Here's a 9-step guide to calculating your credit card interest - We Are The Mighty
MIGHTY MONEY

Here’s a 9-step guide to calculating your credit card interest

When it comes to credit cards, understanding your interest rate and how it works can be the difference between staying out of debt with an excellent credit score and falling behind in your payments and dipping to sub-par credit score ratings.

Your interest rate is the amount your credit card charges you to borrow money. If you pay your credit card balance in full and on time, you generally don’t need to worry much about your interest rate, which is expressed as an annual percentage rate (APR).

But if you’re carrying a balance on your credit card, you’ll notice you owe more over time, and that’s because of the interest rate. Credit cards are notorious for being one of the most expensive types of consumer debt, with an average interest rate of about 17%.


While in most cases you probably don’t need to calculate your credit card card interest rate — your statements should clearly reflect how much interest is owed on any unpaid balance and your APR should be clear on your statement and your bank’s website — you may want to get an idea of how much your balance is costing you on a day-to-day basis.

Here’s a 9-step guide to calculating your credit card interest

Here’s a quick cheat sheet to help you when it comes to calculating your own credit card interest rate.

1. Pull up your credit card information

Log on to your financial institution’s website or pull out your latest statement (if you haven’t switched to paperless billing yet, get on that!) to find the pertinent information you’ll need to calculate your credit card interest.

You’ll need to find:

  • your purchase APR
  • the number of days in your billing cycle

2. Get to know the terms

The way your credit card works boils down to a few different terms, two of which include annual percentage rate (APR) and, more generally, your interest rate.

Although APR stands for annual percentage rate, your credit card company uses this percentage number to determine the interest you’ll be charged each month when you don’t pay your credit card off in full and carry a balance.

Keep in mind that your credit card may have different types of APR, like a:

  • purchase APR (usually applied to the overall purchases you make with a card),
  • balance transfer APR (usually applied to any balances transferred from another credit card)
  • introductory APR (usually applied to purchases made during the promotional period after opening a new credit card)

3. Find your purchase APR

In order to calculate the interest you owe on any leftover balances on your credit card, you’ll need to find your purchase APR. If you can’t find this information readily, try calling your bank, or click on your card’s terms and conditions section.

Here’s a 9-step guide to calculating your credit card interest

4. Determine your average daily balance (or balance subject to interest)

This is the aggregate total of what you spent and either paid off and/or were refunded every day throughout your billing cycle, divided by the number of days in your billing cycle.

If you’ve always paid your purchases in full by the due date, you won’t have any interest payments to make and your average daily balance isn’t really a factor. However, if you plan to carry a balance, to calculate your average daily balance when you need to determine interest, log onto your bank account online and track the charges and credits that went through on each individual day, creating a rolling total as you move through the days of your billing cycle.

This will provide you with an aggregate total that you can then divide by the number of days in your billing cycle (which you’ll find in step five).

5. Get the number of days in your billing cycle

Different credit cards have different amounts of time between billing cycles. A typical credit card statement is paid out in 30-day billing cycles.

6. Divide your APR by 365

Since your APR is your annual interest rate, you’ll need to divide your APR by the number of days in the year to get your daily interest rate. So for example, an APR of 13.99% would become: 0.1399/365 = .00038 daily interest.

7. Multiply your daily rate by your average daily balance

Once you know what you’re charged daily for interest, you can multiply that number by your average daily balance to find the daily interest you’ll owe. So for example, if your leftover balance after paying your credit card is id=”listicle-2639175991″,000, you would get: .00038 x id=”listicle-2639175991″,000 = .38.

Here’s a 9-step guide to calculating your credit card interest

8. Multiply your daily interest rate by the number of days in your billing cycle

If you determined that you have a 30-day billing cycle, then the credit card interest you would owe on a balance for the 30-day cycle in this example would be: .38 x 30 days = .50 in interest.

9. Ask about your credit card’s grace period allowance

Some credit cards offer a grace period between when items are purchased and when they absolutely need to be paid off before accruing interest. Check in with your bank to learn if you have a grace period on your accounts and what the exact grace period is in order to better avoid paying interest.

Also read:

This article originally appeared on Business Insider. Follow @BusinessInsider on Twitter.

Articles

8 steps to executing the perfect do-it-yourself move this PCS season

Here’s a 9-step guide to calculating your credit card interest
(Photo courtesy of Penske)


At first glance, the Personally Procured Move (or PPM) Program (what used to be called DITY move) may seem to be more trouble than it’s worth. After all, you have to take care of your own moving arrangements and expenses, rather than letting the government do it for you. But if you do a little planning and put forth a bit of effort, doing a PPM offers several advantages over a normal military move, like these:

Money, Money, Money. In the PPM Program, you receive a government payment of 95 percent of what it would cost the government to move you. In addition, you receive the standard travel allowances for you and your family. If you end up spending less than the 95 percent payment the government provides, you get to keep the rest. This may sound difficult, but if you take advantage of moving company discounts and other special offers, you’ll find that you can make money for yourself. You should especially consider a PPM if you have a limited amount of items that need shipping or moving — you may be able to take care of all the packing and transport yourself.

Time, Time, Time. When you receive orders to move to another area, you’re authorized permissive TDY or travel time in order to take care of all your moving arrangements. If you make a PPM, you’ll receive additional time to handle your move — time that you can use to relax if you’re efficient about planning your move.

Total Control. While it’s nice to do without the headaches of planning a move, many military personnel had less-than-ideal experiences when the government took care of their moves. With the PPM program, you’re in control every step of the way, from deciding which moving services you want to how much of the actual move you want to handle yourself.

If you’re ready to take advantage of the PPM program make sure you follow each of the steps outlined below:

Step 1. Apply for the PPM move by scheduling an appointment with your base Personal Property Transportation Office (PTO).

A PTO representative will cover all factors of the program in detail, and provide you with all forms and instructions you need. Foremost among these is the DD Form 2278 (Application for Move and Counseling Checklist). Other forms you may need to fill out or provide include:

Standard Form 1038 — Advance of Funds Application and Account (for advanced operating allowance).

Certified empty weight ticket for each shipment with name, your Social Security number and signature of weight master.

Certified loaded weight ticket for each shipment with name, your Social Security number and signature of weight master.

Original DD Form 1351-2 — Travel Voucher or Subvoucher (ask your PTO representative if you have specific questions about this form)

Copy of registration for your boat(s) and/or trailer(s) if applicable.

Only after applying for and being authorized for a PPM move can you proceed with the move. If you make a partial PPM move (i.e., only shipping a certain amount of household goods), make sure you work out all the details with your PTO representative. Note that you will not receive full government payment for your PPM move until after your move.

Step 2. Decide on your type of move.

Will you be doing this all yourself? Will you have packers help? Will you have a moving company take care of the actual transport? Nail down these arrangements as soon as possible.

Here’s a 9-step guide to calculating your credit card interest
(Photo: Military.com)

Step 3. Arrange for any rental equipment or moving services you need.

You can either do it all yourself, have a professional handle tasks, or some of both. Packing materials can be purchased from commercial suppliers.

Step 4. Confirm your insurance coverage.

Make sure you are up to date on your car and accident insurance. If you use a trailer, check your auto insurance policy to make sure you’re covered. State laws regarding liability for accidents during a PPM move vary, so if you’re involved in an accident while performing a PPM move, you should contact the legal office at the military installation nearest the accident site as soon as possible.

Step 5. Pick up your operating allowance from your local disbursing office.

Step 6. When your vehicle (whether you own it or are renting) is ready, calculate the total weight of what you are moving.

