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Money Management for the Military

  A Fresh Look at Finances for Service Men and Women Soon to Be Deployed The Military Pre-Deployment Guide (cs.mhf.dod.mil/content/dav/mhf/QOLLibrary/Project%20Documents/MilitaryHOMEFRONT/Troops%20and%20Families/Dep loyment%20Connections/Pre-Deployment%20Guide.pdf ) is a comprehensive resource for pre-deployment issues and concerns (covering money management issues and beyond).

Money and Deployment
Communication is crucial to successful deployments, but many families avoid talking about money.    Married couples often argue about finances instead of openly discussing them. Parents do not always share their financial worries or concerns so that their military sons and daughters understand their situation. The National Military Family Association (www.militaryfamily.org) has a couple of communication-related online resources for discussing deployment issues with kids and with spouses/family members. On their website, click on “Publications” and then “Deployment + Family Research.”

Making a Plan
This program will help members of the military craft a financial strategy that will serve them while they are serving their country.

Goals
Today’s objectives are to help you: 1. Review your current financial situation 2. Create/complete a financial checklist 3. Develop a spending plan

4. Establish a reserve fund 5. Commit to an action plan

Financial Review
     Do you have your finances in order? What current issues should be part of a family discussion about money? Do you know all of your military benefits? Review IRS Publication 3, Armed Forces’ Tax Guide, to take advantage of military tax benefits. The Under Secretary of Defense (http://militarypay.defense.gov/benefits/militaryben.html) provides a comprehensive listing of military benefits, such as retirement saving, healthcare, housing, family support (including relocation assistance), education, etc.

  The U.S. Army (http://myarmybenefits.us.army.mil/Home/Planning_Toolkits/Deployment.html) provides several fact pages of army-specific deployment information and resources.

  Download a copy of IRS Publication 3 (www.irs.gov/pub/irs-pdf/p3.pdf) to take advantage of military tax benefits.

Financial Checklist
When you are called to duty, it’s important to communicate with family about how to handle:     Bank/savings accounts Credit cards Monthly expenses Insurance

Legal responsibilities

Money Talks
Initiating and maintaining an open line of communication about finances with your spouse and family members before you deploy is essential to a sound money management strategy. Get to know your military branch’s ombudsman network before you deploy. Each of the following military networks provides family support for deployed service members: • Army FRG – www.armyfrg.org. Under “Get Started,” click on “Family Members.” • Marine Corps KVN – www.usmc-mccs.org/family/index.cfm. Click on “Financial Resources.” • Navy Ombudsman - www.nffsp.org. Click on “Families.” • Coast Guard Ombudsman – www.uscg.mil/hr/cg111/default.asp. Click on “Financial Management” and/or “Ombudsman.”

Tips for Family Discussions
Take steps to foster good communication: 1. Plan Ahead    Use the Financial Checklist to identify items to discuss. Collect any documents you may need (e.g., mortgage, other loans, and other financial papers) for a productive discussion. Pages 12-15 of the Military Pre-Deployment Guide (cs.mhf.dod.mil/content/dav/mhf/QOLLibrary/Project%20Documents/MilitaryHOMEFRONT/Troops%20and%20Families/Dep loyment%20Connections/Pre-Deployment%20Guide.pdf ) cover financial document checklists for married couples and for singles.

2. Research resources Be prepared to suggest ways your spouse/family member can access necessary financial help as the need arises.

   3. Practice

Legal Assistance offices Defense Enrollment Eligibility Reporting System (DEERS) Online resources include www.militarymoney.com, www.militaryhomefront.dod.mil, and www.militaryfamily.org.

a. Rehearse what you want to say b. Consider the possible reactions c. Keep the discussion focused and positive d. Take a break if you or your spouse/family member are having difficulty keeping emotions in check. e. Consider including a Personal Financial Counselor in your discussion 4. Get input and feedback a. Ask your spouse/family member for his or her opinion on the family’s financial situation. b. Be prepared to listen and make suggested changes. 5. Discuss ways to manage expenses Actively listen to your spouse’s/family member’s ideas, then add your own. If possible, reach an agreement. 6. Review agreed-upon action steps Go over what you and your spouse/family member have agreed to do as a result of your conversation. Record a simple summary of key points in writing. Military base Personal Financial Counselors are available in the family centers or through Military OneSource (www.militaryonesource.com/MOS/FindInformation/Category/FinancialCounseling.aspx).

An Ongoing Conversation
Framing financial discussions now may also prepare you and your spouse/family for financial discussions while you are deployed.

