Military Finance Guide 2017 by HHC, 807th MC(DS)

Military

SPECIA ISSUE L

Families

JANUARY/ FEBRUARY 2017

2017 FINANCE GUIDE by AMERIFORCE MEDIA, LLC

ONLINE TOOLS AND APPS FOR MONEY MANAGEMENT

HOW TO PAY FOR COLLEGE FOR YOU OR MEMBERS OF YOUR FAMILY

TRUMP

WHAT HIS PRESIDENCY WILL MEAN TO MILITARY FAMILIES

VETERAN ENTREPRENEURS BEYOND THE TRADITIONAL BUSINESS MODEL + + + Enter to win a $250 Visa Gift Card + + + www.AmeriForce.net/SWEEPS

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From the Editor

New year, new you. Every year, millions of people make resolutions as the calendar marks January 1, and improving your ﬁnances remains a popular goal. Many people just don’t know where to start, so the resolution tends to roll over each year.

Military

SPECIA ISSUE L

Families

JANUARY/ FEBRUARY 2017

2017 FINANCE GUIDE by AMERIFORCE MEDIA, LLC

ONLINE TOOLS AND APPS FOR MONEY MANAGEMENT

And every year brings with it its own set of challenges. From preparing for a PCS or starting a new business venture to making sure you have enough money to cover the ever-rising costs of education for your children, you can usually count on something to come along and upset your balance sheet. The biggest news that affects military families and their budgets going into 2017 is the inauguration of President Donald Trump, whose campaign platform included many ideas that are favorable to the military. His recommendations for several cabinet members with military experience or ties is also promising, and military personnel and families are anxiously waiting to see what happens next — from increasing the size of the force (and decreasing the ops tempo of those currently serving) to ending the longtime budget sequester. But no matter what comes down the pike with this new administration, families can do a lot to steer their own ﬁnancial courses.

HOW TO PAY FOR COLLEGE FOR YOU OR MEMBERS OF YOUR FAMILY

TRUMP

WHAT HIS PRESIDENCY WILL MEAN TO MILITARY FAMILIES

VETERAN ENTREPRENEURS

BEYOND THE TRADITIONAL BUSINESS MODEL + + + Enter to win a $250 Visa Gift Card + + + www.AmeriForce.net/SWEEPS

Finances are always at the top of the list of New year’s resolutions, but there’s never a bad time to take control of yours. Cover illustration by Maria Bucaro

In this special financial issue of Military Families, we look at several ways to make the most of your money. From new apps that help you better handle your finances to making the decision whether to buy or rent at your next duty station (and beyond); from planning your finances for retirement to teaching your children about money, there’s something for everyone, at every stage of their careers. We also feature service members and their families who have found creative ways to pay for higher education — and show you how to do so, as well. Members of the military are naturally suited to become entrepreneurs, but owning a traditional business isn’t the only path of entrepreneurship. Many service members are choosing to return to their roots, so to speak, trading in their combat boots for cowboy boots on the farm. AmeriForce speaks with one retired Army officer about the programs available, his journey to success and how you can make it happen, too. Controlling your finances is about more than budgets or saving money; it’s about understanding how to make your money work for you, so you can accomplish all the things you want to do. Make 2017 the year you take control of your family’s financial health—or make it even better! Warmly,

Jennifer G. Williams Editorial Director AmeriForce Media, LLC www.AmeriForce.net

Contents

Columns

6..........Got Your Six 32.....................Briefs

Change of Command

AAFMAA Introduces its Spouse Purchase Initiative; Consumer Financial Protection Bureau updates procedures for policing the Military Lending Act

What to expect from our new commander-in-chief

34.....By the Numbers A look at service members’ ﬁnancial readiness

by Bianca Strzalkowski

Be Money Smart with these Smart Phone Apps by Rebecca Alwine

Military Families Magazine by AmeriForce Media, LLC, is published six 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/Order. 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.

CONTRIBUTORS President and Publisher ...............Todd Taranto Editorial Director .............. Jennifer G. Williams

14 18

Paying for College Options for you and your family by Andrea Downing Peck

To Buy or to Rent? by Bennett Leigh

Serial Buyers One house short of a hotel chain by Jennifer G. Williams

Boot Swap — from Combat to Cowboy

22 26

Military entrepreneurial opportunities extend beyond the traditional business model by R. Brian Williams

Children’s Corner

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

Teaching your children good ﬁnancial habits by Bennett Leigh

Spouses’ Corner Helping returning service members by Bianca Strzalkowski

Vets’ Corner Planning for ﬁnances after retirement

4 www.AmeriForce.net

Got Your Six Marine Corps Major Carl Tucker touches the grave of Navy veteran and Dept. of Defense employee Robert Henry Bruette after placing a wreath at his headstone during the annual Wreaths Across America event at Arlington National Cemetery in Arlington, Va. Dec. 17, 2016. Tucker, who has family and friends buried in Arlington, is an education ofﬁcer at Marine Corps University in Quantico, Va. DoD Photo by EJ Hersom

“

These terrorists and their regional and worldwide networks must be eradicated from the face

“

of the earth

— President Donald J. Trump, speaking after the Berlin terror attacks in December

6 www.AmeriForce.net

No one knows what the future holds, but whatever happens, we’ll be there.

MOAA

LEARN MORE ABOUT TERM LIFE INSURANCE. Call 1-800-247-2192 or visit www.moaainsurance.com

The Military Ofﬁcers Association of America (MOAA) Leader Group Term Life Insurance Plan helps provide members with the peace of mind that comes with complete and affordable term life insurance coverage. Beneﬁt amounts up to $1,000,000 (depending on age) with no military or aviation exclusions. Plus, two non-insurance services are included, Travel Assistance1 and Funeral Planning2. That’s the commitment you can count on to take care of your family.

Not a member of MOAA? Join today at www.moaa.org 1

Voya Travel Assistance Services are provided by Europ Assistance USA, Bethesda, MD. Funeral Planning and Concierge Services provided by Everest Funeral Package, LLC, Houston, TX. Group Term Life Insurance is underwritten by ReliaStar Life Insurance Company. This coverage may have exclusions, limitations and reductions in beneﬁts. This plan may not be available in all states. Please contact the plan administrator for details. The group policy is sitused in Virginia and is governed by its laws. This is a paid endorsement. MOAA receives a fee from the insurance broker and/or insurer for its endorsement of this plan. Policy Form #LP00GP. Program Administered by Mercer Health & Beneﬁts Administration LLC

Technology

MONEY

SMART WITH THESE SMART PHONE

APPS by Rebecca Alwine

8 www.AmeriForce.net

Military families are no stranger to budgeting. For years the military has hammered into our heads that smart financial decisions are crucial to our futures. They provide classes, mandatory training for our service members, and lots of tools. They also have several safety nets available to us if we should need them. Programs like Army Emergency Relief and the Navy-Marine Corps Relief Society are standing by to help out service members with unexpected and emergency bills. Smart budgeting, planning for the future, and spending within your means are the best ways to ensure your financial future. Today’s technology has made these things even easier. From online banking to budget apps to various ways to save money with your phone, there are so many ways to keep track of your finances — or just to get started.

