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At the basic level, I think it is safe to say that human beings fundamentally get tremendous satisfaction out of creating something that is uniquely their own. I personally think this spirit is at the core of all human beings. I see this everyday in my own children when they develop their arts and crafts and proudly show my wife and I the bounty of the effort they put in. As we grow older, graduate from high school, college (or both) and enter the work force, we become part of an organization. While jobs vary widely (as does job satisfaction!), an objective person walking into any organization can see that waning passion is not an uncommon theme. I often wonder if that lack of passion is the cumulative result of getting farther away from your own interests and passions over time.
What is an investment? According to the American Heritage New Dictionary of Cultural Literacy (3rd Edition), an investment is, “The purchase of property with the expectation that its value will increase over time.”
Seems straight forward enough, but for those who want a more thorough explanation with examples from USAA Financial Counselors J.J. Montanaro and Scott Halliwell, click on the short video.
Guys, this effects you directly. If you're a little unsure of just exactly what's happening and what this is all about, please visit this cool new page from MOAA (Military Officers Association of America). They do a great job of laying out the issue, why we should care, and they also make it very simple to help the cause of defending your benefits. Today's "small cuts" to our retirement COLA will effect every one of your families in the future. But what's most important is that these cuts represent a breach of contract, a breach of faith, and a broken promise our government made to each and everyone of our families. Please don't just do nothing, help the cause and join the fight.
Since I've been married, one of the best summers I've had was when my wife was deployed. Sounds crazy and maybe a little insensitive to my wife...but it's true!
First of all, don't get me wrong -- holding down the home front during the deployment was one of the hardest things I've been through. But without the structure of my wife's workweek I was able to spend the summer exploring the great outdoors with our 2 boys. We went on one camping trip after another, any day of the week. A couple times I didn't even bother unpacking the truck when we got home. I just did some laundry, re-packed the cooler, and after a day or two at home we headed back out to another National Park.
Whatever your Winter Holiday tradition, now is the time when many cultures have historically livened up the dark days of winter (in the Northern Hemisphere) with celebrations of community, charity, and gift-giving*. Going into debt, however, should not be a part of your tradition.
How much should you spend on Christmas?
I'm big on using percentages when budgeting. Except for the really, really poor or really, really rich, it makes sense to me that if Martha gets paid 50% more than George, then Martha can spend 50% more than George. That generally goes for housing, cars, or Christmas presents. In other words, don't try to “keep up with the Joneses,” especially if you get paid less than the Joneses. That's the idea behind the 60% Budget: keep regular, monthly expenses down to 60% of your gross income, so you can save 10% each towards retirement, long-term savings, and short-term savings; the last 10% is 'fun money' for Starbucks, beer, wine, pizza, McDonald's, toys, etc. Ideally throughout the year you've saved up enough in your short-term savings to pay for Christmas, even after you've paid for oil changes, shoes for the kids, and a trip to the beach over the summer.
What is a “bond?” No, not a secret agent from England, but an investment tool used to grow wealth. According to the Wall Street Journal, bonds are a form of debt. Bonds are loans, or IOUs, but you serve as the bank. You loan your money to a company, a city, the government – and they promise to pay you back in full, with regular interest payments.
Pretty understandable, but for greater detail and examples, click on the video and listen to Scott Halliwell from USAA explain.
One of the great resources we have at Macho Spouse is the Men's Room for Military Spouses (sorry ladies, this is a private Facebook page designed for all male military spouses only). We plan to start sharing some of the more informative/interesting conversations on our website, the thread below is our first "share." Some of the names have been hidden for privacy purposes, see if you can figure out which names are fake...
Jar Jar Blinks: OK, what is this "Rule of 72?"
Yoda: Interest multiplied by time equals 72.
C-3PO: If you're not good at exponential math, it's a quick way to estimate how long your investment will double, given an interest rate. For example: if a CD is earning 3%, then it will double in value in 24 years (72/3=24)
Yoda: To double your investment.
