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  1. Financial PreparednessSafeguard Your Assets & Protect Your Family Presented by________________

  2. Principles of Financial Readiness This presentation was reviewed by the Council on Accreditation Take charge of your financial future • Define financial goals • Develop a master plan Develop a spending plan – and stick to it Use credit wisely Take advantage of savings & investing programs Protect your assets Seek help for the tough stuff

  3. Financial Security • Means something different to each of us • Paying bills on time • Having enough money • Current with debt payments • Saving for retirement • Adequate insurance • Money to do what we want, when we want

  4. Where Do You Stand? Treading water? Drowning in debt? King of the mountain? Anxious about the future? Confident you can meet financial needs? 4

  5. Barriers to Success • Debt • Taxes • Inflation • Family demands • Fear of investing • Past money mistakes 5

  6. Results of Financial Irresponsibility Civilian Embarrassment Stress & safety Late fees & bounced checks Garnishment of wages Attach lien to savings/ checking accounts Loss of tax refund Impact credit report Repossession Foreclosure / eviction Bankruptcy Divorce Strained relationships Military • Embarrassment • Stress & safety • Letters of indebtedness • Low evaluations • Loss of clearance • Loss of promotion • Loss of reenlistment bonus • Removal of MOS/NEC • Garnishment of pay • Loss of assignment • Administrative discharge • Divorce • Strained relationships 6

  7. Familiar Economic Issues 7

  8. Action Plan • Check your credit report • Create a spending plan • Cut expenses where possible • Check eligibility for SCRA rate reductions • Review tax withholding • Apply for benefit programs • Contribute to an emergency fund • Set up a savings plan 8

  9. Signs of Success • Saving for retirement (401K, TSP) • Money in the bank for emergencies • Covering monthly expenses • Net worth increasing annually • Insured to cover catastrophic risk It’s not what you make; it’s what you keep! 9

  10. Debt • Get a grip on debt • Don’t use credit cards to spend money you don’t have • Shop around for low interest rates and military discounts • Beware of pay day loans and other high-interest lenders Ask Yourself: Is this a want or a need? Don’t let impulse purchases ruin your financial plan! 10

  11. Handle Debt Wisely • Paying down debt is saving dollars for the future • 18% interest = $18 per year for every $100 in debt • Estimate your debt-to-income ratio • $400 debt ÷ $1000 income = 40% debt-to-income ratio • Higher debt-to-income ratio = greater the risk 11

  12. Managing Debt • Getting rid of debt • Stop charging purchases • Pay off highest interest debt first • Keep up payments on: • Auto and mortgage loans • Insurance • Child support • Talk to a credit counseling service, if appropriate • Pay more than minimum payment Free online debt repayment calculator www.powerpay.org 12

  13. Managing Debt Servicemembers Civil Relief Act (SCRA) • Limits interest on credit card and other debt incurred before activation to 6% while on active duty • Service Member must apply to creditor in writing • Check with your base Legal Assistance Office • Ability to break housing or auto leases • Limited eviction protection • Temporary stays of civil proceedings • Bankruptcy, foreclosure, and divorce http://www.defenselink.mil/ra/mobil/pdf/scra.pdf 13

  14. Financial Planning • Cash reserves • Risk management • Net worth planning • Investment planning • Retirement planning • Tax planning • Estate planning 14

  15. Make It Happen 15

  16. Lump Sum Payments • Can be a big part of your total income • Enlistment and re-enlistment bonuses • Accumulated pay Set Goals Build Wealth! You earned it; Don’t waste it! 16

  17. Savings, Emergency or Reserve Fund • For unexpected expenses or losses: • Military pay adjustments • Job loss • Medical emergencies • Unexpected travel • Car and home repairs • Reduces stress on family and cost of borrowing • Keep in a savings or money market account • Use only for emergencies • Covers 3-6 months of expenses 17

  18. Cash Reserves • How much and where? • Checking account • Savings Deposit Plan (SDP) • Savings and money market accounts • Certificates of Deposit (CD) • U.S. Savings Bonds 18

  19. Plan to Save & Invest • Saving • Earns interest • Safe when FDIC insured • Investing • Long-term growth of your money • Stocks, bonds and mutual funds • Make your money work for YOU • Know and understand your investments 19

