Internet loans offer long-term trouble
Fairchild airman digs her way out after falling victim to revolving debt
Staff Sgt. Jennifer Wilson said she knew payday lending shops were no longer extending credit to military personnel when she needed some quick money last spring. But there was plenty of money available on the Internet.
Within a few months of taking out a $350 revolving loan from an offshore bank, the Fairchild Air Force Base dental technician had taken out two more from other lenders, for a total of just more than $1,200. The payments and fees were overwhelming – $670 a month when she finally sought help at the base’s Airman & Family Readiness Center.
“I told myself I was only going to need it for one payday,” said Wilson, a single mother who doesn’t receive child support.
But as the payments snowballed, she realized the debt was becoming a threat to her career, one she has pursued for 11 years.
Sooner or later, Wilson said, someone was going to ask how a staff sergeant responsible for $1 million- plus in equipment could let her own finances become such a mess.
“That’s the irony of the whole thing,” Wilson said. “It was embarrassing.”
Wilson declined to identify her lenders, except to note the Web site uses “military” in the name.
“That’s the sad part for me,” she said, “the premise that ‘We’re here for the military.’
“They could be ruining someone’s career.”
To obtain a loan, she had to submit a Leave and Earnings Statement. Lenders can, and will, lend up to 40 percent of the borrower’s income, Wilson said.
When she got even a little ahead on repaying principal, a cascade of offers for more loans followed.
Eddie Steetle, the financial consultant she met at the Readiness Center, said Wilson’s loans were so onerous the principal increased even if she made the minimum monthly payments. To stop the downward spiral, he drafted a letter reminding lenders of the 36 percent interest rate cap on loans to servicemen and -women that took effect two years ago. Legal action was intimated.
“There was a lot at stake,” Steetle said.
The letter was a bluff, he said, but it worked.
The first lender responded that, as an institution based in the British West Indies, it was not subject to the cap.
But, the lender added, it did not want to do business with Wilson any longer. The debt was canceled, without blemishing her credit record.
The other two lenders have ceased demanding payments. But Steetle, a registered nurse newly trained in financial counseling, was not finished with Wilson.
He took away her debit card (he keeps a jar of chopped-up cards in his office). She gets temporary custody of it only if she can justify the need. She is on a strict budget, one constructed with the help of software proprietary to the Air Force. They review her progress weekly.
A once-careless spender, Wilson said she scrutinizes every $1 expenditure as she works to build an emergency fund, then a nest egg.
“I kind of get geeked out about it now,” she said.
Steetle, who calls Wilson “the perfect client,” said she should be completely out of debt in January. He will stop tracking her budget but continue to review her bank statements.
Steetle said the Air Force is encouraging other airmen to seek help before financial issues put their careers at risk.
Although the initial budget counseling sessions were exhausting, Wilson said, she never walked away without feeling good about the help she received.
“It got to the point I could not do anything for myself,” she said. “You get sucked into the vortex.”