Military Saves Blog
Tips, advice, and the latest news from the savings world.
Have No Money to Spare? How You Can Build a Rainy Day Fund!
December 6th 2012
By Mikki Venekamp, AFC®
Personal Financial Counselor
Most financial experts recommend that people should set aside $500-$1000 as their emergency fund (aka rainy day fund). Most of us don’t even have enough money to make ends meet, so how can we squeeze any more money out for a rainy day fund? I used to feel this way, but my husband and I worked hard and completed the mission of fully funding our rainy day fund. Now I would like to share our workable solution with you.
Save for Emergencies
First, you need to create a “Money Map” (aka budget) for yourself or your family. You will need to know your monthly income (take home pay) and monthly expenditures (bills). Then you use your income minus your expenses and hope you will get a positive number as the bottom-line. What happens if the bottom-line number is in the red? Don’t panic! Look and see where you can trim expenses to bring the number to zero instead of a negative number.
To trim your budget, cut unnecessary spending such as a cup of Joe in the morning, energy drinks in the afternoon, and going out for lunch. If cutting spending still does not push the number to the zero mark, then you probably need to find extra income like a part-time job. I know… I understand…you probably think I am crazy suggesting getting another job. I got it. You have been working all day, and yes, I just asked you to take on another part-time job. Let’s think about this: if you can’t cut your spending, then you have no choice but to increase your income. Having a part-time job is a temporary thing, not a long term situation unless you want it to be.
Planning for Holiday Spending
December 5, 2012
By John Stephan, Union Bank N.A.
Senior Vice President and Pacific Northwest Regional Executive
The holidays are upon us, and many people often feel pressure during this time of year to spend money beyond their means.
Having a plan in place may help you enjoy the festivities of the season without the worry of a post-holiday spending hangover. Following are some tips for developing a holiday budget.
Commit it to Paper
Make a list of items you normally spend money on this time of year, and don’t forget to include things like postage for cards, extra contributions you may make to charitable organizations, holiday meals, entertainment, and other items. It might be helpful to look through last year’s bank or credit card statements to get an idea of how much you spent on items the previous year. Make a list of all items, and the family and friends who will receive your gifts and assign a maximum amount to spend for each. Bring the list and budget with you when shopping and stick to your plan.
Start Saving Now
Remember that anything you finance can cost you more in the long run, so try to pay cash when possible to avoid post-holiday debt. Set up an automatic transfer or have part of your paycheck deposited into a targeted savings account that is solely for holiday spending. If you are unable to set aside part of your income toward this goal, look for ways to cut back on your regular spending or decrease your holiday budget. Consider eliminating one or two bills, such as cable TV or an unused gym membership, to help free up funds to put toward your budget.
Consider ways to earn additional cash, such as a part-time, seasonal job, or by selling homemade goods and craft items at a holiday boutique or fair. Taking on additional work here or there might help pay for some or all of the items on your holiday list.
December 4, 2012
By Lila Quintiliani, AFC®
Military Saves Assistant Coordinator
It seems like holidays bring out both the good and the bad in people. Servicemembers, their families and veterans are a favorite target for scammers. The Better Business Bureau recently released a list of scams directed against servicemembers, and it’s a good idea to review these so you can be on guard against them.
Some of the most frequently-encountered scams include:
-Military loans offering “instant approval” “no credit check” and “all ranks approved.” The loans often come with very high interest rates and hidden fees. Active-duty, guard, reserve or veterans may receive offers like this in the mail, especially if you have a VA-guaranteed mortgage. (The Consumer Finance Protection Bureau’s Office of Servicemember Affairs has recently warned of mortgage-related scams.)
-Fraudulent online housing ads offering military discounts and other incentives that bilk servicemembers out of their security deposits.
-Charging veterans for services they could get free elsewhere, such as obtaining copies of military records or applying for GI Bill benefits.
-Con artists posing as recruiters from government contracting firms. They ask for a copy of the veteran’s passport, and steal sensitive information without ever offering a job.
-Someone pretending to be a representative from the Veteran’s Administration asking to reconfirm credit card or bank information.
-Questionable charities that raise funds on behalf of military organizations.
Tips For Keeping Holiday Debt Under Control: Study Finds Holiday Spending This Year Will Likely Rise
November 29, 2012
By Katie Bryan, America Saves Communications Manager
A survey released today by the Consumer Federation of America (CFA) and the Credit Union National Association (CUNA) found that holiday spending this year will likely rise, but also found that things are still financially tight for many families.
“Our survey results suggest that holiday spending this year will likely rise by between 3% and 4% compared to last year,” said Bill Hampel, Chief Economist for the Credit Union National Association. “This represents the fourth year of gradual improvement in holiday spending plans since a sharp decline in such plans in 2008.”
Yet, things are still financially tight for many families. When asked if they had extra funds (not including lines of credit) available to pay for an unexpected expense of $1,000, only 49 percent said that they did. This lack of emergency savings may help explain why an increasing percentage -- 38 to 43 over the past year -- said that, if they received an unexpected windfall of $5,000, they would use most of it to add to savings or investments.
CUNA/CFA Tips For Keeping Holiday Debt Under Control
CUNA and CFA suggest the following tips to avoid getting deep into debt during the holidays. “With just a little planning, consumers can substantially reduce their holiday spending debt load without sacrificing holiday quality,” Brobeck said.
Thrift Savings Plan (TSP) Roth Option
November 28, 2012
Originally published on SaveandInvest.org
An increasing number of employers—including the federal government—now offer employees a relatively new workplace savings choice—a Roth retirement savings option. With a Roth, employees are able to make after-tax contributions to their retirement savings account that will be tax-free when withdrawn.
The TSP began making the Roth option available in May 2012. Agencies and service branches have been phasing in the Roth option over time, as they modify payroll systems to accommodate contributions. As of October 1, 2012, the following groups are able to participate in the Roth TSP:
· active military members of the Army, Navy and Air Force;
· active duty and Reserve members of the Marine Corps; and
· federal civilian employees.
In 2013, reserve members of the Army, Navy and Air Force, and National Guard members of the Army and Air Force also will be able to participate.
In the words of Greg Long, TSP's Executive Director, "the Roth TSP option offers an important new tool for federal civilian employees and uniformed servicemembers in managing their retirement income by providing greater flexibility in the tax treatment of contributions now and in the future."
According to the TSP, with the introduction of Roth, employees will potentially have two types of balances in their TSP account: a traditional TSP balance and a Roth TSP balance. Money already in your account when you begin making Roth contributions may not be converted to a Roth and will remain part of your traditional balance. Matching contributions, which are not currently offered by any of the services but are available to DoD civilian employees, go into and will always be a part of your traditional balance. However, you may designate your own contributions any way you like—to Roth TSP, traditional TSP or a combination of the two—and participate in any TSP investment option, regardless of how you chose to allocate your savings.