Yoda: ^C-3PO's way is easier to follow. Way easier.
Jar Jar Blinks: So where do these investments live? Seriously, do savings accounts work the same way, assuming you can find one that offers interest?
Yoda: NFCU has a 3% CD right now.
C-3PO: It's all a matter of risk vs. reward/return. The S&P 500, aka TSP C Fund, returned about 30% last year. But it was down 37% in 2008.
Yoda: I was taught to expect a 10% rate of return on index funds back in 06, so my ROTH would double in 7.2 years.
â€ªJar Jar Blinks: I guess I have a trust issue... Can I trust the folks at USAA to steer me in the right direction eggs
Jar Jar Blinks: Eggs... Heheheh
Jar Jar Blinks: When asking to set up investments?help
Yoda: Not 100%. Their funds are kind of expensive compared to vanguard and the TSP. But it's better than nothing and their life insurance is fairly priced.
C-3PO: "It depends" USAA only has 2 real index funds, but together they match the entire US stock market. They are not the MOST expensive. Their insurance is pretty well priced, but you're probably find even better at NMAA or the equivalent for other services.
Yoda: If only all branches could use NMAA...
I'm not as conservative as some. Instead if having 6 months of expenses on hand I have 6 months of expenses in a USAA ROTH IRA (no fee for withdrawals of principle with some caveats), and now put everything into ROTH TSP index funds (lowest fees in the world!).
Yoda: I do keep some liquidity (cash or accounts that can very easily be converted to cash), but since we run a surplus each month even after investing, and the military pay is as stable as it gets, I don't keep much in that account (plus I "float" all my expenses other than car insurance, so I don't pay July's expenses until mid-September (if we have to spend more I can transfer assets as needed, has never happened, but just in case), and the "float" on credit earns us rewards and consumer protections).â€¨â€¨â€¨â€¨â€¨â€¨â€¨ Blue Cash Preferred, 6% back at the commissary, 3% back at the gas station and 1% everywhere else (no fee for military).
C-3PO: â€¨â€¨ I haven't dealt with them, but I hope AAFMAA is as good as NMAA.
â€ªC-3PO: PenFed has pretty good credit cards for military too.
â€ªJar Jar Blinks: .... all these damn acronyms....
Yoda: FUBAR right?
C-3PO: (image that can't be shared)
C-3PO: Sorry about being a wiseass
â€ªJar Jar Blinks: Better than being a wide ass
Yoda: C-3PO, you've got to take it easy on Jar Jar Blinks, he's a submariner. Just think how many bumps to the head he's suffered.â€¨â€¨â€¨â€¨â€¨â€¨â€¨ But on a serious note, it's pretty cool how many guys in this group have an understanding of personal finance.
C-3PO: If I only had a nickel for every time I hit my head while underway (says the 6'3" Marine)
Mace Windu: Personally, I would put my money in a multitude of investments. Like savings,cd's, 401k, TSP, money market fund and precious metals. Never have all your eggs in one basket.
Admiral Ackbar: â€ªLuke, to be excruciatingly technically correct, it's the rule of 69.3. Here's the math behind the answer:
I like the way they cheat by assuming that for small interest rates, the natural log of the quantity (1 + interest rate) is approximately equal to (interest rate). So it's not much of a stretch of radcon math to assume that 69.3 is about the same as 72.
You can also use the math to figure out when you'll be financially independent:
Luke Skywalker: I think NFCU has a special going on that if you open an IRA with $100 they will give you $100. I have 4 IRA's at USAA, IRA at NFCU, TSP and a 403(b) at Fidelity. Saving about $500 a month between all the IRA's.
â€ªLando Calrissian: Boy you guys are starting to make me worry about my future. Where do I start when I have no job and only a limited amount that my wife has volunteered to me over the years in some sort of retirement account?
