Share
by
4 Comments

Military Financial Horror Stories – or How Not to Buy a Car

When I was in the USAF I witnessed a lot of good and bad financial decisions made by the Airmen I worked with. Some decisions were great, and some were horrible. For example, I knew a MSgt (E-7) who owned 5 houses and rented them out. He also owned his vehicles and a small Cessna airplane outright. He was great at managing money and I learned a lot from him.

However, for each success story like that, there were 10 people make horrible financial decisions. I would like to share one of those with you today.

Military Members and Cars

Military members are proud of their vehicles. A lot of military members are young and single and have disposable income to buy nice cars and other cool toys. I knew quite a few people who drove classic antiques, late model muscle cars, souped up tuners, quad cab dualies with a supercharged hemi, etc… You name it, I probably knew someone who drove one. And there’s no problem with that – if you can afford it. The problem comes when you drive more car than you can afford.

Tax free pay = more disposable income

We deployed often at the base where I served the final 3 years of my enlistment. After September 11th, we maintained a constant presence in the Middle East, with many Squadron members rotating back and forth every three or four months. It was a difficult pace to keep up with, but it also afforded many military members the opportunity to amass a large savings account because all the tax free combat pay they earned while deployed.

One Senior Airman (E-4) from my Squadron came back after several deployments and decided he wanted a new truck. His old truck was about 15 years old and was beginning to fall apart. After multiple deployments he had saved quite a bit of money and was prepared to put make a substantial down payment on his new truck. He did his research, negotiated a good deal, made a large down payment, and drove off the lot in a shiny new Chevy Colorado.

Truck Envy

An Airman (E-2) in our Squadron fell in love with the SrA’s new truck and decided he wanted to buy a similar new truck. The Airman was new to the military and was enjoying the first regular paycheck he had ever pulled down. He was new to the area and didn’t have a vehicle. I’m sure you can see where this is going…

Without talking to anyone in the squadron (supervisors, fellow Airmen, etc.) he got a taxi to the local mall, walked down to a dealership, found the truck he wanted, talked to the dealer for a few minutes, got a credit check, signed some papers, and drove off in his new truck. He then immediately drove down the road to have a new stereo and sub woofer installed.

The rest of the story

The next day at work a couple admired his new truck. When asked whether he got a good deal on it, he didn’t have an answer. He didn’t know people could negotiate when buying a new vehicle. He just walked into the dealership, found the truck he wanted, got dealer financing approved, and paid full sticker price. He didn’t know about credit scores, negotiating, or anything about buying a new car.

To put it lightly, he got raked over the coals on the deal. He didn’t have a good credit score so his loan came in at over 19%. He also didn’t have a vehicle to trade in or a down payment to make, which didn’t help him on the final price. On top of that, he had a bad driving record and didn’t check on the price of insurance before buying his truck. Because of the loan, he was required to have full coverage insurance, for which he paid about $250 per month.

By the time he paid his car payment and insurance every month (about $700), he had just enough money left over to cover his cell phone bill and a little bit of gas money. Luckily for him he was living in the dorms and had access to the chow hall. Otherwise, he would have had to park his shiny new truck in the parking lot because he would have to choose between gas and food.

New cars aren’t bad; living beyond your means is bad

There is nothing wrong with buying a new car if you can afford it. In fact, I think there are many good reasons for buying a new car (actually, I bought a new car), but I almost always recommend buying quality a used vehicle if possible. But the problem doesn’t come from trying to decide between buying a new or used car.

The problem comes when you give into temptation and live beyond your means. The Airman in our Squadron could have easily gone with a nice used truck and probably would have been happier in the long run. Sure, it wouldn’t have been as shiny and it wouldn’t have that new car smell… but he wouldn’t have struggled on a month to month basis to make his payments.

