Military Families 2018 Finance Guide by HHC, 807th MC(DS)

SPECIAL EDITION

2018 FINANCE GUIDE

THE BLENDED RETIREMENT SYSTEM: WHAT YOU NEED TO CONSIDER

FAMILY FOCUS: THE HOFFMAN FAMILY MAKING THE MOST OF EACH MILITARY PAYCHECK THE HIDDEN COSTS OF COLLEGE ADJUSTING FAMILY FINANCES FOR POST-MILITARY LIFE

MEET THE HOFFMAN FAMILY! pg 16

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From the Editor

Welcome 2018! This new year brings a new pay raise, new military programs and new features for Military Families Magazine. To start with, we are expanding to 12 issues a year, with a topical focus on an aspect of the military lifestyle in each issue. Also new this year is our monthly Family Focus feature, which will feature a military family each month related to our issue’s theme. Our inaugural featured family is the Hoffman family stationed near Atlanta, Georgia. Michael and Roxanna are the leaders of “The Hoffman Squadron,” which includes “America’s First Surviving Military Quintuplets” — Aurora, Briella, Delilah, Elias and Felicity — now three years old. Their squadron also includes older son Conner and younger son Gideon, so this large military family of nine knows a thing or two about stretching their military dollar, and share some tips with you on page 16. For even more of their amazing story, visit their website at https://thehoffmansquadron.com or their Facebook page, www.facebook.com/TheHoffmanQuintupletsPlus2/ Another huge change for service members and their families is the longdiscussed implementation of the new Blended Retirement System. And even with all the hype and required classes, many families still have questions about the new system. Check out our article on page 8 for some answers. January brings a 2.4% pay raise — the largest annual pay raise since 2010 — and military families everywhere surely will have no problems spending the extra money. But to really get on top of and stay on top of your finances, you need a plan, and that’s where budgeting enters the picture. It may not be exciting, but budgeting can help you reach your future financial goals — and that’s a win-win for all involved. We have a few takes on budgeting and even suggestions for technology to help you track and predict your spending.

SPECIAL EDITION

2018 FINANCE GUIDE

THE BLENDED RETIREMENT SYSTEM: WHAT YOU NEED TO CONSIDER

FAMILY FOCUS: THE HOFFMAN FAMILY MAKING THE MOST OF EACH MILITARY PAYCHECK THE HIDDEN COSTS OF COLLEGE

MEET THE HOFFMAN FAMILY! pg 16

ADJUSTING FAMILY FINANCES FOR POST-MILITARY LIFE

This special 2018 Finance Guide issue of Military Families Magazine takes a look at all aspects of managing your money — from budgeting to retirement considerations. Also meet the Hoffman family, the first of our Focus Families for 2018, on page 16. Cover design by Maria Bucaro (shutterstock_946972, shutterstock_125317457). Hoffman family photo inset by Jennifer Cosby

We also take a special look at military spouse employment — which remains a top concern for many military families. From side hustles to make some extra money (and maybe launch a new career!) on page 18, to the story of two military spouses who combined forces to launch MadSkills, a company that recognizes military spouses as an untapped talent pool and matches skilled spouses with companies seeking virtual staffing on page 22. For military children, we share ideas for helping your kids be more financially savvy in Children’s Corner on page 30; then examine the hidden costs of college, so you can better plan for their higher education on page 26. And since we are not all work and no play, we have some suggestions for some fun on a budget in our new Off Duty feature on page 24. Thanks for starting the new year with us at AmeriForce Media! Here’s to spending it wisely.

Jennifer G. Williams Editorial Director www.AmeriForce.net

Contents

16 Seven Kids…and Some Serious Savings Tips by Madison Linnihan

Got Your Six

3 Things to Consider when Talking about the Blended Retirement System by Rebecca Alwine

10 How to Have More Money in 2018

Military Families Magazine by AmeriForce Media, LLC, is published 12 times a year for active duty service members and their families. Copies are available through participating family service centers, relocation offices, transition offices, base lodges, libraries, daycare centers, MWR activities and other locations by request. Unit distribution requests can be made online at www.AmeriForce.net/ subscribe-to-print-editions/ Individuals can order a free digital edition of this issue at www.AmeriForce.net/ Websubscribe Editorial comments can be emailed to Editor@AmeriForceMedia.com Military Families Maetgazine is published by AmeriForce Media, LLC, Bloomington, Ind., a private company. Information and advertisements in this publication do not constitute endorsement by any branch of the military or the Department of Defense. No part of this publication may be copied without the express written permission of the publishers. AmeriForce Media, LLC, the publishers, and publisher’s agents make no endorsement of any advertised services or products and none should be inferred.

by Bianca Strzalkowski

12 How Technology Can Affect Your Financial Future

CONTRIBUTORS

by Rebecca Alwine

President and Publisher ...............Todd Taranto

14 Budget for Success

Editorial Director .............. Jennifer G. Williams

by Janet Farley

18 Side Hustles — Picking One and Making It Work by Bianca Strzalkowski

20 VA Loans 101 — How to Save Major Money When You Buy Your Next Home by Jack Amberg

22 Spouses Corner — Two military spouses combine forces to create opportunities for fellow military spouses worldwide by Andrea Downing Peck

24 Off Duty — Fun on a Budget by Bianca Strzalkowski

26 The Hidden Costs of College—Paying for college is more than just tuition and books by Andrea Downing Peck

28 How to Adjust Family Finances for Post-Military Life by Bianca Strzalkowski

Design ........................................ Maria Bucaro Production Manager ......................... Diana Tyo

ADVERTISING PLEASE CALL 703-337-8100 Todd Taranto Publisher Todd.Taranto@AmeriForceMedia.com Julie Miller Vice President, Sales Julie.Miller@AmeriForceMedia.com Brian Dunbar Director of Business Development Brian.Dunbar@AmeriForceMedia.com Ursula Hirschhaeuser Germany Sales +49 (0) 69-15053980 Ursula.Hirschhaeuser@AmeriForceMedia.com

30 Money Matters — Helping Your Children Develop Good Money Skills by R. Brian Williams

32 Tips for Savings and Investing in a Low Interest Rate Environment by Carlos Perez

34 By the Numbers

4 www.AmeriForce.net

Got Your Six

“The [DOD] estimates that each year, somewhere between 4,700 and 8,000 service members are involuntarily separated due to financial hardship… Every time we separate a service member, it costs the Department $57,000… That’s a staggering amount of money and it’s totally avoidable I think.” — Rhode Island Senator and former Army Ranger Jack Reed, during a 2017 hearing of the Personnel Subcommittee of the Senate Armed Services Committee about military readiness.

Military Saves Week, a campaign that seeks to motivate military families to save money, is scheduled to run from Feb. 26 to March 3, 2018. The program and its many resources will be available at installations worldwide to help service members and their families achieve their financial goals. Visit https://militarysaves.org/ organizations/militarysaves-week for more information. U.S. Air Force photo by Airman 1st Class Areca T. Wilson

www.AmeriForce.net

geico.com | 1-800-MILITARY | Local Office Some discounts, coverages, payment plans and features are not available in all states or all GEICO companies. GEICO is a registered service mark of Government Employees Insurance Company, Washington, D.C. 20076; a Berkshire Hathaway Inc. subsidiary. ÂŠ 2018 GEICO

BRS

Things to Consider when Talking about the

Blended Retirement System

by Rebecca Alwine

The new Blended Retirement System (BRS) officially goes into effect Jan. 1, 2018, but many service members and their families already are tired of hearing about it From mandatory briefs to articles and spreadsheets galore, much has been released about the new program, but despite all the information out there, understanding of the BRS remains surprisingly low. According to the 2017 Blue Star Families Military Family Lifestyle Survey, the majority ( 51% ) of those who indicated they were eligible for the new BRS say they do not understand it and 42% indicated they did not understand how the new system compares to the old benefit. If we throw out those who aren’t eligible for the switch (you know, those who have over 12 years in the military, or those joining after the first of the year), we still have a relatively large group of service members who have to make a decision — and are looking for answers. 8

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Instead of breaking down the pros and cons (again) of staying with the traditional retirement pension or switching over to BRS, we’re going to present you with some questions you should be ready to answer before making a decision.

and an $180,000 mortgage.

