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USAA Blogger Conference

Last month I was invited (along with about 20 other military and financial bloggers) by USAA to a military and financial blogger event in San Antonio. (As a full disclosure, the event was sponsored and paid for by USAA, and took place at their headquarters building in San Antonio). That said, USAA did not require that we write about the event, nor give us any other compensation aside from travel and lodging. Their goal was to share the USAA experience with military and financial bloggers and share what USAA is doing for their members and the military community.

In short, I was impressed. I have been a USAA member for about 10 years now, and seeing their operations in person, and more importantly, seeing their dedication to their members and the military community, left a big impression on me. And I want to share some of that with you today, as well as share some of the initiatives USAA is working on for their members and the general military community.

First a little more information about USAA

If you aren’t familiar with USAA, they are a large member owned financial institution which caters to the military community. They offer banking, investing, and other financial products, homeowner’s, auto and life insurance, and other related products. Anyone can use USAA’s banking and investment products (and a few other products and services), but you need to be a member to use their insurance products – membership eligibility is limited to current and prior military members, spouses of members, adult children of a USAA member, and a few other limited situations. Learn more about USAA eligibility.

What does USAA membership mean? It’s important to understand that USAA is member owned, which means if you are a USAA member, you are a part owner of USAA’s assets. Wikipedia has a great explanation of how this works (see the “Legal Structure” section for more information). So USAA’s number one goal as an entity isn’t to hoard profits like a normal corporation – it’s to best serve their members. That’s why USAA puts so much time, money, and effort into creating a great user experience, and in creating innovative products and services for their members (more on these in a moment). It’s also the reason why many USAA members receive a refund check from USAA in some years as their Subscriber Savings Account – this is USAA redistributing some of their profits to its membership.

Back to the USAA Blogger Conference

Sharing a little about USAA membership is important because you have to understand their relationship with their members to understand why USAA puts so much time, effort, and money back into their company. Everything they do is to increase the value to their members – from user experience to innovative products and services.

Learning about these initiatives was the purpose behind the USAA Blogger Event. It was also great to meet many of the people on USAA’s marketing and social media teams, as well as meet a lot of other military and financial bloggers. Together, they are all doing a lot for the military community and it is great to continue serving the military community in that capacity.

USAA has an amazing innovation section where they come up with unique ways to create products and services to better serve their members. One example of this is the Deposit @Home feature, which gives members the opportunity to remotely deposit checks by scanning them and uploading the image to their USAA account, or by doing the same thing with their smartphone or iPad. This is an incredibly useful function, specially when you are geographically separated from the nearest USAA branch (Several banks are now offering similar products, but USAA was the first to offer it). USAA Auto Circle and USAA Home Circle are also recent initiatives they created for their members.

USAA is also working on a variety of other services for their members, some of which they asked that we don’t share publicly, as they aren’t yet ready for launch (there were also some things they wouldn’t share with us as they are considered “Top Secret” – kinda reminds me of my days in the military!).

The bottom line is that everything USAA is doing is for the benefit of the military community and their members. And I can’t begin to say how much that means to me from both a member’s perspective, and as a military veteran.

September 11th Memorial

The USAA Blogger Event also coincided with a September 11th Memorial event which was held in the USAA HQ building. Here an excerpt from the presentation:

Here are more thoughts from participants of the USAA Blogger Event:

Jeff Rose from Good Financial cents and Soldier of Finance shares his thoughts in a video:

Overall, I was impressed as always with USAA. Meeting the other military and financial bloggers and learning more about how they are helping the military community was also a wonderful experience.

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Using Corporate Education Benefits and the Montgomery GI Bill

I love the GI Bill. It’s a great program, and one that I have used to help achieve my degree, as well as take additional courses. If you are eligible for GI Bill benefits, I highly recommend using them to help you achieve your personal, professional, or educational goals.

The Montgomery GI Bill can be especially valuable if your employer offers education benefits since the MGIB is paid to you, and not the school. I have a friend whose company paid for his MBA while he pocketed his MGIB benefits, earning over $1,300 a month in the process. His company didn’t have any policies against this, and neither did the GI Bill. What he did in this instance was both allowed, and ethical.

But some companies are tightening their purse strings, and removing this loophole in order to cut down on their expenses. And that brings us to today’s situation, which is a reader question we received.

Should You Use Employer Education Benefits or the GI Bill?

Q: I am currently employed by a company that offers educational assistance. Typically we could use our Montgomery GI Bill and still receive this corporate benefit. Since the new GI Bill was introduced, they have updated the corporate policy to state that those using GI Bill aren’t eligible. My question is, can they really do that? I can understand making that stipulation for people using the Post 9/11 GI Bill, but the Montgomery GI Bill is a whole different animal. Any input is greatly appreciated.

A: Great question, and to be honest, I am not aware of any laws that would prevent a company from doing this, since company educational benefits are voluntary. Personally, I don’t agree with it – I believe companies should treat all of their employees the same way and offer them the same benefits. But on the other hand, I understand that companies offer educational benefits as a bonus, and not a right. For example, many companies limit tuition assistance benefits to certain degree programs, or require the benefits only be used for a higher level degree than you have (for a master’s when you already have a bachelor’s, or a doctorate when you already have a master’s).

So where does that leave you? Well, you need to make a decision regarding which benefits to use.

If you are using the Montgomery GI Bill it’s possible you could double dip since the GI Bill benefits are sent to you and not to the school or the company. Quite frankly, there is no way for the company to know whether or not you are using the GI Bill. But the problem with that is it is dishonest if it goes against company policy and it could be grounds for dismissal from your job, or the requirement that you reimburse the company for the cost of the benefits you used. And even if you don’t get fired, chances are high that you would be on the short list from there on out.

