Mail Early (and Save Money Too!)

It is hard to believe that we're thinking about mailing holiday packages already, but now is the time to think!  If you've got packages going to APO and FPO addresses, mailing early can save you a bunch of money.  Here are the deadlines:

Postage Type	APO/FPO 093XX	All Other APO/FPO
Express	Not Available	18 December
First Class and Priority	04 December	11 December
PAL	01 December	04 December
SAM	20 November	27 November
Parcel Post	13 November	13 November

More information on various mail services can be found here.

Don't forget that none of these are guaranteed delivery times, just the USPS's best estimates. In this case, earlier is always better.

Post-Deployment Spending Sprees

If you've been in the military a few years, you've probably seen it (or even done it):  The homecoming spending spree.  There are two variations on this theme:  a spouse who is preparing for a service members return makes a lot of purchases in anticipation of the return, or a service member who comes home and immediately makes several purchases, sometimes large ones.

With proper budgeting and planning, this might be useful or even necessary.  Without forethought, however, it can surely be a bad thing.

This week has been an excellent example for me.  My husband is coming home on R&R soon  and I've been on a little mini-spending spree in anticipation.  Most of it is things that needed to be done eventually, including numerous small repairs to his car, but altogether the total expense is a little more than I expected.  Add in a huge commissary trip, a stop at the local liquor store, and a few updates to my own wardrobe and now I've spent a substantial amount of money.  I'm only feeling a little bit guilty - the car repairs had been put off a long time and it seems a sensible time to do them.

If I were doing this really well, I'd have set aside the money in a separate account to pay for these expenses.  I didn't but I'm pretty sure that I'll be able to absorb them into my regular budget without too much trouble.  Of course, I haven't gone out an done anything drastic.  We once had a friend who purchased her husband a new car before he came home.  They're a sensible couple, and I imagine that there had been discussions of getting a new car, but the thought still made me very nervous.  That's a lot of money for a surprise!

I've also seen returning military members go on post-deployment sprees.  Again, I think that is fine if it has been planned and fits in the family's overall budget.  A new game system might be a great reward for months of hard work, as long as it isn't causing a financial shortage in other areas.

What experiences do you have with post-deployment spending?  Has it worked well or not?  What kinds of things have you bought?  I'd love to know.

Activity Grants for Kids of Deployed Guard and Reserve Members

Are you or your spouse a deployed National Guard or Reserve person?  Well, I have a great program to tell you about.  A group called Our Military Kids provides grants for children ages 3 to 12th grade to participate in sports, cultural arts, tutoring, and other similar programs.  Application is easy!  You can download the application form, fill it out, and send it in with the necessary other information (copy of birth certificate or ID card, program information and deployment orders.)  There is a $500 limit per grant, but grants are available for each child in the family, and a child may receive two grants during a single deployment if the deployment is over 365 days long and other criteria are met.

This is a remarkable program that can really help your family cope with deployment by providing quality activities without adding extra expenses.  Thanks, Our Military Kids, for your support of the National Guard and Reserves.

The Paycheck Chronicles Main Page

Alert: Credit Cards Abroad

There's always a new concern when it comes to using your credit cards overseas.  Now there is another thing to worry about - the rest of the world has, since 2004, been going to a different type of credit card identification system, called "chip and pin."  In theory, chip and pin readers should be able to read magnetic cards and retailers should still be able to process transactions on US credit cards.  However, customers are reporting problems with merchants who state that they are unable to process transactions using magnetic cards, and some self-service machines, such as gas stations and self-purchase transit tickets, are not equipped to accept the pin-less cards.

How can customers prevent problems when traveling in overseas?

1. Before you leave, notify your credit card issuer that you are going overseas (a good idea anyway) and ask them to issue you a PIN number.  Some retailers are willing to use a magnetic card as long as you have a PIN.

2. Carry adequate cash and/or traveler's check to take care of smaller purchases where a credit card may not be accepted.  Make sure you are able to use your debit card at ATM machines abroad in case you run low on cash funds.

3. As the retailer to try to use the card in their machines, and ask for a manager if necessary.  Sometimes it is a problem with the staff not understanding the new system, not a problem with the system itself.

 

It doesn't seem that US credit cards are going to change to the new chip and pin system anytime in the near future, although it is possible that issuers may begin offering special cards for use overseas.  It is also possible that countries will stop accepting the magnetic stripe cards in the future.  In the meantime, be prepared when you travel, and keep your ears open for additional changes over time.

For further reading, see US Credit Cards Becoming Outdated, Less Usable Abroad, at CreditCards.com, and US Credit Cards Lost Their Cachet in Europe at Frommers.com.

