuse credit or use it unwisely.1. Availability of credit can lead to a buy now, pay

later mentality. Impulse buying on credit canresult in your purchasing an item you would neverhave bought if you had to pay cash. Additionally,you may pay up to 33% more for the item than ifyou had shopped around at discount locations or

SHOW SLIDE 3-4-11 INA

OF CREDIT

SHOW SLIDE 3-4-12 MO

ABUSE CREDIT


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on the Internet.2. Spending on credit to impress others is another

common trap. Advertisements that show peopleusing a credit card to treat their friends can tempt

you to make these unwise choices. Remember thatwho you are and what you have done say far moreabout you than what you won or the number ofcredit cards in your wallet or purse.

3. Lack of, or failure to adhere to, an agreed-uponfamily spending plan is another cause for unwiseuse of credit. A violation of the plan by onemember can result in unwise spending by the other

just to even the score.4. Believe it or not, spending to feel good can

become an additive behavior. Like otheraddictions, the after effects take their toll longafter the good feeling has faded. Avoid this trap byasking yourself if you really need, and can affordto pay for, an item before you charge it.

VIII. WARNING SIGNS OF TOO MUCH DEBT

A. There are several warning signs, in addition to yourdebt-to-income ratio (previously discussed) that you

are on the high-speed highway to financial ruin.1. Those of you who face reality will have plenty ofwarning that your debt load is getting out ofcontrol, starting with not paying off most of yourcards every month. You should become concerned

SHOW SLIDE 3-4-13 WA

TOO MUCH DEBT

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if higher and higher percentages of each monthspay goes to service your debt. When you start tofall behind on payments and/or need loans or cashadvances for daily living expenses, its time to

seek help fast!2. Additional clues that all is not right in yourfinancial world include not having at least onemonths pay in a savings account, being at or nearthe limit on all your credit cards, or relying on asecond job or spouses income to make ends meet.Remember that outside income and your spousesemployment can be affected by an extendeddeployment or Permanent Change of Station.

3. You should acknowledge that things are critical

when you start skipping some bill payments, usingcredit to pay credit, using or even considering adebt consolidation loan, being denied additionalcredit, or hiding bills and lying to members ofyour family.

IX. YOUR CREDIT RIGHTS

A. When you are being denied credit you should befamiliar with the Consumer Credit Protection Laws.

1. Truth in Lending Acta. The Truth in Lending Act of 1968 andamendments ensure customers are giveninformation about the cost of the credit forwhich they are applying.

SHOW SLIDE 3-4-15 MO

SHOW SLIDE 3-4-16

SERIOUS PROBLEMS

SHOW SLIDE 3-4-17

PROTECTION LAWS


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b. Lenders must disclose the cost of any loanexpressed both as the annual percentage rate ofinterest and as the total finance charge indollars. It applies to single purchases made on

credit as well as purchases by credit cards.c. Additionally, the Act provides three businessdays in which you may cancel a transactionthat used your home as security or that took

place at your residence (door-to-door sales).This does not apply to all purchases; forexample, there is no cooling off period on car

purchases.d. This law also limits your liability for lost or

stolen credit cards to $50 per account, if you

notify the issuing company. Contact themimmediately and follow up in writing.

2. Fair Credit Billing Acta. This act protects you from billing errors and

allows you to dispute charges in writing within60 days.

b. You should review your statement each monthto be sure you recognize all charges.

c. You may also withhold payment for items

purchased on your credit card, which do notmeet the quality standards the seller promisedif your good faith approach to remedy with theseller fails. Not applicable to credit card

purchases made overseas.


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3. Fair Credit Reporting Acta. This act provides for your right to know what

is on your credit record and provides for thedispute and deletion of inaccurate information.

b. The credit bureau must first requestconfirmation from the business that originallymade the disputed entry; if unable to getconfirmation, the information is supposed to

be removed, since the consumer has thebenefit of the doubt.

c. This act allows you a free credit report ifdenied credit and limits the time informationstays on your credit file.

4. Fair Debt Collection Practices Act

a. This act determines the means by which debtcollectors can contact you.

b. You are protected from unfair practices fromthird party debt collectors. They cannot beabusive, harass you, tell anyone else aboutyour debt, or threaten you.

c. You can write to debt collectors and tell themto stop contacting you.

d. You can also sue them for breaking this law.

5. Fair Credit and Charge Card Disclosure Acta. This act requires that credit card solicitationsinform you of their total cost. This includesAPR, grace period, annual fee, financecharges, other fees, and the method for


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calculating the balance.6. State Protection

a. Federal laws do not regulate interest lendersmay charge you!

b. Some states may provide additional protectionin credit matters; however, many have fewcredit or consumer protection laws. In

particular, in some states there is no effectivecap on interest rates.

X. DEALING WITH CREDITORS

A. Even though you may have legal protections as justdiscussed, there are right ways and wrong ways todeal with creditors if you find yourself in financial

difficulty.B. Here are some positive actions you should take.

1. Stay in contact with your creditors; let them knowif there is a problem. If a friend owed you moneyand was avoiding you or not returning your phonecalls, you would think he or she was trying tostiff you. Businesses are the same way, just talkto them.