Budget Applications Building a budget is intimidating. For military families it can be challenging, especially when COLA, a secondary income, and housing expenses are involved. The standard budget calculators online prepopulate housing costs to be anywhere from 25% to 30% of income. With the basic allowance for housing, housing costs are largely negated. These programs can help tremendously with creating a budget and sticking to it.

Mint.com — One of the best things about Mint is its longevity. It’s been around for 10 years! It also links to your accounts, including all assets, to help you easily keep track of transactions. It’s great for people with predictable incomes and helps you easily set monthly spending goals by category. Setting up the information is easier done on a computer, but you can download the smartphone app and then check in daily on the go.

You Need a Budget — This program emphasizes the zero-balance budget, where every dollar is accounted for before it is spent. Like Mint, you can import transactions from your bank and other ﬁnancial institutions. YNAB costs $5 per month or $50 per year, which often feels counterintuitive to getting out of debt, but they do offer a free trial period.

Every Dollar — Every Dollar is the program created by Dave Ramsey, and follows his seven baby steps. The program is free, and can be accessed from mobile devices. You assign a planned amount to each category and then update transactions as they occur to make sure you stay within it. To have the transactions update automatically and connect with your bank account, it costs $99 per year. As you accomplish each baby step, the program offers tips to tackle the next one. Your bank — Most banks offer online banking, and many also have a built-in budget or tracker tool. With USAA, a budget tool is included with your account, which helps you predict the balance of expenses and income each month. You can also easily mark your transactions so they are accurately categorized. Along with helping you prepare for things like PCS and ETS, there are ways to monitor your credit report and set up ﬁnancial goals. Many banks offer similar services for free — you may just have to ask!

Savings If your family is like mine, any little bit of extra money that I can save is worth it. And while I won’t drive all around town to save a few cents on my groceries, I will scan them into my phone for a few cents of savings. Here are a few of the apps that help you save money on things you’ve already decided to buy.

Ibotta — App couponing has become incredibly popular with Ibotta. Simply check the store where you plan to shop and see if there are any deals. Cash back ranges from $0.25 for a gallon of any brand milk to a few dollars on Cliff Bars or other products. When you get home, scan the barcode of the product and the receipt and that’s it! There are team bonuses and several other bonuses to increase your savings. Once you hit $20 you can transfer it via PayPal or onto a gift card. Extra bonus? The commissary is included on the list of stores!

Wal-Mart Savings Catcher — The Savings Catcher is quite possibly the easiest app ever. If you shop at Wal-Mart, you simply scan the QR code at the bottom of your receipt, or type in the code on the website, and it will match prices around town. You will then get reimbursed for anything you bought that was more expensive at Wal-Mart than one of those other stores. Super easy. Digit — This is a free app that helps to analyze your spending and then takes small amounts that you don’t need and saves it for you. It’s all done via text messaging, so you can check on your account and withdraw or transfer savings at any time. The average transfer is $9 and it never transfers more than you can afford, based on your spending. Digit Savings Accounts are FDIC insured up to $250,000 and you earn a very low interest rate. It won’t make you rich, but it can help you save. These apps and websites are designed to help you save and manage money better. If even these sound overwhelming, start by talking to a ﬁnancial advisor, either through family services or your home bank. Make 2017 the year you take control of your family’s ﬁnances. —Rebecca Alwine is a military spouse and freelance writer who currently lives near Washington, D.C. www.AmeriForce.net 9

Change of Command What to expect from our new Commander-in-Chief by Bianca Strzalkowski

Peace through strength. President Donald Trump has pledged to expand the size of the service branches while upgrading outdated military equipment. The newly sworn-in commander-in-chief placed military and veteran issues at the forefront during his campaign and his transition to the presidency, and included plans to increase military personnel and to modernize the force. But what does it all mean for service members and their families? Bob Carey, Director of Military and Veterans Outreach for the Republican National Committee, says longneglected matters ﬁnally will be addressed. 10 www.AmeriForce.net

“We’re treating veterans really poorly and the scandals at the Department of Veterans Affairs (VA) have not been addressed properly and [the Obama] administration has failed to do so,” said Carey, a retired U.S. Navy Capt. “[Trump] understands that, and so his ability to focus on those issues, to focus on veterans’ issues, and national security issues also made it much easier for us to be able to message to voters — to veteran voters, on veterans’ issues.”

Rebuilding the Force Carey, who served 29 years in the military, says he believes Trump’s top priorities are pretty clear: give troops what they need.

A recent survey by Blue Star Families revealed 72 percent of service members and their spouses say the current operational tempo exerts an unacceptable level of stress for a healthy work/family life. Carey says the ﬁndings are not surprising when “you don’t have enough of a force in order to be able to support those commitments” after 15 years of war and recent drawdowns. “What I hear anecdotally from the friends of mine who are still in is that they’re being told they’re going on eight, nine, 10-month deployments,” he said. “And you know the Navy and Marine Corps are no strangers to peacetime deployments, but even peacetime deployments are being

Photo credit Gage Skidmore.

Trump

extended because there aren’t enough forces available. And so, it just seems to stand to argue that you increase the size of the force, you reduce the op tempo.”

All the President’s Generals As President Trump prepared for the transition into his new role, he relied on military experience by naming several veterans to key positions in his administration. One of his ﬁrst announcements after the election was tapping Army Lt. Gen. Michael Flynn as his national security adviser. Trump’s pick for Secretary of Defense came during a December speech at Fort Bragg, where he formally named well-known Marine Corps General Jim Mattis to the top Pentagon position. Mattis served 44 years in the Marines and has a favorable reputation among troops and support from both political parties. “I am proud to nominate General James Mattis to Secretary of Defense,” Trump said during his “Thank You Tour” in North Carolina. “He is one of the most effective generals and extraordinary leaders of our time, who has committed his life to his love for our country. General Mattis is the living embodiment of the Marine Corps motto, ‘Semper Fidelis,’ always faithful, and the American people are fortunate that a man of his character and integrity will now be the civilian leader atop the Department of Defense. Under his leadership, we will rebuild our continued on page 12

“Be polite, be professional, but have a plan to kill everybody you meet.” —Retired Marine Gen. James Mattis, Trump’s pick for Secretary of Defense, speaking to Marines in Iraq

Retired U.S. Marine Corps Gen. James N. Mattis, former 11th commander of United States Central Command, and current nominee for Secretary of Defense, speaks to U.S. Naval War College (NWC) students, faculty and staff in Rhode Island in 2015. Mattis is known for his military legacy, playing key leadership roles during combat in the Persian Gulf War, Afghanistan, and Iraq. U.S. Navy photo by Ezra Bolender

www.AmeriForce.net 11

Trump continued from page 11

Trump’s Vision for our National Defense

President-elect Donald Trump watches the 117th Army Navy college football game in Baltimore in December. The Army football team snapped a 14-year losing streak, winning the game 2117. U.S. Navy photo by Petty Ofﬁcer 1st Class Felicito Rustique Jr.