 

Click here to find The Paycheck Chronicles main page.

Reader Help Requested: Cell Phones and Deployment

A reader, we'll call her Sharon, recently wrote with questions about cell phones and deployment.  I'll be honest, I don't know anything about cell phones on deployment.  We briefly looked into whether or not my husband could use his phone while he was overseas, then decided that it was too much hassle and expense.  So I'm asking my readers to help Sharon.

Here's her situation:

I need help finding a cell phone/carrier that will be affordable and allow lots of good communication between me and my deployed hubby. He's probably going to Afghanistan but we don't know for sure yet. We currently have Blackberry phones. Do they work in Iraq and/or Afghanistan? Does an iPhone work? (i have been jonesing for one and if it's the better phone by golly, I'll switch!!)

I am looking to you for expert advice. Which carrier is best for military? Which phones do you recommend?

Any help you can offer will be greatly appreciated!

So, folks, what do you know?  Share the knowledge and I imagine that we'll help more than just Sharon.

Thank you!

 

(Re)Finding My Focus

I'm finding myself in an unusual situation lately.  With my husband deployed, and me working, we're meeting our 2009 financial goals without much pain.  I know that I'm lucky to be in such a situation, but it still makes me uncomfortable.  During the times when money is tight, I am great at squeezing the most out of every dollar.  Now that we are managing to live comfortably, I'm finding myself getting lazy and spending unnecessarily.  I need to get back to the basics of good financial planning and stick to them.  Where should I start?  Actually, it is pretty easy:

1. Assess the current situation.  That should be pretty painless, since I've been (trying to) use the monthly updates for my husband.

2. Update our budget.  We've used serious, down-to-the-penny budgets in the past.  While I'm happy to round to the nearest dollar or even five dollars, it is hard to be successful without following some sort of spending plan.  I've used everything from a simple sheet of paper with expenses to a complicated, Mary Hunt-style Freedom Account scheme, and they all have their advantages and disadvantages.  However, in my current chaotic "let's just get through today" mindset, my idea of a spending plan is that I'm fine as long as I don't bounce any checks.  That is really not making good use of our money.

3. Pick your battles, focus on your priorities, and keep it manageable.  There are a million ways that I could take serious control of our money.  I could unplug every lamp and alarm clock when I'm not using it, I could make sure everyone showers at the pool so that we don't use any hot water at home, and I could make my own laundry soap.  Realistically, though, none of those things are going to happen right now.  So where can I make changes?  There are lots of places to choose, but I'm going to try and focus on just one general area:  food.  I can start making menus again, to make sure that we use all the food we buy and that we aren't tempted to get Chinese because I have no idea what to cook.  I can start making grocery lists again, so that I don't end up with 16 boxes of couscous but no soup.   I can get the dust off my slow cookerand ensure that 5 pm isn't panic time.  I can take the time to cut coupons and teach my kids to help.  Why do I choose food?  First, in most families, food is the second biggest expense, after housing.  Second, I enjoy saving money on groceries.  I love the thrill of a good triple coupon extravaganza.  Third, having meals planned is good for my family's health and brings us together at the table regularly.  (Priceless!)

Keeping your family on financial track isn't painless, but it shouldn't be drudgery either.  Keep your eye on the goal and figure ways to make it fun, and you'll be successful!

Another Amazing Benefit from USAA

Just when I thought that USAA couldn't think of any more ways to support their members, they came up with a new one.  USAA is reimbursing the overseas transaction fee for deployed military members who use their USAA credit cards while they are overseas.

From the press release:

Deployed Servicemembers to Save Money on Credit, Debit Purchases Overseas
USAA bucks industry trend, refuses to pass costs on to military members

SAN ANTONIO, Texas – USAA military members deployed overseas will be reimbursed a foreign transaction fee for MasterCard and Visa credit or debit card purchases made overseas. While MasterCard and Visa will continue to charge USAA these fees, USAA will not pass on the costs to its deployed members.

The new benefit applies to USAA members for up to 12 months from when they notify USAA in advance of deployment to an overseas location. It is in addition to the many products and services USAA provides its members that demonstrate their commitment to serving those who serve our nation.

“Waiving these fees for our service men and women deployed abroad is clearly the right thing to do,” said USAA Bank President David Bohne. “Those on duty around the world, already sacrificing time away from family, friends and the comforts of home, should know that they won’t be further burdened for serving their country when it takes them overseas.”
USAA constantly looks for solutions to help address the unique financial needs of its mobile membership--especially when they’re deployed. Visit usaa.com: USAA / Deployed Member Benefitsto learn more about the special auto, homeowners and life insurance, investment, and banking benefits USAA offers to support deployed members and their families.