You should weigh your vehicle both fully loaded and unloaded. This is extremely important, as your PPM payment will be based on this weight ticket. To calculate the weight of your shipment, follow this formula:

Loaded Weight = Your vehicle with a full tank of gas + all of your property loaded + no drivers or passengers inside

Empty Weight = Your vehicle with a full tank of gas + no drivers or passengers inside

Loaded Weight – Empty Weight = Net Weight of Property

Each weight ticket should have the following information:

Name, grade, Social Security number

Name/location of scales

Vehicle/trailer identification

Date of weighing

Weigh Master’s signature

Legible of weights

Step 7. Get receipts for all moving expenses.

All costs associated with the move are not taxable, and will be deducted from the allowance you receive from the move to determine your actual financial profit. Only your profit will be taxed, so be sure to keep track of everything to maximize your profit. Authorized expenses include:

Payment for rental vehicles/trailers

Packing materials

Moving equipment (including hand trucks and dollies)

Gas and oil expenses

Highway tolls, weight tickets and any other transportation expense directly related to the PPM move

Step 8. Make your move, and submit your settlement.

Once you complete your actual move, you have 45 days to submit a claim for full payment of your PPM allowance. This should include the following:

Empty and loaded weight tickets (two copies of each)

DD Form 2278

PPM Move certification (attach all receipts for moving expenses)

PPM Move expense sheet

Change of Station Orders

Advance operating allowance paperwork (if you are renting a truck or trailer)

Vehicle/trailer rental contract (if you are renting a truck or trailer)

More specific details can be obtained from the Personal Property Transportation office at your installation. To get more PCS tips or information, visit Military.com’s PCS Moving Guide.

Humor

5 things you should know before diving into a ‘contract marriage’

Scenario #1: A young service member walks into their newly assigned barracks room and notices how nasty it is. And on top of that, they have to share the small space with two or three other people that may or may not be very clean. The struggle is real.


Scenario #2: A service member may just have received orders to go on a 13-month deployment wants to make some cash while they’re gone.

Both of these very real circumstances of military life can be strong motivators for troops to tie the knot — and not for love.

Make money, money, money! (images via Giphy

Often called a “contract marriage,” these pairings are purely for monetary gain or medical benefits. No one is suggesting you do this versus saving your money or getting a second job if your command allows, but if you do it, keep these very important things in mind.

Related: 7 ways to surprise your spouses when they return from deployment

1. He/she can turn you in

Your contract husband or wife can blow the whistle on your verbal agreement without repercussions. So you’d better keep them happy.

Oh, sh*t! Busted. (images via Giphy)

2. Adultery is illegal

In the eyes of the military, you’re legally married (imagine that). So if you get caught engaging adult activites with anyone other than your spouse, you’re on the hook sailor.

Preach! (images via Giphy)

3. If she gets pregnant by you or someone else…

You better lawyer up, get divorced or decide to take care of the little rascal to keep the added benefits. That is all.

 You don’t want your name on that birth certificate. (images via Giphy)  

4. Separation pay

In some cases, if you play your cards right, you might be eligible for separation pay.

Separation pay is when your spouse “lives” in another area for one legitimate reason or another. Think about it. (images via Giphy)

Also Read: 7 ways to prove your spouse is really a spy

5. Repayment

If you do get a divorce, the military typically won’t stop the extra pay right away. So don’t go spending all that extra cash too fast. The government will take back every cent from your paycheck until they recoup what’s theirs.

The answer is, yes. (images via Giphy)You’re welcome America!

Articles

The Pentagon can’t seem to explain why the cost of moving military families is going up

Here’s a 9-step guide to calculating your credit card interest
Airman Michael Butler, 28th Logistics Readiness Squadron receiving technician, uses a forklift to retrieve a crate at Ellsworth Air Force Base, S.D.


Permanent Change of Station has gotten more expensive, and the Department of Defense doesn’t know why. That’s the general findings of a report released by the Government Accountability Office last year.

Military.com reported earlier this week that the Defense Department would begin a review of the system that oversees military moves as a result of the report.

Accounting for inflation, the cost of a PCS was up by 28 percent between 2001 and 2014, capping at around $4 billion that year, or 3.7 percent of the overall military personnel budget.

The study found that “the services have not reported complete and consistent PCS data, thereby limiting the extent to which DoD can identify and evaluate” the current PCS system. It went on to explain that the Pentagon had not maintained required data nor required the services to independently maintain data that would help the DoD in determining how to reduce the cost of PCS.

PCS moves ranged on average from $2,289 to $13,336, with the Air Force spending the most on average per move and the Marine Corps spending the least.

In a review between services, the Marine Corps was most likely to accurately and consistently report PCS data outside of the direct cost of moving, i.e. the cost of temporary storage, lodging expenses, and tour extension incentive payments. The Air Force and the Army were least likely to report the data.

Because of the lack of proper reporting by the services and the DoD, the report found, it is impossible to determine exactly how to address the rising costs of PCS.

In addition to a lack of complete data on the cost of PCS, the report found that the DoD was not able to explain why personnel were not meeting “time-on-station requirements” because it had not required any of the services to maintain that data themselves.

Of the services who could provide any data on time-on-station requirements, the Air Force was most likely to have some data, and the Marine Corps was least likely to have any data.

The Government Accountability Office described four recommendations to improve the issue of rising PCS costs:

  • Improve the completeness and consistency of PCS data
  • Complete periodic evaluations of whether the PCS program is efficiently supporting DoD’s requirements for assigning military personnel… [and] identify changes in PCS per-move costs
  • Improve the completeness and consistency of data on exceptions
  • Improve the completeness and consistency of data on waivers

The Pentagon agreed most of the recommendations in the report, writing in its response, “We recognize the importance of improving the availability of information needed for effective management of the PCS program.”

MIGHTY MONEY

This is why cash bonuses are different for each troop

You’ve probably seen it plastered all over billboards by now. The Army is offering “up to $40k in an enlistment bonuses!” Some hopeful recruits will learn that they can, in fact, get that down-payment for a Corvette. Another guy could come in that same day and walk out with just the “honor of serving.”

What’s the difference here? Why does one guy get a ‘vette and the other nothing but a hardy handshake? The determination process is kind of convoluted, but it all comes down to the military trying to get the right people in the right places.


Here’s a 9-step guide to calculating your credit card interest

I mean, it’s better to have a brilliant lawyer become an infantry officer than to have an idiot defending troops at a court martial, right?

(U.S. Navy photo by Lt. Ayana Pitterson)

Troops get a bonus based on what they bring to the military, how long they plan on staying in, and when they sign the contract.

So, if you have just a high school education and you want to enlist in a field that’s pretty crowded at a time when everyone is trying to get in for just the 3 years required to get full access to the GI Bill, your bonus prospects are looking pretty bleak. If you have a college degree and plan to use said degree to benefit the military at a time when it’s almost impossible to find others like you — the cash is yours.

With that being said, the stars need to align for everything to work out perfectly. Even if, say, you have a doctorate in law and decide to use your skills in JAG, if you arrive a time when the Army needs more infantry officers, you’re going infantry. Uncle Sam will always have the final say.

Here’s a 9-step guide to calculating your credit card interest

Obviously I’m making fun of water dogs (because they’re so used to enduring jokes by everyone that they won’t flip sh*t in the comments section).

(U.S. Marine Corps photo by Cpl. Adam Dublinske)

Highly trained and highly skilled troops, like cyber security NCOs, often leave the service and jump into higher-paying, civilian-equivalent jobs. The troop that was once the backbone of their unit is now working the IT help-desk at Google, dealing with a quarter of the stress for double the pay. The civilian sector is gunning for these troops by offering sweet cash deals — and the military can’t sustain this kind of personnel hemorrhaging.