In other words, I wouldn’t chance it.

My recommendation is to look at both your GI Bill benefits and your company’s benefits, and see which one is more valuable to you. In some cases, the company benefits will be more valuable, especially if you are only going to school on a part time basis and receiving partial MGIB benefits. Using your company benefits would also allow you to preserve more of your GI Bill to use in the event you exhaust your company benefits or if you leave your current job.

There are a few other considerations to account for before deciding which benefits to use: taxes, employment obligations, and GI Bill benefits expiration.

GI Bil benefits are not taxable, but employer education benefits can be taxable once you reach a certain point. Employers are allowed to provide up to $5,250 in tax-free educational benefits to their employees. Any employer sponsored tuition assistance above that amount is considered income by the IRS. So you may consider using partial GI Bill benefits and partial employer tuition assistance if you can find a way to use both and stay within your company regulations. For example, you didn’t state you couldn’t use employer educational benefits if you eligible for the GI Bill, just that you couldn’t use them both at the same time. So it may be possible to use employer benefits up to the taxable limit, then switch over.

Additionally, you may incur an employment obligation with your company if you use their tuition assistance benefits. So if you believe you may be ready to move on to a new company after you finish your current degree plan, you may wish to use your GI Bill instead, even if it offers slightly less benefits overall.

Finally, keep in mind that the Montgomery GI Bill expires 10 years after you leave active duty service. You can get a Montgomery GI Bill refund under certain circumstances, but it requires you to transfer to the Post-9/11 GI Bill and exhaust those benefits. If you are running up on your expiration date for the Montgomery GI Bill, then consider transferring to the Post 9/11 GI Bill if you are eligible. These benefits expire 15 years after you leave active duty service.

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5 Options for an Old 401(k) Retirement Plan

When you say goodbye to an old employer don’t forget about the retirement account that you’ve been funding. I’ll tell you who owns the money in your workplace retirement plan—like a 401(k), 403(b), or 457—and give you 5 options for dealing with the account after you leave the job. The Thrift Savings Plan is very similar to these employer sponsored retirement plans, but there are a few other considerations to keep in mind when you leave the military or civil service. We have covered options for your TSP when you leave the service in a previous article. This article covers 401k plans and other employer sponsored plans.

Who Owns Your Old 401(k)?

Once you’re no longer employed, you can’t make new contributions to your old retirement account. However, you still own it and can control the vested portion of your account.

You’re always 100% vested in contributions made from your paycheck plus their earnings, according to the Employee Retirement Income Security Act (ERISA). That means, no matter what, your employer can’t take those funds away from you.

However, any portion of your retirement account that is not vested will be reclaimed by your employer if you leave. Contributions that your employer makes, like matching or profit-sharing funds, are typically subject to a vesting schedule. To know if you’re fully vested, read your plan’s policy for the details.

How Does Vesting Work?

The 2 main types of vesting that are used in workplace retirement plans are graduated vesting and cliff vesting:

  • Graduated vesting is when you take ownership of an employee benefit on a gradual schedule, such as 20% per year after completing one full year of work. An employee with this schedule would be 20% vested after 2 years, 40% after 3 years, 60% after 4 years, 80% after 5 years, and 100% after completing 6 years of service.
  • Cliff vesting is when you take ownership of an employee benefit all at once, such as 100% after 3 years of service.

Leaving work before you’re fully vested means you may lose a portion or all of any employer-provided funds that are not vested on the date of your termination.

So, once you’re gone, what should you do with your vested retirement account balance? Here are 5 options:

Option #1: Cash Out

Your first option for an old retirement account is to cash it out. This is the worst option because you’ll have to pay state and federal tax on the withdrawal, plus a 10% early withdrawal penalty if you’re younger than age 59½.

For example, if you have approximately $10,000 in your 401(k) and pay an average tax rate of 25%, you’ll pay a total of 35% (25% plus the 10% penalty) in tax, leaving you with just $6,500 ($10,000 minus $3,500). That could wipe out every penny of earnings in the account or leave you worse off than if you had never invested the money in the first place.

Many people cash out their workplace retirement account because they don’t realize that there are other options. I’d rather you choose any of the other 4 options that I’m going to cover than to default to a money-losing cash out.

Option #2: Do Nothing

Your second option for an old retirement account is to do nothing and leave it with your previous employer. Generally, this isn’t a good option because you don’t know what will happen to the company, the benefits administrator, or the retirement plan down the road.

However, if you like the investment options in your old account, you can keep it. Just make sure you have a contact name and phone number for the brokerage of record on the account or the plan custodian, so you never lose touch with the people who administer the retirement plan.

If you left a Fortune 500 company, contacting a knowledgeable person in the benefits department won’t be a problem. But if you worked for a small business with one person in charge of human resources, for instance, it could be a real hassle to get accurate or timely information about your old retirement plan years later.

It’s easier to keep a retirement account with your old employer when you have online access to it. If you can check your balance, reallocate your investments, and change your contact information on your own, then you may be satisfied leaving the account with your former employer.

Option #3: Rollover to a New Workplace Retirement Plan

The third option for an old retirement account is to roll it over into a retirement plan at your new job. However, I only recommend this option if your new plan is fantastic and offers a wide range of low-fee investment options.

You should sign up for your new workplace plan because you can contribute up to $16,500 (or up to $22,000 if you’re 50 or older) for 2011. Plus, you can build your nest egg faster from matching funds that might be offered by your employer.

As you get familiar with the new plan, you can decide whether you want to rollover your old retirement account funds into it or not. If it’s not a great plan or you simply want more control over how the money is invested, go with one of the last 2 options I’m going to cover.