What an amazing way to support the troops.

Busy

I've been busy lately - really busy.  My husband is gone, I'm working a little over half-time, and one of my daughters has injured herself, requiring a crazy number of doctor's appointments.  One of the glaring results of all this business is that I'm not watching my money as carefully as I should, and I'm not planning ahead to save money when I can.  It's so frustrating

1. Not planning my spending before it happens.
2. Not reading sales ads to search for the best price.
3. Not cutting coupons and taking advantage of stock-up sales.
4. Not choosing budget-friendly meals.
5. Not being prepared for things that happen, then spending more at the last minute because I'm not prepared.

 

I've been trying not to let this bother me, but it has been anyway.

Fortunately, I read this post at Leaving Excess:  Is There A Secret to Consistantly Making Dinner at Home?   Obviously, it was the title that originally pulled me in, but the meat of the response is truly great:  We all have 24 hours in a day.  Yes, you will need to make the most of those 24 hours in order to live a frugal life, but you can't do it all.  When you add to your plate, something are going to have to go.  Maybe it is OK to give up a little bit of sleep, or a little bit of quiet time, but basically any wholesale change in one direction is going to require a similarly sized change on the other end.

In my own case, doing the single-parent thing, working, and spending an inordinate amount of time in doctor's offices means that I'm not going to make it to CVS some weeks, and sometimes coupons aren't going to get used when I buy groceries.  And that is OK!

More importantly, you can extend this to other areas of your life as well.  Does it matter that your house isn't super clean?  Not really.  Maybe you didn't get the trash out last Tuesday?  The trash will come again.  Sometimes we just need to cut ourselves a little slack and realize that there's only so much one person can do.

An important factor in that is making sure that what you are doing is in line with your priorities.  It is more important to me that my kids eat healthy meals than that I save money.  It is also not worth it to me to spend our limited family time schlepping around to various grocery stores chasing deals.  In that regard, I guess I'm doing well.  And making sure that my actions are in line with my values is way more important than the bottom line.

Deployment & Money

Deployment brings it's own set of financial issues.  There are benefits to deployment:  special allowances, possible tax free status, and fewer bills at home.   However, it is also a slightly dangerous time because it is so much easier to treat yourself  (this is true for the deploying military member but also for a spouse at home.)  Snazzy gear, port calls, R&R, babysitting, and other expenses can really add up.

Way back in December, Jeff Rose of Good Financial Cents wrote this excellent article as a guest post at the Military Finance Network.  In Managing Money While Deployed, Jeff writes about his family's experience with financial issues during a deployment.   He talks about the good and bad side of deployment finances and lists the reasons why he feels that his deployment was a financial success.  I've been working on a similar post for quite some time, but so far Jeff's is better than anything that I've written.

If you are deployed or preparing to deploy, make plans to maximize the financial value of your time away from home.  A little planning will pay off with real, large, long-term benefits.

Powers of Attorney

I have had the most interesting week.  With my husband deployed, I can't easily ask him to call the financial institutions if I have a question about something in one of his accounts.  We do have several accounts that aren't joint, including retirement accounts and credit card accounts.  It is a conscious choice to keep separate credit card accounts, but sometimes it can be a pain.

Since I'm the Chief Financial Officer at our house, any questions or issues come through me first.  If it deals with my husband's accounts, I usually ask him to "call this number and ask/tell them this."  In confusing situations, he'll just ask them to please talk to me, and usually we can get things straightened out pretty easily.  Except when he's deployed, then I've got to whip out the Powers of Attorney every time I need to contact a financial institution about one of his accounts.

This week has been full of financial transactions:  gathering tax records, moving money, and changing stuff to best suit our family's situation while he is gone.  Right now I'm feeling a little frustrated because the two banks with which we do most of our business have such widely differing policies on handling Powers of Attorney.  In fact, neither of them is awful, but they are so very different and I hadn't planned ahead to accomodate their individual rules.

Navy Federal Credit Union wants me to fax the Power of Attorney before every time I call about an account in my husband's name.  I don't actually have a fax machine set up in my house so it is a half hour process to plug it in, put a couple of phone lines together, stretch them across the house to a phone jack, and get the papers faxed.  Inconvenient, but fine.

