Military Saves

E-Newsletter Welcome... 

Welcome to the Military Saver e-newsletter. This message is a supplement to the monthly e-Wealth Coach letters and the quarterly American Saver newsletter, and is intended to keep Military Savers informed about campaign news, suggest ways you can spread the message to build wealth through savings and debt reduction, and to share inspiring stories about individual Savers and military organizations that help themselves and their members by promoting savings. 

Savers Tip 

by TSgt Shaunta Hopson

I came into the Air Force at 23 years old in 1993 with about 12 outstanding bills (hospital bills, car loan, car insurance, school loans, credit cards, etc.). You name it, I had the bill. Thanks to the Family Support Center, Dave Ramsey's Financial Peace University, and many other sources, I now have no outstanding bills. I only have rent and utilities (not even a car payment). I want to help other military members get out of debt. I was able to pay off all my bills by year 1999. I used money from TDYs and deployments to pay off my bills from the least to the greatest principal. At the same time, I started building an Emergency Fund. Now I have the following:

• A Good Basic Need Budgeting Plan
• Money Market
• Emergency Fund
• Roth IRA
• TSP

I hardly use credit cards and I access my credit report annually through www.annualcreditreport.com. This website is free unless you want your credit score along with it. The credit score costs about $5.00. I take whatever financial management information the military has to offer and apply them to my own financial management and it works. I am always willing to learn more and help other people get a handle on their finances.

TSgt Hopson's Tips:  Use the money you get from TDYs and deployments to pay off your bills from the least to the greatest principal. Start building an emergency fund.

Send us your Savers Tips:  info@militarysaves.org.   

Did you know?

• ...if you have artificial nails, you will spend around $600 a year to keep them up.
• ...if you have your uniforms laundered, you will spend around $600 a year to maintain them. (The new washable ABU/ACU or Digital BDU are wash and wear and more cost effective over time!!) 

$600 a year at 8% interest = $10,000 in 10 years!

To share your story email info@militarysaves.org. Please include your name, rank and/or title and organization name, duty location, and the name and contact information for your public affairs officer (if available). We'd like to include your photo and/or video of your savings message.

Sarah Shirley, Director and Corporate/Association Liaison sarah@militarysaves.org 

Julie Kyrazis, Assistant Director and Military Liaison julie@militarysaves.org

Suze Orman Shares Wealth Plans,           Thanks Servicemembers By Lisa Daniel American Forces Press Service

WASHINGTON, Aug. 29, 2008 - Personal finance expert and motivational speaker Suze Orman created her brand of mega-success by bringing financial planning out of the echelons of millionaires clubs and delivering it to middle class people -- and those aspiring to middle class. Earlier this year, Time magazine named the best-selling author as one of the world's 100 most influential people. Orman frequently takes calls from servicemembers on CNBC's "The Suze Orman Show," and has reached out to troops by making speaking appearances at bases and by being involved in the www.MilitarySaves.com campaign. Orman recently spoke to American Forces Press Service about taking her wealth-building formula - in a nutshell, to pay off debts and save more -- to military members.  Read more of Lisa Daniel's article on Suze Orman at:  http://www.defenselink.mil/news/newsarticle.aspx?id=50979

Ask Wendy

by Wendy Christiansen

Dear Wendy,

I keep hearing about TSP.  What is it and why should I enroll?

The Thrift Savings Plan (TSP) is a Government-sponsored retirement savings and investment plan. The TSP offers the same type of savings and tax benefits that many private corporations offer their employees under "401(k)" plans.  With the TSP, your income is reduced by the amount you contribute.  That means less taxes!  Because of this, the IRS limits the annual amount you can contribute.  For 2008, the limit is $15,500.   This limit will be higher if you are over the age of 50.  This allows you to "catch up" on saving for your retirement.  All money that goes into the account, as well as any investment earnings, will be taxed when it is taken out.   

Once the money is in the TSP, you can choose from a variety of investment funds.  This will help your money to grow for your retirement years.  You can check up on your plan with the TSP website, www.tsp.gov.  This website allows you to move money between funds as well as decide where new funds go.  The website is a great resource for staying on top of your retirement money in the TSP. 

