The Veterans Benefits Banking Program (VBBP) is giving Veterans and their families access to greater financial independence, resiliency, and literacy.
VBBP is a partnership between the U.S. Department of Veterans Affairs (VA) Veterans Benefits Administration (VBA) and the Association of Military Banks of America (AMBA). The idea for the program came after a VA analysis revealed a high rate of Veterans were “unbanked,” says Joe Gurney, Senior Advisor of Fiscal Stewardship for the Office of the Under Secretary for Benefits.
“We were seeing an uptick in fraud because hundreds of thousands of Veterans were unbanked, so the Under Secretary actually had me look into this. By unbanked we mean Veterans receiving their VA benefits on a prepaid card or by check. I spent some time doing an analysis about demographics, where they were, who they were, and it turned out there were over 200,000 Veterans who were unbanked,” Gurney said.
Dr. Paul Lawrence, VA Under Secretary for Benefits, charged Gurney with determining courses of action to address the issue. Through his research, he found AMBA — an association of banks operating on military installations. The organizations committed to a joint effort of working with those financial institutions that already “have experience dealing with the unique financial challenges of military members and their families,” retired Air Force Maj. Gen. Steven Lepper, President and CEO of AMBA, said.
A white paper identified key areas affecting today’s Veterans, such as not being able to get a bank account and incurring high fees when cashing checks or using prepaid cards. The VBBP then created a number of common requirements for participating banks and credit unions to join the program, including:
Willing to provide free checking accounts and free access to ATM networks to Veterans who deposit their monthly VA benefits in their account, and
Helping any Veteran become qualified to open a banking account.
Another pillar of the program is a goal of simplifying banking choices by helping eligible Veterans select the right bank and services for themselves and their families. The VBBP website also includes links to resources on topics like fraud protection, identity theft, financial education, and a checklist for opening a bank account.
Lepper adds the VBBP is a work in progress and there are already talks for ways to improve the program.
“Veterans have as many needs as there are Veterans. It’s hard to generalize with anyone, whether they’re military or Veterans. We’re always on the lookout to help make Veterans’ management of their financial resources much more effective and safe,” Lepper, who served 35 years in the Air Force, said.
Gurney says the VBA also looks at trends in the unbanked on a constant basis to identify lessons learned and drive future program enhancements.
“AMBA has setup a constant feedback loop to try to give our Veterans the best experience that we can. For example, we discovered that Veterans want financial education. They want information — especially during COVID – that helps them deal with money, particularly borrowing money. As a result of that feedback, we added financial education to the VBBP website and plan to expand it as we continue improving the program,” Gurney said.
Lepper explains that by giving Veterans access to banking options, it also creates a motivation to save.
“The one benefit you don’t think about immediately when you think about opening a bank account versus receiving your benefits on a prepaid card or by paper check is the ability to save money. If you cash a check or withdraw all the money on your prepaid card; you walk around all month with money in your pocket. With checks and prepaid cards, there’s no motivation to save and no mechanism to save, whereas with a bank account, you do have that ability to save money in a safe and cost-effective way.
“What we’re hoping, as a collateral effect of opening up a bank account or credit union account, is that our Veterans will be able to save money and not live month-to-month on their VA benefits,” Lepper said.
Other features of utilizing a bank or credit union account:
Get access to reasonable loan amounts with advantageous interest rates, and
Thirty four financial institutions are now part of the VBBP. In addition to ensuring Veterans and their families receive benefits safely and reliably, the participating banks and credit unions offer another advantage: accessibility.
A key component of the program is to meet Veterans where they are, whether that be in a large metropolitan area, rural town, or online. By working with financial institutions that have diverse geographical and digital footprints, Veterans can receive streamlined access to information and communication that caters to their needs. Another goal was to create a robust program that is easy to navigate. The VBBP website https://veteransbenefitsbanking.org/ contains a directory that lists participating banks and credit unions, along with direct links to more specific information on products and services.
Since the inception of the program at the end of 2019, VBBP has grown to roughly 1,000 website visitors per week, revealing a growing interest in both financial education and banking options. Now that awareness is growing, Gurney recommends Veterans take that next step of setting up an account so that they no longer have to put themselves at risk by relying on external entities like check cashing companies.
“We really want to urge Veterans during this time, especially with COVID, to consider direct deposit and setting up a bank account so they can have an easier, faster, and safer way to bank,” he said.
Once Veterans have a bank account, they can sign up for direct deposit by either updating their profile on va.gov (and providing their bank account and check routing numbers) OR by calling 1-800-827-1000.
As the partnership moves into its second year, the organizations plan to expand need-based resources that meet Veterans where they are in their financial life cycle.
Any Veteran or beneficiary who receives federal monetary benefits and who wishes to receive their benefit payments electronically can participate in the VBBP. A full list of participating banks and credits unions can be found at https://veteransbenefitsbanking.org/.
Retired Navy Lt. Commander Anthony Cosby knows all about chasing purpose. He just never expected to find it in socks.
Growing up in rural Alabama, Cosby’s first job was working the cotton fields for a family that was enslaved just a few generations before he was born. He did it every summer for five years before enlisting.
“I always say that the hardest day in the Navy was never as hard as one day working in those fields,” he said with a laugh. “I started as a Seaman Enlisted Recruit back in 1990. But I had an urge to do more even coming in at 17 years old.”
For Cosby, joining the Navy was a way to see the world. “It took me to Charleston and eventually to an opportunity to earn my officer’s commission,” he said.
After leaving the Naval Academy, Cosby was stationed in Texas as a recruiter. It was a unique challenge for the self-described introvert.
“I needed to do something to put me out there and force me to take down any walls I had,” Cosby explained. “Recruiting was an opportunity where I thought I could help change lives because I knew what the Navy had done for that 17-year-old kid from Alabama.”