On Monday, I called USAA to ask some non-account specific questions about their credit cards.  They didn't really understand or want to help me in that way and said that I should fax in my POA so that they could talk to me about the specific account.  I wasn't at home and said that I would call back to get the phone number.  I just called, got the phone number, and asked if they would call me or if I should call them.  I was informed that it could take up to 14 business days to process the POA.  What?  That's nearly 3 weeks!  The representative did say that once I had the POA attached to the account, I wouldn't have to send it in again - it would remain on file.  Had I known that initially, I would have sent them the POA two months ago.  I just assumed (yes, I know about assuming) that they would be able to process it a little quicker than 3 weeks.

I think the lesson here it is to ask before you need to know.  While I've only dealt with these two situations (recently), I do know others who have run into similar problems.  Like Andi from SpouseBUZZ, whose lender required a specific power of attorney for her transaction.  As Andi says, the Fedex camel doesn't always come by on a schedule!  If you anticipate any need to use your Powers of Attorney, start asking questions early, and ask them often.  Maybe you can avoid some of the surprises that I've had this week.

3/16 Update:  I faxed my POA to USAA on Friday, March 13th.  I called after faxing the POA, concerned that perhaps two of the pages had stuck together and wondering how I would know if that had happened.  The representative on Friday informed me that I should have access to the account in 24-48 hours, and to call back on Monday.

I called today, Monday, March 16th.  The first representative told me that the POA had been received, it was under review, and I should call back on Thursday.  Since this made no sense to me (and she didn't really sound like she knew what she was talking about,)  I immediately called back to see if I would get a different answer from a different representative.  The second representative today (fourth total) told me that 14 days was correct, and that I could call back in a week to see if maybe they had gotten it processed more quickly.

So here we are, a week since I first started, and I'm still being told two more weeks.  I appreciate the comment, usaarep, but perhaps you could explain it to the rest of the company?

photo by:  Leonid Mamchenkov

Reviewing the Financial Roadshow

Yesterday, I attended part of the Financial Roadshow at Andrews Air Force Base in Maryland.  Due to family commitments and lousy weather, I wasn't able to participate in the entire event, but I'm going to let you know what I experienced to help you decide whether attending an upcoming event would be helpful for you.

I've heard a variety of names used to describe this event.  Yesterday's folder was labelled "Thanks for taking the Financial Readiness Challenge!"  and "Personal Finance and Transition."  I've also heard it called Financial Roadshow and Finance Challenge Event.  All these terms are talking about the same thing (as far as I can tell.)

When I registered for yesterday's event at Military HomeFront, the agenda said that it would run from 7:30 am to 4:30 pm.  I knew that I wouldn't be able to make it there at 7:30 since my children don't leave for school until 8:15 and I live nearly an hour away.  I was able to find a babysitter to stay with my kids after school so that I could stay until the end of the event.  The schedule listed several speakers in the morning and early afternoon, then breakout sessions on individual topics in the later afternoon.  There was also ample time to visit the exhibits and the opportunity to have personal financial counseling.

After much internal debate about the weather, and a slow drive through some snowfall, I arrived at the event around 9:30.

They were running a bit behind schedule and were beginning a break, so I the chance to sign in.  The sign-in sheet was several pages long and it looks like they had a lot of people pre-register for the event.  They were also allowing walk-in, which is good to know if your schedule is unpredictable.  Once I entered the theater, I was surprised to see that there were only about 40 people attending, and it seemed (from the shiny name badges) that many of them were part of the presentation team.

I had missed the first speaker, John Sileo, speaking about identity theft.  From his biography, it sounds like it was a really good session and I'm sorry that I missed it.  The second speaker was Rod Griffin, Director of Public Education for Experian, whose talk was titled "Truths & Myths of Credit Reports."  Mr. Griffin spoke for over an hour about all aspects of the credit reporting process and credit scores.  He was an interesting speaker who engaged the audience and encouraged questions throughout.  I took four pages of notes, which is pretty amazing since I already know a good bit about credit reporting due to one of my previous jobs.  I'll be doing a post on his speech later this week.

The breaks are long so that participants will have time to visit the various exhibits.  Unfortunately, the exhibits were set up in another building.  It was walking distance but it was raining and I didn't know the distance before I started.  Because the exhibits weren't readily available, the breaks were too long for a quick drink and not long enough to see the exhibits.

The third speaker was Susan Abentrod, who seems to work with the Military & Family Life Consultants program.  Her topic was "Take Complete Control of Your Finances - Avoid Drowing in Debt."  I found her presentation to be the most basic type of personal finance advice ("don't spend more than you make") and I had difficulty finding a sense of organization in her presentation.  I did pick up a few good tips but she also presented a couple of pieces of misinformation (in my opinion.)

