Military Saves Week 2018

February 26 – March 3, 2018 is Military Saves week.  This is a special week, allowing installations and organizations to promote good saving behaviors and enhance financial readiness.  Financial troubles can cause security clearance issues, marriage problems, and undue stress on our military members.  Our military pay is dynamic, and can quickly slip out of control if we’re not paying attention.  Additionally, this week allows installations to provide financial resources similar to pre-sequestration (2013) levels.

During sequestration, the Department of Defense lost many of its on-site Certified Financial Planners (CFP).  In lieu of the CFPs, our Family Readiness Centers were trained on basic finances and provided tools and materials to hand out to military members.  During Military Saves week, many of our installations get a CFP on base for FREE financial counseling.  CFPs can charge up to $200 an hour for professional advice and it’s free during military saves week.  Call your Family Readiness Center for more information.

Many of our amazing credit unions participate as well—typically setting up informational booths at Family Readiness Centers.  Some credit unions offer discounted loans, new account services, and financial advice.  It’s mostly informational to encourage military members and their families to save.

This is also a good time for non-profit organizations to promote their services.  This varies depending on location, but most focus on military members in severe financial troubles.  I’ve seen non-profits offer free items for families with newborns (e.g., diapers, formula, etc.), used furniture for free, clothes, and even cash for immediate needs.

WHAT CAN I DO TO SUPPORT MILITARY SAVES WEEK?

The best way to support your installation’s Military Saves week is to personally visit your Family Readiness Center and see what services they’re offering.  If you’re a supervisor, senior enlisted, or commander (at any level), then encourage your subordinates to go with you.  At a minimum, send out an e-mail, talk to people about it, or make a public announcement during recurring meetings.  Here’s a link to the 2016 Military Saves Week Report.

2014 Year in Review and 2015 New Year's Resolutions

Every year I create financial goals to help guide me through the year. I first read this quote when I started my fitness journey regarding meal preparing, "If you fail to prepare, then you are prepared to fail." (Unknown). I think this is relevant in any goal management, but especially with financial goals. Here's a sneak peek at how I managed my finances in 2014.

• Max out Individual Retirement Account (IRA) - In 2014, the limit was $5,500. This is always my first goal and I've been maxing it out every year for almost a decade. This is my first goal in 2015 as well. I use Fidelity to manage my IRA; if you're interested in starting a Fidelity account please let me know so I can refer you. In 2014, I met this goal.
• Put $XXK into my "high-yield" savings account - This is my emergency savings account. I'm expanding it beyond the 6 months of bills (the typical advice) to add 12 months of bills for my new house. My goal is to have the ability to absorb a whole year of not having a renter when we PCS and have to rent this house out. Some of the increase will also be for a new car in 1 1/2 years. I use CapitalOne 360 (the bank that bought ING Direct) for my "high-yield" savings account; if you're interested in starting a CapitalOne 360 account please let me know so I can refer you and we both get money. In 2014, I met this goal.
• Save at least $XK from each paycheck - Ever since I was an E-4 I've been creating this goal. No matter how hard you plan, you'll always have unexpected costs throughout the year. For this goal, I'm focused on the end goal so if I can't save the goal from one paycheck, I'll make sure I save a little more from a future paycheck. But this gives me an average savings goal from each paycheck and allows me to see if I'm exceeding my goal or not meeting it. In 2014, I met this goal.
• Increase dividend income by X% to $XK - One of my retirement goals is to supplement the amount I lose by retiring with dividend and interest income by the time I retire from the Air Force. This is a lofty goal and I may need several years after Air Force retirement to achieve it. Nonetheless, I try finding better return rates on my investments to achieve this goal. One of my new investments this year was Lending Club. They offer loans ($35K or less) to people and investors can contribute $25 increments to their loan so it spreads the risk while offering a better yield. By playing it safe, I earned a 9%+ return on investment this year. If you're interested in starting a Lending Club account please let me know so I can refer you and we both get money. In 2014, I DID NOT meet this goal. I was very close but missed the goal by less than $200. I'm not too worried, but next year I would like to say I exceeded the new goal I set.
• Net Assets of $XXXK by the end of the year - This is just an overall goal. I don't focus on how much I have saved total. I focus on what the money is doing and what return on investment I'm getting. People focus on a round number like $1M without figuring out what their going to do with it once they get there. Most rich people don't even care how much total they are worth, they only care how much money it's earning so they can use it. Either way, it helps me focus and ensure I'm earning a decent of return on investment. In 2014, I DID NOT meet this goal. I tried to do some ultra-risky investments to help my wife pay off her school loans and they all back fired on me. I lost a lot of money this year on those investments and it stings pretty badly. My house equity didn't rise at all either like I had expected. In fact, I manage my Dad's IRA and it's pretty conservative and safe and he crushed my returns this year.

These goals are specific to me. If I had debt-management goals, then those would be near the top. If I didn't have an emergency savings account, then that would've been my first goal. What are your goals for this year? If you need help or are interested in being referred so we both get money please leave me a comment or e-mail me at bjone6 @ gmail . com (spaced out to prevent spam bots).