Option #4: Rollover to a Traditional IRA

The fourth option for an old retirement account is to roll it over into a traditional Individual Retirement Arrangement (IRA). This will give you the most investment options and freedom from the restrictions of a workplace retirement plan.

You can open up a traditional IRA at any number of brick and mortar brokerages, banking institutions, or online brokerages—like etrade.com, vanguard.com, or schwab.com. After the new IRA is open, request a rollover distribution from your former plan, and pick your new investments. You can rollover the entire amount, but going forward your new contributions are limited to a maximum of $5,000 (or $6,000 if you’re 50 or older) for 2011.

More places to rollover an IRA. If you are considering rolling over an IRA, then a good place to compare IRA providers is the Mint.com IRA Rollover Wizard which provides information on rolling over IRAs. Click here to get started.

Contributions to a traditional IRA are made on a pre-tax basis, which means you typically don’t pay tax on them or on your earnings until you make withdrawals. However, depending on your income, some IRA contributions may not be tax-deductible if you also participate in a workplace retirement plan. Read Should You Contribute to Both a 401(k) and an IRA? for more details.

Option #5: Rollover to a Roth IRA

The fifth option for an old retirement account is to roll it over into a Roth IRA. Unlike a traditional IRA, contributions to a Roth are not tax-deductible and must be made with after-tax income.

So doing a rollover from a traditional 401(k) into a Roth IRA means that you have to pay tax on any contributions that weren’t already taxed. However, once you pay it, you’re never taxed on contributions or earnings in the account ever again. All your qualified withdrawals from a Roth IRA are completely tax free.

It’s just as easy to open up a Roth IRA as it is for a traditional IRA. The process for doing a rollover is the same—except for the tax part. You can contribute up to $5,000 (or up to $6,000 if you’re 50 or older) for 2011. To be eligible to contribute to a Roth IRA, there are annual income restrictions.

To learn more about Roth IRAs and which kind of IRA is best for your situation, grab a copy (or an e-book download) of my award-winning book Money Girl’s Smart Moves to Grow Rich.

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Will the Military Forgive Your Student Loans?

The GI Bill is one of the most popular military benefits programs around and it is a great way to pay for your college education. But the GI Bill can only be used to pay for college while you are in the service or after you separate from the service. What if you already had student loans when you joined the military? Well, there are military sponsored student loan forgiveness and repayment programs for that too.

Student Loan Forgiveness for Military Members

The military has several student loan forgiveness programs available to servicemembers, depending on their branch of service, enlistment of commission status, career field, and other variables. Not all of these are applicable to everyone, but we want to provide a general resource for prospective, current, and former military members.

Reserve Office Training Corps (ROTC)

Reserve Office Training Corps (ROTC) is probably the most well-known option for having the military pay for college. Students apply for and are accepted into ROTC and receive a college education in exchange for a military service commitment. Details vary by branch and school and I recommend prospective students research these programs with the school they are interested in attending.

Armed Forces Student Loan Repayment Programs

The military wants to attract an educated force, and one way to do that is to target college students by offering them a student loan repayment program in exchange for military service. The following programs are available from each respective branch:

Air Force College Loan Repayment Program (CLRP). This program is only available to non-prior service recruits who enlist ion Active Duty. Eligible enlistees must sign up for this program when they sign their enlistment contract and they will be eligible for up to $10,000 in student loan repayments. The Air Force will make a payment of 33 1/3 percent of your student loans, or $1500, whichever is greater, after each completed year of active duty service. More info is available at the Air Force education center.

Army Loan Repayment Program (LRP). The Army LRP is available to highly qualified new Army recruits in certain critical career fields (contact your recruiter for a current list of eligible career fields). To be eligible, recipients must be a non-prior service member, decline the Montgomery GI Bill in writing when they accept the Army LRP, and they must have the LRP written into their enlistment contract. Soldiers enrolled in the Army Loan Repayment Program will earn 33 1/3 percent or $1,500, whichever is greater, toward the remaining original unpaid principal on all qualifying loans for each successfully completed year of enlisted active duty up to $65,000. More information.

Navy Loan Repayment Program (LRP). – The  Navy also offers a Loan Repayment Program for eligible first term Active Duty enlistees. Eligible servicemembers must have no prior military service and eligible student loans. This must be entered into the enlistment contract when joining the service. Eligible members can receive up to $65,000 to use toward paying off student loans. Here is more information on undergrad educational opportunities from the Navy.

Student Loan Repayment for Medical, Law, and other Professionals

The military often has a difficult time attracting certain professionals into the military ranks, especially in professions which are generally high paying jobs in the civilian sector. In these instances, the military may offer student loan repayment programs in exchange for a military service commitment. The most common careers which are eligible for these professional programs include doctors and lawyers, but there can be other career fields depending on the branch and the needs of the military. These are programs you want to investigate before joining the military as these are used as recruitment tools. Listing each of these opportunities is outside the scope of this article, so I encourage you to visit the respective branch website, or contact a military recruiter for more information.

Servicemembers Civil Relief Act

The Servicemembers Civil Relief Act gives military members the opportunity to reduce the interest rates on loans which they took out prior to joining the military. This law requires lenders to reduce the interest rate on loans to a maximum of 6% interest, provided the military member qualifies. This includes loans such as a mortgage, credit cards, auto loans, and private student loans. However, the Servicemembers Civil Relief Act does not lower interest rates on federal guaranteed student loans.

Servicemembers should contact their lender for more information on how to apply the Servicemembers Civil Relief Act to their current loans. Be sure to get everything in writing when doing this – it is not the most well-known law in the books and some lenders may not be familiar with the process.