Yoda: â€ªLando, my wife and I each maxed out our Roth IRA's for her first four years of service so we could build up our emergency fund (with the stability of military careers I feel as though the ROTH IRA is a good place to stash an emergency fund that is a very low probiotic of being utilized).â€¨â€¨â€¨â€¨â€¨â€¨â€¨ Now all the money goes into her TSP, but it's our retirement account.
**If you are a male military spouse and would like access to this private page, please send a request through Facebook and we'll usher you in as soon as possible.
The Defense Finance and Accounting Service (DFAS) military pay tables have current and historical pay tables including Reserve pay, special pays, and allowances.
The DFAS website has the following regarding the military pay tables it provides:
"The following pay tables are provided for reference use only and not for official purposes. The effective dates of certain pay rates may differ from dates for various allotments and other pay entitlements.
Pay tables are presented in .pdf (Acrobat) format."
You have captured your small business idea, now what do you do? If you are like me, once the idea is seeded in your mind, you begin to brainstorm the best way forward. But what is the best way forward. Depending on your own personal experiences, getting your mind caged to help your idea might be one of the most challenging things you do.
I think one of most amazing aspects of starting a business is the pure creation of the endeavor. I think the concept of turning your thought, a series of synapses that fired in your brain, into an existing and tactile entity is one of the best attributes to being human. I personally think this pure creation provides is what provides deep satisfaction and feeds the soul of man and woman. Despite the feelings that great ideas provoke, it is still hard to see the path forward if you don't know how to proceed. This is where the business plan fits in nicely.
A CEO is that one person who embodies the entirety of the business they represent. They internalize everything about the business and then direct their energy and effort into making good decisions that (hopefully) fall in line with strategies designed to grow the business into profitability.
What makes an Entrepreneurial CEO so special is their humble starting point. While CEOs of existing companies have resources, a staff, and money to operationalize their actions, an Entrepreneurial CEO typically has none of that. You are the resource. You set the framework from which to organize, then layout the business' milestones and timelines in pursue of the desired end state. You also have the challenge of simultaneously balancing present-day tasks with long-range planning and being able to effectively communicate that to the team. And ultimately, you are the one responsible for how well (or not) things turn out. Sound intimidating? It is! But you have some things working in your favor.
As a male military spouse, I know how important it is to stretch every dollar as far as I can for my military family. I'm always looking for tips on how to save money and I really appreciate money saving tips for the Military Family.
Here are some questions to think about:
Do you have an emergency fund? Are you saving enough money for retirement? Do you have a budget? How close are you to financial freedom?
Military Saves Week (25 February- 2 March, 2013) is fast approaching, and we are helping to get the word out to the military community about this effort to motivate service members and their families to better their finances.
Very early in my experience as a male military spouse I encountered the [[EXLINK_4]]. I remember the day my wife brought home a floppy disk with the DOS version of this financial software. (Yeah, that just took me waaaaaay back.) It didn't have any frills, but PowerPay helped us calculate, plan and execute our path to debt elimination.
I know that there are plenty of money management tools out there. PowerPay is worth a look, especially if you need to develop your debt-elimination plan. This money management tool helped my family.
Buying a house can often times seem like an impossible dream for the average American. But as military family members, many people believe it's “easy” because, when eligible, we can buy a house with “no money down.” Now when you hear this what do you think? What does “no money down” mean to you? Do you relate it to buying a car where you walk into the first dealership you find, you sign some papers and then drive off in your new car? Well, for most people, this is not the case. Buying a home is a wonderful thing, but if you are going to take on the single largest debt in your life, you may want to prepare yourself, take some time, and do it right.
To work or not to work that is the question on all of our minds at one time or another in our military careers.
It seems that the subject of employment comes up whenever money is tight, when the kids are all finally in school, or you PCS to a new duty station. I can't tell you how many times I have thought about getting a job outside of our home just so we could have a little wiggle room in the budget.