The story doesn’t have a horrible ending though. A couple months later he promoted to Airman 1st Class (E-3), which resulted in a couple hundred extra dollars per month. He also deployed a few months later and was able to park his truck for a few months and save some money. It wasn’t enough to pay off his vehicle, but it was enough to establish an emergency fund and give him some financial breathing room.

~

This article is part of a group writing project at ProBlogger.net.

This article was featured in The Carnival of Money Stories.

Share
by
3 Comments

My Post-Military Employment History

Earlier this week I wrote about a post-military employment survey I recently participated in. The survey is designed to help the VA provide better veterans services by better understanding the employment experiences of recently separated service members.

My post-military employment history has been very successful by my standards, even if it did take me 6 months to find work after I separated from the USAF. Many readers here may not be familiar with my other website, Cash Money Life, where I have chronicled much of my employment history (particularly as I went through a job search and found a new job a few months ago).

Leaving the military

The most important decision I had to make was deciding whether or not to reenlist in the military. I was in a situation at my former base where we were deploying every other rotation; every other 4 months at the time. During my 6 years in the USAF, I went on 5 deployments. I had a great time, but there was a point where enough was enough. I wanted to be able to settle down and have a family.

I completed my degree by this time (I let the military pay for my degree), and my decision came down to applying for OTS, reenlisting, cross-training, or separating. The USAF was doing force reductions at the time and were severely limiting officer accessions from the enlisted corps, I didn’t want to reenlist in my career field, and there weren’t any appealing jobs to cross-train into. So I decided it was time for a new job and I made the decision to separate from the USAF.

I still miss the military sometimes, but I made the best decision for me on both a professional and personal level. I have since married my best friend and on a professional level, I have advanced further than I would have had I remained in the USAF.

The job search

I began my job search even before I left the military, which is a great idea if you know you are separating. The best time to search for a new job is while you already have a job. The most difficult part about my search was that I was moving across the country to an area I had never lived before, and I didn’t have a professional network in place. The good news was that I was moving to an area where there was a major Air Force base.

The job search took me over 6 months, and I ended up finding a job as a contractor on a military installation. This was a good thing because I had no desire to go back to being an aircraft mechanic. There is nothing wrong with that profession of course, but I had spent a lot of time working on my degree, and I wanted to use it. I also know that when you are the new guy on the job, you get stuck with the shifts no one else wants. I worked them all in my military career, and I much prefer working a standard M-F day shift.

Interviewing

The interview for my first job was interesting because I didn’t have much white collar experience. I had a lot of military experience and associated maintenance and logistics knowledge, standard Microsoft Office knowledge, and a few other areas of expertise. Luckily, I was applying for a job as an Air Force contractor working in the logistics area.

I was well dressed for my interview, and showed up on time. I was relieved when I talked to my interviewers and discovered that 3 of the 4 were veterans. We had similar backgrounds and I was a good fit for the job (even though I was not an exact fit and had never worked a similar job previous to this). I received a job offer 2 days later.

Negotiating

Salary negotiations are an interesting topic, and one that entire books are written about. For this job, my soon to be employers knew I had been out of the military for a few months and they made me an offer I thought was below market value. The HR rep I talked to said the hiring manager didn’t negotiate on opening offers. So I took it.

I could have negotiated but my theory was this: the opening salary was very close to the salary I was seeking ($2,500 off), I wasn’t an exact fit for this job, I had been looking for 6 months and I needed a job (this was the first interview I had), and I knew that once I had some more experience I would have more ground to stand on in future negotiations. I have since learned more about salary negotiation tactics and if I had to do it again, I would negotiate. In the end, it didn’t hurt me because I received a raise several months later that brought me up to the original salary I was seeking.

Moving on to a new job

Over a year later, I decided the job I was working was no longer a good match for me. It was time to move on again.  I began searching for a job while I was employed and I found two good matches. I went through two telephone interviews with them, then had a couplle in-person interviews. I received two job offers and had to evaluate the job offers to determine which was the best option was for me.