Student Loan Deferments

Some military members may be eligible for student loan deferments, depending on their status, lender requirements, and other variables. Keep in mind that a deferment is not the same as a cancellation of debt, just a way to temporarily postpone repaying the loan. Military members should contact their lender to explore student loan deferment options when they join the service or when they deploy. Some lenders will offer student loan deferments out of their individual policies, while other lenders will not.

Servicemembers who are attending qualified college classes should also explore the opportunity of deferring their student loans. For example, students who are attending college with Tuition Assistance may be eligible to defer their student loan payments while they are attending classes.

Your professional military education may also make you eligible to defer your student loans. For example, members of the USAF are automatically enrolled in the Community College of the Air Force (CCAF) when they go through their job-specific technical training. The CCAF is an accredited educational institution, and attending the CCAF may make student loan holders eligible for deferred loans.

A note about student loan deferments: This would only help delay the student loan payments, not get rid of them. It would be a good idea to use the deferral to your advantage by either repaying other non-student loans, or making pre-payments on your current student loans. Don’t use it as an excuse to get further into debt.

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Prepare Your Home for Winter

The slight nip to the air in early autumn is a great reminder to homeowners to start getting their houses ready for the oncoming winter. If you grew up in cold climates, this may not seem like anything new, but stick around anyway, you might still learn a few tips to help you save money this winter. If you are new to cold climates, then these tips will definitely help you protect and prepare your home for the coming winter, and more importantly, help you save money. Winterizing your home is an important yearly task that helps your house to better brave the elements and helps you to keep more money in your pockets.

Here are 10 winterizing tasks you should put on your to do list this fall:

Winterize your home

Is yout home prepared for winter?

1. Install storm doors and windows. These outside-mounted windows and doors can increase your home’s energy efficiency by as much as 45%. Not bad for an afternoon’s work. Bonus benefit: Some energy saving home improvements are tax deductible!

2. Have your furnace inspected. While you probably do not need to do this every year (every other year may be enough), it is a good idea to regularly have an HVAC professional give your furnace a once-over to check the carbon-monoxide levels, clean and replace air filters, clean the motor and fan and double-check the gas piping that connects to the furnace. This service will cost you approximately $100, but it is worth it for both the energy savings and your peace of mind.

3. Get your heating ducts checked. While your friendly neighborhood HVAC professional is servicing your furnace, have him take the time to clean and inspect your heating ducts as well. Up to 60% of heated air actually escapes from these ducts before ever reaching the vents and your cold toes.

4. Block air leaks. This can be as simple as shoving a rolled up towel or air “draft dodger” (also known as a bean snake) against the bottom of all your exterior doors. But if you’re willing to spend and afternoon with a thermal leak detector, some weather stripping and a caulk gun, you’ll reap the benefits in your energy bills.

If you live an older home and your windows have uninsulated weight pockets, you can seal up your windows with plastic sheeting from the inside. It’s a little unsightly, but it makes an enormous difference.

5. Reverse your fans. If your home has ceiling fans, know that they are there to help your winter utility bills, as well. Flip the switch so that the fans turn clockwise in winter, and the fans will force warm air down to recirculate through the room.

6. Make sure you have enough insulation. Double check that your attic insulation offers adequate R-value for your area. If not, simply add more on top of the old. Just be sure the new stuff doesn’t have paper backing, as the paper works as a vapor barrier that can cause you problems in the future.

7. Wrap your water heater and pipes. If your water heater does not have an insulating blanket, you should be sure to rectify that as soon as possible. These heaters are often the least efficient appliances in your home, and they have to work that much harder to provide you with hot water when they have no insulation.

As for your pipes, wrapping them with the pre-slit pipe foam you can find at any home improvement superstore can help to prevent your pipes from freezing in addition to preventing heat loss when you turn on your hot water.

8. Bring in a chimney sweep. If you have a working fireplace in your home that you plan to use, do not start your first fire before you’ve had a chance to have the chimney cleaned and inspected. You don’t want to start one of the thousands of chimney fires that occur each year because of blocked chimneys and structural problems.

9. Clean out your gutters. Clogged gutters lead to ice dams in winter. Ice dams occur when water freezes near the edge of a roof, creating a dam that blocks the flow of water off the roof so that it pools in multiples places on your roof. Eventually this can lead to water dripping into your house. So break out your ladder and clean the leaves out of your gutters.

10. Make like your frugal dad. Lower your thermostat and wear a sweater inside when it’s cold out. There’s no need to live in shorts and a tee shirt year round!

Getting your home ready for winter may add to your honey do list, but it will pay off in your bank balance.

Do you have any other tips for preparing your home for winter?

Photo credit: Allen McGregor

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Army to Cut 50,000 Troops – Are You Ready for a Drawdown?

The Army Times recently reported the Army will soon begin a 50,000 troop force reduction over the next 5 years. The majority of the troops will leave the service through retirement and normal attrition, but there will also be voluntary and involuntary separations.

Troop reductions aren’t a big event if you were already planning on retiring or separating from the service. But they can be a major curve ball if you were planning on making the military a career or weren’t sure what your long term plans were.

This news can be stressful and make you ask a few important questions: Are you prepared to leave the service? What if you are involuntarily separated?

Before we go too far, you should know this is still in works, and is based on an Army plan that hasn’t been fully implemented. But you should also be aware that once these plans go into place, they can happen quickly. The last thing you want to happen is to receive a force reduction notice when you were planning on making the military your career.

Prepare for a Troop Reduction

Here are some things you and your family can do to prepare for the Army troop reductions:

Get up to date information. Don’t fall asleep at the wheel – you need to do everything in your power to educate yourself about the impending troop cuts. Will they be in your career field? What about your rank? If you are in an overstaffed career field, consider cross-training or applying for special duty assignments to make you more attractive if your profile appears in front a force reduction board.