• Work with Congress to fully repeal the defense sequester and submit a new budget to rebuild our depleted military. • Increase the size of the U.S. Army to 540,000 active duty soldiers, which the Army Chief of Staff says he needs to execute current missions. • Rebuild the U.S. Navy toward a goal of 350 ships, as the bipartisan National Defense Panel has recommended. • Provide the U.S. Air Force with the 1,200 ﬁghter aircraft they need. • Grow the U.S. Marine Corps to 36 battalions. • Invest in a serious missile defense system to meet growing threats by modernizing our Navy’s cruisers and procuring additional, modern destroyers to counter the ballistic missile threat from Iran and North Korea. • Emphasize cyber warfare and require a comprehensive review from the Joint Chiefs of Staff and all relevant federal agencies to identify our cyber vulnerabilities and to protect all vital infrastructure and to create a state-of-the-art cyber defense and offense. • Pay for this necessary rebuilding of our national defense by conducting a full audit of the Pentagon, eliminating incorrect payments, reducing duplicative bureaucracy, collecting unpaid taxes, and ending unwanted and unauthorized federal programs. — From www.donaldjtrump.com/ policies

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military and alliances, destroy terrorists and face our enemies head on, and make America safe again.”

husband, Michael, is a Captain in the Army National Guard and a combat veteran.

In addition, Trump announced his nomination of retired Marine General John Kelly to become the Secretary of the Department of Homeland Security. Kelly, who served as Commander of U.S. Southern Command (SOUTHCOM), is a Gold Star dad who lost his son to combat in Afghanistan.

Carey says these appointments — among other actions — proves President Trump’s ability to recognize the experience needed to solve today’s multifaceted problems.

Another veteran tapped for Trump’s administration is former U.S. Army infantry officer and current Virtu Financial Founder and Executive Chairman Vincent “Vinnie” Viola as Secretary of the Army. Rep. Ryan Zinke (R.-Mont.), Trump’s nominee for Secretary of the Interior, served 23 years as a U.S. Navy SEAL, retiring in 2008 with a rank of Commander after leading SEAL operations throughout the globe. After serving in the Montana State Senate, Zinke became the first Navy SEAL to serve in the U.S. House of Representatives when he was elected in 2014. Trump’s pick for the CIA Director, Rep. Mike Pompeo (R.-Kan.), is a graduate of West Point and served as a cavalry officer patrolling the Iron Curtain before the fall of the Berlin Wall. He also served with the 2nd Squadron, 7th Cavalry in the Fourth Infantry Division. Even Trump’s Secretary of State nominee, Senator Jeff Sessions (R-Ala.) has military ties, having served in the United States Army Reserve for 13 years. South Carolina Governor Nikki Haley, Trump’s pick as the U.S. Ambassador to the United Nations, also has a military connection — her

“He’s walking the walk and talking the talk. I think he understands the value of military experience and organizational acumen and ability to get the job done and understanding how to convert goals to tasks,” he said. “Those are all important elements, especially in some of those areas where we have complex problems.” As the Trump presidency takes shape, service members and their families will ﬁnd out how much authority the new commander-in-chief has to impact military matters. Trump has said he plans to move swiftly on directing U.S. generals for a new plan to defeat ISIS. He also intends to ask Congress to eliminate the defense sequester in order to make room for a new defense budget that allows for future planning. Still, Carey says the biggest impact that will be seen from the new president is a focus on the quality-of-life of the force along with the re-commitment to letting those troops know they have full support from the White House. “You increase the size of the force, you give everyone a little more breathing room. Military personnel are not afraid of deploying or doing their craft — that’s why they joined — but you want to know someone has your back and someone is thinking about the impact on you,” he added. O

—Bianca Strzalkowski is a Marine spouse and a freelance writer living in North Carolina

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Higher Ed

for

Paying College

Options for You and Your Family by Andrea Downing Peck

Attending a top-ﬂight college can turn into a ﬁnancial nightmare if a diploma from your dream school leaves you — or your child — drowning in student loan debt. According to the College Board, annual college costs in 2017 will top $42,000 at private colleges and reach nearly $21,500 at in-state public universities, motivating resourceful military families and veterans to seek out-ofthe-box ways to pay for college. continued on page 16

14 www.AmeriForce.net

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Higher Ed continued from page 14

CLEP Aware that college tuition costs have increased faster than the inflation rate for decades, Tom and Tonia Peasley locked in tuition costs for their two oldest children when they were preschoolers by purchasing the Florida Prepaid Tuition Plan. “It’s an investment decision you make not knowing what you are going to do down the road, but all investment decisions are like that,” Tonia notes. “We looked at it and said this is going to be worthwhile.” Prepaid college tuition programs allow parents to purchase tuition and fees at today’s price for future use at a state’s public universities. (In many states, optional dormitory plans also can be purchased.) Tuition is paid in a lump sum or through monthly installments spread over five years or scheduled to end during the child’s senior year of high school. Prepaid plans are a form of tax-advantaged 529 Education Savings Plan. While the Pealseys’ first two children opted not to head to the sunshine state for undergraduate school — their daughter is attending college in Texas and their high-school-age son is weighing two ROTC scholarship offers, they believe their decision to purchase the Florida Plan remains a money-making move since the amount covered by the plan can be applied to other public universities nationwide, transferred to a sibling or used for graduate study. “We may end up using [the remaining] plan for our six-yearold,” Tonia says. “If he ends up going to school, four years of college will only have cost us $11,500. That would be a winwin.” Because of financial pressures, some states have eliminated prepaid tuition plans, closed them to new investors or increased premiums over current tuition rates. However, Florida, Maryland, Massachusetts, Michigan, Mississippi, Nevada, Pennsylvania, Texas, Virginia and Washington (Washington’s GET Plan is reopening July 2017) continue to offer prepaid plans to their residents. The plans can be particularly attractive to military families since a child remains eligible for in-state tuition and fees in the state where the plan was purchased even if the family moves out of the state.

16 www.AmeriForce.net

Former Florida Institute of Technology student Joshua Lear, 21, arrived on campus with 31 college credits (essentially enrolling as a sophomore), with 19 of those credits coming from College Level Examination Program (CLEP) exams. “Compared to the AP (Advanced Placement) exams, CLEPs were extremely easy,” says Lear, an Army dependent who took his CLEP exams at on-post Education Centers. “The other thing is usually the ceiling [score] to get credit for the CLEP exam is lower than the ceiling to get credit for the AP exam.” CLEP is a fast track to a degree since passing a single CLEP exam can earn test-takers as many as 12 college credits. The program includes 33 exams covering five subject areas — history and social sciences; composition and literature; science and mathematics; world languages; and business — and is designed to test what you already know. By fulfilling his general education requirements prior to entering college, Lear was able to focus his attention on computer programming classes from his first day on campus. That singular focus paid off, earning him summer internships with Parsons Technology and Facebook. When Facebook offered him a full-time engineering job, Lear accepted the position rather than return to FIT to complete his degree. More than 2,900 schools accept CLEP credits (www.clep.collegeboard.org/ exam). Active duty, Reserve and National Guard members, Air Force civilian employees as well as spouses and civil service civilian employees of the Army Reserve, Air Force Reserve and Coast Guard are eligible for DANTES-funded CLEP exams. Inactive Guard or Reserve or Coast Guard Auxiliary are not. The registration fee for each 90-to-120minute exam is $80. In addition, Military One Source (www.militaryonesource.mil) offers free practice tests on its website.