After the third speaker, there was a break for lunch and to visit the exhibitor hall.  The lunch time was being shortened because the morning events had run over their allotted time.  I wasn't sure where to eat lunch so I drove to the exhibitor hall.  As I said, it could have been walked had I known that it was close, but it was several blocks and raining so it worked out okay.  Fortunately, there was a sports club type place attached to the Community Center with the exhibits, so I could get lunch there too.

The exhibitor hall had about 15 tables set up with various exhibits about personal finance, as well as a well stocked table from MilitaryOneSource and a large area devoted to TurboTAP, the military.com administered Transition Assistance Program Website.

Exhibitors included the Andrews Airman and Family Readiness Center, Andrews Federal Credit Union, the Military & Family Life Consultant Program, Personal Finance & Transition, Military One Source, the Maryland Association of Certified Public Accountants, the Federal Deposit Insurance Corporation, SaveAndInvest.org, the Better Business Bureau, The Federal Trade Commission, Freddie Mac, the DC Department of Insurance, Securities and Banking, the Maryland Insurance Administration, the Maryland Office of the Attorney General, and the GSA's Federal Citizen's Information Center.  At first, I thought that many of these exhibits seemed a little odd - what was I going to learn from the DC Department of Insurance, Securities and Banking?  I was very surprised how much really useful and relevant information was provided at each of these tables.  Much of the material was very military specific, which was great, and even the individual state representives had lots of good general wisdom.  I picked up an entire backpack full of material which I will be sharing with you during the next week (or two.)  Everyone was so helpful and pleasant but they were a little bored (and disappointed) because there wasn't much traffic through the exhibit hall.

The center of the exhibit hall was set up with Personal Financial Planners and other counselors who were demonstrating the online TurboTAP program.  TurboTAP.org is the Department of Defense's official website providing information for servicemembers on transitioning from military service.  TurboTAP.org is intended to supplement the services offered by the Transition Assistance Offices and other groups.  The DoD Transition Assistance Program was developed to assist in the transitioning of military personnel and family members leaving the service.  Returning to civilian life is an exciting time, but is also a complex undertaking. There are many steps to take, with questions to be answered.  The DoD Transition Assistance Program is here to help. TurboTAP is administered by Military.com and I have heard nothing but wonderful reviews about it.

I was having such a good time talking to all the exhibit representatives that I decided to forgo the Keynote Speaker, Larry Winget, "The Pitbull of Personal Development".  I usually enjoy motivational speakers, but something about his biography put me off.  Faced with the choice of remaining in the exhibit hall (and eating lunch) or driving back to the theater to listen to him, I chose to remain in the exhibit hall.  Under different circumstances, I might have made a different choice, but the combination of grey weather, ambivilence about the speaker, and hunger prevailed.

The keynote speaker was scheduled for an hour and a half, with a half hour break after him before the concurrent breakout workshops were scheduled.  There were five interesting topics:

• Panel on Foreclosure Prevention
• Home, Sweet HOme...Strategies for Home Buying
• Dream Big - Plan Now!  Make Your Ideal Retirement a Reality
• Before You Take Off - Financial Planning for Deployment
• The Wheels You Want - Successful Car-Buying Strategies

They all sounded interesting but I had chosen to go to the Deployment workshop because it was the closest to fitting my current situation.  The workshops were being held on different location around the base but they weren't listed on the agenda.  I was able to find an employee who told me that the Deployment workshop was being held next to the exhibit hall - perfect!

What I found was that after 45 minutes of exhibit strolling, a quick sandwich, and another 45 minutes of exhibit strolling, I had completely exhausted my interest in the exhibits.  It was still an hour until the breakout sessions were scheduled to begin and I was bored.  I decided that I would head over to the Airman & Family Readiness Center to drop off some Military.com materials and chat with a few people.  That only took about 15 minutes and I was debating what to do when the radio in my car had a traffic update.  It reported several accidents on my way home and though I wanted to attend the deployment workshop, I decided that I should probably be responsible and head for home.  (I'm glad I did because I couldn't find my way off of Andrews Air Force Base and wasted a lot of time driving around in circles.  The good news is that the accidents had been cleared by the time I got to them.)

Overall, I'm glad that I attended this event and I've just signed up for the event at Fort Meade on March 10th.  I picked up a ton of resources and learned a lot.  I would encourage you to check the list and see if there are events being held in your area.  Registration is now being accepted for events through March 10th, and additional events are in the planning stages.

Prioritizing, Again

Like many of you, I always struggle to prioritize my saving/spending/debt repayment.  My husband has recently deployed, and I spent today figuring out the best way to use our money while he is gone.  It took me a while, but I think that I finally came up with a plan.