Even with all of the information available, many families are still unsure of the “right” answer. Hopefully using some questions and advice from military financial experts, you’ll be able to navigate your way through this puzzle.

Do you use a written budget each month? If not, why not? Mielitz suggests you consider how your financial needs may change between now and separation from the military and how you are planning to replace income.

Consider your current financial situation Your current financial situation may be more important in guiding your decision toward changing to BRS than you think. Kate Mielitz, a financial wellness coach, feels that being honest with yourself about your budget, debt, and future plans are crucial in making a good decision. Here are some questions she recommends you answer: Are you in debt? If yes, how much debt? The average American has over $16,000 in credit card debt, $50,000 in student loans, $30,000 in auto loans

Do you have an emergency savings? How much? The 2017 Blue Star Families Lifestyle Survey reports that 49% of military families do not have access to $5,000 in savings.

Have a plan, now What is your plan after the military? What is your time frame until you get out? Do you intend to work after you are out of the military? The typical enlisted service member who retired in 2017 as an E7 will receive $26,842.80 per year. The typical officer who retired in 2017 as an O4 will receive $45,950.40 per year. (Assuming, in both situations, the service member served three years at their retired rank.) Have you reviewed your credit report? Will your credit be in good shape when you get out of the

military? Anyone who knows Dave Ramsey knows he’s not a fan of relying on a credit score, and as he says, “It only takes into account how good you are at borrowing money and giving it back.” But, for those looking to borrow money again in the future, it is important.

a perfectly good example of this, for the first 7.5 years I thought for sure I would stay for an entire career, but then personal things dramatically changed and now I’m separating at nine years.” Put some healthy skepticism in the probability you will make it to 20 years, he advises.

Where do you plan to retire? “Now is the time to find out what your tax implications will be when you retire,” says Christine Maxwell of Her Money Moves. Eighteen states now exempt military pensions from taxation and an additional nine states have no personal income tax, so if you are retiring to one of these states, you may have a different outlook than if you aren’t. Also make sure you understand if the state will tax your traditional TSP distributions as income. There are several things to consider here.

Doug Nordman, the respected voice behind The Military Guide, shares this insight regarding career progression: “Officers have a higher retirement rate than enlisted personnel,” he says. Between the often-surprising statistic that only 17% of people in the military actually serve the 20 years required for retirement pension, BRS deserves at least consideration from each person eligible. Nordman also encourages service members to consider their personal financial decision. “If you’re going to reach financial independence while in the military, then it doesn’t really matter what you pick, right?”

Be realistic Daniel Kopp, an active duty officer currently separating from service, stresses the importance of being realistic, both about your career in the military, and about your preparedness for life after transition. Kopp shares his passion for personal finance with the military community through his blog at www.militarylifeplanning. com and by teaching courses. How likely is serving a full 20 years? Kopp explains that taking your career one assignment at a time is a far better way to plan a career than confidently boasting about something that statistically has a smaller chance of happening. “I am

While the right answer for you may not be the right answer for your neighbor or co-worker, the consensus is clear. Planning for retirement is crucial. Experts and novices alike suggest starting as early as possible.

Rebecca Alwine is a freelance writer, Army wife, and mother of three. Over the past 10 years, she’s discovered she enjoys coffee, lifting weights, and most of the menial tasks of motherhood. When she’s not writing, she can usually be found hiding behind the sewing machine or with her nose in a book. You can follow her on her website, whatrebeccathinks.com

For more on the Blended Retirement System or to help you make the best decision for your family, visit

www.AmeriForce.net/BRS

Arkansas and West Virginia recently became the latest states to not tax military retirement pay, bringing the total number to 18.

The following states do not tax retired military pay: • Alabama • Arkansas* • Connecticut • Hawaii • Illinois • Iowa • Kansas • Louisiana • Maine

• Minnesota • Mississippi • New Jersey • New York • Ohio • Pennsylvania • West Virginia* • Wisconsin

*effective 2018

An additional nine states do not have a personal income tax: • Alaska • Florida • Nevada • New Hampshire* • South Dakota • Tennessee* • Texas • Washington • Wyoming *tax only dividend and interest income www.AmeriForce.net

Money

3 Ways Military Families Can Have More Money in

2018 By Bianca Strzalkowski

American households continue to operate on a tight budget with little to no safety net, according to a recent survey. Seventy-eight percent of U.S. workers live paycheck to paycheck to make ends meet with a quarter stating they have no established savings, according to 2017 findings by Career Builder. Financial readiness has been an ongoing top concern for military families, leading various organizations to step up — including the Department of Defense — to provide access to resources. Jennifer Hemphill, military spouse and accredited financial counselor, explains there are key steps that can lead to better finances in 2018. STEP:

Know the Numbers

The starting point for improving most things in life — health, finances, relationships, etc. — is taking inventory. In terms of money and budgeting, that means putting the full picture on paper (or in digital form, for tech-savvy folks). 10

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“Really, the first thing when creating a budget is deciding what type of tool you want to use. Just because there are spreadsheets for budgets, or software, or there’s apps — you can do something as simple as a notebook, a pencil, and a calculator. So, it’s a matter of learning what you’re going to use consistently,” Hemphill said. She coaches families on how to save money in the simplest ways, and says the number one fear for most people is looking at the numbers. “You have to know what these numbers are to move forward because basically the budget is just a plan for the numbers,” she said. “That incorporates knowing how much money is coming in … and the money that’s going out. In doing that, is just a matter of looking at your bank statements, if you use a debit card.” Common expenses include housing/ mortgage, groceries, auto maintenance, fuel, kids’ activities, emergency fund, clothing, savings, and any bills associated with lines of credit.

TIP: Hemphill recommends a tool called PowerPay (www.powerpay. org) to help determine how to pay down credit debt. It allows you to enter information like balance, minimum payment, and interest rate to estimate likely payoff dates. Then, you can play around with the numbers to figure out how much more you need to pay a month to get rid of those bills one-by-one. STEP:

Pay Yourself First

The usual advice when it comes to savings states that people should have three to six months’ worth of living expenses stored away. However, that isn’t always realistic, especially if a bank account is maxed out each pay cycle. Hemphill says start small. “I think there’s nothing wrong with baby steps, and that’s something I encourage because if you have a baby step and you achieve that smaller milestone, you have that win. That quick win,” she said. “Really you have to know your bottom line — income minus

expenses, which is why you have to have some sort of budget. You have to get clear on your expenses.”

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One way of establishing some version of a savings is deciding what a realistic amount is for you to put aside and paying that out as soon as payday happens. For example, start with $25 a paycheck and work up to higher increments.

In 2018, Jennifer Hemphill will release a new book called Her Money Matters: The Missing Truths From Traditional Money Advice. For additional information about her coaching services, podcast, and tips, visit http://jenhemphill.com/.

Bianca Strzalkowski is a freelance writer, editor, and public relations consultant. A proud Marine Corps wife of 16 years, she has experience in news reporting, social media management, and content marketing. Bianca currently resides in Jacksonville, N.C., with her husband and two children, but continues to root for her beloved Yankees and Giants.