In the end, I accepted one of the job offers and I resigned from my first post-military job. After I resigned, I gave an exit interview and told my former managers why I was leaving. They made me a counter-offer which I refused. Accepting a counter-offer is not usually a good idea.

Future career prospects

I don’t know exactly what the future holds (that wouldn’t be fun anyway!), but I do know that the military has prepared me well for whatever may come my way. One of the things I have considered is getting an MBA. I haven’t decided if I want to go that route yet or not. I do know that right now, I have a lot of professional prospects and my military experience is something I will carry with me for the rest of my life.

~

This article was featured in the Carnival of Personal Finance #167 – Highlights from The Beijing 2008 Olympics.

Share
by
Leave a Comment

Veterans Affairs Post-Military Employment Survey – Part II

I recently participated in the second part of a Veterans Affairs Post-Military Employment Survey. As I previously mentioned, the Employment Histories Survey is designed to help the VA provide better veterans services by better understanding the employment experiences of recently separated service members.

I was happy to be able to participate in the survey, and even happier that they reward participants with $20 for taking the time to participate. I would have done it without compensation though, because I believe in what they are trying to accomplish. You see, a lot of veterans have a difficult time making the transition to civilian life. It’s not always an easy thing to accomplish, though I believe many veterans have the necessary skills to suceeed in any environment.

The problem is not always the veteran not knowing how to do certain tasks; I believe most veterans are extremely adaptable and learn quickly. I think the bigger problem is that many civilian employers do not know how to value miitary experience. There are many misconceptions about what military members do and what they are capable of doing in the civilian world.

In my opinion, military veterans are highly skilled leaders who are willing to take charge and run with projects. We learn quickly, are highly adaptable, and can handle higher stress loads than many people. Military members tend to have wide and varied expereinces working with people of different backgrounds and skill levels. All of these things make for great leaders and solid performers in the workplace.

I have been successful in my post-military career, though it did take me almost 6 months to find work after I separated. Part of the time I was traveling, and I also moved halfway across the country. But I was constantly searching for jobs via the internet. It can be difficult to find a job when you don’t have a network to tap into. Even so, I believe I have done well in my post-military career – perhaps better than I would have had I remained in the service.

I answered all the survey questions regarding my post military experience, and I hope my answers are able to help the VA come to some conclusions about how they can better provide for veterans.

Share
by
19 Comments

Understanding the Veterans Pension Benefit

There is a little known and little used veterans benefit called the Aid and Attendance Benefit, or Veterans Pension Benefit. This benefit can provide up to $1,800 a month to veteran or $900/widow or spouse and can be used for home care, assisted living and nursing home care.

This benefit is available to active duty veterans who served at least 90 days with at least one of those days occurring during a period of war.  Combat service is not required, only that the veteran was in the service during wartime and received an honorable discharge. You should be able to prove your service during a time of war via your DD Form 214 or other military service records.

There currently only about 543,000 individuals receiving the Aid and Attendance Benefit, which represents only 4.7% of those who could be eligible.

Who is eligible for the Veteran’s Pension Benefit?

In order to receive the benefit, a veteran must meet an income and an asset test and, in the majority of situations, a medical needs test. If a Veteran’s Pension Benefit Applicant called a regional VA Benefits office to apply for benefits, the first thing the Veterans Service Representative would usually ask for is the total household income, the amount of assets the veteran owns, and his or her medical status.

Income Test

The household income of the veteran or the surviving spouse cannot exceed the Maximum Allowable Pension Rate (MAPR) for that category of application. There are several categories of pension incomes, so determining eligibility can be complicated. In addition, under certain circumstances, a veteran’s income can actually exceed the MAPR, provided there are enough non-reimbursed medical expenses to reduce the household income below the threshold.