He became one of the top Navy recruiters in the nation.
It wasn’t all good for Cosby, though. A swimming accident caused him to break his neck in eight places. Miraculously, he wasn’t paralyzed and survived. “I was laid up in bed for five months to heal up. It was a big time of reflection for me. It was when I knew there was a bigger picture and bigger calling than what I was doing outside of the Navy,” he said.
Cosby retired from the Navy after 21 years of service in 2012, not long after getting married and having a little girl.
“For us it was like life starting all over again in our 40s. It was really cool,” he said.
But with the good came some surprising challenges. Cosby said his transition was much harder than he had anticipated or was prepared for. Eventually, he was led into roles mentoring student veterans which he enjoyed, and thrived.
After attending his first VET Edge event and spending five minutes with Matthew Griffin, who founded Combat Flip Flops while deployed to Afghanistan, Cosby was motivated to make a change and do something new. “Entrepreneurship is so rewarding and just really fills your heart. I think that’s why I fell in love with it. It has so much that can be offered,” he shared.
While maintaining his role at Syracuse University within the Institute for Veterans and Military Families, Cosby eventually co-founded STZY. “It doesn’t stand for anything but really means you have elegance with your style and with your fitness,” he said with a smile. The company was focused on one product: socks.
The reasoning, Cosby said, was to simplify things and go all in on one thing he believed in. With a passion for fitness, socks made sense. The goal was to create a high quality product geared toward athletes. “We came up with STZY and it took about eight months to get it ready to go to market and we launched on March 21, 2021,” he said.
STZY sold out of the product within months of launching.
The company is now a certified pending B Corporation and remains committed to giving back. Each month the team chooses a new school or student athlete to sponsor.
When he looks back on his early years and Navy service it’s now hard to fathom how far he’s come. “The family that I worked with in Alabama was a Black family and have owned those cotton fields since 1856,” Cosby explained.
The original owner had purchased it all from his former slave owner and father. Now five generations strong, it’s his hope to bring everything full circle and use cotton from those Alabama fields for STZY socks.
His advice for the veteran or military spouse thinking about starting a business is simple: do it with passion and then pay it forward, too.
“Don’t be afraid to go chase something that’s five years away but the work you are putting in now is going to help you obtain that dream or goal. It’s okay. You can’t make Admiral overnight but as an entrepreneur you can become a CEO overnight,” Cosby said. “Always go back and help someone else — that’s how we are going to build thriving entrepreneurship opportunities as veterans and military family members.”
Doug Nordman is admittedly hooked on surfing. It makes him feel as if he’s flying atop the water. This is an interesting contrast for a guy who spent much of his career beneath it. Nordman is a retired Navy submariner.
The tight confines of a submarine leave little room for personal privacy. The cramped environment also makes it imperative that sailors work together. This is something Nordman took very seriously.
The ocean is a complex and dangerous place. Onboard a submarine, you have very little time in an emergency. If there’s a flood or a fire breaks out, decisions have to be made in seconds.
The Navy showed Nordman that he was part of something bigger than himself. That was tremendously motivating, and today he still carries that sense of community.
After 10 years in the service, Nordman advanced to become the executive officer on a boat. But the promotion came with a surprise. He was listed as XO in excess. Nordman made the cut but wasn’t assigned a vessel. He had no job.
He had trained his entire career for that next assignment and suddenly the deck dropped out from underneath him. He worried about work and leaving the Navy. Would he be able to find a civilian job? Would he like it?
“It was the first time in my career that I actually had to think about what I was going to do next,” he says. He was accustomed to a steady paycheck and didn’t want to give that up.
What happened next, he now regards as a mistake. Nordman remained in the Navy 10 additional years. He stayed for his full pension.
In hindsight, he realizes how many choices were available to him then. He could have joined the National Guard. Joining the Navy Reserve would have given him more time to spend with his family. And he could have afforded doing this. The Nordmans were big savers.
But they still made many common investment mistakes. They paid high fees and expenses. They moved money around more than necessary. Nordman recalls that they, “spent more money chasing performance than we would have made if we had just stayed invested and let it grow.”
He acknowledges that every one or two percent they paid in fees, delayed their financial independence by 6 months to a year.
If only he just had a little more financial knowledge…if only the Navy had provided financial literacy training.
“If someone had come up to me and said, ‘put down your tools and go to a training session on how to invest in the TSP or how to save for retirement’, I would have had a much better quality of life along the way.”
But Nordman’s life didn’t turn out so bad. When he retired in 2002, he learned to surf. He’s been doing it for nearly 20 years now. His financial independence lets him surf every day.
And he pays his good fortune forward. The sense of community that motivated his naval career leads him to teach service members and military families about financial literacy so that they can make better choices. Nordman is an avid blogger and author of The Military Guide to Financial Independence and Retirement.
Nordman points out that the resources are there and that service members should talk to their command. They should understand what kind of investor they are.
He also says that, “retirement is just the beginning of life 2.0. You have new choices and new ways of designing your life, to enjoy the things you’re passionate about.”
The Pentagon announced yesterday that they had met Defense Secretary Ash Carter’s deadline of January 1 to set up a streamlined system to recover bonuses they had accidentally paid to thousands of California National Guardsmen several years ago.
Late last year, Carter ordered the suspension of efforts to recover the funds from soldiers until a system could be set up to fairly recover the bonuses.
Peter Levine, acting as the undersecretary for personnel and readiness, headed up the team to develop the recovery system. Levine spoke to reporters during the press conference, admitting that, though some of the Guardsmen might have made mistakes, “sometimes the service does” as well.