RESOURCE: The Consumer Finance Protection Bureau has a program called Money As You Grow, which has age-specific activities to teach kids how to shop, save, and borrow. STEP:

About that Grocery Bill

Food remains one of the highest expenses for American households, coming in only second to housing. The good news is there are so many options to decrease this area of budget, but the bad news is it does take some time. From couponing to apps, a recent trend is social media users bragging about how much they were able to save with these tools. Even before checking out the latest digi-tool, let’s start with the basics: building a food list, preferably based off whatever weekly menu you intend to follow. Hemphill also says being full and prepared is the way to go. “I always say never go [shopping] on an empty stomach, go with a plan,” she said. Below is a list of her go-to apps:

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Technology

Technology Financial HOW

CAN AFFECT YOUR

Future by Rebecca Alwine

Technology is great in so many ways, but when it comes to your finances, is it helping or hurting you? There are certainly advantages to having a safe and secure way to purchase things online, especially when living in remote locations, or to ship things to your service member when they are away, but at what point does it become a problem? A Pew Reserach study in December 2016 found that 79% of Americans shop on the internet, either from their home computer or on their phone. By comparison, in 2000, it was just 22%. Ease is cited as the reason so many people shop online, and it’s certainly something military families can understand. Time is not something military families have in droves and when you move from place to place, it can be hard to find everything you want in one store.

My love for online shopping I’m not a person who enjoys shopping — I prefer to shop online for everything and anything. It gives me the ability to research prices, shop (relatively) uninterrupted by children and salespeople, and it also allows me to reduce the amount of time I spend shopping. 12

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When we lived in a more remote location, I would use Amazon to buy basic things, say toilet paper and dog food brands I couldn’t find at the commissary, and it would save me a trip off-base. Some may consider that lazy, but when it came down to the time spent in the car, the gas, the frustration of kids in car seats and the often-added impulse buys, I actually saved money. Now that we PCSed somewhere that offers online grocery ordering, I’ve been able to save at least $100 a month by ordering those online. While online shopping doesn’t work for everyone or everything, it’s a great way to simply some parts of life.

More options to pay I recently noticed that Google Chrome saved my credit card information on my computer. So the next time I go to purchase something, it will autofill everything except my security code. While this is helpful for me (cuts down on having to go get my wallet each time) it can also have a downside, as it can enable impulse buying. With sites like PayPal and Amazon making it so easy to purchase with seemingly minimal immediate effect, those who struggle with spending

can struggle even more. And while it’s easy to hide or destroy credit cards, it’s harder to remove that saved information from a website. Do you remember the last time someone asked you “cash or credit?” Me either. It is always “debit or credit?” And if you say cash, it throws them for a loop. In 2016, a payment processor asked 1,000 consumers their preferred payment method. The results weren’t surprising — only 11% preferred cash. Paying for things in cash makes for a finite end to spending. No cash? Then no purchase power. Credit cards make it easier to spend money you don’t have. We all know this, but with the increase of programs like Apple Pay and Google Wallet, technology is once again out to make our life easier in the present, not necessarily in the future. Just beware of possible security breaches and the inherent risk in having all of your account information stored in one electronic place.

The Bottom Line The average American has more than $16,000 in credit card debt, which means most of us really don’t need to do anymore shopping online. Before embracing all these new technologies, do consider the ways in which technology can help and hurt your financial future.

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Money

Budget for

Success by Janet Farley

As the haze of the hectic holiday season fades, the bills that paid for all the fun and frivolity start arriving. And if you’re like many people, you vow to do better with your finances in the new year. And while there may not be any fun in it, creating and sticking to a budget can help you avoid overspending— not just during the holidays, but throughout the year. In fact, if you’re not careful you just may set yourself up for financial success in 2018.

Doing so can be a real eye-opener and Foster advises all her clients to track their spending as a first step towards true financial capability. “Take the time to really identify those areas where you’re spending. For 30 straight days, keep all your receipts or faithfully jot down the amount and the reason for the purchase every time you spend any money,” she said.

Put Your Paycheck to Work “Look at those numbers at the end of the 30-day period and try to get a good sense for where you are overspending,” said Foster adding that this is way to gain control over your finances.

Imagine that. “Financial capability is more than just knowing what you’re supposed to do. It’s knowing how to do it as well,” said Liz Foster, an Accredited Financial Counselor based in Colorado Springs, Colorado. According to Foster, understanding the how of money matters begins with knowing where you are spending your hard-earned dollars. “Most people haven’t gone through the process of writing down where every dollar is spent within a given time period,” said Foster. 14

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Other money tracking tools include ClarityMoney, YNAB, and HelloWallet. Find that one that feels right to you and start tracking.

There’s an App for That If the thought of accounting for every single cent just doesn’t excite you, Foster suggests you make easy work of it and simply automate the deed. “You know what they say: ‘there’s an app for that.’ Try easy to use tools like Every Dollar and Mint. Most online banks also have easy to use online budgeting tools today,” said Foster.

Foster also suggests you put aside denial and simply work with what you find. “Give those areas where you are spending a name and adjust your numbers going forward. Make every dollar you earn have a job do to and zero out your income in the process,” said Foster. “Give ‘savings’ a job, too. Make a portion of your paycheck work towards it,” she said.

“You can achieve financial capability by gaining control of your finances, regardless of whether you get paid once a month, bi-monthly or even sporadically,” said Foster.

Pay Your Bills First

For more information, visit: www.militaryonesource.mil www.saveandinvest.org www.everydollar.com www.mint.com www.claritymoney.com www.youneedabudget.com www.hellowallet.com

Foster strongly suggests that whenever you get paid, you take care of business first. “Pay your bills first. Anything you have left over after that is called discretionary and you can spend that however you’d like,” said Foster. Foster suggests you frame the amount of discretionary funds available to you after paying your bills into an “available per day or week amount” until your next paycheck arrives. To do that, simply divide the amount of money left over by the number of days (or weeks) left until your next paycheck. “Getting a good grip on your finances can admittedly take some trial and error, but don’t get discouraged and don’t give up,” she said.

Financial Resources Available to You “Online, there are a number of great resources you can access to help you, free of charge such as Military OneSource and SaveandInvest. org,” said Foster. “You can also visit with certified financial planners on your closest installation at the military family support centers, too,” said Foster. Military and military service branch relief societies also offer you financial assistance in emergency situations. l www.AmeriForce.net 15

Family Focus

PHOTOS BY JENNIFER COSBY

Seven Kids…

and Some Serious

Saving Tips by Madison Linnihan

Raising children can be a daunting and expensive task for all parents. However, not many parents can say that they are raising seven kids — much less, five three-year-olds — all before they turn 30. But that’s just what Air Force couple, Michael, 28, and Roxanna Hoffman, 27, are doing though, and they’ve accumulated quite the collection of money-management tips, from saving during a PCS to everyday grocery savings.

The Hoffman Family’s Story The Hoffmans never imagined having seven children, but they feel blessed to have such a unique family. In 2006, Michael and Roxanna had their first son, Connor, while both were serving in the U.S. Air Force. In 2011, they decided that Connor needed

The Hoffman Family (L-R): Roxanna, Michael, Gideon, Aurora, Conner, Elias, Delilah, Briella and Felicity.

a sibling. Unfortunately, adding to their family proved to be more challenging than expected and they struggled with a miscarriage and infertility. After fertility treatments, the Hoffmans finally got pregnant again. Early on, the doctors told them that it looked like they would have twins based on the ultrasounds. One can only imagine the young parents’ surprise when they learned that they were actually having quintuplets! At the same time, the Hoffmans were also in the midst of preparing for a PCS move to Eielson Air Force Base in Alaska. However, with such a high-risk pregnancy, their plans quickly changed. The military canceled their orders and the Hoffmans stayed in New Jersey. Roxanna transitioned from her job as an EMT/medic to Inactive Ready Reserves after preterm labor at 20 weeks. She then moved to Arizona to be treated by a quintuplet specialist while Michael and Connor stayed in New Jersey. Thankfully, Michael soon followed with a

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PCS to Arizona and he and Connor arrived just two days before the quints’ birth. This PCS presented many new challenges, as the Hoffmans had to move into their new home in a new community along with five newborns. That’s clearly not a small feat, especially for a military family, considering Michael works long hours. However, their family wasn’t quite done growing yet. Shortly after the quints’ birth, Roxanna got pregnant unexpectedly with their son, Gideon, who is now a year old. The quints, Aurora, Briella, Delilah, Elias, and Felicity are all active three-year-olds. And as if they didn’t have enough on their plates, shortly after Gideon’s birth, the Hoffmans received orders to move back across the country again.