Here's how the thought process went:

I had five ideas for how to use our money.  I made a list with the pros and cons of each option.  (My list wasn't this fancy.  In fact, you probably wouldn't even have been able to read it.

 

Once I'd made this list, it was obvious that paying off my Home Equity Line of Credit wasn't a very high priority.  It has a low interest rate, it is tax deductible, I'm already making a huge payment every month, and I wouldn't be able to pay it all off.  So I scratched it off the list.

Then I looked at paying off the credit card debt faster.  I'm already on track to pay it off before the end of the deployment and it is at a low interest rate.  I decided that paying it off faster than currently planned wasn't a very high priority.

That left me with TSP, emergency funds, and the Savings Deposit Program.  The SDP is pretty amazing - you can't find 10% annual interest anywhere else right now.  I decided that we should try to put as much money as possible into the SDP.  If we somehow manage to max out the SDP (deposits are capped at $10,000, which is a lot of money,) then I think that we should try to put as much as possible into TSP.

Right now, my big question is:  do I take our emergency money out of our emergency fund and put it into the SDP?  It is earning very little interest right now and the 10% would really add to that money.  I can't imagine any upcoming emergencies, but that's why they are emergencies - you can't predict them.  Maybe I'll keep a little bit out and put the rest in SDP.

Working this all out has taken a good chunk of my day, but I think that I've made a good decision.  Any thoughts?

Get 6 FREE Valentine's Day Cards

Hurry - this offer ends February 1st!

ScrapbooksEtc, a website that is affiliated with Better Homes & Gardens, is offering 6 free personalized Valentines' Day cards.  The offer is for 6 of the same cards from their selection.  You do have to register with their website to use this offer, and the entire process took me about 20 minutes as there is some uploading involved.  I wouldn't recommend this just to get some free Valentine's day cards, but if you are looking for a cute card to send to a group of people (I'm thinking Dad, grandparents, and aunts & uncles, or maybe a book club, or similar) then this would be a fun and free project for you.

Operation Purple Family Retreats

The National Military Family Association (NMFA) is piloting a new program this year.  An offshoot of their popular Operation Purple Camps, Operation Purple Family Retreats are designed for families whose service member has returned from deployment within the last twelve months.  From the website: 

It is difficult on the entire family when a loved one is deployed, but the time after that father, mother, husband, or wife returns  home is often the most challenging of all. Recognizing this, the National Military Family Association is piloting two Operation Purple® Family Retreats. These free, four-day retreats are set in a National Park using nature’s classroom, where families will have opportunities to strengthen and renew relationships, explore their natural surroundings, and participate in fun family-focused activities.

If you have a recently returned family member, and you live anywhere near these locations (one is in California and one is in Washington State), you might want to see if these would work for your family.  What a wonderful opportunity to enjoy a little affordable R&R and get some quality family time.  Thanks, NMFA!

photo by:  mateoutah

How I'm Going to Meet My Financial Goal for 2009

I've been trying to make some new goals for 2009.  It is so hard!  Well, making the goals isn't hard.  What is hard is making goals that are managable, then working out a plan for accomplishing those goals, and then doing the things that you've planned.  But really, a goal isn't very valuable without a plan for accomplishing it.

What are my goals for 2009?  My primary goal is to pay off all non-mortgage debt.  Step one was to make sure I knew exactly how much I needed to pay off.  Then I divided it by 11 to figure out how much I needed to pay each month.  11?  I figure that December is an expensive month anyway, and that it would be better to pay it off before December.  Also, if I get a little behind over the course of the year, I'll have December to catch up and still be successful in paying off all my non-mortgage debt by the end of 2009.

Now that I know how much I'll have to pay each month, then I need to figure out how I'm going to do it.

Photo by:  Mosieur J

There are a couple of ways to attack this, but I think that they all require starting with a list of income and expenses.  After checking out my numbers, it looks like I should be able to pay off this debt without adding any income.  (If the two numbers were close, or (gasp!) my expenses exceeded my income, then more drastic measures might be needed.)  Seeing that my list shows that I should be able to pay this with our current income makes me wonder - what's missing on my list?  And how much unnecessary spending is happening in my family?

Armed with this information, I'm going to make a strong spending plan for 2009.  I know from past experience that tracking my spending is the best way to keep my finances in line.  I might even use the "envelope" method as that has worked well for me in the past.  I'm not in a good position to change any fixed expenses this year (mortgage, insurance, property taxes) but I can make sure that I'm making wise choices about variable expenses:  food, clothing, entertainment, utilities.  Every month, I'm going to try to take small steps to decrease the amount of money I spend in each category.  It is really tempting to go crazy and try to cut all our expenses at once, but I know that the results will probably be short lived.  I know that food is a big one for my family, so I'm going to start there. 

