Active Duty Military Money and Matters

The Stock Market Lowers

vauslane — Sat, 28 Jul 2007 17:05:00 +0000

Many of us are relying on the stock market for out retirement savings. I have a ROTH IRA and a Thrift Savings Plan (TSP) account that use the stock market to bring gains to my retirement savings. I have lost a little money on the S&P’s 500 4% downfall in the last two days. However, this shouldn’t matter for the long term over our 20+ year career. Think of this as a opportunity to buy more shares. Right now, I am in the 2010 lifecycle fund in the TSP because I anticipated a “correction” of the market. I am moving my $500 into to the 2020 fund where it should protect against some further correction but give me more growth than the 2010 fund. With my Roth IRA, I am still in the 2045 Vanguard fund with 90% stocks and 10% bonds. I have $5,550 in that fund at this point. I lost about $400 with that drop but I am going to be buying $500 worth of shares next Wednesday(automatic contributions. I really like this fund because it has a low expense ratio and at the end of the year they do distribute dividends the end up to be about 2%.

So how can one protect against these drops in the market?
1. Don’t put all of your eggs in one basket: I have two retirement accounts with two different allocations.
2. Diversify diversify: Go with a mix with stocks and bonds depending on YOUR risk tolerates.
3. Get into funds that pay dividends. Yes, TSP does pay dividends more later on this subject.

So, don’t be afraid if the market goes down just think of it as a opportunity not loosing money. What ever goes down does come back up. The question is when?

NOTE: Spongebob is my daughter’s favorite character so this is for her.

Pay Raise 2008

vauslane — Thu, 26 Jul 2007 04:11:00 +0000

The Pay Raise for 2008 is about locked in. I believe that we will be getting the 3.5% pay raise that congress has in store for us. Here is an article that was written about the pay raise.

Like the House, senators favor a 3.5 percent military pay raise for 2008 versus the administration’s proposed 3 percent to match private sector wage growth as measured by the government’s Employment Cost Index (ECI). The White House calls the extra half percentage point unnecessary and notes that basic pay has jumped by 33 percent since 2001. The added cost of the bigger raise, $2.2 billion through 2013, is money “that would otherwise be available to support our troop,” said OMB letter.

The White House will lose this one. Congress intends to approve the ninth consecutive military raise to be set at least .5 percent above private sector wage gains, continuing to close a perceived “pay gap” with civilians.

However, a Congressional Budget Office report released in late June suggests no such gap exists. When housing allowances growth and associated tax advantages are weighed, the pay gap for the enlisted force, which advocates say started in 1982, actually was closed by 2002. Since then, the military pay gap has become a “pay surplus,” even excluding improvements in special pays and bonuses, CBO says.

Military associations dispute the CBO findings and support congressional efforts to continue to special military pay adjustments. The House in May voted to sustain the string of ECI-plus-a-half-percent military raises through 2012. The Senate bill deals only with the 2008 raise. When House-Senate conferees work a final compromise bill later this summer, the CBO findings could persuade conferees to adopt the Senate pay raise plan.

Source military.com

So, I believe that we will still have those ECI-plus-a-half-percent military raises through 2012. What does this mean. Well, we will still see a pay raise every year. The pay raise percentage may change every year but the good news is that until 2012 we should get one. In 2012 I should be a LT or CAPT which should help out a lot. So just remember that congress at this point is looking out for us, they are even combating the white house on pay raises. Way to go!!!

Payment for GSA Van

vauslane — Wed, 25 Jul 2007 03:35:00 +0000

Well, it is about time for the payment of my van off the credit card. I still have the money in the ING Direct account until five days before the payment is due. The reason why I am keeping the money into the account until five day before the payment is due is that I am earning almost a dollar a day worth of interest. That would put me ahead of the game by about $10. It takes 2-3 business day to move the money from ING Direct to my bank account and just overnight to make payment. I do this all electronically. Now, if you worry about not making the payments on time go ahead and make the payment early just in case. If I were mailing the money to my credit card company by check, I would take the money out of ING Direct on the first of the month. I am happy that this van has worked out for me. I have had no difficulties with it. I really like the AC on the van it keeps me very cool when the temperatures are reaching double digits. So just remember if you are making payments make sure you plan a little and you may end up getting a $10 bonus.