Your Spending Plan
  Knowing your spending habits is the first step to correcting bad habits and reducing stress. Managing money means making choices.   There’s not enough money for all we want. Sometimes, there’s not enough for what we need, unless we plan for emergencies.

Income and expenses can be affected by:    Being deployed Unexpected events Long-term goals

It’s important to communicate with family on priorities and expenses and develop a spending plan together.

4-Step Spending Plan
 Step 1: Identify Income Sources   Figure out where your money comes from and the amounts you can count on.

Step 2: List Expenses  Make sure to include savings as an expense.   Thrift savings plan (similar to a 401(k) plan) Savings deposit program: 10% return but only available to combat zone troops

Step 3: Compare Income and Expenses  What is one way to cut an expense today?

Step 4: Change Habits

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Create a sound financial foundation.

How do I use my spending plan? Experiment with ideas for cutting expenses and re-calculate the plan. Follow your plan for one month. Write down what you actually earned and what you actually spent Review the plan and adjust it to create a spending plan for next month. In the accompanying Word document Military Money Management, see the “4-Step Spending Plan” document for a sample budget worksheet. The Defense Finance and Accounting Service provides information on the thrift savings program (www.dfas.mil/militarypay/thriftsavingsplantsp.html) and the savings deposit program (www.dfas.mil/army2/investmentoptions/savingsdepositprogramsdp.html). The thrift savings plan is a defined contribution plan that operates in a manner similar to a 401(k) plan. The thrift savings plan has six fund investment choices, ranging from government securities to international stocks. Military members deployed in combat zones can deposit up to $10,000 (during a single deployment, for as long as the deployment lasts) in a Department of Defense savings account that earns 10% annually. The account ceases to earn interest 90 days after a member returns from a combat zone.

Establish a Reserve Fund
Deployment puts new strains on your budget. These new expenses can include: 1. Child-care expenses 2. Income changes 3. Health-care costs Meet these needs by creating a “reserve” savings fund. Saving a little at a time adds to your financial security. You’ll be surprised how quickly a reserve fund grows. Take it step by step:   Review your expenses and see where else you can economize. Put that money in a reserve account.

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Build the account one day at a time. Start saving today! Last resort: military emergency-relief fund in case of financial hardship Each branch of the military can provide emergency funds for cases of financial hardship. Typical allowable needs might include food or rent, funeral expenses, or medical expenses. Fines, credit card bills and other nonessentials are not eligible for assistance. For specific information on any emergency-relief fund options at a military facility, talk with the community-service office, or depending on the branch of the military, visit: Army Emergency Relief – www.aerhq.org Navy-Marine Corps Relief Society – www.nmcrs.org Air Force Aid Society – www.afas.org Coast Guard Mutual Assistance – www.cgmahq.org

Protect Your Family Finances
 Servicemembers’ Group Life Insurance     Coverage up to $400,000 in increments of $50,000; cost of $90 annually for every $100,000 of coverage www.insurance.va.gov or 800-827-1000

Identity theft: place an active-duty alert on your credit report Servicemembers’ Civil Relief Act   Covers rental agreements, security deposits, credit card interest rates and other financial issues Contact nearest Armed Forces Legal Assistance Program office for assistance

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Beware scams specifically targeting military members (and your family) Paydays: steer clear of predatory lenders  Maximum interest rate of 36%!

The Department of Veterans’ Affairs provides information on servicemembers’ group life insurance (www.insurance.va.gov/sgliSite/SGLI/SGLI.htm). Military members can purchase up to $400,000 of life insurance coverage in $50,000 increments. The annual

cost per $100,000 of coverage is $90. Members can call 1-800-827-1000 for more information. To place an active-duty alert on your credit report, contact one of the three major credit reporting agencies (more information at www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt147.shtm). The United States Department of Justice enforces the Servicemembers’ Civil Relief Act (www.servicemembers.gov), which provides military members about to enter active duty with protection regarding rental agreements, security deposits, eviction, credit card interest rates, mortgage foreclosure, insurance and tax payments. For assistance, military members can contact their nearest Armed Forces Legal Assistance Program office. As of 2007, payday loan interest rates for military members have been capped at 36%. Most fees and charges, with few exceptions, are included in the rate. Creditors may not require use of a check or access to a bank account for the loan. Military consumers also must be given certain disclosures about the loan costs and their rights.

Summary
Today, you learned how to take charge of your finances by: 1. Assessing your current financial situation 2. Planning how to discuss money with your spouse and/or family 3. Identifying sources of income and expenses 4. Creating a spending plan 5. Establishing a reserve fund

My Action Plan
Follow through by focusing on your:  Commitment   What I plan to do

Obstacles

  Action  

What I may face

Steps to my success

Understanding  What I learned today