If the military didn’t offer retention bonuses, those cyber security NCOs would all jump ship. Suddenly, offering that bonus of 0,000 over a four-year period for an indefinite contract doesn’t seem too unreasonable.

All that being said — and this isn’t to diminish the service or need of anyone who didn’t get an enlistment or a reenlistment bonus — the more competitive your specific skill set is to the outside world, the more of an incentive the military will offer to keep you in.

Humor

15 last-minute Valentine’s Day gift ideas from actual military spouses

Here’s a 9-step guide to calculating your credit card interest
Pfc. Harley Dennis, of Anderson, who serves with the Missouri National Guard’s 276th Engineer Company in Pierce City, assists Sgt. 1st Class Eric Corcoran to deliver more than 300 Valentine’s Day balloons to area school kids in the southwest Missouri town. (Photo by Staff Sgt. Dennis Chambers/Missouri National Guard)


In our house, Valentine’s Day isn’t really a thing. As a general rule, the Marine isn’t home for the “holiday,” and since there are a lot of holiday’s he spends away, courtesy of the USMC, this is one day we just don’t really concern ourselves with.

But this year we ran into a snag. Their names are Bethany, Zachary, and Christopher — also known as the three youngest members of the Foley Fire Team.

On the edge of the dreaded teenage years, Bethany came home a few days ago armed with a love note from her “boyfriend” (that asshole), and sat down with her younger brothers to plot out “The Best Valentine’s Gift Ever;” it apparently consists of a lot of bacon (they DO take after their mother, after-all), and a seven-hour nap time while they’re at school. Because adulting is hard.

They presented their plan to the Marine, and then waited with bated breath for him to tell them his grand scheme for the Day Of Love.

“I just bought Mom curtains and a new curtain rod. I suppose I could hang them up before she wakes up?”

The two youngest of the fire team promptly ran off to tattle on Daddy. Not buy Mom a “love” gift? He’s practically an abomination to them right now.

While the boys were relaying the horrifying ordeal to me, I wondered how the Marine was going to get out of this one. It’s perfectly fine to explain to the 12-year-old that sometimes Dad just doesn’t really subscribe to romantic things. As a girl she’s going to have to come to terms with the fact that dudes like him really do exist.

But try explaining that to two 8-and 9-year-old boys who are currently at the dining room table gluing pink and red hearts all over their camouflage Valentine boxes because they know that, while they like camo and guns, girls sometimes like hearts. How Daddy doesn’t understand this is totally beyond their capacity.

“Maybe Daddy is planning a surprise and he doesn’t want to ruin it,” I whispered conspiratorially. The boys nodded and agreed that that’s exactly what was happening. It was the only thing that made sense to them.

“You’re going to want to brain storm some last minute ideas, dude,” I told the Marine later.

“Can you do that crowd-sourcing thing you do on your Facebook and I’ll pick something from that?” he asked.

So that’s exactly what I did, and let me say, I was surprised. Not one girl said she wanted flowers, chocolate, jewelry, or even anything expensive or time consuming, and a lot of their gift suggestions included food.

In fact, because I know the Marine isn’t the only one out there who is finding himself in a gift pickle at the last minute, here’s what actual military spouses said they really want for Valentine’s Day, word for word and complete with all their annoying little emoji things:

1. Bacon roses

Because Valentine’s Day just screams “pork,” right?

2. Not celebrating Valentine’s Day at all.

Jeesh, more “romance” in our marriage/dating? We already have enough of that already…

3. Homemade vouchers for cool stuff

How about a movie night, a kiss and makeup session no matter how upset I am, free kisses anytime all day, etc.

4. Stay at home “date”

My husband is hitting up the USO tomorrow during lunch for flowers and cheap chocolate. ?. Yes he told me he wants to do that. He’s ridiculous. Lol. But in seriousness, even a nice walk or living room picnic on the floor. Super cheap, corny, and fun

5. Waffle House

Hands down. If you sneak them like $10, they’ll let you smuggle in wine sometimes (not that I’m speaking from experience or anything).

6. Beach stroll

This year we are going to take a few hours during the day to run to the beach and just put our toes in the sand before kids get home from school.

7. Mom time

Netflix movie, homemade desert, and pjs. 🙂

8. Cheap sushi

We went to Hamazushi last night because it’s very inexpensive (most items are ¥100 a plate), all you can eat, good quality sushi. Plus it’s all served on conveyor belts and ya can’t beat the novelty of that. 😉 Also, [He] started college again and has a lab tonight, so he won’t be home for “actual” Valentine’s date stuff.

9. A cuddle

After being apart—just being together is enough. I know that may sound cheesy, but it’s so the truth. Being preggo and sick, I’m hoping our date will include pj’s and our couch and the latest “this is us” episode.

10. Couch time

We spend all our budget on the kids. We will stay home with popcorn and a movie to celebrate it.

11. Old School necking

In the car…in the driveway!! ??

12. A load of beef … with love

I’ll make him his fave meal at home… meat loaf!

13. Learn something new

We are taking a couples cooking class tomorrow ❤️

14. A full-on pizza and bubbly extravaganza

[He] & I have done the same thing every year since we’ve been together: Heart-shaped homemade pizza (with mini heart pizzas for the puppies) + our favorite prosecco (the same brand from our wedding) and chocolate covered strawberries (sometimes homemade, sometimes from HEB)… and then turning on a cheesy movie or tv show on Netflix.

It started out the first year or two as our “thing” because we really couldn’t afford too much else. But now it’s a special, almost sacred ritual for us. I wouldn’t trade our little cozy tradition for a world-class meal. It’s just too important to me. I should clarify and say “every year he was actually HERE to celebrate.”

15. Some shootin’

Well, we got married Valentine’s day. We celebrate by hanging out and we go to dinner either the day before or the day after (since payday is always afterwards)because it’s always less crowded. This year is our 20th and we both took the day off. We’re having a range and lunch date. Since it’s a work day, lunch isn’t as crowded and definitely cheaper.

So what are you doing for Valentine’s Day?

And if the Marine is reading this, bacon roses are totally appropriate.

MIGHTY CULTURE

USAA says, be safe—cyber threats never end

If you received an email advertising a new vaccine for the coronavirus, would you open it? If a doctor called you requesting payment to treat your family member for COVID-19, would you share your information?

While the world is focused on the coronavirus (COVID-19), criminals are taking advantage of the situation.

“We are seeing coronavirus-related phishing attacks and we are seeing them at USAA,” warns Michael Stewart, assistant vice president of information security at USAA. “We are seeing emails advertising alleged coronavirus-related benefits and others from a healthcare perspective.”


Other potential scams include fraudsters pretending to be members of the Centers for Disease Control and Prevention or World Health Organization to obtain personal information or selling fake coronavirus test kits and vaccines that do not exist.

“Fraudsters like to take advantage of these situations,” explains Stewart. “They will leverage the coronavirus and urgency around it to get people to click on things or give up information that they might not otherwise disclose.”