Like most military families that transfer Post-9/11 GI Bill benefits to their children, Murf and Andrea Clark expected to use the Chapter 33 benefits as soon as their children stepped on campus, but they revamped those plans after speaking to a Notre Dame financial aid officer. He coached the Clarks on how to “manage” the Veterans Affairs (VA) benefits so the family would qualify for the maximum amount of financial aid once their second child entered college, a strategy that paid off at a rate of two-to-one. Following his advice, their daughter used her transferred GI Bill benefits during her first two years at Dartmouth University, where the Yellow Ribbon Program covered the balance of her yearly costs. But when their son started at Notre Dame, they shut off VA benefits for both children and took the combined $50,000 in financial aid offered by the two private schools. Once their daughter graduated, their son used his two years of GI Bill/Yellow Ribbon award to pay for his junior and senior years. “We ended up paying for just two out of eight educational years at these very expensive colleges,” Andrea Clark explains. “I’m not saying that still didn’t hurt a bit financially…but we ended up with enough VA benefits left to cover at least a semester for child No. 3.” Clark says one lesson learned is to question universities about their financial aid formulas, which can be more generous at private schools, and be willing to negotiate with colleges when comparing aid packages. “A lot of private schools don’t add BAH to military income,” she says. “You can show a pretty low adjusted gross income as a military family and qualify for a lot of general scholarship money.” When it came time to dip into their investment savings to pay college bills, the Clarks followed another piece of outside-the-box advice. Rather than take cash out of a stock mutual fund at a low point in the market or apply for a parent loan, they refinanced their three-year-old car at 1.5% interest and then quickly paid off the loan when the stock market rebounded. “It gave us access to really cheap money,” Clark said. “That’s not an option for everybody, but it is something parents could consider.”

One hundred and two. That’s the number of scholarships Marine Corps veteran Stephanie Talcott applied for when looking for ways to pay for her undergraduate degree. “I only got three, but it was enough that it paid for everything and I didn’t have to take out any loans,” she says. “I didn’t go into debt. I am trying to go back for my master’s degree and I’ve qualiﬁed now for a couple of other scholarships. I should be starting back in the spring and my ﬁrst year will be completely paid for.” Talcott was forced to be innovative after watching half of her Montgomery GI Bill go to waste when she took so-called “accredited” distance-learning courses from an institution whose credits ultimately would not transfer to a four-year degree program. “I was stuck not having the credits I needed and not having the money to go to school,” she says. “I had to get very creative.” Talcott used the websites www.Scholarships.com and www.Fastweb.com to search for under-the-radar scholarships. “It was like a full-time job,” she admits. “I wrote a lot of essays and spent a lot of time on the computer after everybody went to sleep. It took a lot of time.” Talcott completed her associate’s degree at a New York community college, taking advantage of a campus program for military spouses that covered daycare costs for her daughter and paid a portion of her tuition. A grant and money saved through the cash-back rewards program Upromise (www.upromise.com) covered the balance of her costs. After her husband received orders to Florida, Talcott completed her business degree at St. Leo University, combining two university scholarships, outside scholarships and the balance of her GI Bill to complete her debt-free undergraduate education.

—Andrea Peck is the spouse of a retired service member and a freelance writer who lives in Washington state www.AmeriForce.net 17

Real Estate

Buy or Rent? by Bennett Leigh

There are pros and cons for each option. The key is to determine what makes the most sense for your situation. The experts at Realtor.com have put together a list of pros and cons to consider before you decide to buy or rent with your next PCS:

Buying a Home VA Loans PRO: You may be eligible for a Department of Veterans Affairs loan. With a VA loan, you may not need a down payment. These loans also offer limited or no closing costs and don’t require private mortgage insurance. CON: Loan limits are capped at $417,000 in most counties. That doesn’t mean you can’t get a larger loan, but you will probably have to make a down payment and the rate or amount the lender will lend you can be affected. Also, a VA home loan typically won’t apply to some ﬁxer-uppers as the home has to be live-in ready at the time of sale.

Accommodations PRO: If you’re moving with a large family or large pets, you may have trouble finding a rental. Apartment complexes in your area may not offer the number of bedrooms you need and you may struggle to find a landlord willing to take your large dog. Buying means you can find exactly what you need. 18 www.AmeriForce.net

Photo credit Gage Skidmore.

It’s a common dilemma for service members and their families moving to a new duty station — should you buy or rent?

CON: Depending on the area, buying may also be more expensive if you need something speciﬁc like a large backyard or four or more bedrooms. You may strike a better deal by renting a larger house from a private landlord.

Renting It Out PRO: You can rent out your home while you’re deployed. This can give you a steady income you can store away or invest in remodeling and upgrading your home (see sidebar). CON: You may have to hire someone to handle maintenance requests and collect rent while you’re away, which will cut into your proﬁts. And if you come back early, you’ll have to honor the rental agreement and ﬁnd another place to live until your tenant’s lease ends.

Renting a Home Renting a home may give you more freedom, but consider the potential advantages and disadvantages before you sign a lease.

Mobility Versus Equity PRO: Not sure if your new location is where you want to live? Mobility is a big bonus for rentals. Short-term rentals can ease the pressure of deployment orders since you can pack up and ship out. CON: You’re not building equity. Sure, your basic housing allowance will help or even take care of your rent costs but, like all rentals, you’re not investing in a home — which you might sell later — and building equity. Money spent on rent is money that isn’t invested.

What’s This Place Called Again? PRO: If you’ve relocated recently, you will likely be looking at property in an unfamiliar place. You’ll need to take time to understand the neighborhoods and the town. If you rent, you can keep an eye on the real estate market and make a better informed decision before you buy a home. For example, read the local paper for new construction that may value or de-value your property of choice, and look for signs of people ﬂocking to or ﬂocking from the area. CON: You might miss out on some real estate opportunities, especially if you move to an area just before a growth spurt. Housing may increase in price or become scarce when you decide to buy. O —Bennett Leigh is a military spouse and freelance writer who lives outside of Washington, D.C.