Communicate. Communication is the most important aspect of personal finances, especially when you share financial responsibilities with a spouse. Keep your spouse up to date with what is going on with your career, the force reduction efforts, and how it might impact your position with the military. These may be tough conversations, but they are much easier to have in the advance stages of the force reduction process than they are after you have been selected for involuntary separation.

Examine your options inside and outside of the service. The USAF went through a force reduction process while I was in the service. It didn’t affect my career field or pay-grade, but I knew quite a few Airmen who were given the option to either cross-train or separate from the service. You will need to look at your civilian career opportunities and compare them to opportunities currently available to you. Keep in mind our current economy isn’t the strongest, and unemployment is high in many areas.

Consider the Guard or Reserves. You might also consider switching over to the Army National Guard or Army Reserves. Here is some additional information of available jobs in the ANG. You may also be able to transfer into the Guard/Reserves from a sister service. Most Guard and Reserve branches will welcome members from sister services with a minimum of additional training (usually just the tech school for the job to which you are applying).

Brush up on your skills. Now is the best time to start padding your resume. Make sure your training is up to date and take advantage of any military training or educational opportunities which come your way. You may also consider working online or night classes into your schedule, or working toward professional certifications which you may be able to use on the outside. Tuition Assistance may help pay for some or all of these courses.

Prepare for Unemployment

I was unemployed for 6 months after I separated from the USAF. It was difficult, but I had one advantage over many people in the unemployment line: I was prepared for it. Knowing that you are going to lose your job gives you an advantage and gives you time to prepare. Before you get out of the service, contact the state employment bureau where you plan on living after you separate from the military. In most cases, military members are eligible for unemployment benefits. There are some exceptions, so be prepared for this – you should know your eligibility and how to file for unemployment benefits before you leave the service. You don’t want to wait as it could delay your benefits.

Consider the financial impact. Separating from the military is a big deal – you have a steady paycheck with perhaps the best benefit system in the US. Don’t underestimate the impact of losing your health insurance and other benefits. The next most important area to focus on is to reduce your fixed expenses. This could be from getting out of debt, cutting expenses like cable or other subscriptions, refinancing a mortgage or other loan, or selling a car or other item which has remaining payments. Reducing your fixed expenses gives you more financial flexibility when you no longer have a job.

Consider the emotional impact. One of the most difficult experiences I faced when I separated from the USAF was going from a role of responsibility to the unemployment line. It’s tough going from a respected shift leader who makes important decisions on a daily basis, to someone who is standing in line behind dozens of other people who are looking for work. It took me 6 months to find a job, and it was a difficult period.

Know your benefits. Before you separate, make sure you know which benefits you are eligible for. This could include things such as the GI Bill and VA Loan, or it could include things such as a pension, TRICARE, disability benefits, and more. Take good notes in your Transition Assistance Program (TAP) and set up a meeting with the VA if you have medical issues you feel need to be addressed. It is always better to get as much done as possible before leaving active duty military service.

Do you have other tips for troops facing a drawdown?

Source.

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Carnival of Financial Planning – Edition #205 – October 7, 2011

Welcome to the October 7, 2011 Edition #205 of the Carnival of Financial Planning.

The Carnival of Financial Planning takes a long-term view of personal financial planning for individuals and families. We focus on efficient and sustainable personal financial planning practices that can lead to lifetime financial security.

This edition is arranged by subject heading, so that you can browse efficiently.

Enjoy!

The Skilled Investor, Editor

Best Personal Financial Planning and Personal Investment Articles this Week from Personal Finance Blogs

Budgeting and Economics

Aaron Nguyen presents What makes a successful budget posted at Aaron Hung.com, saying, “Sometimes people ask me how much they “should” be spending in a certain budget category. The problem with this question is that there is no one-size-fits-all answer. There are plenty of websites that will make you a budget based on percentages of your income.”

Rogan Seager presents Retirement Savings Calculator posted at Retirement Savings Calculator, saying, “Valuable future investment portfolio assets and future investment returns slip through many people’s fingers at the checkout stand every day, because they spend beyond their long-term means.”

Financial Planning

Chelsea Prescotti presents Preventing and Stopping Identity Theft posted at CreditScore.net, saying, “Identity thieves can use your information to apply for loans, start businesses, and even traffic illegal drugs, all under your own name. As we use and store more information online, the threat of identity theft increases as cyber criminals have more ways to access your private information.”

DJ presents Ten Tips for Borrowing Wisely posted at The Family Wallet, saying, “Unless you’re born into an extremely wealthy family, you’ll probably end up having to borrow money. Whether for a vehicle, a home, or post-secondary education, you can expect a financial institution to be in your future. Here are ten tips for borrowing wisely.”

Frank Knight presents Investment Asset Allocation posted at Retirement Planning Software, saying, “When you are already there and invested in an asset class, you are following a passive asset allocation strategy. Tactical asset allocation strategy advocates suggest that you can anticipate the crowd, but flow-of-funds studies show that almost all tactical asset allocation fund flows are late money flows that chase performance after valuations have already moved.”

Matt presents Buy a Boat or Buy a House? posted at Living In Financial Excellence, saying, “My favorite question for the day came from Jackie. She and her husband are debt free and currently renting a house. They live near Lake Michigan and love to spend time on the water. Jackie wants to know if they should buy a house or if it’s ok to keep renting so they can buy the boat they want to live the lifestyle they want. They also have retirement and college savings in place, and her husband earns a great income.”

Marjorie presents How to Get a Higher Credit Limit posted at CardHub.com, saying, “This answers a frequently asked question concerning credit cards. There are a number of factors that can affect your credit line, and depending on your situation, there are a few steps you can take to try to raise it.”