Levine said he had worked with the National Guard Bureau, the Army Audit Agency, the Army Review Boards Agency, and the Defense Finance and Accounting Service (DFAS) to develop the system, and that part of that system involved screening each case to determine if there was even enough information to pursue a resolution.
Cases that are determined to have enough information will go before the Army Board for Correction of Military Records, and Guardsmen will have an opportunity to make their cases then.
There are currently about 17,500 cases up for review which have been separated into two categories.
In a moved that shook the federal workforce, President Trump ordered a freeze in the hiring process of all executive branch departments, effective at noon on January 22, 2017.
A report from the Office of Personnel Management estimates that veterans made up about 44 percent of new hires in the executive branch during fiscal year 2015. The total number of veterans employed was 623,755, or roughly 31 percent of the entire executive branch.
So what does this mean for veterans now in the process of seeking employment with the government? Unfortunately, even federal employees currently working in the executive branch aren’t sure.
We Are the Mighty consulted with a Division Director at one of the federal departments, who asked to remain anonymous due to the department being ordered to cease all public communications.
“We just don’t have many answers,” the source told WATM. “This is a very different political environment and we don’t know what to expect.”
We Are the Mighty obtained the “Memorandum for Heads of Executive Departments and Agencies,” signed by acting director of Office of Management and Budget Mark Sandy.
Sent to the heads of the departments, the memorandum read, in part, “An individual who has received a job offer/appointment prior to January 22, 2017, and who has received documentation from the agency that specifies a confirmed start date on or before February 22, 2017, should report to work on that start date.”
Individuals who were offered a position before Jan. 22 but do not have a start date (or a date after February 22) may find that employment offer rescinded. According to the Memorandum for Heads of Executive Departments and Agencies, those positions offered will be under review.
Agencies will be tasked with considering “merit system principles, essential mission priorities, and current agency resources and funding levels” when it comes to determining whether job offers should be rescinded.
At this time, the hiring freeze applies to every executive department except for the Department of Defense, and even then, it only allows for recruiting into active duty.
The leadership in any given executive department may grant an exemption to the freeze if he or she believes it to be in the best interest of national security or public safety, according to the press release from the White House.
This public safety exemption rule could be what helps the Department of Veterans Affairs continue to attempt to fill what it might deem necessary positions among the 3,473 jobs listed on its website — though it is unclear exactly how many of those positions could be considered in the interest of national security or public safety.
That same argument can be made for a large number of positions available at the Department of Defense. As DoD employees are directly related to national security, the department seems to have wide latitude over how it will respond to the hiring freeze.
The President has given the Office of Management and Budget 90 days to present a “long-term plan to reduce the size of the Federal Government’s workforce through attrition.” Upon implementation of that plan, the executive order will expire.
This hiring freeze is part of one of the many campaign promises President Trump made last year to drastically shrink the federal government.
The kitchen puts Coast Guard veteran, Lamont Brown, at ease. It’s the place of early childhood memories and where he contemplates his next moves. It reminds him just how loved he was. That’s why he’s always been interested in cooking. It’s a way to hold on to his childhood memories.
Born into a big family in El Paso, Texas (at one point, there were 13 people in the house) Brown remembers how his mother would work tirelessly to help feed so many kids. But when he was just 8 years old, his father passed away.
The void that created led him on a slow slide downward. He ran with the wrong crowd down the wrong path. His teenage years were a blur of drugs and petty crimes. By adulthood, he couldn’t hold down a job and owed more than $10,000 in fines he could not pay.
One day, after not seeing his sister for four years, she knocked on his door.
She was in the Army at the time and Brown remembers the look of disgust on her face. Her searing words burned clear through him.
“Do something with your life!”
He did. He joined the Coast Guard.
Brown shipped out to boot camp the week before his 28th birthday. When he arrived in New Jersey, he realized that he was some 10 years older than the “bunch of kids” in his class. He felt isolated and alone. But his situation would change.
On one of his patrols, the cook needed to be relieved. The crew nominated Brown to replace him. In the kitchen, Brown found himself. The place brought back childhood memories that helped him reason and work through his problems. He knew he would open a restaurant after leaving the Coast Guard.
Sharing that dream with a shipmate didn’t produce the response he expected.
“You’re gonna become a drunk and a failure within two years!”
His immediate supervisor was no more encouraging. He told Brown he’d never pull it off. So, Brown did what any would-be restauranteur would do. He ignored the dress down.
Today, Maya’s is a neighborhood restaurant on the North Shore of Oahu. Brown named it after his daughter to further fuel his passion and to make sure he lives up to the standard he wants to teach her.
While the Coast Guard provided the means for Brown to open his restaurant, it didn’t provide him any financial training to help him understand a budget or to run a business. Without a network of investors to help finance Maya’s, Brown borrowed against his home.
His biggest financial hurdle was going 18 months without a paycheck. Still, the lessons his mother taught about stretching a dollar…complimented by a wife who supported his dream…have help Maya’s to embody Brown’s heritage and past. The menu is complete with the foods he ate as a kid; his mother’s recipes, with some refinements.
Maya’s sustains itself by supporting local farmers. When COVID hit, the neighborhood came out to support the restaurant. Today business is better than it ever.
Brown’s role as a restauranteur brings him instant gratification. When the food goes out he watches his guests smile as they eat. That’s why he cooks.
And he explains transitioning like this. “When you get out, you get to start all over again. Take the good of the military and put that into your next chapter. And never let anybody tell you, you can’t do it.”
Walter Reed National Medical Center announced this week a plan to expand a partnership between the National Endowment for the Arts (NEA) and the Defense Department that focuses on creative art therapy for service members, veterans, and family members.
The “Creative Forces: NEA Military Healing Arts Network” focuses on art therapy such as writing, painting, and singing to help service members address and deal with post-traumatic stress and traumatic brain injury.