To start contributing to the TSP, fill out form TSP-U-1 (http://www.tsp.gov/uniserv/forms/tsp-u-1.pdf) and turn it in to your local unit.  You can also use this form to change the amount of your contributions as needed. 

The Thrift Savings Plan is a great way to save for your retirement.  The money is automatically taken out of your check, allowing you to save without noticing it as much.  Also, we need to remember that Social Security will most likely not be enough when we retire.  We need to act as if we alone are responsible for the money we will need in retirement.

• By using TSP:  if you are in the 15% tax bracket and contribute just 5% (about $208/month or $2500/year) you will save $375 in Federal Taxes (15% x 2,500 = $375) and you'll save more if you pay state taxes.  In addition, that $2500 will earn tax free interest!!

Send any questions you want Wendy to answer to info@militarysaves.org.

More on TSP...

by Gisile Goethe,  PM, Education and Training, Office of Participant Services, Federal Retirement Thrift Investment Board

When military members deploy to a combat zone they contribute tax-free contributions to the TSP because the contributions are deducted from tax-free pay.  The contributions to TSP made from tax-free pay remain tax-free when withdrawn. Earnings on these contributions accrue tax-deferred and are taxable when withdrawn like the regular TSP contributions made.  In fact, when making tax-free contributions, the TSP limit increases to $46,000!

I can't emphasize enough the tax free benefits of contributing to the TSP while deployed.  Not all will sock $46,000 in, but the ability to take that much hard-earned cash and invest it tax-free to accrue tax-deferred earnings is another great advantage to the TSP.  I CAN tell you how many upset members I've briefed that didn't know it at the time they deployed and wished they had made different investment decisions with their money or family income during that period that was put aside for retirement. 

Servicemembers Civil Relief Act (SCRA)

Have you recently been called up for active duty? Are you preparing for a long-term deployment that may affect your ability to meet legal or financial commitments? Or are you nearing the end of your active duty service? If the answer to any of these questions is yes, it's particularly important that you understand your rights-and responsibilities-under the Servicemembers Civil Relief Act (SCRA) of 2003. This article briefly describes the SCRA, explains how to invoke the law's protections, and tells you where to turn for legal help and more information.

SCRA in Brief

The primary purpose of the SCRA is to ease legal and financial burdens on military personnel and their families brought on by the demands of active duty. In the words of the Act, the provisions were designed to allow servicemembers to "devote their entire energy to the defense needs of the Nation."

SCRA extends relief to all Army, Air Force, Coast Guard, Marine Corps, and Navy servicemembers on active duty, including reservists, members of the National Guard and Air National Guard who have been activated for duty, and active-service commissioned officers of the Public Health Service and National Oceanic and Atmospheric Administration. A number of SCRA provisions also extend to spouses and other dependents, such as protection against eviction and relief related to the termination of residential and motor vehicle leases.

Primary SCRA Provisions

SCRA offers a variety of provisions to help active duty personnel meet their legal and financial obligations. But relief under the SCRA is not always automatic. You must affirmatively invoke or request relief. That is why you should familiarize yourself with the law's provisions and work with your nearest Armed Forces Legal Assistance Office to identify and invoke any SCRA protections that apply to your particular circumstances.

• Some of the more commonly invoked provisions include:
• Six percent cap on interest rates
• Credit rating protection
• Judicial relief
• Ability to terminate property leases
• Cancelation of automobile leases
• Relief from foreclosures and forced sales
• Termination and reinstatement of insurance
• State tax relief

What's New? How the SCRA Differs from the Law It Replaced

SCRA expands the protections provided under the original Soldiers' and Sailors' Civil Relief Act (SSCRA) of 1940, which was in effect until 2003. Because many of today's servicemembers may be more familiar with the old law, we have highlighted some important changes:

• A break for higher rents
• Interest on credit
• Increased life insurance coverage
• Tax relief for working spouses

For the whole story, go to:  www.SaveAndInvest.org

Military Saves was made possible in part through the generous support of the FINRA Investor Education Foundation. Please visit www.SaveAndInvest.org.  

Military Saves is also supported by Wells Fargo Bank, Chase Bank, and Dave Ramsey's Financial Peace University Military Edition. Together, we can build wealth, not debt!