...these two lines are unnecessary though:
date_txt.text = month + "/" + day + "/" + year;
time_txt.text = hour + ":" + minute + ":" + second;
Yeah I originally took them out after I got the if statements done but when it started messing up I put them back in just in case.
Also you have a very strange indentation style.

ha ha I guess it just helps my brain organize it a little better lol
Actually I think I know what problem you're talking about. If we change it a bit...
Hmm that didnt seem to work for me. but I truly appreciate the help!
You can also do stuff like this
// Shorthand if statements can reduce the need for multiple if blocks
// They take the form of
// a= ( b ? c : d );
// which is the same as
// if( b ) {
// a = c;
// } else {
// a = d;
// }
date_txt.text = month + "/" ( day < 10 ? "0" + day : day ) + "/" + year;
// Modulus: gives you the remainder. eg 4 % 5 equals 1, because 4 divided by 5 has 1 remainder
// Gotta be careful, because 12 % 12 = 0 (ie,12 divided by 12 has 0 remainder)
hour %= 12; (Modulus will give values 0 to 11, where 0 is the same as 12am/pm)
hour = ( hour == 0 ? 12 : hour ); // Make hour 12 if hour is 0
// Again, inline if statements can reduce additional lines. This is used in a slightly
// different way to the last one - the intention is probably more visible here, but at the cost of
// slightly more overhead because you're always building a string.
minuteStr = ( minute < 10 ? "0" : "") + minute;
this is what I ended up doing aside from changing 0 to 12 because I think that is a little too advanced for me right now.
thank you for your help and here is the finished product and code.
Oh and P.S.
The shortened if statement really cleaned it up.
to see that it's working it needs to be some time afternoon
http://www.truploader.com/uploads/128946Clock.swfand the code
var looper:Timer = new Timer(100);
looper.start();
looper.addEventListener(TimerEvent.TIMER, loopF);
function loopF(event:TimerEvent):void{
var time:Date = new Date();
var month:Number = time.getMonth()+1;
var day:Number = time.getDate();
var year:Number = time.getFullYear();
var hour:Number = time.getHours();
var minute:Number = time.getMinutes();
var second:Number = time.getSeconds();
date_txt.text = month + "/" + (day < 10 ? "0" + day : day) + "/" + year;
time_txt.text = (hour > 12 ? hour-12 : hour) + ":" + (minute < 10 ? "0" + minute : minute)+ ":" + (second < 10 ? "0" + second : second);
}