It’s currently offered at Walter Reed in Maryland and Fort Belvoir, Virginia.
“Post-traumatic stress disorder and traumatic brain injury are notoriously complex conditions to treat,” the NEA chairman Jane Chu said, noting that day long workshops don’t dig deep enough into the issues surrounding PTS and TBI.
Understanding that, the National Intrepid Center of Excellence decided to add a therapeutic writing program to its already existing creative art therapy program. That program now incorporates visual arts and music therapy.
The program, which received an additional $1.98 million funding in fiscal year 2016, has plans to expand to Marine Corps Bases Camp Pendleton and Camp Lejeune; Madigan Army Medical Center in Tacoma, Washington; Joint Base Elmendorf-Richardson in Anchorage, Alaska; and Fort Hood in Killeen, Texas.
The NEA and DoD have enough funding to open those and five other sites around the country in 2017, the Pentagon says.
Readiness, diversity, location, population density and leadership were all taken into consideration when determining where to open expansion clinics, Chu said. Leadership is “critical to the success of our work together,” Chu explained, adding that the expansion will also work with a network of community based nonprofit organizations.
The goal with the expansion, according to Chu, is to develop a web of resources and tools to help local organizations and communities as they work with the military community among them.
Chu reports that, through the program, veterans are better able to manage stress.
“We’re seeing such transformational results in our service members and our expansion plans have come as a result of them saying that they want this program to be closer to their communities as they make a transition back into civilian life,” Chu explained. “This is a way to help service members and veterans … understand the dignity that they already have and so much deserve.”
If you’re lucky enough to have a budget that allows you to spend hundreds of dollars on fancy board games, you’d better act quickly — the collection will only be available until June 29, 2018, according to the website.
But if you don’t have a spare $1,500 lying around, you can always indulge your nostalgia with the classic Hasbro version of Connect Four that sells on Amazon for $8.77.
This article originally appeared on Insider. Follow @thisisinsider on Twitter.
What are the most important lessons to teach children about money? It’s a good question to consider, particularly because, thanks to a distinct lack of a broad financial literacy curriculum in schools, it falls on parents to be the ones who instill the core concepts of spending, saving, and handling money in general. While there are certainly lessons all parents should be teaching kids about money, we wondered, what do financial planners, accountants, and others who work in the financial industry teach their kids about money? What concepts are essential and how do they distill them down so they can be understood by, say, a seven-year-old? That’s why we asked a broad array of financial professionals, “What lessons do you teach your kids about money?” The varied responses include everything from envelope systems and understanding wants versus needs to the creation fake debit cards and engineering simple lessons about compound interest. All provide inspiration and instruction on how to help kids get a head start on the road to financial success and serve as a reminder that it’s never too early to begin teaching kids about money.
Try the Sticker Chart Reward System
“We use a sticker chart reward system with our young ones, who are in Kindergarten and second grade. You get a sticker for doing homework, practicing, household chores, and the like. After earning 20 stickers each child then gets to pick out a toy, experience, goodies, etc. of their choosing (up to a $ value). This is a foundational value in our household; to instill that effort and hard work is required to earn many of the ‘wants’ in life. And that it takes time.” — Ronsey Chawla, Financial Advisor at Per Sterling Capital Management.
Incorporate Financial Topics into Everyday Life
“This can be as simple as taking my kids to the bank to open a checking/savings account, involving my two kids — I have a 14-year-old son and 11-year-old daughter — in household budgeting conversations during a trip to the store, or planning for a family vacation. It’s important to share lessons and what you learned from your experiences with money management, with the depth of that conversation being up to your individual family. It’s also a good idea to start them saving early. Developing smart saving habits is the first step to becoming money-wise. Encouraging children to contribute a realistic amount to savings, even if it’s just a month, is an easy way to put them on the right track for future financial success.” —Daniel Cahil, SVP, North Dallas Bank Trust Co.
Trust the Lemonade Stand
“With my own kids, who were four and six at the time, we opened lemonade stands, as cliché as it may be. It teaches them literally the fruits of their labor. The help made the lemonade, with real lemons, at every step, until they have the product ready for market. They learn the lessons of “location, location, location,” understanding that where they set up can make a big difference in the traffic they can expect. Setting up on the corner brings some traffic, but not nearly as much as by a nearby field on a hot day where a bunch of kids are at soccer practice.
When they’re done, they bring their profits back home and count it up. This helps them identify and understand what different coins and paper currency mean. They also have piggy banks that are broken up into four different chambers – save, invest, spend and donate. This helps them understand the different utilities of money, immediate gratification, delayed gratification and being a contribution to others.” — Chet Schwartz, RICP, registered representative with Strategies for Wealth, a Financial Advisor with Park Avenue Securities, and a Financial Representative of Guardian Life Insurance
Teach Them to Save — But Also Enjoy the Rewards
“To clarify, this all starts with being responsible, working hard, and earning some dough. But this particular piece of advice is about what I do with that earned money. When I come into some kind of bonus or non-recurring income, I always, without fail, carve off some small-ish amount of that bonus for me, my wife, and my daughter, and we all go out together and buy something fun for ourselves, something that we would not otherwise have bought because we thought it was frivolous or hard to justify. We save the bulk, but the rule is that we have to spend that smaller allocated amount on something fun, and we have to do it together as a family.