Here’s a 9-step guide to calculating your credit card interest
Hunter’s Den

media.defense.gov

Some additional scams during this pandemic period to be aware of include:

  1. Charity scams: Stay alert of scammers contacting you to donate to fake charities. Research the organization you desire to sponsor to ensure your information is protected.
  2. Product or services scams: Items like hand sanitizers, disinfectants and household cleaning supplies are often offered by scammers who will keep your money. Scammers also offer cures, coronavirus test kits and vaccines that do not exist. Services can range from house cleaning to doctor visits.
  3. Employment scams: Scammers create job ads to lure unemployed consumers to fake jobs. The scammers will wire money or send a fake check to you, asking to send a portion back or use the funds to purchase goods, which are directed back to the scammer

Tips to protect your information include:

  1. Secure your accounts: use multifactor authentication everywhere, especially with banks, phone and email providers. This extra layer of security helps keep you safe.
  2. Stay vigilant: scammers will contact you by phone, email or text offering products, services or humanitarian opportunities. They often pose as credible companies “phishing” for login or personal information Pause to confirm it’s a credible company before proceeding.
  3. Monitor your accounts: stay close to your personal bank accounts, report suspicious behavior and respond to alerts.
  4. Use trusted Wi-Fi networks: as more people transition to work from home, ensuring your Wi-Fi network is password protected is critical to safeguard your information.
  5. Be informed: visit the FTC’s Consumer Information site for more information at https://www.consumer.ftc.gov/features/coronavirus-scams-what-ftc-doing

More information is available at www.usaa.com/coronavirus.

MIGHTY MONEY

ADPI H.E.L.P.S: Six Secret Hacks to Financial Freedom for Your Family

How to use your Veteran Benefits to Help Achieve Financial Independence

Can you, as a veteran, hack military benefits to financial freedom?  Yes.  The average American household spends $5,000/month.  Let’s imagine that this represents you.  If you succeed in stacking your benefits as monthly passive income to outweigh $5K/month, then you win in hacking your way to financial freedom.

Here’s a 9-step guide to calculating your credit card interest

You can win freedom by increasing money flowing in or reducing the money flowing out.  I prefer to focus on income, to think offensively, vs. the defensive approach of aggressive saving and living frugally.  Your expenses can shrink to the floor, but your income has no ceiling.  And as we say in the military, the defense sets up the offense.  The offense remains decisive.

As a veteran, there exist at least four significant sources of passive income that you should hack:  retirement, VADC, SSDI, and VR&E.  You also have at least two state-level benefits on which to give serious thought:  zero property tax, and free college for your dependents.

For illustration, let’s say that you’re an Army Captain (O-3E) retiring at 20 years in 2020.  Let’s also say that you fall under the High-3 pension, with two dependent children, and have a good chance at VA 100.  And yes, presume $5,000/month in expenses.  Sneak peek.  That means $3,700/month (pension), $3,300/month (VA 100), $2,800/month (SSDI), and maybe $1,500/month (VR&E housing stipend).  That adds up to $11,300/month, best-case scenario.

Veteran Retirement and Pension


Retirement qualifies you for a pension.  There exist four pension types:  Final Pay, High-3, CSB/REDUX, and BRS.  The math goes as follows, monthly pension = (retired base pay) x (multiplier) x (years of service).  At present, you can’t choose.  It’s a moot issue.  You have what you have, and that got determined by when you entered.  In our example, the High-3 applies to you.  It calculates as follows, $3,700 = (approx. $7,400) x (2.5%) x (20 years).

There exist five types of retirement:

  • Regular.  Completed 20 years of active service.  You can begin active duty as early as age 17 and retire at 37.  Some do.
  • Reserve.  Reservist with 20 years of service who has reached age 60.  Sometimes called a non-regular retirement.  Ready Reserve recalled to active duty or in response to a national emergency, shall have the age 60 requirement reduced by 3 months for each cumulative period of 90 days (3 months) so performed in any fiscal year after 28 Jan. 2008.
  • TERA.  Temporary Early Retirement Authority.  At least 15, but less than 20 years of active service between 2012 and 2025.  Program expected to end 31 Dec. 2025.  Future use of TERA will require approval by Congress.  Specific eligibility criteria for TERA depends on the service branch.  The Army has in place a limited use of TERA, enough to conclude that it’s not an option.
  • TDRL.  Temporary Disability Retirement List.  Temporary disability rating, placed on retirement rolls by member’s branch of service (max of 5 years) before returning to duty, separating, or proceeding onto PDRL.  Results from a med board.  This results in a military pension.  This retirement check comes from the DOD and not the VA.
  • PDRL.  Permanent Disability Retirement List.  Placed on the retirement rolls by member’s branch of service.

All of the above will result in a pension.  The math will differ for each.  We’ll continue with our High-3 and regular retirement example.  But I’m guessing that you’ll want an idea of how to retire as soon as possible, and with the highest return you can get.  Keep reading.

Regular, reserve, and TERA allow with reasonable certainty for Concurrent Retirement Disability Pay (CRDP).  That means both the pension plus VADC.  CRDP requires retirement under the first three, as well as a ≥50% VA disability rating.  In our example, that means $3,700/month plus $3,300/month (VA 100), or $7,000/month so far and well over the average in household expenses.

Otherwise, the only way to get both, concurrently, is through Combat-Related Special Compensation (CRSC).  The criteria:

  • Entitled to or receiving retired military pay
  • Rated at least 10% by VA and combat-related
  • Have waived VA pay from retired pay (the VA waiver or offset) (it’s a bit complicated)
  • Can present documentation for the event resulting in the condition

Notice that CRSC can occur before 15 or 20 years, and pay the pension plus VADC.  The math will adjust accordingly.  To keep this article from getting too long, I won’t go over it here.  Know that less time in service or a lower disability rating means a smaller compensation amount.  Also note that yes, with CRSC, you can stack both the pension and VADC, and well before 15 or 20 years.  Such a case would most likely look like TDRL/PDRL plus CRSC.

By the way, combat-related need not refer to actual combat.  Combat-related may mean training that simulates war, e.g., exercises or field training.  It could mean hazardous duty, such as dive, flight, parachute.  Or come from an instrumentality, such as combat vehicles or weapons.  In 2011, as a Second Lieutenant (O-1E) at Fort Lee, a Private negligently discharged her rifle during a range and almost shot my foot.  If she had shot my foot, that would’ve counted as combat-related.

VA Disability Compensation (VADC)


Here’s the big one.  A high enough VADC rating can lead to SSDI, VR&E, zero property tax, free college for dependent children, student loan forgiveness, and more.  The goal here is not to be disabled but to obtain disability compensation.  And winning compensation is probably much easier than you think.  There’s no lying or cheating required or encouraged – only diligence.  We’ll go over ways to give your claim the best chance possible.

Keep this framework in mind:  How much is it?  How long will it take?  Claims, conditions, criteria, and appeals?  Anything quirky?  Where can I get help?

How much is it?  The amount will depend on the VA’s final composite rating and the number of dependents.  The higher the composite and the more dependents, the higher the amount.  In our example, a 100% VADC (or VA 100) with two dependent children would pay $3,300/month, non-taxable.

The final or composite score consists of adding up the ratings of each separate disability.  Two disabilities, each rated at 50, do not add up to 100.  The VA uses a unique table.  If you search Google for a VA disability calculator, try punching in 10 different disabilities.  With 10 disabilities, you’ll need to score the following individual ratings at the least for VA 100:  70, 40, 40, 10, 10, 10, 10, 10, 10, 10.  Notice that using lay math, these individual ratings add to 220.  The rule of thumb is to shoot for 250+ points to reach VA 100.

How long will it take?  Six months to a year or more.  Anecdotal evidence from my friends who’ve reached VA 100 tell me about two years.  You can begin your claim at https://www.ebenefits.va.gov/ebenefits/login, six months from separating or retiring, or upon referral to a medical board.  Fill out the VA Form 21-526EZ.  If you’ve been referred to a medical evaluation board (MEB), your claim will happen as part of the IDES (Integrated Disability Evaluations System) process.

Claims.   Two types, standard and a Fully Developed Claim (FDC).  File an FDC.  The standard claim relies on the VA to obtain your medical information.  The FDC lets you take charge.  It means more work for you, but you don’t want to leave this up to the VA.