In addition, I will keep my eyes out for ways to add little bits on money to my debt repayment.  I don't really have any time to add another job (plus my husband is deploying, so that might not be the best idea anyway).  However, I can eBay some extra stuff, take unused clothes to the consignment shop and maybe even have a garage sale.  This will help me declutter and make some extra cash at the same time.

If i complete my main goal before the end of 2009, then I'm going to concentrate on putting as much money as possible into my husband's TSP.  Usually, we try to balance our contributions to my IRA, his TSP, and his IRA.  Since he will be deployed for most of 2009, it makes sense to stash more in TSP for this year and take advantage of the fact that it will be forever tax free.

What are your goals for 2009, and how do you plan on accomplishing them?

Planning for 2009

One of the (many) unique things about being in the military is that you get regular pay increases every January, when the new pay tables are implemented.  This gives you the opportunity to plan your spending for the following year.  New housing allowances and BAS rates were recently posted, so I took a few minutes to look at my family's financial plans for 2009.  If I don't plan ahead, that extra money will slip into our everyday spending instead of working towards our financial goals.

Here's what I did:

I started by getting a copy of my husband's last LES.  These can be printed at the MyPay website. Then I made a note of the new, updated amounts.  (Thanks to rate protection, BAH amounts won't go down even if your areas rate falls.) I did some estimating for changes in taxes, social security and medicare, and figured out what the net change would be.  Then, I thought about what would be the best use for this extra money?  There are three main choices:

• Pay off debt:  This is obviously very important.  Debt reduction should be a very high priority for everyone.  I have a pretty ambitious debt reduction plan and we're meeting our goals so far.
• Save for retirement:  In a perfect world, we would all be maxing out our IRAs and putting a good chunk into TSP each month.  We recently reduced the amount that we're saving for retirement to pay down our debt faster.  This makes me very nervous.
• Build an emergency fund:  Experts say that you should have 3-6 months of expenses in an accessible account.  I used to think that we didn't need that much because military paychecks are pretty secure, but then I started thinking about the unexpected expenses that sometimes come with military life, and I heard a few horror stories of people's paychecks being messed up.  Now I'm thinking that maybe 3-6 months expenses wouldn't be such a bad idea.  So far, we've saved about month's worth of expenses.

For my family, I am putting a chunk away each month into an emergency fund, and I am putting the rest into TSP and IRAs.  We're already paying down our debt pretty fast, and we have a small emergency fund.  We aren't saving as much for retirement as I'd like, so that is my highest priority.  Your family's choices will probably be different, depending on your debt situation, the size of your emergency fund, and your retirement plans.

I've attached an example (I got the LES from Wikipedia):

            

In this case, this Staff Sargeant at McGuire Air Force Base will be earning an additional $119 per month in January, minus a little extra in deductions for taxes.  She could pay that money towards a credit card, put some in her TSP account, put some into a savings account, or some combination thereof.  Her choices will depending on her situation.

What we all need to avoid is letting that extra money disappear into our existing budget.  A yearly increase is a benefit that very few people can count on.  Let's use it to our financial advantage!

Savings Deposit Program

Have you heard of the Department of Defense Savings Deposit Program (SDP)?  This high-yield savings account is a benefit of serving in areas that authorize the receipt of Hostile Fire/Imminent Danger Pay.  Want to know more?

Eligibility:  Service members (including National Guard and Reserve members) receiving Hostile Fire Pay and deployed for at least 30 consecutive days (or 1 days in each of three consecutive months) are authorized to make deposits into a SDP account.

Deposits:  Service members may begin making deposits on their 31st consecutive day in designated area.  Deposits can be made via allotment, check or cash.  Cash and check deposits are made to the finance office in your deployed location.  Deposits are accepted in $5.00 increments, with a minimum deposit of $5.00.  If you are depositing via allotment, be sure to stop the allotment when you leave the combat zone and before requesting a withdrawal.

Interest:  Interest is computed at 10% per year - much higher than any other savings product I can find.  It is compounded quarterly.  Deposits made during the first 10 days of the month will accrue interest from the first of the month.  Deposits made after the 10th will begin accruing interest on the first day of the following month.  Basically, the money must be in the account the entire month to earn interest for that month (except for the 10 days grace period for making deposits at the beginning of the month.)  Interest will only be earned on total deposits up to $10,000, and that $10,000 includes any accrued interest. The interest accrued is taxable even though the money deposited into the account is not taxable - that can be a little confusing if you don't know.