I even tried it one year to get some extra holiday cash, and frankly it was a disaster. Nothing got done, the kids were disappointed because I wasn't home when they came back from college, and my husband hated the fact that his life had to change, not to mention my home business began to struggle as well. (Yes, he is spoiled but the fact that he is a genius on the grill makes up for it)
For some military spouses working outside the home works for them, but for many of us the constant changes, multiple moves and unpredictability of our lives make employment very difficult unless you are fortunate to have a career that can move with you.
In Part 1 of Nurturing the Money Tree we chatted about creating income by working for someone else. But if you are like me, maybe working for someone else isn't for you, and many military spouses actually choose to own their own businesses. I know I did.
This option gives them the flexibility and control that they are looking for while building something for their future at the same time. Being a business owner has some great advantages, but if you don't know what you are getting into and you don't have a plan of action it can quickly take over your life or worse leave you in a financial pickle.
[These aren't real questions that avid readers have sent in, yearning for my sage advice. I'm just paraphrasing some discussions I've had about money with family, friends, and co-workers]
I just changed jobs. Should I leave my 401(k) with my old employer, or roll it over to my new employer's 401(k) plan?
You shouldn't do either. You should rollover your old 401(k) into an IRA with low-cost mutual funds, like Vanguard. There are 2 main problems with 401(k) accounts in general:
First, the investment choices they offer are usually going to be fairly limited. They might not even have index funds. Opening an IRA with someone like Vanguard, Charles Schwab, or Fidelity gives you access to just about all of the mutual funds each company offers. It's like comparing a state-run grocery store in the Soviet Union to a well-stocked Wal-Mart in the United States.
Rob Aeschbach is a male military spouse who spent 12 years as an active duty Marine before becoming a Navy spouse. Since then he has been a stay-at-home-dad for more than 10 years, served in the Marine Corps Reserve until his recent retirement, and started a personal finance blog.
Is it possible to buy a home with no money down? If you or your spouse qualifies for a VA home loan, the answer is yes. VA home loans are a special benefit available to current and ex-members of the U.S. military only and they can save homebuyers a lot of money. Veterans and active members of the U.S. military are eligible for some of the lowest interest rates on the market but that's not the only way VA Loans save buyers money. VA Loans are also "No Money Down" home loans.
Understanding "No Money Down"
"No money down" means homebuyers don't have to provide a down payment to obtain a VA Loan. Traditional mortgages or home loans require as much as 5% to 20% of the purchase price as a down payment on a home. On a $200,000 home that is between $10,000 and $20,000 that must be provided at the closing. Saving up that much money for a down payment is a huge stumbling block for many would-be buyers. They may have the credit and income qualifications needed to obtain a home loan, but just can't come up with the down payment. Too often they end up not buying their own home or they miss out on the home they really want.
The VA Loan program changes that and makes homeownership more accessible by waiving the down payment requirement. VA Loan mortgage lenders are willing to forego this requirement because VA Loans are backed by the U.S. Government. This minimizes the risk to lenders if a buyer defaults, which is one of the primary reasons down payments are typically required.
Which is More Risky, Entrepreneurship or Trying to find Defense-Related Employment After Separation?
Earlier this year I attended my Transition Assistance Program (TAP) class ahead of my planned 1 August 2014 retirement. After completing the week of training with 25 other military members (both officers and enlisted), I was left with some thoughts about the program and life after the military.
TAP class, whose name is now Transition GPS due the passage of the 2011 Vow to Hire Heroes Act, was heavily geared towards providing military members the tools to become Government Service (GS) employees or defense industry professionals. I certainly understand why. After all, everyone in the class served in the military their entire career, some spanning over 30 years. It makes sense that most would want to capitalize on the skills they acquired during their many years of service.
Macho Money Investing 101 is a video series based on the fundamentals of investing. These videos will discuss many different types of investment accounts, some basic investment philosophies, and offer advice on how to find the right financial planner to fit your needs. Investing is a risk we take to build financial wealth, and even though the level of risk varies from one military family and investment to another, there will always be an opportunity to lose money. Anyone remember 2008? So before we begin investing our hard-earned cash, we really should have our basic life needs covered just in case something goes wrong. In this video, Certified Financial Planners, Scott Halliwell and JJ Montanaro, discuss what anyone's first steps to investing should look like. Wrestling with the idea of cutting money from your budget to build a savings account? Below is some great advice from both JJ and Scott on why it's important to have some cash readily available in a savings account.