This is important to me because one, if you don’t enjoy some part of your money “now,” you may never get the chance, and two, it gets us out, as a family, doing something that breaks the normal rules of saving and spending. I’m all about saving of course, but I’m also about enjoying the rewards of hard work, and that’s what this is really all about. If you don’t treat yourself well, you sure as heck shouldn’t expect anyone else to.” — Dan Stampf, VP, Personal Capital Cash
Use “Skip Counting”
There’s more than one way to count to 100. You can take the long way, starting with the number one. Or you can also count by twos, tens, twenties, even fifties to get there faster. Learning to “skip count” is an important precursor to developing fluency in calculation, number sense, and the basis for multiplication and division — not to mention counting money. Just pour a bunch of coins on the table and put them into piles by coin type (pennies, nickels, dimes, and quarters). Work with your child to “skip count” using different coins and values, reinforcing what they’ve learned. For example, ask them if they notice any patterns (e.g. while counting by 2s, 5s, and 10s). If “skip counting” is still too complex for your kids, continue practicing by changing the number of coins they are counting. That will encourage your children to figure out another total value.” —Jeremy Quittner, Resident Money Expert Editorial Director, Stash
Put Pocket Money to Good Use
“It’s important to teach your children about saving, and the potential benefits. I think a fun way to do this is with their pocket money. Say you give your child for the weekend. Once its spent, it is gone. But I like to introduce the offer that if, for every change they bring back at the end of each week, that change is matched from my money, and saved until it reaches 0, and they can buy themselves something special. For example, if they bring me change, I put aside for them, and this pot grows until it hits 0. The opportunity here is for the children to really think about what they are spending their money on, while also seeing that saving can result in a better purchase that is actually wanted at the end.” — Andrew Roderick, CEO of Credit Repair Companies
Use The Token Economy with Toddlers
“Make money fun. Toddlers can start to experience a ‘token economy’ by pretending to play in grocery stores or banks: games that can actively involve your child in playing and beginning to understand money. It’s also important to recognize that it may be more constructive to create other activities for older kids, by introducing them to easy-to-read financial books, like this one. Explain to them how your family approaches investing, paying for taxes, and seeking financial advice from an advisor” – Dillon Ferguson, CFP, Head of Product, Zoe Financial
Make the Concept of Prioritization Crucial
“We ask our three kids to do certain activities at home that are outside of their normal chores for which we compensate them with small amounts of money. This way they learn that to make money they need to put extra effort and work hard. They also learn that the money they make at home can be spent on a variety of different things, but we teach them about the concept of prioritization, since money is a scarce resource. Most importantly, we teach them that the best investment they can ever make is their own education, since education leads to better job opportunities and better quality of life.
We opened college savings accounts for all three kids via UNest and our older one is already contributing into her own account. We show her how money grows over time and teach about the concept of investing, compound interest and tax-free growth. In addition, we emphasize that lack of savings can lead to the student debt. Money that is borrowed can be very expensive and the need to pay off student loans would create setbacks in life and delay other important decisions like buying a house or starting a family. Putting a small amount aside each month and investing for education teaches our kids discipline and motivates them to think long-term.” — Ksenia Yudina, CEO and Founder of UNest
Teach them About Coins — And the Four Pillars
“I think that six years old is a good age to start teaching kids about money. A great first objective is teaching them about coins. While that might seem simple, it is not as easy a subject as you might think. Take a step back and think this through: Why is the big nickel worth less than the small dime? I think it’s fun to play games with kids once they understand the value of each coin by having them make different combinations to get to one dollar. 10 dimes. 20 nickels. Four quarters. One-hundred pennies. Fifty pennies and two quarters.
Start with teaching them one of the four pillars of financial literacy: save, spend/budget, invest and charity. For younger children, savings is the easiest as you can simply use a clear jar where they can put loose coins and see them build up. Remember to keep lessons age-appropriate and that developing money-smarts is not an exercise in trying to create the next Warren Buffet. It is about making them feel comfortable talking about money, understanding basic money vocabulary, and eventually starting good habits that will last a lifetime. You want to avoid the firehose method of teaching where you pile on too much information too soon. Rather consider using the drip-drip-drip method that starting them at a young age gives you plenty of time for them to build a great foundation.” — Thomas J. Henske, Partner, Lenox Advisors
Be Open About Your Financial Goals
“When my kids were younger, my wife and I agreed on an aggressive goal to pay off our house in a set number of years. When that goal was reached, we agreed to take the family on a trip to Disney World. We bought a Mickey Mouse puzzle, assembled it, and disassembled it in a way that for each id=”listicle-2646259052″,000 we reduced principal on the loan, we put so many pieces of the puzzle together. It created a visual representation of our progress. We explained our goal to the kids in terms they could understand so they saw the progress and the reward at the end after several years of work. While the kids now understand the financial side of the goal, it is the visual representation of the puzzle they recall most.” — Phil Kernen, CFA | Portfolio Manager, Mitchell Capital
Teach Them About Compound Interest
“As a financial planner and fastidious investor, my kids are being taught about compound interest at a young age. When my five-year-old daughter receives birthday money from our relatives, I show her how putting 25 percent of her money away can give her many more Barbies and dolls in the future. Would you rather buy one Barbie today, or be able to buy five Barbies later, I ask? Even a child can understand that by deferring some instant gratification today, they can enjoy greater luxuries later.” — Thanasi Panagiotakopoulos, Financial Planner, Life Managed
Never Say ‘There is No Money’
“Say instead, money is valuable and needs to be used wisely. Or money is not to be wasted. The reason is that children should not grow up with a limitation mindset but an abundance mindset while learning to be careful with money. Saying ‘there’s is no money,’ tells the child that when they get money in their hands, they can throw it away, and that’s not a good thing.” — Kokab Rahman, author of Author of Accounting for Beginners