Ex-Sergeant Named Calender Covergirl for Playboy

vauslane — Mon, 23 Jul 2007 04:13:00 +0000

This is a few months old but the military is done investigating the issue. I thought that some would be interested in seeing what people do with their time outside of work and how we must maintain our integrity where ever we go. Money is not the always the answer even if we may be in debt. Here is part of the article:

In February’s issue, hitting newsstands this week, Michelle Manhart is photographed in uniform yelling and holding weapons under the headline “Tough Love.” The following pages show her partially clothed, wearing her dog tags while working out, as well as completely nude.

“This staff sergeant’s alleged action does not meet the high standards we expect of our Airmen, nor does it comply with the Air Force’s core values of integrity, service before self, and excellence in all we do,” Oscar Balladares, spokesman for Lackland Air Force Base, said in a statement.

Operation Calendar, producers of the “CAMOUFLAGE: PIN-UP” calendar announced that Playboy model and actress Michelle Manhart will be the cover girl for their third annual calendar, set to be released later this year. Source Military.com

Also, she was demoted from Staff Sergeant to Senior Airman in February of this year. You know, I cannot believe some people that join the military and expect to do anything here. This goes to show that we need to pay our debts and save for retirement for our future. This is one reason why I started this blog was to help uniformed members with money so we do not do these extreme measures.

Thanks for visiting my blog!!!

Gas Prices

vauslane — Sun, 22 Jul 2007 04:49:00 +0000

I am not sure what the gas prices are in your area but mine is about $3.00. When I was in college, the last time I saw gas prices less than $1.00 was in Cedar City,Utah. I was traveling to Las Vegas for a trip. I remember saying to my friends that this may be the last time we will see gasoline less than a buck. Man, we were right!!!
Here are a few tips to conserve gas and bring down your bill.

1. Replace you air filter: The way I know that my air filter needs to be change is to lift the filter into the air and look through the filter. If you cannot really seen any light it is time to change it.
2. Keep your tires inflated: If your tires are not properly inflated, you can increase your drag and increase gas usage.
3. Walk to work. This will also help you pass the PT tests and loss weight.
4. Make only one trip: When you go to work make sure you pass by the grocery store on the way home. This will reduce a lot of usage.
5. Car pool!!! There may be a few people that commute where you work. I am sure there is someone going to the base!!

There has been a media attention of green pills, magnets etc. that help increase gas efficiency. Well, you are just wasting money. Until the government approves this gadgets don’t buy them. They do all of the testing and have show that none work. You would here it on CNN if the products worked. So, take a walk or conserve a little gas and become a little richer!!!

Image found at http://www.bayareamonitor.org/images/gaspump.gif

Shaving Cream

vauslane — Sat, 21 Jul 2007 03:29:00 +0000

Well, I believe that I have saved a lot of money not using shaving cream Ever since I visited Madagascar in the late 90′s I have not used shaving cream. Instead I just use either bar soap or shampoo. The trick is to make the soap really foamy so that one can shave with it. So here is my calculation of saving money. Let say that I one goes through a can of shaving cream a month (since we are in the military we have to be clean shaven each day.) Since 1998 I have not used it so the calculation would be 12 X 10 X $4.00 (rough estimate for shaving cream) = $480. I have save $480 dollars with several years. If I were to put this money away I would have have a few thousand. I am not saying do not go without shaving cream but it sure does save a lot money if you don’t have that much plus if you save money with toilet paper then you will money for gas. That is money money saving tip for the month. Could you live without shaving cream?

Health Savings Accounts

vauslane — Fri, 20 Jul 2007 02:58:00 +0000

Here is a little more about Health Savings Accounts. We are ineligible to get one however, just keep this in the back of your mind in case one decides to quit the military before the 20 years are up.
This is the FAQ list form the US Treasury Department:

Health Savings Account is an alternative to traditional health insurance; it is a savings product that offers a different way for consumers to pay for their health care. HSAs enable you to pay for current health expenses and save for future qualified medical and retiree health expenses on a tax-free basis.

You must be covered by a High Deductible Health Plan (HDHP) to be able to take advantage of HSAs. An HDHP generally costs less than what traditional health care coverage costs, so the money that you save on insurance can therefore be put into the Health Savings Account.

You own and you control the money in your HSA. Decisions on how to spend the money are made by you without relying on a third party or a health insurer. You will also decide what types of investments to make with the money in the account in order to make it grow.