Tips for PCS Moves With Little Ones PCS moves are never easy, but the Hoffmans successfully moved across the country with seven kids — six of them under the age of three. Roxanna has some tried-and-true tips for any families undergoing a move with little kids — especially when it comes to cutting costs. She explains that planning in advance is the most important thing you can do to save money. The military has weight limits for PCS

PHOTOS BY JENNIFER COSBY

moves and every pound over the limit means extra money out of your pocket. Her family reuses the same plastic storage tubs they purchased on their first PCS for every move, so they don’t have to repurchase cardboard boxes over and over again. Lodging especially can be a challenge for big families in a PCS move, but Roxanna has some tricks up her sleeve to save money. She says that they use credit cards during their PCS moves that offer rewards or hotel points to help minimize travel expenses, since they obviously couldn’t go camping with so many babies.

•

eat out as a family once a month. However, choosing a restaurant takes a little bit more prior planning when you have seven kids. Michael and Roxanna pick restaurants with kids’ specials — to include Texas Roadhouse — to help minimize costs. She also stresses the importance of choosing a restaurant that has food out on the table while they order. She explains that having chips or breadsticks helps keep the little ones occupied while she and Michael figure out what to order for everyone. When it comes to grocery shopping, Roxanna likes to look for special deals and uses coupons to save money. It helps that she can buy food in bulk at some stores. Overall, she explains that planning, again, is key.

Utilize Facebook swap pages, especially pages for Military families, because people are often trying

Cutting Costs on Vacations

Even though traveling with so many young • Bargain hunt for clothes children can be a • Use coupons whenever you can, because the challenge, the Hoffman savings will add up over time family still goes on at • Take advantage of military appreciation days to be least one family trip able to go to zoos, aquariums, national parks, etc. for every year. For example, free. Always ask for a military discount everywhere they recently took a trip • Only order water at restaurants to Disney World. Just as • Always have a savings account to cover any extra with PCSes and dining expenses during PCS, travel, or emergencies. out, Roxanna’s biggest tip for large families Roxanna also advises military families is preparation and planning. She explains that she’s able to get deals to ask for gas and VISA gift cards for at vacation destinations over the the holidays, so that they can stock holidays by scoping them out months up on them and use the money when in advance. they need it during a move. to get rid of things before a PCS

She advises it’s always helpful to set money aside in a savings account just in case of an unexpected PCS.

How to Save Money on Food with a Big Family Every large family knows that the cost of restaurant meals and groceries can add up very quickly. Roxanna says that they usually only

Additionally, she says they rent houses when they take trips instead of staying in hotels. Roxanna explains, “You get a full kitchen usually, so can prepare meals — saving money and it is healthier when vacationing. This past summer, we stayed in Orlando for eight nights in a four bedroom, fully-furnished house with a pool

Jennifer Cosby became a full-time photographer and formed Grace Photography in 2014. She always did photography as a hobby, but worked as a full-time hairstylist for 19 years. In 2012, Jennifer and her husband Al — an Army veteran who served in counter intelligence in Iraq in 2005 and 2006 — had daughter Chesney, who was born with Cri Du Chat syndrome, which caused her to be delayed, and also with a congenital heart defect called Tetralogy of Fallot. Once Chesney, now 5 and thriving, was stable in her health, and with a push from her friend (now assistant) Crystal Cole, Jennifer went into photography full time. Jennifer also has a son, Canyon, 12, who first lit up her life. Jennifer does not consider what she does to be a job, but a love and a passion.

and game room for under $1,000. Hotels wanted us to rent two rooms because of our family size and that was more expensive with fewer amenities.” This is a really helpful tip for big families who are looking to cut hotel costs.

Lessons Learned Michael and Roxanna learned the importance of saving money and budgeting when they became parents of seven. Roxanna admits that she’s always been budget conscious, but having a large family has helped her learn even more about saving money. Both Michael and Roxanna learned quickly to make conscientious purchases instead of impulse buys. Overall, the Hoffmans know the importance of planning and budgeting and they’ve collected quite a few money-saving skills since the quints’ birth. Madison Linnihan is a contributing editor with AmeriForce Media. She currently writes weekly blog posts for Military Families Magazine and Reserve and National Guard Magazine, as well as contributing feature articles to both print magazines. She is a senior at Troy University with an English major and a dance minor. www.AmeriForce.net

Employment

Side Hustles— Picking One and Making It Work by Bianca Strzalkowski

More than half of military spouses reported they made less than $20,000 in 2016, according to a new Blue Star Families survey released in November. It is one of many factors that have made side gigs a popular trend for those married to service members. From entrepreneurship to blogging to direct sales, these types of jobs offer the flexibility needed for on-the-go professionals whose life circumstances may not support a nine-to-five type of career. COURTESY PHOTO

Military wife Moni Jefferson started MilSpouse Creative in 2017 to connect military spouse talent to a range of opportunities, such as jobs in graphic design, writing or consulting. The community is a virtual workspace with over 800 spouse professionals. Membership is free

www.AmeriForce.net

Moni Jefferson, a military wife of 16 years, started MilSpouse Creative — a gathering place for spouses to connect and collaborate across various industries, in 2017 to fill what she saw as a void in the community. “When I started my virtual public relations agency in 2015, I was looking for places on Facebook to connect with those that were likeminded, ask questions, get support and guidance on how to do this whole entrepreneur thing. I felt lost and lonely,” she explained. “Being a military spouse comes with its own challenges. I noticed on all these other private entrepreneur Facebook groups, fellow peers were collaborating and referring each other for work and projects — and I thought wow that’s amazing, what if there was a space for military spouses to do the same thing. Instead of hiring a designer in the local community why not hire a fellow spouse?”

Now, with more than 850 members and counting, the group cultivates an environment of opportunity for spouses seeking the exact type of side hustles that have grown in popularity and tap into the talent of spouses. Examples include freelance writing, graphic design, and coaching. Joining MilSpouse Creative is free and includes mentoring, access to influencer interviews, and daily prompts for motivation. “Honestly — becoming an entrepreneur, it is the most empowering thing spouses can do right now,” Jefferson said. “Spouses are realizing that we don’t have to rely on anyone to hire us, invest in us and advocate for us. Because we can do it and there are the resources and community — like the MilSpouse Creative — to support them along the way. And while so many things are out of our control in this lifestyle, one thing we can control is who we work with and what we do and that what we decide to do is what makes us happy and drives us to excel.”

http://foxtrotandpennies.com

Air National Guard wife Kara Fidd, owner of Foxtrot and Pennies — a website with resources for military families looking to budget, cut expenses and use their military resources to save money, did exactly that: started her own income stream that could work with the components of her life. “During my husband’s first year in the military, we also had our son and I became a stay-at-home mom. Obviously, our income was decreased on both ends and money was very tight as we adjusted to our new budget,” Kidd said. “But, when we were down to just dollars in our account, I was able to budget and cut expenses enough to help us get by. I started writing articles on my blog about it and soon realized that a lot of military families also struggle with finance. I wanted to help them cut their expenses, start a budget, and

supplement their income with PCS job opportunities, as I had done — which is why I have a financial focus on Foxtrot and Pennies.” Kidd, who has become a go-to expert on all things financial, talks about side hustle-type of careers on her site. She says blogging has become a common option for spouses because it has limitless potential for income and low startup costs. “Blogging is a fantastic way to make money from wherever you are stationed,” she said. “Unlike a traditional business, blogging doesn’t take much of a financial investment — you can start a blog for around $20. It does take a time investment when creating a blog, but the income potential is endless, you can set up your income streams to be very passive (which means you are earning money while PCSing, on vacation, etc), and you can pick up and go whenever you need to without worrying about job hunting or losing the income you rely on.”