Example: A husband and spouse apply for the Aid and Attendance Benefit. They do not have a medical rating and their combined income cannot exceed $1,220 a month or $14,643 a year from all sources. However, their income can be reduced by non-reimbursed medical expenses to fall under the $1,220/mo threshold. Some examples of qualifying non-reimbursed medical expenses include medical insurance such as Medicare Part B ($96.40 a month) and certain medical expenses associated with assisted living care, or home care costs. The rules can be quite complicated, but it can pay to investigate your eligibility.

Asset Test

As a rule of thumb, veterans applying for the Aid and Attendance Benefit cannot own cash equivalent assets of more than $80,000. However, this is not a hard regulation; it is the generally accepted limit because regional Veterans Service Representatives are required to file paperwork justifying approved applicants if they have assets that exceed $80,000.

Counting Assets: The VA is primarily interested in those veterans who have more than $80,000 in cash and cash equivalent assets such as stocks, bonds, and similar accounts. A personal residence along with a reasonable amount of land, automobiles for personal use, and personal property are normally exempted from the asset test.

Rearranging Assets to Qualify: Veterans can get can get creative with their assets and rearrange them so as not to have too much money to qualify for the Veteran’s Pension Benefit. Veterans can gift assets to someone who does not live in the same household, or a portion of the assets can be converted into an annuity to create immediate cash flow. However, if the veteran chooses this route, he should be careful not to create too much cash flow, which could reduce or eliminate the pension eligibility.

Enlist professional help when rearranging assets. There can be legal ramifications when assets are transferred or rearranged. One topic in particular to be aware of is interfering with Medicaid benefits. Assets reallocated to qualify for VA benefits could create penalties for Medicaid eligibility. Be sure that if you rearrange assets that you get the professional help you need to do be able to qualify for the Aid and Attendance while still qualifying for other benefits.

Medical Needs Test

The most important qualification to receive the Veterans Pension Benefit is demonstrating a medical need for assistance or supervision due to a disability. Certain medical costs can qualify as deductions to reduce household income levels. The high costs that accompany long term care such as nursing home care, assisted living, or home care are sufficient to allow medical deductions for a veteran to qualify for the Veteran’s Pension Benefit.

If the veteran under age 65, he or she must be totally disabled to receive the benefit and must provide medical documentation to support his claim. Veterans over age 65 do not have a disability requirement to receive benefits. Surviving spouses may also apply for a Death Pension benefit. In these situations, the deceased veteran did not have to meet any disability requirements nor does the surviving spouse need to meet any disability requirements, regardless of age.

Most of the veterans and surviving spouses who qualify for the Aid and Attendance benefit qualify with low incomes and have few cash assets. They usually meet both the income and asset tests without the need for the special provision for medical expense deductions to reduce income.

Take advantage of your Veteran’s Benefits – That’s what they are for!

This is just one of many Veteran’s Benefits Programs that is underutilized because it is complicated to qualify for and it is not well known. However, don’t let the complicated qualifications discourage you from applying. This is one program that has a lot of flexibility when determining eligibility.

If you know a veteran who is in need of assistance, direct them to their local regional Veteran’s Benefits Office. There may just be a program they qualify for. They sacrificed, and they have earned these benefits.

For more information about this program, visit your local or regional VA center, or visit the VA website.

Share
by
2 Comments

Not all Veteran’s Have Received Their Economic Stimulus Checks Yet

I was doing some reading online last night and I read something that alarmed me: There are over 5 million unclaimed economic stimulus checks currently held by the IRS. A large percentage of those are held by military veterans whose primary source of income is VA benefits or Social Security checks.

But there is a problem… many people whose sole source income comes from Social Security or VA benefits are not required to file taxes with the IRS every year. The problem is that the only way to receive the economic stimulus rebate is to file taxes with the IRS. Many people who are eligible for the stimulus rebate have not received it because they did not file taxes, because they are not normally required to do so. If you know anyone who may be in this situation, please do them a favor and let them know they might be eligible for a rebate.