Don’t Forget the Power of Delayed Gratification
“My children are 2 and 4 years old currently, and while it’s definitely too early to teach any significant money lessons to the two-year-old (aside from showing him how to put coins in a piggy bank), the four-year-old is another story. I recently tried this simple method of teaching savings and it worked well. Each night, I gave her a quarter for straightening up her toys before bed. She could choose to use a quarter to get a treat from the candy dish, but if she saved five of her quarters, we could do something special that weekend (go to the zoo, a favorite restaurant, etc.). Delayed gratification is such a valuable skill to learn at a young age, and I plan to use more complex ways to incentivize saving as she gets older.” — Matt Frankel, CFP, The Ascent
Turn Financial Mistakes into Teachable Moments
“We don’t pay our kids for daily chores like making their bed, feeding the dogs, or picking up after themselves. But I do pay them for mowing the yard (my 10-year-old) or helping cut firewood (all my children), things that are above and beyond their normal family contributions that they worked hard to attain. It’s also important to let them make mistakes. Recently my 10-year-old wanted to purchase a new movie release for .99, so I let him. The next day he wanted to buy a video game. I said sure pay me and he could buy it. He then realized he spent all his money on the movie. That’s the time to have a good conversation around it. Was it worth it? What could you do differently?” — Joel Hodges, CPA, Intuit, Tax Content Group Manager
Explain The Difference Between Needs and Wants
One of the most important money lessons I’m already teaching my young children is the difference between needs and wants. If she holds up something at a store — say, something from the candy aisle — I’ll ask ‘Do you need that, or do you want that?’ It took a few tries, but she got the hang of it. It can be helpful to set a firm cap on the ‘wants,’ such as one per week, while showing that we always take care of our needs.”— Matt Frankel, CFP, The Ascent
Introduce the idea of Money Early and Often
“At home, we value speaking openly about our financial lives and the value of saving such that our kids learn by example. A great way we teach our 4-year old about money is to have them understand the value of a purchase. The other day my son wanted us to buy him a new game for his iPad. To ‘convince us,’ we had him walk through the value in relation to the actually cost of the game. It’s never too early for your children to understand the cost of things. “- Andres Garcia-Amaya, Founder, Zoe Financial
Enlist the Envelope System
“Kids are never too young to learn how to handle money, one fun way for them to learn about money is to have them separate their allowances on what they want to spend. They can do this by having small envelopes and placing a certain amount from their allowances. This helps them learn about budgeting and the value of money when that certain envelope reaches the goal amount. Children are also allowed to have bank accounts, so it is good for them to have their accounts so that they can start learning to save early. — Leonard Ang, CMO, iProperty Management
Try The “Bank of Dad” Approach
“By the time my daughter started elementary school, she had a few chores each week for which she got a small allowance and she might get the odd bill in an Easter card from her grandparents. Instead of a piggy bank, we went forward looking and with the ubiquity of debit cards, I created ‘The Bank of Dad.’ Using an old hotel key card I made a make-believe Bank of Dad debit card and she opened an ‘account.’
At 12 years old and a long-time Bank of Dad customer, she was definitely ready for a real account. With our bank, the account was connected to a parent’s account so we had visibility into everything. At the start, we sat down and introduced the basics of a budget. We talked about understanding how much she “made,” how everyone needed savings for an emergency/rainy day, and how to also save for something “big” like those fancy new embroidered and bedazzled jeans she just had to have.
Now at 24 years old, my daughter came to me and asked if I could help her fix a spreadsheet she made because she wanted to try and pay off her student loans early, but couldn’t make the formulas work. If there’s anything that makes an accountant parent happier than hearing ‘Hey dad, will you check my spreadsheet?’ Turns out she was very close, but having her do the work and walk me through it, made fixing her error make sense to her and empowered her. — Gregg Gamble, Intuit, Lacerte Tax Content Development Manager
Members of Congress are urging President Trump to begin rebuilding the U.S. military, starting with a 2018 defense budget of at least $640 billion, most of which would go to buying more aircraft, ships, and other hardware.
That ambitious number would be about $50 billion above the spending caps set by the 2011 Budget Control Act, which enacted the process called sequestration to enforce the limits.
But House Armed Services Chairman Mac Thornberry and Senate Armed Services Chairman John McCain are ready to lead fights to eliminate the BCA caps so they can pay for the hardware, the additional personnel and the maintenance needed to restore a defense they say has been badly weakened by six years of reduced spending.
At a media briefing Feb. 6, 2017, to preview the upcoming congressional session, Thornberry (R-Texas) first urged Congress to pass an appropriations bill to cover the six remaining months of the 2017 fiscal year “as soon as possible.”
The federal government currently is being funded under a continuing resolution that runs until April 28 and limits most spending to the prior year levels.
“There’s no reason in the world to wait until April,” Thornberry said.
The HASC chairman then urged Trump to send the supplemental funding bill he has promised to increase defense spending this year. “The sooner the better,” he said.
When asked what the supplemental should cover, Thornberry said it should start with “the things that were in the House-passed NDAA (National Defense Authorization Act) that were not in the final bill. I think they should be at the top of the list.”
The NDAA cut $18 billion that the House wanted to add, which would have gone mainly to increased weapons.
The U.S. Air Force F/A-18F has an estimated flyaway cost of $98.3 million. | U.S. Air Force photo by Staff Sgt. Andy M. Kin
The deleted funds also would have allowed the services to hire even more troops than the 16,000 Army soldiers and the 3,000 additional Marines allowed by the final bill.
Funding the current fiscal year would clear the way for Congress to work on a fiscal 2018 budget, which should include an even bigger increase in defense spending, Thornberry said.
Asked what amount he wanted, Thornberry said, “Our view is about a $640 billion base budget to meet the increased end strength, the increased number of ships, to turn the readiness around, and deal with a lot of those problems.”
McCain (R-Arizona) used that same number in his opening statement at a Jan. 24 hearing of his committee.
“We have to invest in the modern capabilities necessary for the new realities of deterring conflict,” he said.