Ciana Locke presents Market Index Funds posted at Best Index Mutual Funds, saying, “The dominant issue in choosing among passively managed index mutual funds and ETF funds benchmarked against the S & P 500 is that securities industry management and trading fees are all over the map from reasonably low to shockingly high.”

Echo presents 11 Steps To Financial Freedom – Record Your Cash Flow posted at Boomer & Echo, saying, “Over the past two weeks I have prioritized my goals and determined my net worth. Now it’s time for step 3: record your cash flow.”

Financing a Home

Roshawn Watson presents Should You Pay-off the House? posted at Watson Inc, saying, “Housing is one of the biggest expenses most of us have. Making the quality decision to greatly diminish one’s living expenses through owning a home outright can have reverberations throughout your entire financial world.”

Financing Education

Charles Chua C K presents 7 Effective Ways to Determine the Worth of a Stock posted at All About Living with Life.

Health Care

Linda Rodriguez presents Breast Cancer Awareness Month: How Will You Contribute? posted at Christian Dating Sites, saying, “The month of October has arrived and with fall knocking at our doors we tend to think of pumpkin patches, cooler breezes, apple cider and the color orange. Considering that October also means Breast Cancer Awareness month, instead of orange, we should change the color we normally associate October with to the color pink.”

Income

Jonathan from Debt Loans presents Give the Gift of Financial Finesse: Your Teenager posted at Wallet Watcher, saying, “Trust that even if your child spends wildly and makes poor choices in their teens or twenties, they will return to more moderate habits within a few years. Then, when they’re ready, you’ll be there.”

Investing

Investor Junkie presents optionsXpress Review posted at Investor Junkie, saying, “Now considered a top pick for on line trading, optionsXpress is the number one choice for many traders, serving the needs from beginner traders to the most seasoned investors.”

Mike Piper presents A Request for Vanguard (or Fidelity, or Schwab…) posted at The Oblivious Investor, saying, “Why don’t more brokerage firms allow for one-step rebalancing, rather than having to enter a separate transaction for each of your holdings?”

Frank Bertin presents Index Funds posted at Top Index Funds, saying, “Top ten no load index funds that track the Standard and Poors 500 composite index in terms of lowest costs.”

My Journey presents October 2011 Dividend Investment Portfolio Update posted at My Journey to Millions, saying, “About 18 months ago, I started my Perpetual Income Machine which then eventually morphed into my dividend investment portfolio. Now every couple months I update those specific stocks which are on my “watch list” for the following months to come.”

David Leeman presents Simple Investing With Little Money, Best Ways to Invest Money for Busy People posted at Financial Freedom Advantage, saying, “Are you looking for some simple investing ideas? Many people don’t have enough money to adequately fund an investment account. Others lack time or investing savvy to manage an investment portfolio.”

Craig Ford presents Mastering the Art of True Passive Investing | A Guide for Worry Free Investing posted at Money Help For Christians, saying, “Learn how to invest without all the stress and worry.”

Dividends4Life presents 6 Higher Yielding Basic Materials Stocks With Growing Dividends posted at Dividend Growth Stocks, saying, “The Basic Materials Sector includes companies involved with the discovery, development and processing of raw materials. This week week, I screened my dividend growth stocks database for Basic Materials companies with a yield above 3.0% and that have increased their dividends for at least 20 consecutive years. The results are presented below:”

Janet Russell presents The illusion of superior professional mutual fund manager performance posted at Personal Investment Management, saying, “If investment mutual fund managers were truly skilled at beating the market, then you would expect mutual fund manager performance prowess to persist over time. The effort to find those few supposedly superior money managers willing to sell their services sufficiently cheaply is a costly, time consuming, and futile, “Where’s Waldo?,” searching exercise for the individual investor.”

Mike Piper presents Evaluating Vanguard’s New LifeStrategy Funds posted at The Oblivious Investor, saying, “Vanguard recently announced major changes to their “LifeStrategy” funds. Are the changes positive? And what type of investors should be considering these funds?”

John Border presents Best Investments for the long term posted at Learn Stock market basics, saying, “The article describes the best investments for today as well as from a longer term perspective. It is all about time in the market as opposed to market timing when it comes to investments for the future.”

Mirelle Rowden presents Fixed Income Funds posted at Best Bond Mutual Funds, saying, “Vanguard dominates this low cost United States bond mutual funds marketplace for direct purchase accounts with both low and high minimum deposits.”

Mike Holman presents How To Buy Canadian Dividend Stocks posted at Money Smarts Blog, saying, “Guide to buying Canadian dividend stocks.”

John presents How to Buy and Sell ETFs Without Paying Trading Fees posted at Wallet Blog, saying, “If you are planning to invest in the market, you should consider the benefits of investing via an ETF especially when you can avoid paying trading fees.”

Managing Credit and Debt

Jeri Ford presents Best Cash Back Credit Cards with Mileage Transfer Options posted at Help Me Travel Cheap, saying, “If you love cash back credit cards and mileage credit cards you’ll love this list.”

MoneyCone presents Bank Of America To Start Charging Debit Card Fees posted at Money Cone, saying, “BofA has come up with a novel way to earn people’s trust after battling one PR disaster after another for the fraud perpetuated by the bank over the past few years. BofA has decided to charge a nominal monthly fee of $5 every month you use BofA’s debit card.”

Jason@LiveRealNow presents What Can Cause Damage to Your Credit? posted at Live Real, Now, saying, “Credit scores move up and down as new financial data is collected by the credit bureaus. Many factors can cause a credit score to rise or fall, but most people don’t have a clue what they are”

Madison presents New 4th Quarter 2011 5% Rotating Cash Rewards Credit Cards posted at My Dollar Plan, saying, “Oct 1 marks the start of the 4th quarter and that means there are some great new cash back categories to maximize your cash back strategy!”