When filing your FDC, look for a form to attach to it called a Disability Benefits Questionnaire (DBQ).  DBQ refers to a category of standardized forms for specific disabilities.  The VA has created over 70 DBQs, one per disability.  For example, if you intend to file a claim for scars or disfigurement, the DBQ for that is Form 21-0960F-1 (scars/disfigurement).  Check if the disability you intend to claim already comes with a corresponding DBQ.  If not, no worries.  Continue mission.

Conditions.  Two types, primary and secondary.  Primary disabilities refer to those which military service caused or aggravated (made worse).  Notice the part about the military having made worse the condition.  Even if pre-existing, it suffices VADC that military service has exacerbated it.  Primary conditions represent the category that most of us know, and on which we spend most of our efforts trying to win.

There also exist secondary disabilities.  Whereas primary refers to a direct service-connected condition, secondary refers to indirect.  Secondary connects to primary.  These seem easier to win.  Whether they are, know that they represent one more way to increase odds of VA 100.  Some of the more common reasons connecting secondary to primary include behavioral health, illness, medication side effects, and overcompensation.  Also, note that the connecting primary may suffice at a non-compensable rating of 0%.

Yes, 0%.  0% compensation for a primary condition still means service connection, although non-compensable.  You may still use it to achieve compensation for a secondary.  One more time, realize that a 0% rating on a primary can still service-connect to a 100% rating on a secondary.  Makes sense?  It doesn’t matter.  One more way to stack the odds and the benefits in your favor.

Criteria.  For the VA rater to decide, you must connect at least three records:

  • What · your present impairment limits your earning capacity
  • When · you experienced an illness/injury while serving active duty
  • Nexus · that illness/injury caused/aggravated the present impairment (service connection)

Something happened on active duty.  That something, or set of somethings, produced or made worse your present medical condition.  You indeed have a medical condition that limits your earning capacity.  Get straight to the point.  Give the rater these records and nothing more.  If you lack one of these records or clog his inbox, it makes work difficult for him and unlikely for you to win.

The medical nexus letter will look like a memo for the record (MFR).  It should contain four parts:

  • Records review.  The medical professional writing the letter must state that he has looked at your relevant medical records.
  • Medical opinion.  The opinion, which must at minimum say, at least as likely as not (the 50% probability evidence standard).  Equipoise.
  • Medical research.  Reason and evidence to support the opinion.
  • Credentials.  The examiner states his relevant credentials.  An eye doctor probably knows more about feet than a VA rater.  But when it comes to your foot problem, the VA doesn’t want your eye doctor’s opinion.

For each disability you claim, you should also fill out a VA Form 21-4138 (statement in support of a claim).  Tell your story.  Say what the condition is.  Identify what it resulted from, the symptoms, and the severity of those symptoms.  Describe the degree to which it has limited your life.

If the claim requires lay evidence, ask someone relevant to your case to fill out a VA Form 21-4138.  When filled out as lay evidence, it now becomes a buddy letter.  In his letter, he should state how well he knew you during the qualifying incident, and then what he observed about you.

Along the way, the VA may ask you to undergo a C&P (compensation and pension) exam.  It’s a medical review with a VA doctor.  It could be a few questions or a comprehensive physical exam.  Be honest, of course, but do not be on your best day either.  The C&P examiner aims to disqualify you.  Furthermore, carry with you the attitude that you gave military life your best effort.  If he sniffs you out as lazy or looking to milk the system, he’ll decide accordingly.

Even if he does decide against you, you may still get a second opinion from an approved examiner of your choice.  Notice the word equipoise above.  Given a 50% probability, such as when the C&P says no, but your doctor says yes, the benefit of the doubt goes to you.

Appeals.  Yes, you can appeal.  Search for VA Form 20-0998 (your rights to seek further review of our decision).  It outlines four review options:  supplemental claim, higher-level review (HLR), appeal to the board, and a U.S. District Court complaint.  File a supplemental claim given new and relevant evidence.  File an HLR when you have no new evidence.  These first two, especially HLR, appear to result in more success than the last two and happen much quicker.  The last two take years.  The VA Form 20-0998 gives instructions on how to file for review.  More ways to win.  Keep at it.

Quirky things.  We’ll discuss SMC (special monthly compensation) another time.  Know that there exist four types of VA 100:  temporary, schedular, TDIU, and P&T.  Temporary means you’re incapacitated or suffering a severe condition.  If schedular, you reached about 250 lay points.  TDIU pays the equivalent of VA 100 if the member rates at least VA 60 or 70 and cannot obtain substantially gainful employment.  Permanent and Total (P&T) provides the least likely chance of reduction later.  You want P&T.  If you’ve reached VA 100 the other ways, you may write to your local VA Regional Office to request P&T.

Recap.  Stack the odds in your favor.  Use FDCs and DBQs.  File for both primary and secondary disabilities, and claim as many as reasonable.  Shoot for 250+ lay points.  Add buddy letters.  Present the rater with what he needs, and nothing more.  Realize TDIU could shortcut to VA 100.  And use supplemental claims and HLRs.

Get help.  Check out www.VAClaimsInsider.com.

Social Security Disability Insurance (SSDI)


Yes, the SSA computers talk to the VA computers.  But eligibility with one doesn’t automatically translate into the other.  Check out www.socialsecurity.gov/woundedwarriors.

VADC covers a veteran for loss of earning capacity because of a service-connected medical condition.  SSDI compensates the applicant for the loss of the ability to do substantially gainful work because of a medical condition.  For SSDI, the condition must have lasted or be expected to last at least a year or to result in death.

How much is it?  For our notional Captain (O-3E) with 20 years of work credits, that’s $2,000/month plus $400/month each for two dependent children, or $2,800/month.

How long will it take?  Expect about six months to get a response from the SSA, and a mandatory five-month wait if approved.  Oh, and the five-month wait comes with no back pay.

Claims, conditions, and criteria.  First, you need to meet the non-medical requirements:  sufficient work credits, below retirement age, residency, and not working or earning too much.  As a veteran, you likely already meet all of those.  Then, the SSA asks five questions when evaluating SSDI:

  • Do you work too much or make too much money?
  • Is your medical condition severe?  Will it last at least 12 months?
  • Does the condition meet or exceed a listing?  A listing is a condition found on the SSA’s Listing of Impairments.  It outlines the SSA’s established set of medical conditions determined severe enough to prevent one from performing any gainful activity.
  • Can the applicant perform past relevant work?
  • Can the applicant retrain for new work?

Income, condition, listing, past work, and retraining.  To award SSDI, the applicant must reasonably answer, respectively:  no, yes, yes if so, no, no.  But the gist of it is that the condition must have lasted or be expected to last at least a year or to result in death.

Appeals.  Yes, you can.  Your denial letter should explain.  You typically receive only 60 days from the date of the denial letter to appeal.  If you miss the deadline, you may have to start from the beginning.  Recommend that you seek help by this point.

Quirks.  Instead of applying online or in person, call the SSA at (800) 772-1213.  One book on Social Security puts the burden back onto the SSA when it comes to form-filling and the nuisances of interpreting the forms.  The SSA would know best anyway on how to fill out its own forms.  If you don’t finish it all in one day, the SSA will schedule another phone call to work around your schedule.

You can get SSDI while still serving on active duty.  In what scenario?  Assignment to the Warrior Transition Unit (WTU).  Not easy, but not impossible.

Get help.  Check out Side by Side Solutions, LLC, https://www.facebook.com/sbssolutions, founded by Lisa Hiering, mother of a disabled Marine.

Vocational Rehabilitation & Employment (VR&E)


VR&E intends to help a veteran fix his vocational impairment or employment handicap, resulting from a service-connected disability.  It consists of five tracks.  I’ll just cut to the chase.

