Soldier of Finance (6 page)

He agreed and she took the picture to the FBI. They investigated and brought charges. In early 2010, Burton was fined $250 and sentenced to a one-year probation.

The crime is considered a misdemeanor, carrying a maximum of one year in jail. That might seem a little harsh for someone playing dress-up, but those who have served in combat wouldn't agree. They take their service seriously and don't appreciate anyone claiming accomplishments when they never were in actual danger of being shot at. Phonies are not well liked. We had a name for them:
PX Rangers.

PX stands for “Post Exchange.” It is the general store on an Army base, where you can buy virtually anything you need. Included in the inventory are all the ribbons, badges, and decorations worn on uniforms. If you need something for your uniform, you go to the PX and buy it.

If you were a Ranger, for example, you would wear a Ranger tab on your left arm. The Rangers are the elite of the elite. They go through hardcore training that most people could never endure. If you saw a Ranger, you knew he was a stud. Very few could qualify to wear that Ranger tab.

Yet anyone could buy the tab. You just walked into the PX, picked it up, and paid for it. We used to joke that someone might not be tough enough to be a Ranger, but he could easily become a PX Ranger. You could buy the badge, put it on your sleeve, and no one would suspect—except an actual Ranger. If a real Ranger found out, you would not be able to run fast enough to get away. It would not be a good thing.

The question you must answer in this chapter is:
Am I a financial PX Ranger?
How can you tell? You've heard the phrase “keeping up with the Joneses,” meaning you try to live beyond your means in order to have the appearance of success. If your neighbor has a new car, you feel compelled to get a new car, just to look good. Your brother-in-law buys a big-screen TV, so you have to get a big-screen TV, just so he won't think you're a failure when he comes by your house. The reality, however, is that you are over-leveraged and maxed out. Your appearance of success is a fraud.

Examining your financial situation does not serve to beat you up for poor financial management. The objective is to get to the truth. If your SIT Report shows that you have an exorbitant amount of consumer debt, then you know exactly what enemy you need to attack to bring your finances under control.

Do not buy into the illusion of success. Instead, aim for the substance of real success. Step on the financial scale and take a long, hard look at your weaknesses. Be honest in creating your own Situation Report; when you do, you will be able to recognize your reality. Put away those shiny medals and ribbons and get ready to develop a winning strategy that will put you back in charge of your life.

You can access the SIT Report form on the Soldier of Finance website at
www.soldieroffinance.com/resources
.

Go / No Go

• As a Soldier of Finance, you need to complete a thorough examination of your current financial status.
  
• Don't be in denial about your true financial status.
  
• A Debt Situation Report (SIT Report) will help you analyze your current debt situation. SIT stands for Size of the debt, Interest rate, and Type of debt.
  
• Do not be a financial PX Ranger, trying to pretend you are wealthier than you are. Keeping up with the Joneses for the sake of appearance will produce unnecessary and often crippling debt.
  

“Private, what's your roster number?”

That was never a question I wanted to hear. It meant I was in trouble.

“First Sergeant! Roster number four-zero-three,” I barked out.
“Oh, crap,”
I thought.
“I'm screwed.”

Most of the time I managed to fly under the radar. The last thing you want during training is to be noticed. And at that moment, I had definitely been noticed. “Four zero three” was my numerical identification, which was more important than my name. “Four” indicated I belonged to the fourth platoon, and “zero three” meant I was the third person when the fourth platoon lined up. At that moment, I was the only one being noticed.

We were in a typical formation, standing at attention, heels together, arms to our sides with thumbs resting on the seams of our pants, eyes straight ahead. As often happened, the drill sergeant walked away for thirty minutes or more and left us standing. It was a test, of course. We could not talk, scratch, or sneeze. Absolutely no movement was allowed.

My first sergeant had seen me talking. “Four zero three? I'll remember that number,” he said. “We'll be talking soon.” My only hope was that he would forget, but “403” isn't hard to remember…which he did. The next day we were out at a range and I heard the first sergeant's voice: “Where's 403? We need to talk.”

Needless to say, he did all the talking. I did push-ups while nine other drill sergeants watched. From that moment on, I dreaded hearing my number. I got smoked systematically until some other private screwed up and became the next victim. By that time, I was almost smoked out.

Roster numbers were assigned at Basic Training and they followed us everywhere. I was either “Private Rose” or “Number 403.” My number predetermined where I lined up in just about anything, from where I stood in the chow line to where I drew weapons to where I stood or marched in a formation. My number was everywhere. I wrote it on my
Soldier's Handbook.
It was plastered on every piece of gear, on my Kevlar, helmet, weapon, canteen—
everywhere!
As my primary identifier, my roster number was more important than my name.