Jacob presents Are You REALLY Doing Everything You Can to Save for the Future? posted at My Personal Finance Journey, saying, “When you sit down to do your financial planning, do you ever take a second to put the troubles the economy is currently experiencing in perspective? This post examines how we can use history as a gauge to help us plan for the future. ”

Miscellaneous

Jonathan presents 7 Ways to Put Your Old Clothes to Use posted at Frugal Living, saying, “Who says you have to throw your old clothes away when there are so many ways in which you can use them? These vary from easy to laborious, so depending on your time and how much effort you want to invest in the endeavour, you can resort to different alternatives. Here are 7 ways to put your old clothes to use.”

Tripp Danner presents No Load Funds posted at No Load Fund, saying, “There are over 60,000 different mutual fund investment share classes sold worldwide. Some mutual funds and ETFs must be better than others, but which ones are they? How can you tell before the fact?”

Jeremy presents Everyone Is Wrong About Bank Of America’s Debit Card Fee posted at Personal Finance Whiz, saying, “Everyone is up in arms right now because of Bank of America’s announcement that it is going to start charging $5 per month to use a debit card. But, I think Bank of America has every right to charge the fee. Further – I think it’s ridiculous if you’re upset about it.”

The Skilled Investor presents Market Timing Does Not Work posted at Personal Financial Management, saying, “Always stay invested to earn risk premiums. You must have your money invested and at risk to get risk premium returns. Jumping out and in or “timing the markets” doesn’t work.”

Retirement Planning

Moneyedup presents Early Retirement Planning posted at MoneyedUP, saying, “The fact of the matter is that an early retirement is not out of reach for most people. For people scrimping and saving throughout their working years, it’s not a slam dunk, but it is doable with discipline and a some creativity.”

FMF presents Financial Strategy #3: Setting Your Retirement Number posted at Free Money Finance, saying, “What specific amount of money do you need to reach in order to retire successfully? How do you determine that number? Twenty. Your number is 20 times the amount of money you are spending this year. ”

Walter Binkle presents Large Cap Mutual Funds posted at Mutual Funds, saying, “Retirees can save a lot by paying attention to mutual fund expenses. Each of these S & P 500 index funds is among the least costly on the market.”

FMF presents Financial Strategy #2: Social Security posted at Free Money Finance, saying, “If you want to retire well, you need to develop an overall financial plan with Social Security as just one part.”

Brockton Eaton presents Long Term Investment Strategies posted at Retirement Investment Strategy, saying, “The investment research literature repeatedly demonstrates that a fully diversified, low cost investment strategy is superior.”

Risk Management

Larry Russell presents Identity theft protection and prevention posted at Personal Investment Management and Financial Planning, saying, “As a threat to your financial security, you should take the potential for identity theft very seriously. Identity theft sometimes entails a loss of your money, but whether or not you lose money, it can take a very large amount of your time to rectify. Taking these steps to prevent an occurrence is prudent.”

Savings

Jon Elder presents Let Savings Fall Onto Your Lap posted at Free Money Wisdom, saying, “As a massive money-saver, I really enjoy the fact that my off-season vacationing can lead to a lot of savings, but most of all I appreciate dealing with a lot less crowds!”

Miranda presents 45 Money Saving Tips posted at Financial Highway, saying, “You can increase the efficiency and effectiveness of your personal economy by finding ways to save more money. Here are 45 of my favorite ways to save money. ”

Nathan Richardson presents As Debit Card Fee Caps Come Into Effect, Banks Raise Fees on Consumers posted at Deals & Tips, saying, “Are you ready for the next move in the war on consumers? Banks are preparing to institute debit card fees in response to the caps that are about to go into effect.”

Bradson Oakley presents Bond Mutual Funds posted at Best Bond Funds, saying, “Higher bond fund expenses tend to mean lower net returns to individual investors. It is not worth paying higher bond fund fees.”

Taxes

Steve Zussino presents The Great American Tax Hunt for Canadians posted at Canadian Personal Finance, saying, “The U.S. Internal Revenue Service is on a campaign to chase down Americans squirreling funds offshore to evade paying taxes. But the crackdown aimed at large-scale tax evaders is also hitting people of more modest means.”

Gregory Stokes presents Your Basic Guide to Child Tax Credit posted at Tax Credit Calculator, saying, “If you have children under the age of 16 you may be able to claim child tax credits. This post is a guide on how to make claim.”

Finley Merriwether presents Retirement Planning Calculator posted at Retirement Plan Calculator, saying, “Tax-advantaged retirement savings plans give you the opportunity to make investments with deferred taxes in 401k, 403b, 457, Keogh, Simple, or other employer sponsored retirement plans.”

Marie presents Filing Status Explained posted at Money Spending Mommy, saying, “There’s one really simple thing that can reduce our tax liability which many taxpayers overlook, and that’s choosing the correct filing status.”

That concludes this edition. Submit your blog article to the next edition of Carnival of Financial Planning using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

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Get a Free Flu Shot from the VA

Flu season is just around the corner, and it is better to get immunized sooner rather than later. While flu shots can be expensive, there are several ways to get your shot free or at a reduced cost.

For instance, did you know that US Military Veterans can get free flu shots at local VA hospitals and clinics? This is a free service provided by VA clinics and hospitals to all US military veterans, regardless of when they served.

How to get your free flu shot from the VA

To receive your free flu shot from a VA clinic or hospital, you have to be in the VA’s medical system. If you are not already in their system, you will need to provide a copy of your DD Form 214 to prove your military service. After you are in their system, they will require you to fill out a standard health questionnaire and then you can get your shot. It’s that easy.