How much is it?  Track 4 (employment through long-term services) can work just like the Post-9/11 GI Bill and pay a monthly housing stipend, or subsistence within the VR&E language.  Think of it as BAH.  It depends on the school and on attendance, but we could reasonably estimate around $1,500/month.

There’s also a Track 3 (self-employment) that could pay up to $100K towards business startup costs.  Yes, up to $100K, to you.  You can ride Track 4 up through a doctorate and then get $100K through Track 3 to start your practice.

How long will it take?  Expect about a month to get a meeting with a Voc. Rehab. Counselor (VRC), then another two months to get a decision.

Claims, conditions, criteria.  Fill out a VA Form 28-1900 at www.ebenefits.va.gov/ebenefits/login.  The VA will also ask you to fill out an Individualized Employment Assistance Plan (IEAP), in which you outline exactly what it’ll take to help you.  You’ll need at least a VA 20 rating, or VA 10 for a serious employment handicap.

There’s a 1,200-page manual called the M28R that the VRC uses to do his job. If you’re wondering what questions he’s trying to answer, then check out Part IV, Section B, Chapter 2 (evaluation and planning determinations).

Appeals.  Can you?  Yes.

Quirks.  The C in VRC may stand for counselor, but you should treat him like the C&P examiner.  Think of him more as an interviewer.

Get help.  Check out attorney Benjamin Krause at www.DisabledVeterans.org.

Zero Property Tax · State-Level


Some states, like Texas or Florida, provide zero property tax for disabled veterans.  Also called a homestead exemption.  Typically for VA 100.  Rules vary by state.  For a quick list of states that offer this, check out https://hadit.com/disabled-veterans-property-tax-exemptions-state/.

For a summary of all benefits by state, check out https://myarmybenefits.us.army.mil.  It’s an Army website that summarizes veteran benefits applicable to all service members.

Free College for Dependents · State-Level


Florida and Texas also offer free college tuition in-state up through a BA/BS for the dependents of a disabled veteran.  Typically for VA 100, but a lower rating might suffice.  Varies by state.  Check out https://www.affordablecollegesonline.org/college-resource-center/scholarships-for-veterans-and-dependents/.

Although not direct cash, that’s still a BA/BS degree that would’ve cost $40K at a public four-year college (in-state student), $90K public four-year (out-of-state), or about $180K private.

Bonus · Four More Financial Freedom Hacks!

House Hack · VA Home Loan Guaranty


Use the VA home loan guaranty to get zero down on a residential property.  This hack lets you obtain up to a four-plex.  You could reside in one unit and rent out the other three.  In the unit you live, you could further hack that with roommates or Airbnb.  Eventually, you could refinance to then re-use the VA home loan guaranty and obtain yet another multi-family.

Here’s a 9-step guide to calculating your credit card interest

Credit Card Hack · SCRA (Title 50 USC Chapter 50)


Credit cards typically come with a low introductory rate (anywhere from 0% APR to a little more) before becoming about 20%+ APR.  However, if you serve on active duty or if the military called you onto active duty, among other benefits, the SCRA provides a cap at 6% APR and a waiver of service and renewal fees.

By the way, Chase gives me 0% APR as part of its SCRA benefit.  If your side hustle consists of e-commerce, use this credit card hack to boost your margins from arbitraging goods.  How often do the credit card companies check?  About once a year, otherwise, they use your anticipated (hint, self-reported) end date.  Self-reporting applies to those with indefinite contracts.  If this is you, I’m sure you can see how you could self-report an end date far into the future.

Student Loan Hack

 https://DisabilityDischarge.com


On 21 Aug. 2019, President Trump signed a memo to cancel student loan debt for disabled veterans.  To qualify, you’ll need to have either reached VA 100 or have been approved for SSDI.  See https://disabilitydischarge.com for details.

Time Hack · Army Career Skills Program

 www.DODSkillBridge.com


The Army’s Career Skills Program (CSP) allows a Soldier to spend the last six months of active duty interning with a school or employer.  While on CSP, the Soldier still gets paid as if on active duty but instead reports elsewhere.  I’ve seen this flow as smoothly as a one-page form signed by an OIC.  Are you separating or retiring?  Do you have a friend who also happens to have her own business?  It’s like shaving six months off your contract.

This article originally appeared on Active Duty Passive Income. Follow them on Facebook.

Lists

10 gifts for the man in your life who’s operator AF


Here’s a 9-step guide to calculating your credit card interest

My Marine husband is the worst to shop for.

The worst, I tell you.

The man sees something he wants and he hauls off and buys it. It makes Christmas shopping extremely difficult.

So in an effort to put together a good Christmas list I asked him to consult with me on an article for WATM’s “10 gifts for the man in your life who’s operator AF.”

This is what he sent me:

1. Operator Stocking

This stocking is definitely operator AF.

Here’s a 9-step guide to calculating your credit card interest
High Speed Operator Stocking / Accessory Pouch

Specs:

  • Double Zipper Main Pocket
  • Santa Clause Approved & Compatible.
  • Modular Webbing for Pouch Attachment
  • 3x Polymer D-Rings
  • Integrated Drag / Carry Handle
  • 2x Hanging Hooks
  • External Small Pouch with Elastic Cord Closure
  • 3″x2″ Patch Panel
  • Made from High Durability Nylon Fabric

2. Hidden gun rack

No one will ever catch him by surprise as he’s flexing in this mirror.

Here’s a 9-step guide to calculating your credit card interest
N.J. Concealment Furniture surface mounted wall mirror

Specs:

  • 16″x52″x3.75″ inside 12″ x48″ 2 3/4″
  • Construction:
  • Solid hardwood with hardwood plywood back.
  • Includes:
  • 2 1/4″ Kaizen foam
  • mounting hardware
  • Includes magnetic lock and one magnetic key.

3. Plate carrier

…Because every operator should wear this every time he leaves the house.

Here’s a 9-step guide to calculating your credit card interest
Plate Carrier With Cummerbund Molle Style

Specs:

  • tab “panes”
  • External cummerbund that offers a more stable MOLLE platform
  • Cummerbund is fully adjustable and removable
  • Small/Medium has three rows of MOLLE webbing
  • Large/ X-Large has four rows of MOLLE webbing
  • Carrier is not releasable
  • Armor not provided

4. SureFire weapons light

…For seeing under the couch and shit.

Here’s a 9-step guide to calculating your credit card interest
Surefire X300U-A 600 Lumen LED WeaponLight Rail Lock

Specs:

  • Virtually indestructible LED regulated to maximize output and runtime
  • Tactical-level output with TIR lens for close- to longer-range applications
  • Quick-detach rail clamp
  • Accepts optional pistol grip and long gun forend switches
  • Weatherproof—O-ring and gasket sealed
  • Construction—High-strength aerospace aluminum with Mil-Spec anodizing; impact-resistant polymer; coated tempered window
  • Includes high-energy 123A batteries with 10-year shelf life

5. A sweet 1911 handgun

Because every SureFire needs a firearm attached (..and because this is MARSOC AF!).

Here’s a 9-step guide to calculating your credit card interest
M45A1 Close Quarter Battle Pistol

Specs:

  • M1070CQBP SPECIFICATIONS
  • CALIBER .45 ACP
  • WEIGHT 2.8lbs (1.27 kg)
  • CAPACITY 7+1 Wilson Magazine
  • OVERALL LENGTH 8.5in (21.59cm)
  • BARREL LENGTH 5in (12.7cm)
  • FIRING ACTION Single Action
  • FIRING SYSTEM Series 80

6. JetBoil stove

Because even operators need their coffee.