“We also have to regain capacity for our military. It does not have enough ships, aircraft, vehicles, munitions, equipment, and personnel to perform its current missions at acceptable levels of risk.”
“It will not be cheap,” McCain added. “In my estimate, our military requires a base defense budget for fiscal year 2018, excluding current war costs, of $640 billion.”
Both of the chairmen insisted the BCA caps must be removed, but only for defense, not for the domestic programs that also are limited.
The holidays are over, and we are now in the year 2020. It’s a good time to start working on our 2019 taxes, because April 15 will be here before we know it. Taxes are overwhelming and complex, but there are numerous tax benefits for military families, so it is important to understand the basics.
Servicemembers receive different types of pay and allowances. It is important to know which are considered as income and which are not. For servicemembers, income typically includes basic pay, special pay, bonus pay, and incentive pay.
Items normally excluded from income include combat pay, living allowances, moving allowances, travel allowances, and family allowances, such as family separation pay.
Combat pay exclusions are a substantial benefit to servicemembers and spouses. Combat pay is that compensation for active military service for any month while serving in a designated combat zone. This may also include a reenlistment bonus if the voluntary reenlistment occurs in a month while the servicemember is serving in the combat zone. Note that for commissioned officers, there is a limit to the amount of combat pay you may exclude.
The most common living allowances are Basic Allowance for Housing and Basic Allowance for Subsistence. Moving allowances are those reasonable, unreimbursed expenses beyond what the military pays for a permanent change of station.
Sale of Homes
Servicemembers and spouses often decide to purchase homes when moving to new duty stations. Often, we then turnaround and sell the homes a few years later before moving again.
What happens if you make a profit from the sale of this home? If you are fortunate enough to profit, you may qualify to exclude up to 0,000 of the gain from your income, or up to 0,000 if you file a joint return with your spouse. This is referred to as the Sale of Primary Home Capital Gain exclusion. Normally, this exclusion requires that you owned the home for at least two years and lived in it for at least two of the last five years. There is an exception, however, for servicemembers. If you were required to move as the result of a permanent change of station before meeting these requirements, you still may qualify for a reduced exclusion.
Claim for Tax Forgiveness
If a servicemember dies while on active duty, there are circumstances where the taxes owed will be forgiven by the IRS. Contact your closest Legal Assistance Office immediately for assistance using the website provided later in the article.
If April 15 is quickly approaching and you are running out of time, remember, there are several different extension requests that military families may make. If the servicemember is in a combat zone, an automatic extension covers the time period the servicemember is in the combat zone plus 180 days after the last day in the combat zone.
Avoid Tax Scams
In November 2019, I wrote an article on common scams during the holidays. Unfortunately, scams are not limited to the holidays. There are numerous tax scams that have stolen personal information and millions of dollars. Scammers use the mail, telephone and email to initiate contact. Please remember that the IRS never initiates contact by email, text messages or on social media pages to request personal or financial information. The IRS initiates most contact through the regular U. S. Postal Service mail. Finally, the IRS never uses threats or bullying to demand payments.
If you have any questions, contact the IRS with a telephone number you find on its website (www.irs.gov) and verify what you received is legitimate before doing anything. To protect yourself, only use an IRS telephone number from its website. Do not use a telephone number you received that you suspect may be part of a tax scam from an email, text message or social media page.
Signing Tax Returns
Normally, both the servicemember and spouse must sign jointly filed tax returns. If one spouse will be absent during tax season, it is advisable to have an IRS special power of attorney, IRS Form 2848 (Power of Attorney and Declaration of Representative). You may access this form on the IRS website.
Military Tax Centers
Annually, many Legal Assistance Offices worldwide help servicemembers and spouses file their federal and state income tax returns starting in early February. Last year, for example, Army Legal Assistance personnel and volunteers prepared and filed over one hundred thousand Federal and over sixty-four thousand State income tax returns saving servicemembers and their families more than million in tax preparation and filing fees.
If you don’t live near a military installation, visit the Department of Defense Military One Source website at https://www.militaryonesource.mil for additional information on accessing free online tax assistance.
Legal Assistance Offices
If you have specific tax questions or receive correspondence from the IRS, contact the closest legal assistance office to schedule an appointment. Use the Armed Forces Legal Assistance website (https://legalassistance.law.af.mil) that I provided in the October 2019 blog to locate your nearest legal assistance office. The quicker you address your issues, the better likelihood that you will successfully resolve them.
Valuable Tax Tip for 2020
Finally, here is a valuable tip for next year’s taxes. Does it seem like every year you are scrambling to find tax documents and receipts from throughout the tax year? Relieve this stress by getting a folder and writing “Tax Year 2020” on the front of it. Keep it in an easy-to-find place, and every time you receive a document or receipt that may impact your taxes place it in the folder. That way, at the end of this year, you will have most of the supporting documents you need already together.
Be on the lookout for future blogs that will continue to discuss specific legal issues often encountered by servicemembers and military spouses. As always, this blog series will help to protect your family and you!
Military members are accustomed to significant challenges. Combat tours, deployments, and frequent transfers are a few of the difficulties they face frequently. Because of this stress, many military members experience significant struggles when it comes to getting ahead financially.
Possibly one of the greatest benefits to U.S. government or military service is the Thrift Savings Plan. The Thrift Savings Plan (TSP) is a retirement savings and investment plan offered to current employees of the military and federal government.
Since it’s a “defined contribution” retirement plan, the retirement income you receive from the TSP will depend on how much you (and your agency, if applicable) contribute during your working years–along with how well your investments perform over that time. Though it offers numerous advantages for retirement savings, the TSP is an under-appreciated and under-utilized benefit offered by the federal government.