Questions to Ask Yourself When Deciding to Rent or Buy at Your Next Duty Station

you plan on living there for at 1 Do least three years? you have a budget, good credit 2 Do and emergency savings? you have enough for the down 3 Do payment and related expenses? 4 Do you have steady income? you cover the recurring cost of 5 Can owning a home? Answering “No” to any of these questions means renting is better for you right now. Changes in your life or ﬁnancial readiness could make you more prepared for becoming a home buyer in the future:

1. The longer you keep the home, the more likely you will be able to sell it without paying anything out of pocket. Three years may be long enough to allow you to recoup your down payment and expenses in many housing markets, but not everywhere. You may plan on keeping your home and renting it out in a hot military market, but keep in mind the costs that go with that option, as well. 2. Good credit can potentially help you save money by qualifying for a lower mortgage interest rate and insurance rate. As for savings, set aside money so that life’s suprises don’t cause too much of a ﬁnancial hardship. Start by setting aside $1,000 and then build your savings to three to six months of living expenses. 3. The VA Loan helps many military home buyers with the zero down option, but making a sizeable down payment can lower your mortgage payment and help you save on the upfront fees and interest. Your lender can tell you your minimum down payment requirement. Closing costs on a home purchase average more than $2,500. 4. This is usually not an issue for those in the military, but recent downsizing and military cuts may cause a potential home buyer to think twice. 5. The total costs of homeownership include taxes, insurance, utilities, maintenance, repairs and homeowners association fees in addition to the mortgage. — Courtesy USAA

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Real Estate continued from page 11

Serial Buyers One House Short of a Hotel Chain by Jennifer G. Williams

Our military family chose to buy homes in various duty stations — not all, but in the high-military-turnover areas around Washington, D.C. and Colorado Springs. We chose to buy in those areas not just for personal preference (having pets that caused issues when trying to ﬁnd rental homes, for one), but with the thought that we would keep those homes while we traveled to different duty stations and rent them to military families. This worked well for us for the most part. We were able to keep both homes until we paid off one and sold both homes in the last two years of my husband’s time on active duty. We then were able to buy our dream retirement home. Not to say everything was simple or easy, or that this strategy would work for everyone, but it did for us. Here’s how we made it work:

• The VA Loan is the best thing going for military homebuyers. Now, you can only use it for one home at a time, but if you refinance your home (which we did when interest rates fell significantly), your VA Loan benefits will once again be available. The no-money 20 www.AmeriForce.net

down option was a lifesaver — particularly when we chose NOT to sell one home before purchasing another. We calculated our BAH and the amount we would spend on rent and took the chance to build equity in a home that would be attractive to military families relocating to the area. Turns out, we bet right. Which brings me to:

• Choose Wisely. Our personal choice for a home in Colorado would have been one high in the mountains, with a lot of land and sweeping mountain views, but we instead chose a home in a well-established neighborhood in an awesome school district. Also take a look at the distance to the nearby military installation—it may be a cool area, but if it takes more than an hour to drive to work every day, it may be harder to rent to those coveted military families (or, if your house is in the D.C.-area, where trafﬁc is truly a beast and everything is more than an hour away, your home’s proximity to mass transit becomes important). We never had an issue ﬁnding military families to rent our houses, but do keep in mind:

• Plan for Emergencies and Downtime. It is SO important to think about the upkeep side of

things. The same expenses you are glad you don’t have to deal with in a rental (leaking roof? Call the owners!) are the ones you must cover when you are the owner. We always had the philosophy that we wanted to treat our renters with the same respect and courtesy we would want from a landlord, so we took care to be extra-responsive when things needed ﬁxing or servicing. This tended to bring out the best in our renters — when they saw that we cared about the house and wanted to make sure it was in great shape, they tended to take better care of it themselves. We also had a few times when our incoming renters were coming in a month or so later than our outgoing renters were leaving, so we had to be sure we had the money to cover our mortgage payment and the utilities during that time. We also budgeted for yard maintenance during those downtimes, so the house would look lived-in, even when no one was there.

• Do It Yourself! Our Colorado home was a great find since it was a foreclosure in such a desirable area. The awful smells that hit you as you first walked into the abandoned home were enough to drive away most potential buyers, but my husband and I saw opportunity instead. We bought it at a great price, then proceeded to update and replace almost everything from the roof down into the basement. Doing it ourselves saved us a lot of money at the time, and greatly increased our equity when it was time to sell. Not everyone wants a fixerupper, or has the time or resources to put into such a house, but even updating the little things can pay off in the long run. “Collecting” houses (as my husband semi-jokingly called it) is not for everyone, but it can result in a pretty good return on investment when your military days are over. Some people choose to return to one of their homes from along the way for retirement. Just do your homework and be prepared for the unexpected, and do what the military lifestyle has trained you to do: be flexible! O

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Veteran Entrepreneurs

The Department of Agriculture and the Veterans Administration has teamed up to provide Veterans like Bruce Barker an opportunity to get back to the farm and improve their chances of success.

Military entrepreneurial opportunities extend beyond the traditional business model by R. Brian Williams

22 www.AmeriForce.net

As a member of the Armed Forces, one has incredible opportunities. The travel, training and benefits are the best that can be found. However, for those looking to get their hands in the dirt, there is a program that is ready to take you down to the farm. Entry into the military takes a person away from home and hearth and puts them into roles of sacred trust and great responsibilities. But those times are finite, for some it may be after 20 to 30 years, for others, it may be after their first hitch. In the end, it comes to a close and will end sooner than most think. A huge challenge for those leaving the military is to find what is next. A lot of veterans go to college to either start or finish up a degree and then into the workforce. However, going back to school is not mandatory and not all people are looking to get back into a classroom. Many also do not look forward to being told what to do by a civilian employer in a traditional workplace. This is where opportunity knocks and is answered by those willing and able to get their hand dirty and their boots muddy. LTC (R) Bruce Barker entered into the U.S. Army shortly after graduating from high school in Missouri. Bruce’s grandfather owned a feed store where Bruce spent time working behind the counter and learned to appreciate the hard work and rewards of all things agricultural. But as most young men

are wont to be, Bruce was ready to leave Missouri and the Ag life to see the world with the storied 82nd Airborne. After a tour as a paratrooper and seeing everything between North Carolina and the Sinai, Barker returned to civilian life and enrolled in college, joined the National Guard, and eventually became a police ofﬁcer. But no matter how far away from the Ag life Bruce got, those roots were strong and kept calling him to come back to work the earth. The Department of Agriculture and the Veterans Administration has teamed up to provide Veterans like Barker an opportunity to get back to the farm and improve their chances of success. Like all government programs, there are certain steps for one to take before they see any grants or loans — but the rewards are out there for those who persevere. Veterans returning to the United States from active duty face many challenges, according to the Department of Agriculture’s website. The Department of Labor reports that as of May 2010, more than 20 percent of young veterans are unemployed. Moreover, recent data show that 45 percent of armed service members are from rural America. The agricultural industry can be a logical solution to ﬁll the economic gap veterans face. The USDA is “committed to assisting veterans start or continue farming and ranching operations in order to strengthen the American economy

and provide livelihoods to our returning veterans.” In addition to the USDA’s efforts to hire returning Veterans and Reservists and qualifying family members, the organization also is strengthening service delivery to members of the military who live in rural America or who are interested in farming or ranching. The USDA for Veterans, Reservists and Military Families Task Force is working to create models of how the diverse array of USDA programs can work together to help communities establish job training programs and other efforts to assist returning military. Back in Missouri, Barker took advantage of some of these programs and recently attended a three-day grazing class designed to educate ranchers in grazing management to help out their productivity. Those three days that Barker invested in a classroom now makes him eligible for a grant to assist him in building a fence for his livestock. The federal government loans for a farmer or rancher are a bit more complicated than traditional ﬁnancial assistance. As Barker will tell you, a micro loan from the USDA puts a rancher into somewhat of a Catch-22 situation. For a farmer or rancher to get a loan to help him along the way, he must ﬁrst show that he or she has already worked the continued on page 24 www.AmeriForce.net 23