Macho Money "What Worked For Me" videos are a series of short videos that highlight some financial successes people have accomplished. These quick interviews are not from Certified Financial Planners, bankers, or any other type of sophisticated financial gurus...they are normal, hard-working people who made some smart decisions with their money. In this video, Alan Brown shares a quick tip on what helped him start a savings plan nearly 20 years ago. We can only imagine how much he has in savings today!
Macho Money "What Worked For Me" videos are a series of short videos that highlight some financial successes people have accomplished. These quick interviews are not from Certified Financial Planners, bankers, or any other type of sophisticated financial gurus...they are normal, hard-working people who made some smart decisions with their money. In this video, Julie Finlay shares why she is looking at a potential early retirement. If you've already seen Alan's video, we think you'll start to notice a patern.
If you hear someone use the letters “CD,” they are abbreviating the term “certificate of deposit.” And according to Investopedia, a CD is A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate and can be issued in any denomination. CDs are generally issued by commercial banks and are insured by the FDIC. The term of a CD generally ranges from one month to five years.
It can get a bit confusing, but for a more clear explanation with examples, click on the video and listen to Scott Halliwell from USAA.
What is a “market index?" According the SEC, a market index tracks the performance of a specific "basket" of stocks considered to represent a particular market or sector of the world stock market or the economy.
There are indices for almost every conceivable sector of the economy and stock market.
USAA Certified Financial Planner, Scott Halliwell, does a great job in this video of giving a more thorough explanation of a market index with some examples.
According to Investopedia, a mutual fund is an investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. Mutual funds are operated by money managers, who invest the fund's capital and attempt to produce capital gains and income for the fund's investors. If you're still a bit confused, click on the video and watch USAA Certified Financial Planner, Scott Halliwell explain in further detail.
What is a stock? According to Dictionary.com, a stock is:
1. the outstanding capital of a company or corporation.
2. the shares of a particular company or corporation.
3. the certificate of ownership of such stock; stock certificate.
Click on the video and listen to a couple cool USAA Financial Counselors give a more thorough explanation with examples.
An investment account is defined by the web as an account that allows you to invest in a wide variety of securities including stocks, bonds, mutual funds and fixed income products. InvestorWord.com defines an investment account as an Account held at a financial facility for the purpose of a long term investment for capital preservation, growth or fixed income. Both are correct, but you can get a more thorough explanation in this video that features USAA Certified Financial Planner, J.J. Montanaro.
When talking investments, IRA is the abbreviation for “Individual Retirement Account,” not “Irish Republican Army.” According to About.com, IRAs are basically savings plans with lots of restrictions. The main advantage of an IRA is that you defer paying taxes on the earnings and growth of your savings until you actually withdraw the money. The main disadvantage is the tax law imposes stiff penalties if you withdraw the funds before you turn age 59.5 years old. There are different types of IRAs, each with their own tax implications and eligibility requirements. And here is a little fun fact, IRA's stem from the early 1970s when NBC broadcasted a television special called “The Broken Promise,” which showed Americans the consequences of poorly funded pension plans. In this short video, USAA Certified Financial Planner Scott Halliwell explains IRAs in further detail.
OK, so you've taken the advice from our last video, "Before We Invest," and built-up a cash savings account. Great. But now that money is looking pretty good in savings, why risk any of it playing the stock market? Having something is better than having nothing...right? When it comes to planning for retirement, not exactly. In this video, Scott and JJ (Certified Financial Planners with USAA) share some great insight on why it's important to start an investment account, what we should consider before beginning, and why it's not a good idea to simply start throwing money at random stocks.
