By Dave Ramsey
Q. My son is 22 and about to enter the Navy as an officer. He’s been offered a Career Starter Loan. His plan is to invest the money and let it grow while he’s in the service. I’m not sure this is a good idea. What do you think about it?
A. The Career Starter Loan is just another form of debt, so it’s something I can’t recommend. Basically, it’s the military trying to do a nice thing for its men and women. The problem is it’s still a loan that has to be repaid. It’s not a signing bonus. In my mind, if you want to help me start my career, kick things off by giving me a job and a paycheck.
Do you know what the No. 1 cause of security clearance problems is in the military? It’s debt. And financial irresponsibility is the third-most prevalent reason for dishonorable discharge from the armed forces. And yet, with this kind of program, they’re shoving debt into young people’s faces right off the bat.
I appreciate the fact that he’s trying to use an academic approach. I’m sure he sees a scenario where he can borrow money with low payments and a really low interest rate, invest it and make a ton of money. The problem is he’s leaving risk out of the equation. What happens if the investments don’t pan out? He could lose the money and still have to repay the loan.
Being older, and having a bit more wisdom, you and I realize things don’t always work out the way they’re planned. In other words, life happens. But don’t be too hard on him. He’s trying to use his intellect, and that’s a good thing. Still, wisdom always trumps academia. And that whisper of wisdom is telling us this situation could be a mess waiting to happen.
Q. My stepson is about to turn 18. I have reason to believe that his biological father has used his son’s name to open credit accounts. I’ve been told that you can’t do a credit check on a minor, so what’s the easiest way to go about checking this out?
A. I’m not sure who told you that you can’t do a credit check on a minor. I did it on all my kids when they were younger. There are three national credit reporting bureaus: Experian, Equifax and TransUnion. Just go online to each one and pull his credit reports to see if anything is showing.
If you find anything, you’ll need to file a police report in the locale where the offense occurred. After you file the report, get a copy and approach the business in question, explaining what happened. You’ll have to make sure they understand this guy is not the kid’s legal, parental guardian, and that he stole his son’s identity to open the account. Then provide them with a copy of the police report and make sure they take his name off the account.
Checking a credit report is pretty easy and it will give you a wealth of information. The biggest hassle is making the contacts and explaining things to creditors and the reporting bureaus. But it’s a lot bigger hassle for the identity thief once the companies that have been duped and the authorities know what’s going on.
Dave Ramsey has authored four New York Times best-selling books, and “The Dave Ramsey Show” is heard by more than 5 million listeners each week on more than 500 radio stations. Follow him on Twitter at @DaveRamsey and on the web at daveramsey.com.