For more information about getting a free flu shot from the VA, or to find the nearest VA medical facility, contact your local VA facility.

Don’t qualify for the free VA flu shot? Try these tips

If you have family members how do not qualify for the free flu shots, try these tips for free and inexpensive flu shots:

  • Local hospitals and clinics – some charge as little as $10-20 per shot. Check in your local community for more information.
  • Insurance company – Many insurance companies provide free or reduced immunizations. Check your policy to see if you are eligible.
  • Grocery stores, drug stores, and retailers – Many stores that see a lot of foot traffic offer customers a way to get inexpensive flu shots. This is a great way for them to increase their traffic, and the stores’ management know that when people come for a flu shot, they are also likely to spend money shopping.
  • Employer – Many companies and employers provide free or discounted flu shots because the cost is much less expensive that the lost productivity of people missing several days for the flu.
  • Airports – Some airports now offer flu shots as a way to reach the travelers.

Flu season is fast approaching. Don’t forget to immunize yourself!

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President Obama calls for TRICARE Fee Increases

President Obama recently released a $4.4 trillion deficit-reduction plan, and military benefits were a large part of the proposed cuts. Increases to TRICARE fees were included in the President’s plan, in addition to proposed cuts to military retirement benefits. The proposed increases in TRICARE fees include charging an enrollment fee for TRICARE for Life members, and increasing TRICARE pharmacy co-pays for military beneficiaries.

Proposed TRICARE for Life Enrollment Fees

TRICARE for Life is available to military retirees who are age 65 and older.  They currently do not pay an enrollment fee to participate in TRICARE for Life. Part of President Obama’s deficit-reduction proposal include a $200 annual enrollment fee for military retirees to continue receiving military health care benefits. If approved and voted into law, the increased TRICARE For Life enrollment fees would not begin until Fiscal year 2013. This is expected to generate over $6.7 billion in revenues over the next 10 years.

TRICARE prescription co-pay increases may be coming soon. The Department of Defense (DoD) has also proposed increased co-pays for prescription drugs to help make up for budget shortfalls and help decrease the gap between the enrollment fees and actual costs. These increases have not yet been approved, and would likely be based on a percentage of the government’s cost of the medicines.

TRICARE Prime Enrollment Fee Increases

If you are enrolled in TRICARE Prime, then you will see a small increase in your TRICARE Prime enrollment fees in 2012. Stating on October 1, 2011 (fiscal year 2012), the new annual fees for TRICARE Prime enrollment are $260 and $520 for individual and family plans, an annual increase of $30 for individuals, and $60 for families. The price increases work out to an additional $5 per month for a family enrollment, or an additional $2.50 per month for a single retiree.

These enrollment fees apply to retired uniformed servicemembers, eligible family members, survivors, and eligible former spouses of TRICARE Prime members. Members who are currently enrolled in TRICARE Prime will not have to pay the increased enrollment fees until they renew their enrollment in January 2012. These fee increases are separate from President Obama’s deficit reduction plan and the proposed TRICARE For Life enrollment fee increases.

There may be more price hikes in the future. This proposed price increase may be the first in a series or annual enrollment fee increases for TRICARE Prime members, as there has been discussion to tie the price hikes to the Medicare health care index, which will cause TRICARE Prime membership enrollment to rise as the Medicare health index rises.

Raising TRICARE Fees is a complicated issue

There are pros and cons to raising enrollment fees and prescription medicine co-pays. I see 3 distinct sides of the argument, and I have broken them down as best I can in an objective manner:

  • Raising enrollment fees hurts retirees.
  • Even with the price increases, TRICARE is an excellent deal.
  • TRICARE is unsustainable in its current state.

Let’s take a look at these three points of view in more detail, and as always, we would love to hear your opinion.

Rising TRICARE Enrollment Costs Hurts Retirees

The trouble with raising the prices of retiree health care is that most retirees are on a fixed income, and if there is a freeze on Cost of Living Adjustments (COLA), or a series of small increases in COLA, then even small increases in retiree expenses could have a dramatic affect on a retiree’s standard of living. Perhaps $5 per month won’t have a big affect on most retirees’ quality of life, but when you add that to the inflation we are seeing in other areas and fewer COLA increases, then it may have a detrimental effect.

Even with Price Hikes, TRICARE is a Great Deal

I don’t want to defend the price hikes, but I understand the need for the DoD and government to do something. The cost of health care is rising faster than most people can keep up with, and it is one of the biggest concerns in our nation – not just for military retirees, but for everyone. The new proposed family care plan under TRICARE Prime would cost $520 per year, which is less than many civilian families pay each month for family health care through an employer’s group health insurance plan. It’s a great deal, but unfortunately, the rising cost of health care means something must be done.

TRICARE is Unsustainable in its Current State.

I know many military retirees and their family members will be disappointed to hear about the price increases, but many retirees probably already realize that the rising cost of health care has placed the government in a tough position. The simple fact of the matter is this: TRICARE is unsustainable in its current state, and the DoD will have to spend an increasingly large part of its budget paying for retiree pensions and health care, while sacrificing money that could be spent on weapon systems, training, and troop retention.

The key will be for the DoD to address these TRICARE enrollment fee increases in a way that will won’t dramatically affect military retirees’ budgets. Ideally, the DoD would be able to work with the federal government to find another way to fund TRICARE without resorting to price hikes.

Do You Disagree with the Proposed Price Increases?

At the time of this writing, the TRICARE Prime price increases have been approved and are in effect. however, the proposed TRICARE For Life enrollment fees and prescription medicine co-pays are just proposals, and need to be voted into law before they go into effect. If you feel strongly that these price hikes shouldn’t be passed, then you should contact your Con­gressional representative or favorite military organization and let them know where you stand on this issue.

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