Macho Money Investing 101 is a video series based on the fundamentals of investing. These videos will discuss many different types of investment accounts, some basic investment philosophies, and offer advice on how to find the right financial planner to fit your needs.
Wait, you're a stay at home dad? How'd you get on base?" said the hairstylist at the exchange when I responded to her question on what I did for the Air Force. This happens a lot when you're a military husband. You'll get salutes from the gate guards, military discounts that only apply to active duty personnel, and maybe if you're really lucky, the start of a chewing out over haircut and shave regulations by a senior enlisted person. Why? Because our wives make up a small part of the force.
Guys, the APA has determined that men and women share cognitive skills, we are fundamentally the same. The whole notion of guys being better at math and women being better at communication is simply a social construct. I firmly believe that statement, but that doesn't change the social construct.
This same social construct demands that we take care of our families and makes us feel like lesser men when our combat boot wearing women make more than us.
Throw that idea away, after all it's just an idea. Who makes what, doesn't have to matter.
(St. Paul, MN)—Award-winning independent publisher Elva Resa Publishing is pleased to announce the October 2014 release of Stories Around the Table: Laughter, Wisdom, and Strength in Military Life, a collection of personal stories from more than forty military family writers, including spouses, parents, children, and service members. (make sure you check out the list of authors guys...a few of us are represented in this group!)
From poignant to practical, tragic to humorous, these candid conversations shed heartfelt insight on many aspects of military life. Some subjects, such as deployment, reunion, combat injury, post-traumatic stress, and frequent moves, specifically reflect the military lifestyle. Writers also explore topics common to both military and civilian families, including marriage, education, parenting, friendship, faith, finances, depression, infertility, and grief, and how military life influences the experience.
The inspiration for the book came from a phone call Elva Resa author and publisher Karen Pavlicin-Fragnito received from a young military spouse who was facing several military life challenges. “We sent her a variety of books and suggested community resources,” says Pavlicin-Fragnito, a former Marine spouse, “but I really wanted to invite that young woman to my kitchen table, to have lunch or coffee or dessert with a handful of other military spouses who understand her life.”
At a spouse summit sponsored by Military.com in April 2013, Pavlicin-Fragnito spent two days gathered around tables, listening to military spouses recount stories and lessons learned from around the world. Many of those spouses regularly write or talk about their experiences on social media, in published books and columns, at workshops, or on the radio. “I wanted to invite them all to have lunch with that young spouse—and with other military families, new and seasoned—to laugh, cry, lend insight, and tell stories,” she says. “A book seemed like a great venue for a gathering of that scope.” The first person at the summit she invited to the literary table was Stars and Stripes columnist Terri Barnes.
The federal government's consumer watchdog has changed a regulation to make it easier for stay-at-home parents and others who don't work to be approved for new credit cards.
Monday, the Consumer Financial Protection Bureau finalized a regulation change to allow card companies to consider financial support from other people when evaluating a consumer's credit-card application. It changes a 2011 regulation under which banks were allowed to consider only the applicant's income.
The 2011 regulation and its more accommodating new version both grew out of the Credit CARD Act of 2009. Its underlying purpose was to clamp down on students getting cards and racking up debt they couldn't repay, and it required individuals applying for credit to demonstrate an ability to repay what they borrowed.
As originally written, though, the regulation had a side-effect impacting more than students: Its "ability to repay" language meant that anyone who relied on someone else's income -- including stay-at-home parents or spouses who are divorced and don't work -- suddenly had a harder time being approved for credit cards and building credit histories in their own names.
"Stay-at-home spouses or partners who have access to resources that allow them to make payments on a credit card can now get their own cards," CFPB Director Richard Cordray said in announcing the rule change. The agency proposed the change in October 2012, calling it a common-sense move.
Instead of just an individual's income, issuers can now consider broader measures, such as "available income" or "accessible income." Previously an issuer could not consider household income -- which used to be widely used on credit-card applications -- without confirming how much money the applicant has access to in order to pay bills. The changes apply to people 21 and older.