Veteran Entrepreneurs Entrepreneurs continued from page 23

Some helpful websites for researching your Ag options:

www.veteranstofarmers.org www.outreach.usda.gov/veterans.htm www.newfarmers.usda.gov/veterans www.farmvetco.org www.ncta.unl.edu/specialty-programs-ncta-curtis farm for the last three years. Chicken and egg analogy here, or in Barker’s world, cow and calf. But Barker says the headache is worth it, as government loans have very low interest rates and a rancher can take up to seven years to repay those loans. The information is out there for a service member to access, and this is something that Barker stresses as being very important. “Gather the information and learn as much as you can about getting into farming or ranching before you jump in,” he says, adding that the Vets-to-Farmers, the USDA website, and the FarmerVeteran Coalition are all great places to educate yourself on working in the Ag sector. These sites are focused on assisting the veteran in being a success in farming and ranching. For those who want to have more formal in-class room instruction, schools across the country offer agricultural studies for veterans as well. The University of Nebraska caters specifically to veterans in their Combat Boots to Cowboy Boots program. This program is a “University of Nebraska-Nebraska College of Technical Agriculture (NCTA) program designed to assist eligible military personnel, their families and armed forces veterans to become Farmers, Ranchers, and Business Entrepreneurs in their next careers. Combat Boots to Cowboy Boots utilizes existing

24 www.AmeriForce.net

programs funded by the federal Department of Agriculture, Small Business Administration, Veterans Administration, Department of Defense, and various state and local agencies to create successful business succession plans that match participants with existing farm/ business/ranch owners.”

If Momma Aint Happy… Along with educating yourself, Barker points out that you must have cooperation from your home front as well. Fortunately for him, Barker’s wife, Sherry, was raised on a farm and knew what to expect. She bought into the ranching lifestyle and supports the family’s dream of making the ranch work. “This is just as important as any decision that a couple makes together and has lifestyle changing consequences,” says Barker. As the Barker ranch is now at the end of a two-mile long dirt driveway, an urban lifestyle is not exactly what is at hand for the family. A testament to her grit and hard work ethics, Sherry bought in early and has supported the decision to move to that rural part of Missouri — raising triplets to boot. She made the commitment to make the dream of owning a ranch a reality. The planning alone to make the dream of a ranch was a long and drawn-out process as well.

Once Bruce and Sherry agreed that a return to the Ag lifestyle was their future, the hard part began. The Barkers searched for property in the area where they wanted to live and found several candidate sites. Barker offers a few words of caution: “Don’t jump into the first thing that you see…be patient and look for the right site that will fit what you want to do in the long run. Prices of land may or may not be right and you want to make your dollars stretch as far as you can. Getting into the first thing that catches your eye may cost you more than you want to spend. Do your homework and work to find what will be best for you.” As Barker will remind you, a ranch is a business, and a business has to make ends meet to be successful. An acumen for balancing a checkbook and paying bills on time is just as important as knowing how to work your cows and mend fences, he says. While the loans and grants help out in the short run, turning a profit is key for any business. Loans are just that, and a loan and will have to be paid back eventually. A service member has many choices when they separate and opportunities can be overwhelming. While some choose to go back to college, work in an office, drive a truck or learn a skilled trade, others have the opportunity to work the earth and get back to what feeds America. The Veterans Department, USDA and institutes of higher learning are all there as resources to use. Educate yourself on your future and explore the road less taken. As Barker would tell you, there is nothing better than working the land, growing food for others and making something for your children to have when you are gone. ● — R. Brian Williams is a recently retired Army officer who is looking into his own agricultural opportunities

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Childrenâ&#x20AC;&#x2122;s Corner

Words of Wisdom Teaching Your Children Good Financial Habits by Bennett Leigh

26 www.AmeriForce.net

From an early age, your children are watching, observing your money habits. Those unspoken lessons can carry over into their adulthood. Start the new year out on the right ﬁnancial foot for your entire family with these ﬁve tips:

Start by modeling good money behavior for your children. If they only see you using plastic to pay for purchases (as many of us do these days), they may not understand that you are taking money directly from your bank account or that you pay off your credit card each month. Talk to them about this when you use your card for purchases, even when they’re too young to really understand — the more you repeat a lesson, the more it will sink in with them.

Get them involved! When they are old enough to count coins (ages 3-5), let them count out exact change for smaller purchases. Once they are a little older, tell them an amount you have in your account (it doesn’t have to be the actual amount, just give a number), and see how much you have left after a purchase. Talk about buying or not buying things as you go through the grocery store: “We have $5 to spend on fruit today — we can get this pineapple or this bag of apples and this bag of clementines. What do you think?” Talk about how you can make one meal of roasted chicken and then use the leftovers to make a family favorite such as chicken and dumplings. As they get even older, let them plan how to stretch a meal into several and even let them cook as an extra bonus for you!

Tough Lessons. It can be hard to see your children make mistakes. You want the best for them and don’t want to see them upset. But sometimes, the best lessons are the ones you let them teach themselves. I’ve heard it said, and it’s a great rule of thumb for kids: You can only spend money once. So, if your child is saving up

for that latest and greatest video game or for a new pair of fancy soccer cleats, and they blow their money on buying extra dessert at school or going to a movie with friends, don’t come to their rescue! They may have to wait two or three times as long before they get that purchase, but it will always mean more if they have some “skin in the game.”

Show them how to save and how to spend. If you give your child an allowance, give them some jars or envelopes to split their money for spending, saving and even giving. Talk with your child about how much to put in each time they get “paid.” Discuss their short-term and long-term goals (buying a new, trendy handbag or saving for a car), and how long it will take them to realistically reach those goals.

Look to the Future. More and more people are using online banking instead of cash or checks these days. Help your children understand how to make these options work for them. Some banks allow youth accounts, complete with debit cards. I have chosen this route to distribute allowances in our house, and it has shown my children (now teenagers) how those plastic cards we use for purchases work. They have their accounts set up to automatically split their “pay” between their savings accounts and their spending accounts, and they know they use their spending money for dinner with friends or presents for the holidays. They have also become pretty good at checking their balances and they love seeing the interest that gets paid to the savings accounts each month just by letting their money sit there.