Other side gigs that can likely be found at most duty locations: Uber (or Lyft) – The transit phenomenon that transforms anyone into a professional transportation company does not require any formal training https://www.uber.com/. Care.com – From dog walking to elder care and babysitting, Care. com connects service providers to clients all around the US https://www.care.com/. Upwork – Offers opportunities in freelance contracts, like grant-writing and blogs www.upwork.com.

To join MilSpouse Creative, go to https://www.facebook.com/ theofficialmilspousecreative/. For access to information on budgeting and careers, visit Foxtrot and Pennies at http:// foxtrotandpennies.com/. www.AmeriForce.net

Money

VA Loans 101 How to Save Major Money When You Buy Your Next Home by Jack Amberg

Following World War II, the Federal government was looking for a way to ‘bonus’ troops returning home, and give them a benefit that would help continue to grow the economy. One result of this bonus plan was VA Home Loan Guaranty Program.

Obtaining a COE can be a lengthy process for a Veteran. However, Lenders are allowed a streamlined process so contact your lender to save time. Once the COE is in hand, your lender will also be able to note, simultaneously, if you owe a VA funding fee.

At the start of the program, the VA made all of the loans itself, but over time the program has changed to meet the needs of Veterans and has adapted to the market. There are now more than 300 lending institutions providing VA mortgages to qualifying Veterans. With so much information available about VA Home Loans, let’s start by breaking down the basics of the benefit.

Fees and Rates

Eligibility The benefit is available to Veterans who meet various service requirements that are based on the time you served, what component you served in, and how you were discharged. For example, for a reservist to qualify for their benefit they must have 6 years in the reserves/National Guard or 90 days of active duty service. Once the Veteran qualifies, the VA will provide a “Certificate of Eligibility” (COE) that confirms the benefit is awarded and the amount available to the Veteran. An additional component of the VA benefit is that it also covers surviving spouses not receiving Dependency and Indemnity Compensation. The ability for a spouse to qualify is different from the actual Veteran. 20

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The VA funding fee is a fee the Veteran pays to receive the benefit of the VA Mortgage. That benefit includes no down payments for the balance, lower qualifying credit scores and reduced seasoning periods for significant financial events such as bankruptcy and foreclosure. So, because 25% of a VA Mortgage is backed by the Federal government, holding all borrower characteristics and property information are the same, your VA interest rate will always be lower than a conventional rate. Your lender must follow these guidelines to receive the backing of the VA. When asked about the VA Loan, a representative from the VA regional loan office in St Paul, Minnesota, said, “The Veteran has earned this benefit. We want them to receive it. We want to find a way to make it work.” ● Jack Amberg is a 26-year U.S. Army Veteran who served as both an enlisted Soldier (19D) and as an officer. He has had 11 VA mortgages himself. Jack works for a Veteran-owned and Operated Bank and is certified to provide VA mortgages in all 50 states. He lives in Naperville Illinois, outside of Chicago, with his wife and kids. His web site is www.yourvaguy.com.

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Spouses’ Corner were doing,” McMannes said. “Liza brought that talent to the table, which was awesome. She also thinks like a program manager and has an operations background. It was a really good match for us to get down and dirty and knock something out.”

MadSkills Founders Liza Rodewald and Erica McMannes Courtesy Photo

Making Connections

Two military spouses combine forces to create opportunities for fellow military spouses worldwide By Andrea Downing Peck “Military spouses are a force to be reckoned with. More people should know about you.” Those words were the catalyst Army spouse Erica McMannes needed to turn her talents toward connecting job-seeking military spouses with companies seeking remote workers for positions ranging from accountants to virtual assistants. “I had this light bulb moment,” said McMannes, whose own career trajectory saw her transition from child development specialist to community manager and consultant to Silicon Valley start-ups focused on the military community. “I could create my own company matching spouses to companies that had distributed teams.” 22

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A baby and a military move kept McMannes from immediately acting upon her idea, but the nagging feeling she could help other spouses find fulfilling employment that meshed with the unpredictable military lifestyle stayed with her. In 2016, McMannes founded MadSkills, a virtual staffing service matching military spouses with portable, remote jobs. Her cofounder, Army spouse Liza Rodewald, had built her own software consulting company after leaving a tech industry job a decade earlier. Rodewald had the high-tech knowhow McMannes needed to bring her idea to fruition. “If I was going to do this, I knew I needed to have a website and somebody that knew what they

A few years earlier, the two Army wives had met through a virtual fitness group when both were living in Virginia. Their friendship was limited to Facebook until McMannes asked Rodewald to join her on a video call where she pitched her idea of matching military spouses with “mad skills” to employers who could capitalize on their talents through remote work. “As soon as Erica told me about it, I told her I was onboard,” Rodewald recalled. “We started the next week laying the ground work.” For Rodewald, Madskills was a “natural fit” because it provided her with a platform to scale the oneon-one mentoring she already was doing helping military spouses find work as consultants, contractors and entrepreneurs. In less than a year, while McMannes was living at Fort Rucker in Alabama, and Rodewald was at Fort Drum in New York, MadSkills blossomed from a concept to a reality. That’s right — the virtual cofounders started a virtual company virtually. “We tell people that and they always

laugh,” McMannes says. “But we live by the name of what we’re trying to sell.” Today, more than 2,000 military spouses have profiles on the MadSkills website (www.hiremadskills.com) and many spouses have found virtual jobs, both part-time and full-time, though the actual number of placements may be even higher since spouses may apply directly to job listings. MadSkills is open to active duty, veteran, National Guard and Reserve spouses. While military spouses create free profiles, companies pay $197 per month to post unlimited jobs, browse and contact spouses directly and manage applications on the site. For a $300 monthly subscription, MadSkills will vet candidates for employers and select a “top 3” group of candidates for job openings. “Every time we get a spouse a job, it is very fulfilling,” says Rodewald, who left traditional employment to regain control over her time and family life. “When I started working from home and saw the flexibility I had – I was able to be there when my kids got off the bus and put them on the bus. I took them on field trips. Once I had that, I wanted other women and other spouses, male and female, to be able to have that flexibility too.” While MadSkills attracts many job listings from employers seeking graphic designers, content writers, website developers and other creative types, work-fromhome opportunities are becoming mainstream in industries ranging from social work to law. “Companies are seeing the value of having a distributed team, not only for cost savings but also for talent acquisition,” Rodewald explains. “Now companies don’t have to be location based only when searching for the top talent they need. There are opportunities in every single sector in every industry at every job

level. We have jobs that are entrylevel based – call center and help desk type of positions – up to project managers and software developers.” Army spouse Katie Wright has an established photography business in Hopkinsville, Kentucky, which she will be setting aside when her husband begins a seven-month school at Fort Gordon in Georgia. Knowing she couldn’t relaunch her business during such a short

assignment, Wright, who has a degree in journalism, recently landed a job through MadSkills for a remote position writing blog content and providing graphic design work for online marketing company Fearless Social. Wright is grateful for the work MadSkills is doing to educate employers about the untapped talents of the military spouse workforce. “I hope more and more employers will use this avenue to look for employees,” she said. “Employers are saving money by finding people that can work remotely, and there are so many spouses with skills they want to put to use.” Because MadSkills screens all job opportunities posted to its site, spouses do not have to fear falling for envelopestuffing or other remote work scams. “We want to be known in the military spouse community as the place to go for very legit and prevetted virtual work opportunities,” McMannes states. “We want to be

presenting virtual job opportunities that are career paths. These are opportunities to have a job and move it with you. Not having to start and stop, and not doing something you hate just because you need a job.” MadSkills encourages spouses to tell potential employers how their military experience has increased their marketable skills, pointing out the demanding and transient lifestyle makes spouses resilient, reliable, adaptable, multitasking team players – soft skills valued in virtual employees. She also recommends spouses “put their best foot forward” with potential employers, using every interaction as an opportunity to position themselves as “the most desirable candidate” a company will come across. “If you’re a stay-at-home mom and haven’t worked for 12 years, don’t put ‘Stay at Home Mom’ as the title of your profile, which we’ve had people do,” she says. “It’s about who you are and your career goals.” The MadSkills team is convinced virtual work can play an important role in solving the military spouse underemployment problem, while acknowledging it is but one piece of the puzzle. “Sometimes people don’t have the right personality or skill set to want to work from home or to be able to work from home,” McMannes notes. “So, I don’t think it will ever 100% solve everything, but it is a huge opportunity that hasn’t before been delivered directly in this way to the military spouse community.” Andrea Downing Peck is a freelance writer, Accredited Financial Counselor® and retired Navy spouse from Bainbridge Island, Washington. She received her accreditation as an AFC through the FINRA Military Spouse Fellowship program. www.AmeriForce.net