Do my contributions provide any tax benefits?
Your personal contributions offer you an “above-the-line” deduction. An “above-the-line” deduction allows you to reduce your taxable income by the amount you contribute to your HSA. You do not have to itemize your deductions to benefit. Contributions can also be made to your HSA by others (e.g., relatives). However, you receive the benefit of the tax deduction.

am a Veteran, can I have an HSA?
If you have received any health benefits from the Veterans Administration or one of their facilities, including prescription drugs, in the last three months, you are not eligible for an HSA.

I’m active-duty military and have Tricare coverage, can I have an HSA?
At this time, Tricare does not offer an HDHP options so you are not eligible for an HSA.

My employer offers an FSA, can I have both an FSA and an HSA?
You can have both types of accounts, but only under certain circumstances. General Flexible Spending Arrangements (FSAs) will probably make you ineligible for an HSA. If your employer offers a “limited purpose” (limited to dental, vision or preventive care) or “post-deductible” (pay for medical expenses after the plan deductible is met) FSA, then you can still be eligible for an HSA.

So just remember that this is an option after active duty if you don’t really have a good insurance plan. My brother uses this instead of insurance for him and his family. He doesn’t ever go to the doctor so he thinks that it will be better for him. So take a look at you circumstance and determine if it is for you.

Retirement Accounts PLUS Health Savings Accounts

vauslane — Wed, 18 Jul 2007 04:14:00 +0000

Well, in theory a typical military family could save quite a bit for retirement but I think it would hard unless someone was a full colonel (0-6) or B. General(0-7). A family can put this year $15,500 in their TSP account plus $4,000 in either a Roth IRA (income eligible) or Traditional IRA. A family can further save an additional 4,000 in a ROTH IRA or IRA for a spouse. That is a total of $23,500 a year. As an O-2 there is no way I can afford this per year, unless we really cut out some of the normal stuff like internet,TV, etc. Maybe one day, I will get to this level.However, I do know of another LTJG that saves to this maximum each year. His wife works as a one of the highest managers at Wal-Mart in their local area. She makes around $50,000 a year. So, they pretty much make a lot with the two incomes combine so they put in away is his accounts and her Wal-mart employee stocks. He has calculated last month that he would have about $100,000 in about two years since he already had a bunch save up. So, as you can see, if there is a two income household it can be done but without my wife working I can only save so much.

I read an article about how one can save even more money in a Health Saving Account and if the money is not used it turns into a Traditional IRA after the person turns 59 1/2 or so. That means one can save even more money than the limits. Being in the military one pretty much has free health care on a pre-approved basis. So another words, one could have a bunch more money later on in life for retirement using this method. However, since we have tricare we are not eligable for this type of savings. But, it keeps you thinking about how one can save for retirement if you had more money and decide not to be in the military. What do you think?

Depleting My Emergency Saving

vauslane — Tue, 17 Jul 2007 03:49:00 +0000

I depleted my emergency savings by buying my van last week. However, starting in September, I will start my emergency savings again. I have only $10 in that account. I don’t advice people what I have done but sometimes when your cars get old like mine 1989 you have to do some extreme measures. Now, if you cannot afford to deplete this fund don’t do it but being in the military if you want to separate they usually will pay for your last move. So, I really don’t need this fund at the moment. If I was thinking about separation maybe buying an van would not be such a good idea because I would have to look for a job and that may take awhile. So in short just be wise with your money and don’t buy things that you will only use once. I keep you updated on my progress!!!

Credit Cards

vauslane — Sun, 15 Jul 2007 22:41:00 +0000

I bought my van with a credit card at the GSA auction. This was the only way that they would accept money for the purchase. So, I am using all of the money that I have in my ING DIRECT account except $10. Now, I am not an advocate for using credit cards for purchase like this but if it is the only way to purchase the item then doe it (only if you have the money!!). I wouldn’t have a large line of credit if I didn’t buy things on my credit card last year. So, my advice is to use your credit card to purchase groceries and a few items that you can pay off quickly not forgetting to pay the card all the way off. I know several people that have only a line of credit of $2,000 with the credit card. They say that they are afraid to have larger line of credit because they don’t want to be responsible if someone else uses the card. This is a bad excuse. Most cards have a feature that have fraud protection on them. The trick is that one need to monitor their credit card purchases at least twice a week to detect any misuse. For me, I look at it once a day. To get a better Fico score one has to be trusted with more money on their line of credit. I really believe that these people with $2,000 line of credit with one card, will have a hard time buying houses etc.
So in short, use your credit card when you have the money and to build up your line of credit so that you can be able to buy a house one day!!

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