Bonus Tip: Lessons Everywhere! The ice cream man can even help you teach a ﬁnancial lesson. A few years ago, I gave my then-seven-year-old daughter $2. She later heard that familiar bell coming down the street and could not wait to fork over her $2 for a rocket-shaped popsicle. That afternoon, we went to the grocery store and I showed her how a box of six of those same popsicles were on sale for $1.99, and casually mentioned that she could have bought ﬁve more for the price of one from the ice cream man. The next time the ice cream man’s bell rang out, she looked at me and said, “I’ll save my money for the grocery store. The ice cream man is just too expensive.”

—Bennett Leigh is a military spouse and freelance writer who lives outside of Washington, D.C. www.AmeriForce.net 27

Spouses’ Corner

Guenther’s organization provides specialized sporting equipment for injured team members to compete in events across the country.

Making it Work One military spouse fulﬁlls a need for returning service members by Bianca Strzalkowski When wars began in Iraq and Afghanistan, no one forecasted what to expect from service members returning to American soil — or, what overwhelming price would be paid by those answering that call. The military community soon realized that when troops came home, combat would linger in their lives through physical, emotional and mental effects. Those realities would rally onlookers, like Karen Guenther, founder of Semper Fi Fund — an organization providing immediate ﬁnancial assistance and lifetime support to post-9/11 wounded, critically ill and injured members of all branches of the U.S. Armed Forces, and their families, to seek out a way to assist going forward. 28 www.AmeriForce.net

“… I was seeing ﬁrsthand that the service members who were returning had needs that had to be met in order for them to do the best they could during recovery, and to thrive once they left the hospital and went back into their homes and communities,” Guenther said. “I look back today, and I suppose I was kind of naïve — I thought we’d help a little bit, do our thing, then go back to our day jobs. A dozen years later, it is our day job.” The thought behind Semper Fi Fund was born out of military spouses reacting to a need. In 2003, Guenther watched the ﬁrst wave of homecomings from Operation Iraqi Freedom. She joined a group of military spouses in planning homecoming activities. It was evident

that those wounded Marines and sailors returning faced unimaginable hardships. “I had no idea at the time that there was so much work to be done, but the more we did this, the more we saw how much work there was, and the more we ﬁgured out how to help,” she said. “And even though the issues affecting our post-9/11 veterans may have faded from the headlines, their needs remain — and in many cases, when we talk about things like integration into the community, lingering effects of PTSD, caregiving for chronic injuries and other long-term issues — those needs actually continue to grow as more service members come home and reintegrate into their communities.”

Guenther, who has a background in nursing, had no formal experience in the nonprofit sector or in business. She read as many relevant books as she could and married that with an “intense desire to make our service organization strong, relevant, and sustainable.” Near the onset of the organization’s founding, Guenther received a letter from one of the families they helped and it gave her a greater understanding of exactly what the organization’s focus should be — and would be. “My ah-ha moment came very early on. In those first days, we were distributing snacks and toiletries at hospitals, but the first truly substantive assistance we made was an adaptive van for a catastrophically injured Marine. Shortly after the van was delivered, I received a deeply personal and heartfelt note that expressed how much it meant to him and his family,” she said. “It probably wouldn’t surprise you if I told you the note brought me to tears, and while you could call it an ah-ha moment, it was really more of a moment that said to me, ‘This is what the Semper Fi Fund should be doing much, much more of. This is the way we want

to impact the lives of our service members and their families.’” Even as the coverage of the ongoing wars dim into the background, the quality of life ﬁght for those injured in those conﬂicts continues long after the return and reintegration. Since 2004, Semper Fi Fund has assisted over 17,500 military members and their families with grants

Forget laughter... charity may be the best medicine and programs, including adaptive equipment, housing support, education and career transition assistance, and therapeutic arts. Connection with the organization becomes a lifelong relationship, what Guenther refers to as a family.

“We are there for service members and their families at a critical time in their lives, but also for the rest of their lives, if necessary. That’s part of our mission, and our team of staff members and volunteers has been able to fulﬁl that mission since 2004 in ways I could never have imagined and still can’t believe,” she said. “We look at everyone we assist as family, but we also look at each other as family. We laugh together, we cry together, we serve together. “I’ll tell you a little secret, and this may sound corny, but it’s absolutely true: If you’re feeling down, if you’re feeling like you need a boost of energy, if you need something to help you overcome some trouble or issue in your own life? Reach out and help someone else. They say laughter is the best medicine, and I agree it’s pretty good, but as far as I’m concerned, charity is the best medicine,” Guenther added. For information about supporting the Semper Fi Fund through volunteerism and donations, visit the organizational website at https://semperﬁfund.org/. Semper Fi Fund founder Karen Guenther, pictured here with members of her team, says their work ethic is second to none and they work 24/7/365 to serve the very best America has to offer.

www.AmeriForce.net 29

Vets’ Corner

Planning for Finances after Retirement by Andrea Downing Peck

A military pension is a financial blessing, but for most career military and Reserve/National Guard members, it falls short of providing financial independence because family bills don’t simply disappear the day you leave the military. Car loans, credit card balances, mortgage payment and other expenses will transition with you into civilian life, but these smart money moves can help reduce financial stress:

Don’t be surprised — Know how much your retirement pay will be, realizing that 50% of your base pay will be equal to less than half your military takehome income, which is boosted by tax-free housing and food allowances as well as special duty pays. “I still ﬁnd people getting close to the 20-year mark and they don’t understand the math and how much they are going to be paid in retirement,” says Marine Corps veteran Rob Aeschbach, a Certiﬁed Financial Planner in Norfolk, Va. Retirement pay calculators at http://militarypay.defense. gov/Calculators/ can predict retiree pay for active duty and Reservists.

Count every dollar — Before saying “Yes” to a civilian job, determine whether your combined income — civilian salary plus retirement check — will equal or exceed your final military compensation package, which included up to $400,000 of low-cost life insurance, medical and dental coverage and a chunk of lifestyle-boosting tax-free income. State income taxes and the cost of living in your military retirement city also can alter your bottom line. “There are multiple states that don’t tax [military] retirement income,” explains military veteran and current Air National Guard member Ryan Guina, who writes the personal finance blog The Military Wallet. “You could be in a state that has a very high income tax and then move to a state where your retirement pay is no longer taxed, or the situation could be flipped.” A Civilian-to-Military Take Home Pay calculator can be found at http://www.moaa. org/calculators/MilitaryPay.html.

Prepare for a single payday — Your retirement pay will be deposited on the first of the month, but your expenses will be spread over all four weeks. For that reason, Guina recommends retirees begin budgeting and build a transition fund as they prepare for a single monthly retirement check. “I would strongly suggest having one to six months living expenses saved and set aside, depending on how far you are in the transition process,” he states. “Even someone who is retiring and starts a job the next day isn’t going to get paid for two weeks and your retirement check won’t hit until the first of the next month.” Replace Servicemembers Group Life Insurance (SGLI) — Most career service members reach retirement age in their early 40s, which means life insurance remains an important part of their financial plan. “Unless your children have already graduated from

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college and your spouse is ﬁrmly in a great career, which is pretty unlikely for most service members, you are going to have a life insurance need,” Aeschbach says. After leaving the military, veterans have 240 days to sign up for Veterans Group Life Insurance (VGLI) without needing a medical exam. However, purchasing commercial term life insurance may be less expensive for military retirees with no pre-existing health conditions. If opting for private insurance, Guina suggests “locking in” a plan prior to leaving the military since a service-connected disability rating can affect rates.