Withdrawals:  You may only close your SDP account after departing the combat zone.  Interest will continue to accrue up to 90 days after losing eligibility, ending on the first day of the month during which you have been out of a combat zone for 90 days.  You do not have to remove the money from the account when you leave a combat zone, but it will stop earning interest on the first day of the month during which you have been out of the combat zone for 90 days.  SDP allotments must be stopped prior to requesting a withdrawal.  Withdrawals typically take between 10-14 business days to process.  There is a provision for emergency withdrawals, if the health or welfare of the service member or dependents is endangered.

From these details, you can see that it sounds like an excellent program.  A service member serving in a Hostile Fire area who deposited their $225 in Hostile Fire Pay into the account for 12 months would earn $150 in interest during the twelve months they were deployed, and another $50 in interest during the next two months post deployment.  Here's the chart (and please, feel free to double check my math):

Download sdp_hostile_fire_pay.xls

Just imagine if you could save more than just your Hostile Fire Pay, or if you could deposit a small chunk into the account at the beginning of your eligible time.  What if you had $2500 in a savings account and deposited that into a SDP account during your first eligible month, and still deposited your Hostile Fire Pay?  During that one year, you would earn $412 in interest, plus another $95 during the two post deployment months.  In contrast, money kept in my current emergency fund would earn approximately $25 in interest during the same period of time.  That is almost $500 difference!

Is it as good as it seems?  As always, there is no clear cut answer to that question.  With other current investment options paying such low rates, it seems like a good choice for many people.  I have heard criticisms about the interest payment and compounding schedule, but I'm not sure they are enough to make it a bad deal.  Another suggestion is putting the same money into your TSP account instead.  It probably won't grow as much, but it will tax-deferred and it will really give your retirement account a big boost.

I am anxious to hear your experiences and thoughts about this program.  My husband is considering participating when he deploys next year and we want to learn as much as possible!

Here's a link to the current Savings Deposit Program brochure.  This brochure is put out by the Wounded Warrior pay department, but it contains all the correct information on the program.  Here is a link to a audio file talking about the SDP.  This audio program is provided by Argonne Credit Union, and it can be downloaded if this isn't a good time to listen.

So please, comment freely and help us all learn more!

Financial Readiness Challenge Events

Would you like a little in-person financial education?  Do you have specific questions and wonder who to ask?  Well, the Department of Defense has something just for you!  In conjunction with installation commanders, the DOD has begun offering Financial Readiness Challenge Events at locations across the country.  Available to military members and their families, these events will provide both workshops and individual financial counseling.

From the DefenseLink news article:

"Hands-on workshop sessions will provide information on debt elimination, investing, car- and home-buying strategies, the Thrift Savings Plan and retirement planning, building a better budget and spending plan, paying for college, identity theft, credit reports, and what to do in today's economy, officials said."

At some locations, special children's programs and child care may be available with pre-registration.

This is the current schedule:

TODAY:  Lackland Air Force Base

January 7th:  Beale Air Force Base (child care available)

January 24th:  Fort Belvoir, Virginia

February 23rd:  Naval Base Kitsap, Washington

February 25th:  Norfolk, Virginia

March 7th:  Fort Polk, Louisiana

I'm sure that more are being planned, but I couldn't find any exact dates for other locations yet.

Registration is available through MilitaryHomefront. The site also includes flyers, agendas, and other information as it becomes available.  What a great program!  I can't wait to attend - I'll be sure to tell you all about it.

Free Welcome Home Banners

Andi at SpouseBUZZ tells about the generous promotion from BuildASign.com:  they're giving away 20,000 banners and jumbo cards for deployed and returning servicemembers.

Austin, TX - November 10, 2008 - In honor of Veteran's Day, BuildASign.com™ is re-launching its banner giveaway to help 20,000 more Americans show their support for the US armed forces. With this donation, BuildASign.com™ will provide military families all over the country with personalized banners for their homecoming and holiday celebrations while encouraging businesses to create banners that show their support for our troops.

BuildASign.com™ is also giving away jumbo holiday cards to families whose service members won't be home in time for the holidays. These families can send personalized jumbo holiday cards to loved ones overseas for less than the cost of shipping a banner. Both free banners and free jumbo cards are available to everyone at www.BuildASign.com/Troops.

If you have a loved one deployed, or are anxiously awaiting a return home, check out this wonderful offer from BuildASign.com!

Free Holiday Messages in Stars and Stripes

Stars and Stripes military newspaper is offering free holiday messages to be shown on their website and also included in their print editions.  Click here to access the December 2008 holiday message website.  Messages must be submitted by 8 a.m. EST on November 28th, 2008, for inclusion in the print editions.