2015 Military Basic Pay Charts and BAH Cut

Last night, the government passed the $1.1 trillion budget, known as an "omnibus" for the federal government. The bill includes a 1% basic pay increase for all military members except for Generals and Flag Officers which are still in a pay freeze and a 1% cut to our Basic Allowance for Housing (BAH). Here's a link to see the proposed 2015 Military Basic Pay Charts, though the site is not the official DFAS site.

Although I've attached the link, you can simply look at your LES and add 1% to your basic pay while decreasing your BAH by 1%. For me, this equates to a net .07% pay increase. That's less than a 1% pay raise. The main reason for cutting the BAH was the Pentagon and Congress don't feel that renter's/homeowner's insurance should be part of our BAH.

How does this make you feel? For me, I've noticed a significant reduction in personnel with an increase in the amount of work. Not being fully compensated makes it a more difficult burden to bear. Leave me a comment on how you feel.

Sources:
http://www.military.com/daily-news/2014/12/02/congress-agrees-to-troop-pay-bah-cuts-in-budget-compromise.html

Military Retirement Plan

A majority of the people I've helped with their finances have been military members within 5 years, or even days, from retiring. They're concerned about only receiving 50% of their basic pay and not receiving BAH or BAS anymore. Anytime is a good time to start getting your finances settled but the earlier you start in your military career the better.


If done correctly, military members can retire from working at 40 years old. Imagine not having to work at the end of a 22-year career and only being 40 years old. When military members retire, after 20 years in the military, we get 50% of our basic pay (only basic pay) and an additional 2.5% each year after. If you start at the beginning of your career, you can have enough to make up the remaining portion of your basic pay when you retire.


For example, an E-8 at 22 years makes $5,115.30 a month (in 2014). The E-8 is entitled to 55% of his or her basic pay in retirement. 50% for twenty years and 2.5% for both years after. This would be $2,813 every month for the rest of his or her life, or $33, 756 annually and if you start saving now, you can earn enough income to get paid like you did when you were in active duty. You can potentially make enough to earn what you were getting in Housing Allowance (BAH) and Food (BAS).


To make up the remaining pay the E-8 would have to save up $552K and earn 5% when he or she retires. This may seem like a lot of money to save up, but by starting your Thrift Savings Plan (TSP) right away, investing in an Individual Retirement Account (IRA), buying real estate, living within your means and keeping debt to a minimum you can easily save this much money (or near it). $552K earning 5% a year would earn you $27,624 a year.


This discussion is theoretical because you can't withdrawal those savings from your TSP and IRAs until you are 59 1/2. But the point is, starting early and saving as much as you can will put you in a prime retirement position.

5 Tips for Dealing With Military Finance

The military pay system is very dynamic.  Unlike most civilian companies, your pay, and things that affect it, change continuously.  In the past 14 years that I've been in (10 of which were not in finance), finance hasn't had the best reputation with military members.  Our career field is constantly working on how best to manage the systems we are forced to use and provide the best customer service possible.  Here are some things that you can do to help yourself.

- File your travel voucher within 5 days.  This is on the back of your orders and is considered a Direct Order; however, it's not enforced.  The majority of complicated pay cases stem from individuals not filing their travel vouchers within 5 days.  You can't help the long part of rejects, slow finance response times and actual processing, but you can help your portion which is filing the voucher.  Filing your travel vouchers w/in 5 days reduces pay debts and travel card delinquencies and also ensures you are receiving the correct entitlements.

- Don't suffer in silence.  If you're not receiving the answer or service you think you should from finance, then ask for an NCO, the flight chief or the OIC (a.k.a. the Financial Services Officer).  Don't abuse the junior enlisted technician or you may create a negative response for that technician and will increase poor customer service.  Regardless of what most people think, most finance personnel want to help customers.  Don't leave finance feeling like your problem is unresolved.

- Know our regulations.  Most people say, "Why do I have to know your regulations?  That's your job."  That is very true, but it's your pay.  No one cares more about you getting paid correctly than you.  Our military pay comes from appropriated funds, which means it's taken from taxpayers and given to us by Congress.  This means the money has to only go to what's it authorized for.  So, unfortunately for many customers, if a military pay technician tells you the wrong answer, the government will still seek collections in the form of a debt.  It sucks that the military pay technician gave the wrong advice, but you still owe the money back.  The most common regulation cited for all services is the Joint Federal Travel Regulations (JFTR) for military and the Joint Travel Regulations (JTR) for civilians located here: http://www.defensetravel.dod.mil/site/travelreg.cfm

- Be persistent.  Due to various reasons, some finance can control, some we can't, resolving your pay issue may be a lengthy, laborious and complicated process.  Be persistent, but professional, with finance to ensure it gets resolved.  Don't just fire an e-mail and forget and hope it gets resolved.  Get a positive ID on the corrective action.  If we say it will pay out in 5 days and on the 5th day it doesn't, give us a call back.

- Leave constructive feedback.  If you have constructive feedback, please give it to us.  Use whatever method your local finance has for customer service feedback.  We can't improve unless we know what to improve.  If you had a positive experience, please leave that feedback too.  Nothing is more motivating than the Commander receiving a thank you note due to a positive customer service feedback.

I was a customer like you for 10 years before crossing into finance, so I bring those experiences with me and we, at least in the Air Force, are doing everything we can to get back to the basics and give the best possible service we can.  We need your help to ensure you're doing your part to take care of your finances and focus on the mission.