Here’s a 9-step guide to calculating your credit card interest
Jetboil Flash Cooking System

Specs:

  • Best Use Backpacking
  • Fuel Type Canister
  • Fuel Isobutane-propane
  • Auto Ignition Yes
  • Integrated Pot Yes
  • Burn Time (Max Flame) 100g canister: 42 minutes
  • Average Boil Time 4 min. 30 sec.
  • Dimensions 7.1 x 4.5 x 4.1 inches
  • Liquid Capacity (L) 1 liter
  • Liquid Capacity (fl. oz.) 33.8 fluid ounces
  • Weight 15.25 ounces

7. Kevlar helmet

Holidays are coming. So are the in-laws. Enough said.

Here’s a 9-step guide to calculating your credit card interest
3M Combat High Cut Helmet with Rails and NVG Shroud

Specs:

  • Meets or exceeds NIJ Level IIIA ballistic standard for penetration
  • Meets a minimum of 650 mps V-50 for 17 grain tested according to STANAG 2920
  • Shell sizes: S-XL
  • Variable thickness, 7 impact absorbing pads can be adjusted or removed for individual comfort
  • Pad thickness sizes: standard size 6 @ 3/4″ or optimal size 8 @ 1″
  • Weight: starting at 2.4 lbs (small)
  • Includes: Wilcox NVG mount and side accessory rails

8. Hammock

Sometimes an operator just needs to hang shit in the back yard and sleep there.

Here’s a 9-step guide to calculating your credit card interest
OneLink Sleep System – JungleNest

Specs:

  • JungleNest Hammock
  • Your Choice of Atlas or Helios Straps
  • Your Choice of Rain Tarp
  • Set of Carabiners Included
  • Set of Stakes Included

9. Combat boots

For stomping on all those battery operated toys his mother-in-law is going to send the kids this year.

Here’s a 9-step guide to calculating your credit card interest
Nike Special Field Men’s Boot

Specs:

  • Quick-drying synthetic leather overlays for durability and support
  • Multiple ventilation zones that allow the boot to breathe and drain quickly
  • Genuine leather footbed for durability, flexibility and comfort
  • Nike Free-inspired outsole, designed for traction and natural range of motion
  • Sticky rubber forefoot lugs for exceptional traction on all terrain
  • Weight: 15.9 ounces (men’s size 9)

10. Backpacking stove

For when the holidays get to be too much and he takes his SureFire, JungleNest and JetBoil out to the woods for a few days. He’ll need to cook.

Here’s a 9-step guide to calculating your credit card interest
MSR WhisperLite Universal Backpacking Stove

Specs:

  • Best Use Backpacking
  • Fuel Type Canister, Liquid
  • Fuel Auto, Isobutane-propane, White Gas, Kerosene
  • Burn Time (Max Flame) (20 oz.white gas) 1 hr. 50 min. / (8 oz. isobutane) 1 hr. 15 min.
  • Average Boil Time (White gas) 3 min. 30 sec. / (isobutane) 3 min. 45 sec.
  • Dimensions 6 x 6 x 4.75 inches
  • Weight (Stove, pump & canister mount) 13.7 ounces
MIGHTY MONEY

How to use a TSP to invest in real estate

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.

Why TSP?

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.

This article originally appeared on Active Duty Passive Income. Follow them on Facebook.

MIGHTY MONEY

Time to slay the myth around the magical unicorn called the “VA Loan”

Since transitioning out of the military, I’ve had the, um, “pleasure” of being around a lot more civilians. Some of the questions I’m asked on an annoyingly regular basis are, “Aren’t VA loans awesome? Don’t you get a free house? Did you get yours?”


Here’s a 9-step guide to calculating your credit card interest

After polling some veterans, I realized I should give a little brief on the subject. Time to slay the myth around what a VA loan is or isn’t.

First: The VA loan is, in fact, not a loan at all.

The VA Loan Program, created in 1944 as part of the Servicemen’s Readjustment Act, is a service the Department of Veteran Affairs created to help veterans returning from WWII buy a home.

According to the VA website, “VA Home Loans are provided by private lenders, such as banks and mortgage companies. VA guarantees a portion of the loan, enabling the lender to provide you with more favorable terms.”

Essentially, the VA will co-sign a loan with you, and that gives you a few perks.

Why is co-signing helpful?

When new adults try to rent an apartment or buy a car, most people won’t trust them unless they get a “guarantor” to co-sign the loan or the lease, usually in the form of a parent or older family member. After faithfully paying rent and payments on a loan or two, civilians in their 20s build up credit and no longer need anyone to sign off their financial choices.

Military personnel and veterans are a bit different. Our lifestyle inherently makes us look financially untrustworthy.

How are you 24 with no rental history?” I live in a barracks.

You seem to have moved every two years...” Yep.

You disappeared from our system for over a year except for credit card transactions from… Afghanistan. Are you a terrorist?” It’s called deployment!

Here’s a 9-step guide to calculating your credit card interest

Luckily, we have an Uncle Sam willing to co-sign on such a big purchase, or what’s called a Purchase Loan. You’ll be able to get better interest rates than your credit alone could get you, and you can skip the down payment.

Bonus: Uncle Sam will also insure the transaction, allowing you to skip Private Mortgage Insurance.

The Devil’s Details

Just because you can get a loan for down, doesn’t mean you should. Regular people are expected to drop at least 20% value of the house as a down payment.

Here are three different scenarios. Same house, same interest rate, same 30-year loan.

Here’s a 9-step guide to calculating your credit card interest
Here’s a 9-step guide to calculating your credit card interest
Here’s a 9-step guide to calculating your credit card interest

The less you pay upfront, the more you have to pay in compounded interest for the next 30 years. 30 years. That’s your entire military career plus half your next career!

Being able to do less of a down payment is useful in a few scenarios. For example, if you live in California, chances are you won’t ever have 0K cash for a 20% down payment on the crazy prices out here.

A few resources to see how much you can afford while buying a house: RedFin has a quick calculator (above) as well as a more in-depth option. USAA also has one with different loans they offer.

Warning: Anything offered by Uncle Sam comes with a catch

According to the VA website, “VA-guaranteed loans are available for homes for your occupancy or a spouse and/or dependent (for active duty service members). To be eligible, you must have satisfactory credit, sufficient income to meet the expected monthly obligations, and a valid Certificate of Eligibility (COE).”
Here’s a 9-step guide to calculating your credit card interest

A few takeaways:

  • VA Loans are only for houses you will live in, NOT commercial or investment properties.
  • You have to live in the house for at least one year.
  • You can’t buy a multi-family or multi-unit property. No duplexes or apartment buildings (Trust me, I tried).
  • Banks set the terms of the loan (interest rate, payment schedule, etc.) based on your credit and current job, not the VA.
  • The VA might not approve you.
  • Requires at least 181 days active duty completed to be eligible.
  • Dishonorable discharge not eligible
  • Some dependents are eligible
  • Can be used to BUILD a house
  • Receiving a Certificate of Eligibility is required
  • There is a loan fee charged by the VA
  • Closing costs still have to be paid (typically 2-5% of the loan)
  • There is a limit on how much you can borrow without making a down payment based upon where in the country you live.

When good loans go bad

After nearly an hour and being transferred 7 times, I finally spoke to the most unenthusiastic Federal Employee in existence to answer my unanswerable question: “Are VA loans any different in foreclosure or the foreclosure process than a regular civilian mortgage?”

The answer: No, mostly.

The VA will not step in and save you, there are no cash handouts, and the VA will not shield you from the banks that are after their money. The VA will take care of a few fees dealing with the lenders, but that is about it. For more questions: 1-877-827-3702 or visit the payment problems page.