Off Duty

Fun on a Budget by Bianca Strzalkowski

All work and no play makes Jack a dull boy. There are actual studies that show leisure activities make for a more productive workforce. Luckily, that military identification card is like a ticket for free or discounted fun — both on and off post — no matter what your interest is. First Stop: Base Ryan Guina, who serves in the Air National Guard, founded The Military Wallet — a personal finance and benefits website for military members, veterans and their families, to give this exact type of advice to others. He helps the community “better manage money and understand the variety of programs and benefits available to them,” according to the business website. He says the first place he recommends looking when it comes to off-duty recreation is the installation Morale, Welfare and Recreation (known as MWR) center. “Most bases have an MWR Center where you can rent certain equipment for local area sports and activities. This is a great way to get introduced to a new sport or hobby, as well as save money instead of buying gear right away. Many bases also offer inexpensive activities at on-base centers - including fitness 24

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Airman 1st Class Alyssa VanGorder, left, and Airman Daniella Bejarano, right, U.S. Air Force Honor Guard ceremonial guardsmen, hug the Disney character Goofy at Disneyland in Anaheim, Calif., in June 2017. U.S. Air Force photo by Senior Airman Jordyn Fetter

centers, bowling, golf, paintball, running trails, libraries, and on some bases near a body of water, marinas where you can rent boats, fishing gear, and other equipment,” he said. In his own experience, Guina had the opportunity to go deep-sea fishing near Keesler Air Force Base for only $10 compared to the typical cost of $150 per trip.

Don’t Buy New The cost of a new hobby can range from a few bucks to hundreds or thousands of dollars. Rather than investing that kind of money into a new activity, Guina says to look into buying used equipment. “You can save a lot of money buying used gear that is in good repair. In many cases, you can save well over half the price of a new item. Start by looking for specific items on your local Craigslist, used-sporting goods stores, Ebay, yard sales, PCS sales, and word of mouth,” he explained.

Always Ask for a Discount For years, businesses and corporations have found their own way of saying thank you for military service by offering unique discounts

In this courtesy, file photo, a marine sergeant and her son view the Bat Ray display aboard Marine Corps Air Station Miramar, Calif. Marine Corps Community Services and exotic-animal ambassadors from SeaWorld hosted the event to educate and entertain children during a Month of the Military Child event.

to those with a military ID. It may not be publicized so a good rule of thumb is to either research on the company’s website ahead of time or ask at checkout. Guina says it never hurts to ask — the worst they can say is no.

“Ask for military or group discounts. Many organizations offer free admission, membership, or other discounts to service members — all you have to do is ask. You may also be able to negotiate discounts if you organize a large group of people to attend your gathering,” Guina said. “This can work for something as large as a unit event, or sometimes even as small as a group of five to 10 people.”

The options are endless. With a little research, a small budget (or no budget) can be stretched far for the unlimited places with free or discounted access. It is also a great way to make the most of whatever is unique at your duty station, especially if you end up somewhere

like Hawaii or Japan or Europe. If you’re unsure of what to do with your free time, MWR takes the thinking out of it by planning day or weekend trips. Your installation’s website houses all of the latest updates and contact information specific to your area. l

To get news and information on military pay and benefits, listen to The Military Wallet weekly podcast: https://themilitarywallet.com/category/podcasts/

Other Places that Offer Deals Annually There are a whole host of private organizations and large corporations that offer military-specific deals yearround. Whether it is weekend liberty or a 96 for a holiday, you can plan an entire itinerary around who has bargains. Outdoor adventures: Sierra Club Outdoors plans outings for military and veterans to go rafting, hiking, climbing, bicycling, and more. Find a local chapter at https://content. sierraclub.org/outings/sierra-cluboutdoors. NATIONAL PARKS: Military members and their families get free access to over 2000 recreation sites. For details, go to https://www.nps.gov/ planyourvisit/passes.htm. ARTS AND THEATER: Blue Star Families works with the National Endowment of the Arts to connect the military demographic to museums at no-cost. A list of participating locations can be found on their website at https:// bluestarfam.org.

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AMUSEMENT: For daily fun at several amusement parks, there are various deals for free or discounted access. • Waves of Honor Sea World, Busch Gardens, Sesame Place https://Wavesofhonor.com • Shades of Green Disney www.Shadesofgreen.org • Great Wolf Lodge Water Park and themed resort with 17 locations nationwide in 2018 www.Greatwolf.com/heroes

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www.AmeriForce.net 25

The

EDUCATION

Hidden Costs of College

Paying for college is more than just tuition and books by Andrea Downing Peck Are you socking money away in a college saving plan in preparation for the onslaught of tuition, room and board bills you will face when your child heads to college? If you are only focusing on the bigticket items associated with higher education, you may be surprised when the “hidden” costs test your patience and your bank account. In 2016-2017, the average tuition, fees, room and board costs at public in-state universities rose to $20,090 while the price tag at private universities hit $45,370 per year, according to the College Board’s “Trends in College Pricing” report. While those numbers grab headlines, military families often overlook all the unexpected college-related expenses that may throw their budgets out of whack, everything from student parking passes to campus club dues. Financial aid expert Mark Kantrowitz estimates “incidental and hidden” charges can tack another $250 to 26

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$500 per month onto the cost of a college education, as much as $20,000 more than anticipated over four years. Where does all that money go? Here are examples of “optional” fees at a variety of universities: • Laboratory or course fees for students majoring in the art, music or sciences. ($25$300/course, Coastal Carolina University) • Music Facilities Service Fee ($57/ per quarter, plus $17-$68 to reserve a practice room, UCLA) • Convenience fee on credit card transactions (2.4%, University of Texas) • Athletic event fee ($140, University of Florida) • Greek life activity fees ($40 to $300/semester, University of South Carolina) • Parking permit fee ($121 to $906/ year, Ohio State University) • Change of schedule fee ($40, Baylor University)

• Student health center fee ($375, Washington University in St. Louis) • Capstone Course field trip fee (up to $3,000, Portland State University) • Graduation fee ($47, California State University, Northridge) Kantrowitz notes parents who help pay for their child’s college education “almost never” budget for the numerous extra expenses that crop up throughout the semester. “It’s a surprise for them,” says Kantrowitz, publisher and vice president of Cappex.com, a website connecting students with scholarship opportunities. “That is why many students phone home in the middle of the semester saying they need more money. They run out of money for even basic things.” While Air Force spouse Andrea Anfinson Clark didn’t receive the dreaded “out-of-money” text or phone call during her two older children’s college careers, she was surprised by the many unexpected

expenses that added to their education costs. Top on that list was her daughter’s study abroad program, which didn’t raise tuition costs, but did result in a bonus bill for transferring the academic credits she earned overseas to her home school, Dartmouth College.

Fund’s (www.1000dreamsfund. org) recent “Hidden Costs of College” survey revealed 74% of college students had to turn down enrichment activities due to lack of money and roughly half of students did not feel prepared to manage their college finances.

“We ended up having to pay to transfer those credits into the university, which was a little detail that wasn’t emphasized to us,” Clark said. “It ended up being about $2,100 that we had to pay to get those credits on her record.”