Don’t touch your Thrift Savings Plan (TSP) While cashing out some of your TSP account in the event of an emergency or to cover transition expenses may seem like a good option, Guina recommends retirees “leave their money in the TSP for as long as they can.” Doing so, allows you to continue to beneﬁt from the plan’s low administrative costs and tax-deferred earnings. Not only will federal income taxes (and possibly state income taxes) be due on an early withdrawal, but withdrawals prior to age 59.5 also will be subject to a 10% penalty on the taxable portion of the distribution. “Most people are going to be giving up one-third of what they take out in taxes and penalties, and they are missing out on all the future [investment] earnings,” Guina says. “They are hamstringing their future self.”

Say “Yes” to Survivor Beneﬁt Plan (SBP)? SBP provides a spouse (or other designated beneﬁciary] with 55% of the selected base amount of your retirement pay. Premiums are equal to 6.5% of the base amount and are paid with pre-tax dollars. As the base amount increases with cost-of-living adjustments (COLA), the monthly premium also rises. SBP participants who reach 70 years of age or older and have made 30 years of payments are considered “paid-up” and pay no additional premiums. While a level-term life insurance policy with a large lump sum payout may be a better option for some families, Aeschbach states, “SBP is almost always a very good deal. People that tell you otherwise are usually in the business of selling insurance.”

Apply for a VA Mortgage — If your retirement plans include a home purchase, consider a VA loan, which may have lower closing costs and does not require a down payment or private mortgage insurance. In addition, veterans with a service-connected disability rating are exempt from paying the VA Funding Fee.

Briefs

AAFMAA Introduces its Spouse Purchase Initiative 93% of the nation’s 1.1 million Military Spouses are women

71% have children

95% inﬂuence all buying decisions in the household

85% make all buying decisions in the household

Military spouses play an important role in every military family’s financial situation. With their husband or wife as an active duty service member, it is up to the spouse to research and gather financial information during deployment, or any time the servicemember is unavailable to contribute. However, in various cases, military spouses run into some road blocks when it comes to taking charge, especially within the insurance market. It’s all too common that providers make plans purchasable only by the active duty members on behalf of their families. With women accounting for 93% of the military’s 1.1 million spouses, 71% of which have children, it’s crucial that they have the resources available to them to take care of their families. When it comes to making these important financial decisions, such as purchasing life insurance or managing their family’s finances, we found that women influence 95%, and actually make 85% of all buying decisions. It is clear that military spouses are more than capable of making financial decisions for their families, emphasizing the need to provide them with opportunities to protect their family. The American Armed Forces Mutual Aid Association (AAFMAA), the country’s longest standing not-forprofit organization expressly serving all branches of the American Armed Forces community, recognized this need in the military insurance market and wanted to offer a solution. As a result, the organization rolled out their Spouse Purchase Initiative, a first-of-its-kind program that makes AAFMAA insurance and services available to military spouses of Active Duty servicemembers and honorably discharged veterans. Military spouses can now purchase a life insurance policy for herself, and then for her children, grandchildren, and the servicemember. This offering empowers military spouses with the resources and

32 www.AmeriForce.net

choices to take care of themselves and their families while their husband or wife is abroad, on assignment, or otherwise unable or unwilling to commit to family ﬁnancial needs. Further, this initiative is intended to beneﬁt our military families by removing the burden from Active Duty servicemembers and those veterans who have been honorably discharged, whose duties regularly involve(d) deployments and assignments that keep them from home.

add-on products sold in connection with the credit extended, and other fees such as application or participation fees. • No mandatory waivers of consumer protection laws: Creditors cannot require servicemembers or their covered dependents to submit to mandatory arbitration or give up certain rights under state or federal law, such as the Servicemembers Civil Relief Act.

• No mandatory allotments: Creditors cannot require servicemembers or their covered dependents to create a voluntary military allotment in order to qualify for a loan. For most forms of credit subject to the updated Military Lending Act rule, creditors are required to comply with the amended regulation as of Oct. 3, 2016; credit card providers must comply with the new rule as of Oct. 3, 2017. — from the CFPB

If interested in learning more, please contact an AAFMAA Membership Coordinator at 877-398-2263 or visit www.aafmaa.com to apply for life insurance policies. Spouses will need proper identiﬁcation to prove he/she is married to a service member. — courtesy AAFMAA

Consumer Financial Protection Bureau (CFPB) updates Procedures for policing the Military Lending Act In 2006, Congress passed the Military Lending Act to help address the problem of high-cost credit as a threat to military personnel and readiness. In July 2015, the Department of Defense issued a ﬁnal rule expanding the types of credit products that are covered under the protections of the Military Lending Act. The protections provided by the Military Lending Act extend to active-duty service members (including those on active Guard or active Reserve duty) and covered dependents. When lending to servicemembers and their dependents creditors must abide by the following requirements: • A 36 percent rate cap: Creditors cannot charge servicemembers or their covered dependents more than a 36 percent Military Annual Percentage Rate, which generally includes the following costs (with some exceptions): ﬁnance charges, credit insurance premiums or fees, www.AmeriForce.net 33

Last Call

More than

members

pay all of their bills on time and have no debts in collection — signiﬁcantly more than the national population who are more likely to struggle to pay bills, get calls from collectors and consider bankruptcy.

Nearly 9 in 10 service members (87%) have savings (excluding retirement). In fact, while almost 1 in 3 adults nationally (32%) save nothing annually for retirement, only 8% of service members (four times less) save nothing.

Almost

83% service

6 10 in

Service Members

are extremely/very conﬁdent in their ability to meet future ﬁnancial obligations. The 2016 Financial Literacy among the U.S. Military Survey was conducted online within the United States by Harris Poll on behalf of the National Foundation for Credit Counseling

A signiﬁcant minority of service members are more worried today (than they were one year ago) about:

37%

being able to save for future goals 34 www.AmeriForce.net

31%

having enough money to cover unexpected expenses or emergencies

25%

meeting basic household needs

22%

being able to make debt payments on time

*Rewards exclude military clothing line of credit. Available at all military exchanges and other participating facilities.

Use of the term â&#x20AC;&#x153;memberâ&#x20AC;? or â&#x20AC;&#x153;membershipâ&#x20AC;? refers to membership in USAA Membership Services and does not convey any legal or ownership rights in USAA. Restrictions apply and are subject to change. Bank products provided by USAA Federal Savings Bank, Member FDIC. No endorsement by the U.S. Marine Corps or DoD intended. USAA means United Services Automobile Association and its affiliates. ÂŠ 2017 USAA. 237860-0117-M