2. Be honest.

3. Approach them with a plan, but be careful ofpromising more than you can deliver.C. Conversely there are some things you should not

consider.1. Credit clinics. Many of these charge upfront fees

Facilitator Note: Reseaparticular area and provide tinformation is crucial to all

SHOW SLIDE 3-4-18

CREDITORS

SHOW SLIDE 3-4-19 THI


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promising to clean up your credit report fast andget you out of debt. They cannot do anything foryou that you cannot do for yourself. Chargingupfront fees for debt counseling is illegal in a

number of states.2. Debt consolidation loans. Debt consolidation loansare not always bad, but they are at best atemporary fix. They will not work without achange in your behavior. A 1996 study byAmerican Express indicated 78% of all consumerswho take out bill consolidation loans have a higherdebt-to-income ratio 18 months later than whenthey first took out the loan.

3. Bankruptcy. Declaring bankruptcy does not allow

you to walk away from all past problems. This is alast resort option that may have lastingconsequences. It may severely impact on yourability to get credit in the future, in addition to the

potentially negative career implications.4. Pawn shops.5. Payday loans.

XI. SOURCES OF HELP

A. Particularly as a member of the military, there areseveral sources you can turn to for assistance inproperly managing credit or recovering from failure todo so.

B. Your Command Financial Specialist (CFS) is always a

SHOW SLIDE 3-4-20 SOU


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good place to start.C. Fleet and Family Support Centers (FFSC) your local

FFSC will have a Financial Educator and/or a CFS onstaff to provide personal financial information and

counseling. They normally work closely with the CFSat the local commands.D. Navy Legal Services can provide assistance in a

dispute over a bill or contract. They stronglyencourage service members to come in with a copy ofthe contract before signing it when making any major

purchase.E. Local Defense Credit Unions often have financial

counselors available who provide a range of servicesto members, up to and including full-scale debt

management programs.F. Consumer Credit Counseling Services (CCCS)

provides low- or no-cost financial counseling and debtmanagement.

G. Navy/Marine Corps Relief Society provides no-costfinancial counseling and emergency financialassistance.

XII. CORE VALUES AND FINANCIAL PLANNING

A. Values are good value when:1. You properly handle your personal finances.2. You take an honest inward look at yourself

regarding your spending and savings habits.3. Your personal financial management reflects a

SHOW SLIDE 3-4-21

FINANCIAL PLANNING


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clear recognition of and execution of your own,and the Navys Core Values.

B. Core Values simply applied means:1. Honor True to self regarding debt, spending, and

saving.2. Courage To live within your means and cut outunnecessary spending.

3. Commitment To stay in financial good standing.

XIII. CORE VALUES AND FINANCIAL PLANNING

A. There are four case studies attached to this lessondealing with financial management and credit.

B. It is recommended that you divide the participants intofour groups and have each group discuss and debrief

one scenario or you may have the entire group discusseach scenario.

C. To stimulate discussion, a series of questions areincluded with each case study.

XIV. SUMMARY

A. In this lesson we have covered:1. The Navys Personal Financial Management

Program.

2. Personal and family financial planning.3. The basic uses of credit.4. Appropriate and inappropriate use of credit.5. Warning signs of too much debt.6. Your credit rights and how to deal with creditors.7. Sources of help.

SHOW SLIDE 3-4-22 SUM


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XV. THRIFT SAVINGS PLAN

A. Thrift Savings Plan (TSP) is a defined contributionplan for all military personnel that began on October

9, 2001. This is open to all active duty military,regardless of when they came on active duty or whichretirement system they may be covered by.

B. There may be a brief time-in-service requirement,most likely six months or less, before becomingeligible.

C. Here is a breakdown of the aspects of TSP.1. Individuals may contribute 7% of base pay per

month plus the total amount of any special pays or bonuses into this account. This amount may be

increased 1% per year.2. Contributions come from pre-tax pay, will not

show up as part of wages on a W-2, and theindividual will not pay taxes on the account untilthe money is withdrawn.

3. The maximum contribution per year is $10,500 peremployee per year. There is no government matchfor military TSP.

4. No monies can be withdrawn while on active duty.

Upon separation or retirement, the individual cantake the money in case (minus tax withholding),keep the money is TSP until retirement, or transferthe entire amount to a 401(k) or traditional IRA.

5. There are substantial penalties for taking themone out entirel rior to a e 59 .

Because the Thrift Saving2001, it is important tinformation once again.

SHOW SLIDE 3-4-23 THI

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II


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money out entirely prior to age 59 .6. While a service member remains on active duty,

there are options for securing relatively low-costloans from the plan.

D. TSP has several investment options. They include:1. The C Fund is the Common Stock IndexInvestment Fund, which invests in stocks in theS&P 500 Index.

2. The F Fund is the Fixed Income InvestmentFund, which invests in government and corporate

bonds and is designed to track the LehmanBrothers US Aggregate (LBA) bond index.

3. The G Fund is the Government SecuritiesInvestment Fund, which invests in special, non-

traded US Treasury securities guaranteed againstany loss.