  20. Investment Pyramid Futures Most risk Common Stocks Bonds Least Risk Cash Money Market Fund CD’s 20

  21. Military Wealth Benefits • Savings Deposit Program (SDP) • Thrift Savings Plan (TSP) • Servicemembers' Group Life Insurance (SGLI) • Housing Allowance • VA Mortgage • Tax-free earnings & Roth IRA • Re-enlistment money 21

  22. College Planning • Education savings • Coverdell IRA • 529 Plans • Prepay tuition programs 22

  23. Risk Management 23

  24. “No Brainer” Servicemembers’ Group Life (SGLI) Family Servicemembers’ Group Life (FSGLI) Traumatic Injury Protection Under Service Members' Group Life (TSGLI) 24

  25. SGLI Servicemembers’ Group Life Insurance (SGLI) Low-cost life insurance • For Service Members and family members Available up to a maximum of $400,000 • $50,000 increments Cost competitive • Premiums are currently $.065 per $1,000 of insurance • Regardless of age 25

  26. TSGLI Traumatic Injury Protection Under SGLI Every member who has SGLI has TSGLI • Effective December 1, 2005 Retroactive for members incurring severe loss as a result of traumatic injury between 10/ 7 /2001 and 12/ 1 /2005 • If loss was direct result of injuries incurred in Operations Enduring Freedom or Iraqi Freedom 26

  27. Estate Planning • Documents to have: • Wills • Medical and financial Power of Attorney • Insurance with beneficiaries current • Unified credit if married • Advanced directive • Guardianship for minor children • Trusts 27

  28. Why Have a Will? • Wills allow you to: • Direct the distribution of your assets after death • Determine how to distribute your resources to heirs • Appoint a guardian for minor children • Name people to carry out your wishes • Executor/executrix • Personal representative 28

  29. Wills – Estate Planning • Legal will • Addresses what would happen to your personal property and financial accounts • Designates guardian for your minor children • Living will • Allows appointee to handle situations if you become physically or mentally disabled 29

  30. Beneficiary • Directs who receives your assets • Don't name your estate as a beneficiary • Minor child as beneficiary requires court supervision • Consider setting up a trust • Think about tax ramifications • Name contingent beneficiaries 30

  31. Beneficiary • Assets that pass by beneficiary designation • Life insurance • Thrift Savings Plan (TSP) • Individual retirement accounts (401 K) • Pension plans • Unpaid salary/leave • Bank accounts 31

  32. Tax Resources - Military www.irs.gov/individuals/military/index.html • Combat zones designated • Publication 3, Armed Forces' Tax Guide • IRS Free Filing & Information 1-800-829-1040 FREE tax preparation also available through www.militaryonesource.com 32

  33. Update Important Documents • Will and living will • Beneficiaries on • Financial accounts • SGLI • TSP • PAY • Service record & contact list • Defense Enrollment Eligibility Reporting System (DEERS) • Confirm enrollment, call 1-800-538-9552 • ID cards & spouse relocation 33

  34. Protect Your Identity Order your free credit reports at www.annualcreditreport.com • Register an “active duty alert” with: • Equifax 1-800-525-6285 www.equifax.com • Experian 1-888-397-3742 www.experian.com • TransUnion 1-800-680-7289 www.transunion.com Contact FTC www.ftc.gov for ID theft information 34

  35. Useful Websites General Military Information www.deploymentguide.com www.military.com www.militaryonesource.com Financial Planning www.aafmaa.com www.usaa.com www.usaaedfoundation.org Relief Sites www.redcross.org www.nmcrs.org www.aerhq.org www.nmfa.org www.afas.org 35

  36. “SAFE” Help is Available MilitaryOneSource.com TurboTAP.org Command Financial Specialist (CFS) Family Support Center Navy & Marine Corps Relief Society Financial Planning Association (FPA) Other DoD, VA, and Guard-endorsed organizations 36

  37. Sources of Help Personal emergency fund Military relief societies American Red Cross Fleet and Family Support Center, Army Community Service Centers (ACS), Family Service Centers Personal Financial Manager (PFM) or Command Financial Specialist Ombudsman 37

  38. Summary • Create a spending/savings plan • Complete taxes or file for an extension • Use Savings Deposit Plan & TSP to maximize opportunity • Review all insurance coverage - SGLI, auto, homeowners, etc. • Update will and beneficiaries • Use SCRA rights and benefits 38