As a Soldier of Finance, you also have an identifying number that is, in many ways, more important than your name: your credit score. It is tied to everything financial and follows you everywhere you go. It is plastered on every loan application and every apartment rental. The good thing about credit scores is that, unlike Army roster numbers, they don't stay the same (I earnestly wanted to change my roster number a couple of times). Our credit scores are not locked in. They can be changed if we take action to improve them.

For all practical purposes, your credit score is your financial identity. Note that there is a difference between a credit “score” and a credit “report.” Your credit report, which we will discuss in
Chapter 5
, is a snapshot of your credit use history. Your credit score is a three-digit number based on the information from your credit report. You will often see it called a FICO score, from the name of the company that computes it, Fair Isaac Corporation.

After the credit bureaus take into account all aspects of your report, a mathematical formula is used to determine your score. No one really knows quite how a credit score is computed except the people at Fair Isaac. What you do need to know is the primary factors that are included in the calculation. These include:

• Payment history
  
• Balances on loans and credit cards
  
• Length of your credit history
  
• New credit
  
• Types of credit used
  

Lenders refer to this little number to determine your creditworthiness. It will affect whether or not you will be approved for a mortgage or car loan. And if you do get the loan, your credit score will affect how much interest you pay. Moreover, any loan you apply for triggers a credit check, the results of which will affect the interest rate you get and whether or not you're approved for the loan in the first place.

Your credit information will affect things you likely haven't thought about. For example, it will dictate the kinds of credit cards you can obtain and how much interest you pay on them. Landlords, in deciding who gets an apartment and who does not, utilize credit scores. Insurance companies use them to evaluate applicants and set their premiums. Even prospective employers check your credit score to help them determine whether you might steal from them once you start working. Your credit score plays an important role in nearly every aspect of your life. It represents all the past financial decisions you have made, which is also a reflection on your character.

The higher your credit score number, the better your credit. A score of 720 used to be the number that would garner the best loan terms, and even if the score was lower, decent deals could still be found. Since the economy tanked, credit has tightened considerably. To guarantee the best deals, you now need at least a 740. And if your credit score is bad, you're out of luck.

To give you an idea why these three digits are so important, let's look at something as basic as a mortgage payment.
Table 4-1
shows the differences in monthly payments on a thirty-year fixed mortgage for different FICO scores on a $300,000 mortgage.

The difference between the top bracket, with scores between 760 and 850, and the bottom, with scores under 640, is more than 1.5 percent. That might not seem like much until you realize that the difference in monthly payments is $276. That means that over the full thirty years of the mortgage, the person with the low credit score will pay a grand total of almost $100,000 more for the exact same home. Of course, that assumes he can get the mortgage in the first place.

The good news is that over the thirty years, the homeowner will probably improve his credit score and likely refinance, thus reducing both his interest rate and monthly payment. So if your credit score is low, all is not lost. But the higher you can get your FICO number, the better off you will be.

Table 4-1
Effect of Credit Score on Mortgage Payment

Getting your credit score is not difficult, but there will be a small cost. The easiest time to find your score is when you get your credit report, which you will learn to do in
Chapter 5
. I will cover the details of getting your credit score at that point.

For now, be aware that there are several kinds of credit scores available, including your consumer score, a rental score, and an auto formula score. Make sure you get the right number. You want your FICO score. That is the number used by nine out of ten lenders, and it is generally lower than some of the other numbers. If you get a consumer score, thinking it is your FICO score, you will likely be off by as much as a couple of hundred points.

There are three credit reporting bureaus that provide credit reports free of charge and credit scores for a small fee. They are TransUnion, Experian, and Equifax. If you buy a credit score from Experian, it will be a consumer credit score. TransUnion and Equifax will provide you with the FICO score.

You can refer to
www.soldieroffinance.com/resources
to find trusted sites from which to request your credit score. There are plenty of other sites that will give you a credit score, but they aren't your real FICO score. The only advantage is that they give you a rough idea of how your credit is, but they aren't what lenders will pull.

Go / No Go

• Your credit score, a three-digit number based on information in your credit report, is your financial identity.
  
• Your credit score reflects your payment history, balances on loans and credit cards, length of your credit history, new credit, and types of credit you have used.
  
• A credit score of at least 740 is required to secure the best deals.
  
• You can get your credit score when you obtain your credit report, but there will be a charge.
  
• Be sure you get your FICO score, not a consumer, rental, or auto score.