Holly Petraeus recalls one of her early financial regrets: a pricey British red convertible that spent more time in the shop than on the road.
Petraeus and her husband bought the car on their first tour overseas with the Army in the 1970s. And as the couple prepared to return from Italy to the states, she says, she insisted on leaving the "very impractical" set of wheels behind.
"I was always the one taking it to the shop," she says.
Today her husband, U.S. Army Gen. David Petraeus, is the commander of the coalition forces in Afghanistan. And her job is to help other service members and their families make sound financial decisions and avoid pitfalls — from payday loans to, say, unreliable red roadsters.
Holly Petraeus, 58, was appointed last month to head the team that's creating the Office of Servicemembers Affairs within the new Consumer Financial Protection Bureau. Created as part of last year's Wall Street reform law, the bureau is expected to be fully up and running this summer. Congress specifically required it contain an office devoted to the financial literacy and consumer protection of service members and their families.
Shady businesses pitching high-cost loans and overpriced products often prey on those in the military. The reason: Service members get regular paychecks, won't be laid off, and are often young and financially inexperienced — not to mention preoccupied with weightier issues that come with their jobs — so they're less likely to read the fine print.
"Sadly, the military has proved to be a targeted population," says Holly Petraeus, who served six years with the Better Business Bureau's outreach program to military families.
Petraeus has wasted no time in her new role. Early this month, she shot off letters to the nation's 25 largest banks, reminding them of the decades-old Servicemembers Civil Relief Act that protects active-duty military members against foreclosure and limits the interest rate they pay on consumer debt.
Banking giant JPMorgan Chase recently admitted to wrongfully foreclosing on 18 active-duty service members and overcharging about 4,500 others in interest and fees. A Chase representative told a congressional committee this month that the bank has begun making the homeowners whole and will repay — with interest — $2.4 million to those who were overcharged.
Petraeus sees education as a big part of her new job. Not just the education of service members and their families, but making sure the new consumer protection bureau understands the issues facing the military.
Military families have many of the same financial pressures as civilians, but they also face some unique hurdles.
Frequent moves are common, making it difficult for a military spouse to maintain continued employment, says Petraeus, who has moved 23 times in 36 years. And in today's weak housing market, she says, families sometimes end up selling their houses for less than they owe.
"And then, of course, you have the issues of deployment," Petraeus says. "One is departing the country for a year, and one is at home trying to manage the finances."
Petraeus says she's particularly concerned about debt among service members.
Twenty-seven percent of service members and their spouses reported having at least $10,000 in credit card debt, compared with 16 percent of civilians, according to a survey released last year by securities regulator FINRA. And nearly one-third of enlisted personnel and junior noncommissioned officers had resorted to pawnshops, payday and car title loans, tax refund advances or other expensive lending options.
"When we were young, you didn't have the easy credit that you have now," she says. "It was rare for people to have credit cards, and there was no such thing as a payday loan."
Now, service members have more and faster ways to get in trouble. Google "military loans," Petraeus says, and a flood of pitches for high-priced loans for those with bad or no credit history pop up.
"The Internet is making the situation more complicated," she says. "You can get in trouble right in your own living room."
The military requires some financial education. But on a visit to a Texas base last month, Petraeus says service members and their spouses told her they wanted mandatory education to be done more frequently. Financial lessons that are given during basic training just don't stick, they told her.
Joseph Montanaro, a financial planner with USAA, which caters to the military, agrees that the exhausting basic-training schedule isn't conducive to lectures on money.
"Some guy talking about personal finance may be an opportunity to sleep," says Montanaro, a retired Army reservist.
Petraeus says her goal is to visit one military installation a month. If she comes to Maryland, she's likely to hear about housing problems and the high cost of living here.