Being a service member gives you access to investment opportunities that civilians don’t. That’s a great thing! At the same time, many service members are young and haven’t had much formal financial education, so navigating the investment options to invest is tough. Though sometimes confusing, investing early is the key to wealth! I know several retired service members who made it a point to start early. They didn’t just rely on their retirement, but also bought rental properties in areas where they were stationed, and invested in taxable accounts. After 20 years, they were set for life.
To start with, the TSP is cheap.
When you make any investment, the investment company is going to take some of your money as a service fee; nobody works for free. The TSP currently charges a service fee of 0.04%, which is probably the lowest you will find anywhere in the world. Even index funds, which some investors swear are the best investments, normally have service fees at least twice as high as the TSP. Most employer-sponsored retirement savings plans are at least three to four times more expensive than the TSP.
The TSP is also a tax advantage. Since the TSP is a tax-deferred or tax-qualified retirement program, you are making a deal with the IRS that you won’t use this money until you are close to retiring. In return, the IRS says it won’t tax you on a portion of that money. This is one of the big selling points of any retirement savings plan. With traditional TSP contributions, you get a tax break now and pay taxes in retirement. Conversely, you make Roth TSP contributions with after-tax dollars. So, you don’t get a tax break now, but the account grows tax-free over the years. Additionally, your withdrawals in retirement are tax-free.
Can a real estate investment be funded using a TSP?
The TSP can be invested in real estate with some conditions. The only option is to use the funds for a residential loan, which is real estate that one is living in as a primary residence. In theory, one could rent out a couple of extra bedrooms, which would be considered an investment. However, if you are still employed, you may be able to transfer some of the TSP funds to an IRA or solo 401k, which both allow for investing in real estate. If you are retired, the entire TSP balance can be transferred.
Using your funds to buy an investment property
Borrowing against your TSP contributions can be an easy way to establish a down payment and closing costs for your investment property. The loan is limited to the funds that you have contributed to your TSP account – not matching funds from your agency or service – and any accrued earnings. The loan amount must be between $1,000 and $50,000 and gets repaid at the interest rate for the G Fund at the time of processing. A $50 processing fee gets added to your loan as well.
Benefits of buying an investment property with TSP
Interest from a TSP loan gets paid to you – not a commercial lender – and payments can be taken directly out of your paycheck. When you repay your loan, you repay it with interest. The repayment amount gets deposited back into your TSP account and is invested according to your most recent contribution allocation. There’s also the option to amortize the loan as needed to change repayment details like extending the payback period for up to 15 years– which tweaks the number of payments or adjusts its amount.
How does a TSP loan work?
Loan payments are paid proportionally from your traditional and Roth balances, and from each TSP fund in which you have investments. Applying for a TSP loan is easy and there are no denials as long as there’s sufficient money in your account. If you default on your TSP loan, your credit isn’t affected– because although the remaining balance becomes taxable income, the default isn’t reported to credit bureaus. Before taking out a TSP loan, be sure you’re not sacrificing your long-term retirement goals by doing so. There are possible financial ramifications to TSP loans, including having to postpone retirement to replenish your nest egg. TSP accounts grow through contributions and compounded interest both of which are reduced by loans taken out against them. It is always recommended to speak to a financial counselor before taking out a TSP loan.
When you’re underwriting potential deals, include the payment from your TSP loan in the cash flow analysis and budget ahead of time for the payroll deduction. If it still makes sense for you after all expenses including the loan repayment, it can be an amazing opportunity to fund your investment properties.
In recent weeks, Wall Street has talked a lot about the fears of a coming recession, fueled by a drop in government bond yields. The casual investor may have no idea what this means for them, but for homeowners in the military and beyond, it means now is the perfect time to refinance a mortgage.
What any potential refinancer needs to know is that the falling bond yield is pushing mortgage rates to their lowest levels in three years. In November 2018, the interest rate was steady at five percent. Eight months later, the interest rate in now at 3.6 percent and looking to fall further.
This isn’t some shady internet ad, promising easy money on Obama-era mortgage laws or new Trump-era government home loans – those certainly exist and everyone should be wary about trusting easy money. But the drop in mortgage rates comes directly from Freddie Mac, whose rate on a 30-year, fixed-rate mortgage fell to 3.6 in August 2019. The reason is that the 30-year rate is linked to 10-year Treasury Bonds. The rate of return on those bonds just fell to their lowest since October 2016.
(St. Louis Federal Reserve)
What this means is that suddenly your homeowner dollar goes a little bit further, considering the cost of taking out a new loan or refinancing an old one just dropped. According to Caliber Home Loans, a lending company who specializes in military and veteran homebuyers, the rule of thumb used to be that the interest rate for a new mortgage must be about two percentage points below the rate of a current mortgage for refinancing to make sense.
With new low- and no-cost refinancing from Caliber and other lenders, refinancing could make sense any time – especially right now, given the latest interest rates. A refinance could reduce overall interest while reducing a monthly payment. If you acted right now, you wouldn’t be alone, not by far. Falling rates boost the U.S. housing market.
It’s important to think of your home as an investment, too.
“My applications are up across the board,” said Angela Martin, a Nashville, Tenn.-based loan officer told the Wall Street Journal. “Every time the Fed starts talking is when my phone starts ringing off the hook.”
What Martin means is the Federal Reserve just cut the benchmark interest rate after a few successive rate hikes. This is when people start looking for a better deal. But be wary – lenders will sometimes employ different perks after a rate drop to entice customers to accept things like credits at closing instead of a lower rate.
For military families and veteran homeowners, look into military-oriented lenders like Caliber Home Loans. Caliber and companies like it specialize in the needs and benefits afforded to military members and veterans. Caliber is also a proud sponsor of the 2019 Military Influencer Conference, a three-day conference of service members, veterans, and spouses who work to elevate the military veteran community.