Kantrowitz acknowledges that many college students do not have the financial literacy skills needed to manage money wisely. He says students don’t realize how quickly a routine small purchase such as coffee, energy drinks or pizza can snowball into a large expense. A $10 per week pizza habit becomes a $1,200 bill during four years of college, he notes.

The cost of the “extras” associated with college is the reason Christie Garton established the 1,000 Dreams Fund, which offers scholarships of up to $1,000 to help collegebound women pay for study abroad programs, accept unpaid internships or travel to conferences and seminars. “We created the fund knowing it was access to those activities that in this day and age are difference makers in terms of one’s overall potential career success and ultimately their ability to go beyond the wildest dreams they may have for themselves,” explained Garton, noting the 1,000 Dreams

“In some cases, money is burning a hole the student’s pocket. They have all this money available and aren’t planning for the future so they spend it on things they don’t necessarily need,” he says. “But it may be a mix of reasons. They may be running out of money because of unanticipated real expenses plus some eating out and entertainment they can’t afford.” Kathy Sweedler, consumer economics educator, University of Illinois Extension, says parents can help college students manage their money by letting them know how much discretionary money they have each month and revisiting the money topic throughout the school year and before the child moves off campus. “There is something to be said for learning by experience,” she says. “Education needs to be timely. Maybe at the beginning of the school year it doesn’t all click, but check in, for example, at Thanksgiving. ‘How are you doing on your money?’ Don’t wait until March when things bottom out.”

In 2016-2017, the average tuition, fees, room and board costs at public in-state universities rose to $20,090 while the price tag at private universities hit $45,370 per year Sweedler also suggests parents be aware of how transportation expenses can derail a budget, including the cost of having a car on campus, which leads to added spending for parking, gas and — not infrequently — parking tickets. “Transportation is one of those categories that can be surprising,” she says. “Sometimes we don’t think to figure in parking costs and travel costs home for the holidays or if a student is feeling homesick and wants to come home more often.” Military Saves Communication Strategist Alecia Blair advises parents to teach budgeting and saving lessons to teens by making certain expenses the child’s responsibility and having them earmark a percentage of what they earn through part-time jobs for college. Not only do studies show students with college savings are more likely to attend and graduate college, but Blair notes the child also will have learned financial literacy skills they will take to college and into the future. “It prepares them for the world they are going to experience after college when they are on their own and have their first job,” Blair said. “They are more likely to be successful as young professionals in having a budget, balancing a budget and then setting savings goals and reaching those goals. The financial education and literacy young people get from home carries through their entire life and can set them up to have a successful retirement.” l www.AmeriForce.net 27

Transitioning

Three Ways to Adjust Family Finances for Post-Military Life by Bianca Strzalkowski

There are plenty of things about military life that are uncertain, but getting paid isn’t one of them. On the first and 15th of every month, service members can count on a direct deposit from DFAS for a specific amount. It is so predictable that it’s easy to budget around it — even if some wish for a bigger number to that paycheck. Cue impending retirement. Predictable turns into many question marks, like what will pay and benefits look like? When will the retiree receive it? How much supplemental income do we need to earn to maintain, or improve, our current lifestyle? And, so on. Experts say how much — or how little — you prepare for retirement while you are still in the military, can affect what life looks like after.

www.AmeriForce.net

2: Three Areas of Focus

In order for service members to have breathing room to be selective in post-military life, Kay offers advice on three areas. The number one is to avoid the pressure of false urgency to take on more debt.

1: Prepare Early Financial Expert and military spouse and mom Ellie Kay, who has worked with families and finances for nearly 20 years, says transition planning should start as early as possible. “It doesn’t matter if you’re going to transition out after three or four years, or after 30. It’s important to start planning your transition as soon as you get in,” she said. Kay tours military bases around the world with Heroes at Home – a 501 (c)(3) providing financial literacy to military members., according to its website. She explains that military families have a number of challenges when it comes to transitioning into the retirement stage, but having “little to no margin” tops the list.

To learn more about the financial education offered by Heroes at Home, visit heroesathome.org/ “What I mean by that is they have too much consumer debt, they don’t have enough savings, and so they’re forced to take the first job that comes along — which is usually not their dream job, not a sustainable job or one they want to stay in for an extended period of time,” Kay said. “It may not be the job that can yield the most in terms of income either, and so then they end up finding themselves stuck. They’re either changing jobs frequently, or they’re just not satisfied in the job they get right after retirement.”

Minimize debt — Become super savvy in saving money and paying less for things that are a normal part of a budget. “If you know you’re going to be retiring in two years, now is not the time to go out and buy a brand new, big honking truck. Accruing any more debt the closer you get to the retirement stage is not wise, and that may be a little counterintuitive because people may think ‘I need to get my new car now or I need to buy my house now because I can get that loan and a good rate because I’m gainfully employed by the military,’” Kay said. These types of decisions should be delayed until the veteran knows where they will be working and living, she adds. Savings — Establish a savings of three to six months of living expenses, with three months being the absolute minimum. The Thrift Savings Plan (TSP) and Roth IRAs are useful financial investments, but Kay emphasizes that they are not something that will be drawn immediately upon retirement from the military. The amount of savings that is accumulated provides a cushion as other life decisions are being navigated. Family Readiness Centers — Make use of the programs available right now, for free. In addition to mandatory transition classes, there are financial-centric programs available through the entirety of a military career. From resume building to retirement budgets, counselors are experienced in a full range of topics.

3: Resources in the Financial Toolbox The military retirement checklist is nothing short of overwhelming. Military families adapt to a certain way of life with structure in place. However, there are a tremendous number of tools to guide every step of that process. Further, current Department of Defense (DOD) resources would require a substantial cost if retained in the civilian sector, but they are completely free for all military ID holders. • Military installations have installation financial readiness management programs that can assist in building a budget around current finances to help determine what type of income to pursue in the next stage of life (www.militaryinstallations.dod. mil and choose Personal Financial Management Services in the dropdown menu). • The Military and Family Life Counseling Program (MFLC) allows certified professionals to meet military members and/or their spouses at a location convenient to them (www. militaryinstallations.dod.mil and choose Family Center in the dropdown menu). • If meeting in person to discuss finances is inconvenient, Military OneSource offers online and telephone counseling that can be scheduled at 800-342-9647.

It can be daunting to plan for the future when day-to-day tasks seem time consuming. The DOD understands just how big of a change transition is, which is why so much training and so many resources are devoted to this stage. Transition classes offer a suggested timeline of checklist items that military families should work on up to 24 months out, but as Kay referenced — the sooner attention is paid to today’s expenses, the greater likelihood that tomorrow’s budget will provide your military family with the lifestyle you desire.

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CHILDREN’S CORNER

Helping Your Children Develop Good Money Skills by R. Brian Williams None of us are born with instinctive financial literacy — managing money is a learned skill. And experts say it’s never too early to start helping your children understand money.

Always Watching

In fact, your children have been watching how you handle money since before they could walk and talk. And while you don’t need to be a money expert yourself to help them learn and mature in their financial lives, there are steps you can take now to help your children get off on the right financial foot.

Experts at the Consumer Financial Protection Bureau (CFPB) identified behaviors, knowledge, skills, and personal characteristics that appear to help people achieve greater financial well-being within their own circumstances. They then put together the building blocks people tend to develop as children, which can have a lasting impact on financial well-being in adulthood.

Children learn from watching you earn, shop, save, and borrow — you’re the top influence on their financial lives.

TRY THIS: THINK OUT LOUD From your actions, your children often draw their own conclusions — and sometimes they might not be what you intended! When you think out loud, you clarify what you’re doing and why. Try getting into the habit of thinking out loud during your day-to-day money and time management, so your kids can follow along.

Skills Develop in Stages There are three broad childhood developmental stages where different skills and behaviors come into focus (and they continue to develop into adulthood). Development of these behaviors, knowledge, skills, and personal characteristics overlap multiple developmental stages and can develop at different periods based on each child’s maturity level. Understanding these stages is key in helping your child understand money at an ageappropriate level.