E. There are also two new options that will beginoperation this year; they are:1. The I Fund is the International Stock Index

Fund, which will invest entirely in non-UScompanies.

2. The S Fund is the Smaller Company StockIndex Fund, which will invest in small and

medium size companies in the US.F. TSP is participant directed and each individual will beable to choose which of these five funds they wishtheir monthly contributions to go to. They will also beable to transfer money from one fund to another on a

SHOW SLIDE 3-4-25 TH

III


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periodic basis.G. For more information on TSP, contact your Command

Financial Specialist.SHOW SLIDE 3-4-26 REF


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General Military Training - Personal Financial Management 3-4-21

UNIT 3-4


EXERCISES

FOR

GENERAL MILITARY TRAINING


TOPIC 3-4


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UNIT 3-4


SCENARIOS

Case 1:

Facts: Petty Officer Smith is an unmarried E-5 with over four years in the Navy.His monthly salary is $1,701.00 with an additional $372.00 for BAH. His monthlycredit card debt totals $275.00 in minimum payments. He also has a car paymentof $353.00 including insurance. His total monthly household bills, including rentand utilities, are approximately $610.00

Calculate Petty Officer Smiths debt-to-income ratio.

According to the percentage of his debt-to-income ratio, what category does PettyOfficer Smith fall into? What does this mean?

Who can Petty Officer Smith turn to for assistance with his financial situation?


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UNIT 3-4


Case 2:

Facts: Senior Chief Maxwell is a married E-8 with over 16 years in the Navy.His monthly salary is $2,945.10 with an additional $690.60 for BAH. Hismortgage payment is $700.00 per month. His minimum monthly credit card

payment is $83.00 for a furniture purchase and all monthly credit cardspending is paid off at the end of each month. There is one car payment of$198.00 including insurance. All other monthly household debt is $248.00.

Calculate Senior Chief Maxwells debt-to-income ratio.

According to the percentage of his debt-to-income ratio, what category doesSenior Chief Maxwell fall into? What does this mean?

Does Senior Chief Maxwell need assistance with his family financial situation?


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UNIT 3-4


Case 3:

Facts: Petty Officer Jackson and his wife are looking to purchase a new car. Theyshop around and agree upon a reasonably priced car. Because they dont have thecash to pay for it, they apply for financing. The financing is approved and their

payment is approximately $250.00 per month. After calculating their debt-to-income ratio, the couple agrees that the payment would fit within their budget andstill leave them below 15% debt.

Is this an appropriate use of credit?

Should the couple wait until they save enough money to pay cash for the vehicle?


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UNIT 3-4


Case 4:

Facts: Three Sailors are out shopping one weekend when they stumble into anelectronics store. One Sailor decides to buy a DVD player he has been wanting andsaving for and pays cash for it. The second Sailor buys a digital camera on credit

but finances it for 60 days same as cash and she will pay it off in two installments.The third Sailor decides he wants a big screen television that is over $1,800.00. Heapplies for credit and is approved. Although there is a six months same as cashspecial on big screen televisions, the third sailor cannot pay off his purchase in thistime and can only afford to make the minimum monthly payment.

Which of the Sailors made smart decisions when making their purchases? Whichdid not?

What should Sailor three have done before purchasing the television?

Is either of the decisions to purchase credit appropriate? Is either decisioninappropriate?


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UNIT 3-4


ANSWERS

Case 1

Petty Officer Smith has a total monthly debt of $1,238.00. His total monthlyincome is $2,073.00. His debt-to-income ratio is 59.7%. This ratio places him inthe extremely overextended category and he needs to seek help immediately. Forassistance with his finances, Petty Officer Smith can see his Command FinancialSpecialist, Fleet and Family Support Center, Navy Legal Services, Local DefenseCredit Unions, Consumer Credit Counseling Services, or Marine Corps ReliefSociety.

Case 2

Senior Chief Maxwell has a total monthly debt of $529.00. His total monthlyincome is $3,635.70. His debt-to-income ratio is 14.6%. This ratio places him inthe less than 15% debt category. Because his ratio is so low, he can add credit with

caution. He would want to closely weigh his decision to ad credit because he isextremely close to the next category of fully extended. At this point, Senior ChiefMaxwell does not need financial assistance with debt, but may need to talk tosomeone about a spending plan or saving options.


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UNIT 3-4


Case 3

Petty Officer Jackson and his wife were wise to calculate their debt-to-income ratioand determine whether the car payment would fit within their budget. Use of creditfor major consumer goods or big ticket items sometimes cannot be avoided.Many people cannot purchase a car or house without a loan. If the couple needs acar immediately, saving money to pay cash may not be an option and using creditis acceptable.

Case 4

The first Sailor was wise in saving money to pay cash for the DVD player hewanted. Sailor two was wise in doing 60 days same as cash, if she can pay it off atthe end of the 60 days. The third Sailor should have calculated his debt-to-incomeratio before applying for credit and should also have considered the impact of only

being able to make the minimum payments. Compound interest will take its toll

and the Sailor will end up paying an enormous amount of money over the original purchase price of $1,800.00. Impulse buying for consumables is considered aninappropriate use of credit.

naval financial management

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