The stimulus check was automatically sent out to qualifying tax filers, but if you have not yet received your rebate, check, there is still time.

How to claim your stimulus check

First, make sure you filed your taxes. You will not receive a stimulus check if you do not file taxes.

Second, learn when you should receive your rebate. The best way to do this is to use the official stimulus payment tracker provided by the IRS web site. You will need to have information from your 2007 tax return, so be sure to have that handy when you use this online tool.

Third, check for reasons that may delay your rebate check. There may be legitimate reasons for receiving your economic stimulus payment late, or for not receiving it at all.

  • If you filed your taxes late, your rebate check will be delayed. Expect a 2-6 week delay if you filed your taxes late. You must file by Oct. 15th 2008 to receive a rebate this year.
  • Your stimulus rebate check was garnished. Your check can be garnished by the Treasury Offset Program. If your money was scheduled to be garnished, you should have received a notice. Reasons can include unpaid child support, back taxes, or student loans.
  • You PCS’d or changed addresses. The IRS will not forward rebate checks, so you need to notify them if you moved. You should file a Form 8822 with the IRS, and a change of address notice with the U.S. Postal Service.

Fourth, contact the IRS. If all else fails, contact the people who know best. Try calling the IRS at 1-866-234-2942. Again, be patient. IRS workers are receiving hundreds of calls daily, and need time to process your information. You will get much better results if you are friendly with the agent handling your claim.

Fifth, have patience. Above all else, be prepared to wait. The checks acan take anywhere from 2-6 weeks to be sent out. In addition, IRS agents are handling hundreds of calls daily, so be patient with them.

Share
by
3 Comments

Ohio Gives All Veterans In-State Tuition Rates

Ohio governor Ted Strickland recently signed The Ohio G.I. Promise into state law, which changes the  in-state residence requirements at each of the state’s 36 colleges and universities to allow all veterans, their spouses and dependents to attend Ohio colleges and universities at in-state tuition rates. This is the first plan of its kind in the US. This is a huge benefit for veterans attending college on the G.I. Bill.

The Ohio G.I. Promise law follows the passing of the new GI Bill which was recently passed by Congress and signed into law by President George W. Bush June 30. The new G.I. Bill essentially doubles college benefits for eligible troops and veterans, guaranteeing full-tuition scholarships at any in-state public college or university, as well as providing monthly housing stipends. However, the new G.I. Bill only makes provisions for in-state tuition, which limits veterans wanting full tuition coverage to their state of residence. The Ohio G.I. Promise bill makes college affordable for all veterans who wish to attend college in the state of OH.

This is also a great move for the state of Ohio because it brings in more qualified individuals looking to improve their education and professional skills – potentially improving Ohio’s workforce.

According to Ted Strickland:

“This is a great benefit for veterans, as well as for Ohio,” Strickland said. “It delivers real support to veterans while helping strengthen Ohio’s strategic plan for higher education, which calls for attracting and keeping talent in the state. Who better to have as part of Ohio’s colleges and universities, workforce and communities than the veterans who have served, led, and protected our country?”

This is an awesome bill, and one that each state should pass. For more information, you can read the press release.

More information about The Ohio G.I. Promise and veteran’s Education Programs

You can read more about The Ohio G.I. Promise law at the OH GI Promise website. Here is more information about OH state college tuition.

Military education benefits:

Search GI Bill Schools: You can use this GI Bill School search tool to help find available programs where you can use your GI Bill.

Copyright © The Military Wallet 2007 - 2013 All Rights Reserved. About | Contact | Privacy Policy | Sitemap
TheMilitaryWallet.com is not connected with the Department of Veterans Affairs or any government agency and is for informational and entertainment purposes only. The content on this site should not be considered professional financial advice. References to third party products, rates, and offers may change without notice. We may receive compensation through affiliate or advertising relationships from products mentioned on this site. However, we do not accept compensation for positive reviews; all reviews on this site represent the opinions of the author.