What Can Develop During This Time Pre-elementary school / Early childhood, ages 3–5 Executive function – The mental processes that enable us to plan for the future, focus our attention, remember information, and juggle multiple tasks. Elementary to middle school / Middle childhood, ages 6–12 Financial habits and norms – The attitudes and mental shortcuts that help us navigate our day-to-day financial lives. High school and young adulthood / Teen years and beyond, ages 13–21 Financial knowledge and decision-making skills – The ways we intentionally seek out and apply information, compare alternatives, take action, and review the consequences. By helping your children develop important behaviors, knowledge, skills, and personal traits — when they are developmentally ready — you can help put them on a path to financial well-being in adulthood. 30

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Q: Are there activities I could use to teach my child about needs and wants? Answer: When trying to teach your children about needs versus wants, consider pointing out items like food and clothing as you shop and ask them to tell you which category each fits.

Remember: • Keep in mind that you’re teaching about money, on purpose or not • Your children are constantly watching and listening, so they might absorb more than you think. When you shop for a bargain, or splurge on a treat, or plan a special occasion, you’re showing your kids how you think about money. • Don’t worry too much about things you don’t know • Don’t feel confident about money matters? You’re in good company. Most people don’t. And that’s okay. Every day, you excel at something your children need to learn –—whether it’s managing your time between work and home, saving money when you shop, or planning for a future event.

Understanding the difference between needs and wants is a bedrock concept that can lead to a lifetime of better financial decision making. Needs include the basic things we need to survive — food, clothing, and shelter. But we also need to earn a living so we can pay for those basic needs and things we want. So, we need reliable transportation and the tools and resources necessary to do our jobs well. We also need to build and protect our assets so we can keep meeting our needs in the future — this includes emergency savings and insurance. Wants are all the upgrades and other things that would be nice to have but aren’t necessary for living, earning and protecting what we have. Knowing the difference is the key to purchasing decisions, and the payment choices that young people will face one day.

Activities to Try: • When you are out shopping, point out essentials such as food and clothing, and ask your child to describe items that she may want but are optional. • Talk about how your family decides what to buy and what to pass up. Which is more important: Buying cookies or fresh fruit? Soda or milk? • Draw a circle and divide it into sections for food, rent or house payments, clothes, and “optional items,” to show that there is a finite amount of money to spend. www.AmeriForce.net 31

Money

Tips for Savings and Investing in a Low Interest Rate Environment by Carlos Perez simple savings accounts and certificates of deposit. You will likely need to blend these into a larger, diversified portfolio of different types of assets such as bonds, stocks, and more. And, diversification is possible even within an asset class. For example, stocks are available for different company sizes (i.e. market caps), different sectors, and even different countries.

One of the outcomes of the 2008 housing market crash and its accompanying recession was the adoption of expansionary monetary policy by the U.S. Federal Reserve. Expansionary monetary policy seeks to spur economic activity through lower interest rates. As the Federal Reserve lowers rates, the costs of borrowing for business and consumers decreases, providing the incentive for borrowing. These funds can then be used for investment in capital by businesses and for the purchase of goods and services by consumers. While lower interest rates may have been a boon to borrowers, they have made it more difficult for savers because interest rates have remained low. With real interest rates approaching zero, savers are finding it increasingly challenging to earn a worthwhile return on their funds. This is especially problematic for those nearing or in retirement because they may have counted on interest income as part of their investment portfolio. In this low interest-rate environment, savers and investors should consider the following six basic financial strategies:

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Plan

Before deciding where to save or invest your funds, you must understand your financial goal(s), time horizon, and risk tolerance. Defining these will help you select options that are most appropriate for your circumstances. A mismatch among these three factors will affect the ability to meet your goals. For example, if your time horizon is short and your goal is such that you need substantial growth, but your risk tolerance is low, it is unlikely that you’ll be able to find a well-diversified asset that will provide the return you need in time to meet your need. Another mismatch occurs when you have a very long horizon, and can therefore accept relatively more risk, but select an investment that is very low risk and has a correspondingly low return. The lesson is that all three— goal, horizon, and risk, must align.

Diversify

How you allocate your assets is the most important factor in determining the return from your investments, which will affect the likelihood of reaching your financial goals. In a low interest rate environment, this may mean looking beyond

On the fixed income side, bonds may be issued by national governments, local governments and municipalities, private companies, and more. One way to tap into diversified investment opportunities for the personal investor is through mutual funds. Well-diversified, lowcost mutual funds from reputable companies can serve as the building blocks of a personal investor’s portfolio. Not only can you gain exposure to stocks and bonds through mutual funds, they can also provide investment opportunities in other areas such as metals, commodities, and real estate.

Layer fixed income investments.

If you do opt for investments that pay a fixed rate, one way to position yourself for when rates improve is to “layer” the investments so that they reach their term in successive time periods. For example, one might purchase certificates of deposit (CDs) that mature in 1 year, 2 years, 3 years, and so on. Each year in succession, one of these will pay out and you can reinvest the proceeds. If rates start increasing, your portfolio will be postured to take advantage of higher rates as each CD comes due. And, you will also have the flexibility to invest in a better alternative if one presents itself.

Consider other ways to make your money grow.

There are several ways to make your money grow beyond stocks and bonds. Assets such as real estate, metals, or commodities are just a few examples that can be integrated into a well-diversified portfolio. Another often-overlooked example is a permanent life insurance policy. The cash value of a whole life policy can grow at a crediting rate that may be greater than other investment options with similar risks. While you should read all of the terms and conditions to fully understand any fees or penalties, whole life insurance can be a very sensible store of relatively higher growth savings. In additions, some polices have features such as the ability to borrow against the cash or annuitize it if you need a stream of income. And, they offer protection to those that depend on your income.

with your personal circumstances. Do your homework first and be sure to research any prospective advisors. Verify their credentials and obtain references. Donâ&#x20AC;&#x2122;t be afraid to ask hard questions and learn about their fees, commissions, investment philosophy, track record, and experience. There is a great deal of information on-line about how to interview a financial adviser. Review it and put together a list of questions that suits

your needs. In addition, consider reputable organizations that focus on serving military and veterans and provide services unavailable through other companies. l Carlos Perez is a retired Army Engineer Officer with over 26 years of active duty service. He presently serves as the Chief Operating Officer of American Armed Forces Mutual Aid Association (www.aafmaa.com). Perez holds a B.S. degree in Economics from West Point and an MBA from the Stanford University Graduate School of Business.

Use low rates to your advantage.

As mentioned, low interest rates spur economic activity because they reduce the costs of borrowing. While we advise against adding any new debt, you may be able to put low rates to work for you if you can replace existing high interest borrowing with lower interest borrowing. Consumers should assess their debt to determine if refinancing would help them reduce overall costs and debt burdens. Evaluate your credit cards, consumer loans, and even larger items such as auto loans and mortgages. Interest rate changes of even less than a percent can make large long-term differences.

Consider professional advice.

In challenging financial times, even experienced investors can benefit from assistance. If youâ&#x20AC;&#x2122;re not sure where or how to start, seek a trusted financial advisor who can help you www.AmeriForce.net 33

By the Numbers

As of April 1, 2017, the Consumer Financial Protection Bureau (CFPB) handled approximately

74,800

complaints

submitted by service members, veterans, and their families

42%

of the service member complaint population were debt collection-based, compared to only

Of those complaints, approximately 31,500 were

debt collection complaints

27%

from the entire consumer population

from military consumers

Service Member

Debt Collection:

Complaints

42%

by Product: Mortgage:

Credit reporting:

Bank account or service:

Credit Card:

Consumer loan:

Student loan:

Payday loan:

Other financial service:

Prepaid:

Money transfer:

18%

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11%

0.9%

0.8%

â&#x20AC;&#x201D; from the Office of Servicemember Affairs (OSA) at the Consumer Financial Protection Bureau (CFPB)

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