Articles

National Guard chief says ‘tie goes to the soldier’ in California re-enlistment bonus scandal

The head of the National Guard said Oct. 26 that the Pentagon will continue to investigate re-enlistment bonuses paid to thousands of California National Guard soldiers a decade ago and will force those who wrongfully accepted them to pay the money back.


Chief of the U.S. National Guard Bureau Air Force Gen. Joseph Lengyel said his office is looking into more than 13,600 cases that could be fraudulent, but he admitted investigators have to prove that the soldier knew they were accepting upwards of $15,000 they didn’t qualify for.

Here’s a 9-step guide to calculating your credit card interest
Sgt. Jeffrey Nelan, a Infantryman with the 184th Security Force Assistance Team, California National Guard, plays with Afghan children during a leadership engagement at the Afghan Uniformed Police headquarters in Uruzgan Province, Afghanistan, Sept. 25, 2013. | U.S. Army photo by Cpl. Harold Flynn

“The tie goes to the soldier,” Lengyel said at a breakfast meeting with defense reporters in Washington. “If their hands are clean where this soldier is doing their duty and doing their job, it is not our intent to try to enforce this hardship on them 10 years later.”

A nationwide furor erupted after a Los Angeles Times story revealed the California National Guard was demanding repayment with interest for some bonuses it doled out to its Guard troops as an incentive to re-enlist during the height of the Iraq war. The former head of the  state’s Guard incentive program was later convicted of filing over $15 million in false claims and the bureau began looking into the scope of the problem in 2012.

Some soldiers, the Times story alleges, have been forced to pay pack tens of thousands of dollars to the government after nearly a decade — some who sustained severe injuries during their subsequent deployments and have been financially ruined by the errors.

President Obama weighed in on the scandal Oct. 25 and reportedly ordered the Pentagon to speed up the audits, but he stopped short of asking for a blanket amnesty, the Times said.

Pentagon chief Ash Carter said in a statement the next day that he’s ordered a suspension of the paybacks and has asked his office to establish a more streamlined process to investigate fraud claims and allow Guard soldiers a speedier appeal.

“This process has dragged on too long, for too many service members,” Carter said. “Too many cases have languished without action. That’s unfair to service members and to taxpayers.”

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Guard officials claim over 13,600 questionable bonuses were paid out to California soldiers in the mid-2000s — some for re-enlistment incentives, others for education reimbursement. About 1,100 bonuses were given to soldiers who officials allege were not entitled to them, about 4,000 were error free and about 5,300 had paperwork errors. There are still about 3,200 that Guard officials are still trying to track down.

So far about 2,000 soldiers have been asked to pay back all or part of their bonus cash, Guard officials say.

Lengyel explained some of the more egregious cases included officers who took the cash to re-up when the money was intended to help fill the enlisted ranks, some who took bonuses to stay in certain jobs even though they were already in the process of changing their roles in the Army Guard and others who took re-enlisted bonuses despite being on track to take a slot at officer candidate’s school.

“Was there an intent to trick the system, to take advantage of the fact that apparently there’s some new sheriff in town who’s handing out bonuses?” Lengyel wondered. “Unfortunately with all of this was mixed in some proven intent to defraud the government, in some cases. There was some intent to take money knowingly that you weren’t entitled to by some people.”

But he added that likely the vast majority of soldiers who took the bonuses didn’t have any intent to illegally work the system.

“We think there are a lot of people out there who were 22-year-old soldiers who were given information that they thought by all means they were entitled to the money,” Lengyel said. “They were told they could take this money, they were told that they were entitled to this money, they took the money, the re-enlisted and they went about whatever they were doing and they were given bad data.”

Guard officials say there are more cases of alleged fraud in the re-enlistment bonuses for National Guard troops in other states, but that they pale in comparison to the California errors. Lengyel said in all about $50 million in questionable bonuses were paid out in California during the period, and the Guard is investigating each one individually.

The National Guard is granting exceptions, he added, particularly for those who were paid bonuses without submitting records that they were actually eligible. Lengyel said, for example, a bonus paid out to a soldier that didn’t forward a copy of a high school diploma will likely be given a pass since he couldn’t have joined the Guard without it in the first place.

“That’s a technicality by which this member shouldn’t be levied a fine,” Lengyel said. “The blanket rule is to do the right thing.”

Lawmakers on both sides of the aisle have been outraged by the story, with some already calling for an investigation into the issue and forwarding language to an upcoming defense bill that would give some bonus recipients amnesty. National Guard officials say they did notify Congress of the potential for bonus fraud but nothing was done.

Vet groups have been quick to side with California guardsmen, arguing it’s unfair to put so many soldiers in financial peril due to a former military official’s malfeasance.

“If any of these people were misled about their own eligibility for the bonus with the intent to keep them on, they shouldn’t be held responsible for that,” said John Hoellwarth, National Communications Director for AMVETS. “We think the benefit of the doubt has to be with the soldiers,”

Lengyel said his office is sending investigators to California to help speed up the process of determining whether a bonus or incentive was paid in error in hopes of helping affected soldiers get on with their lives.

“We’re focused on helping those service members who were doing the right thing and served their country and thought they were entitled to a bonus to get this out of their past and out of their way,” Lengyel said. “And we want to help California do that, and help the service members do that as quickly as we possibly can.”

MIGHTY MONEY

Finance Friday: 4 things to look for in finding the right lender

When you’ve made the decision to start shopping for a home loan, it is important to make sure you find a lender who will be your partner in the home buying process. It is encouraged to shop around; you won’t be penalized because the credit bureaus expect it. This is a lot of money you’re about to invest! The most frequently asked question from home loan shoppers is, “What is your interest rate?” but it is absolutely essential to understand that there is so much more to a home loan than just a rate.


Dealmakers and breakers beyond the stated interest rate:

Here’s a 9-step guide to calculating your credit card interest

media.defense.gov

Are there fees or points baked into the loan?

You want to make an apples-to-apples comparison, and that goes far beyond rate. Take a look in “Section A” of the lender estimate to look out for things such as origination fees, processing fees, underwriting fees, and points. All of these fees impact your bottom line, and even if the interest rate is better, it could still be the worse deal for you. Mortgage math can be complicated; you want a lender that will not charge these fees and break down your estimate line by line. Your lender should empower you to make an informed decision, rather than boxing you in a loan product that wasn’t necessarily the “right choice” for you.

Is your lender accessible?

When you’re out shopping for a home on your evening and weekend time, you want someone who is available to answer financing questions on the particular property. A good lender will work real-time with your Realtor to send over updated approval letters specific to the home, to include accurate property tax information (which is important because I’ve seen many cases where a lower-priced house costs more monthly because of taxes or HOA). You want a lender who will answer your frantic calls on the weekend when you have a burning question that just can’t wait. You want a lender who will answer a text when you have something pop up. You want a partner in the process that values you as a person, not just another file.

Here’s a 9-step guide to calculating your credit card interest

Can you close on time?

Look at your lender’s track record of closing turn time. Some lenders will advertise interest rates with a lock period of 45+ days. That is an indicator of how long it is going to take them to get the job done. Most mortgages need to close within 30 days or less, and the last thing you want is to jeopardize the contract on your home or the sweet rate you’ve locked in.

Does your lender educate you?

You want a trusted guide that takes the time to answer all of the questions you ask, and the ones you didn’t. A mortgage loan is full of information you don’t know that you don’t know. You want someone who takes the time to explain #allofthethings and makes you feel well informed and empowered throughout the entire process, start to finish.

Bottom line is you want to feel like you’re working with a lender that is your advocate and partner throughout the entire home purchase experience. It is important to have a relationship you can trust with the most important of all investments – your home.

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