In an age when foreclosures are at a record pace, credit card debt is hitting new highs and personal savings are at an all time low, thousands of America’s military are worried about their financial future as they defend our Country. Many turn to payday lenders with high fees and interest rates to solve their immediate financial needs.
Financial education – a skill young people desperately need – isn’t taught in high schools. So for many military personnel, they enter the military without any knowledge on how to handle their finances. This can lead to financial problems and military debt since it’s the first time many of them have to make financial decisions for themselves.
This lack of financial education is evident in a recent Associated Press report stating that thousands of U.S. troops are being banned from serving overseas because they are deep in debt. Because of this high level of debt they are considered security risks. On top of that, many unscrupulous payday lenders are taking unfair advantage of many members of the military by charging them fees and interest rates that make it almost impossible for them to get out of the hole.
You can become financially secure in the military with some simple steps. The tips below will put you on the path to financial freedom.
1. Cut your expenses. To afford the items you would like to purchase, start by listing everything that you want to buy in the order you want to buy them. This will help you focus your spending on the things you want the most.
To avoid wasting money, keep track of your daily expenses for a month. Find out where you spend your money by writing down everything you purchase. If you’re spending four dollars on a cup of coffee during the week that adds up to more that $1,000 a year. You’ll find out quickly that those small purchase add up fast.
Develop a military budget by writing down your take home pay and listing your current expenses. If you’re spending more than you make, it’s time to cut those expenses or work extra hard to get that promotion.
2. Create a savings plan. The average American spends more than they earn, so become a money rebel and save money. With a simple investment plan, just by saving $250 a month starting at age 18, you could reach millionaire status by age 40.
Get in the habit of paying yourself first. Have your bank automatically transfer a portion of your money from a checking account to a savings account or start an allotment directly to your savings account. Each time you deposit your paycheck, money is automatically transferred into your savings before you have a chance to spend it. That way you’ll have military money set aside for the long-term and available for the things you want to buy now.
Many of you are serving the country overseas now in hostile territory and earning hostile fire and imminent danger pay. You’ll find this is an ideal way to keep more money in your pocket. Take advantage of the military programs such as TSP (Thrift Savings Plan) and SDP (Savings Deposit Program) that allow you to save military money and earn a higher return when compared with most civilian savings accounts. By simply setting that military money aside, it will help you to have money in the bank and a way to treat yourself when your return for a job well done.
3. Have the government buy your home. You can become a homeowner using the benefits the military offers. VA loans allow you to borrow 100% of the purchase price which means you won’t need money for a down payment in most cases. Combine that with BAH (Basic Allowance for Housing) for civilian housing and you can have your mortgage payments paid for.
This is a huge benefit because you purchase a $100,000 home your property could be valued at over $570,000 in 30 years. The best part is using BAH you could of not even made a payment with your own money.
4. Invest in yourself. The military offers education benefits through the G.I. Bill, VEAP (Veterans Educational Assistance Program), LRP (Loan Repayment Programs) and TA (Tuition Assistance) may all help you to get a higher education. Just like in the civilian world the higher education you receive the more likely you are to get promoted and paid more.
You defend this country to protect the freedom of all American’s; and you deserve to be financially free to live the lifestyle you want without having to worry about military debt. The tips above will help you avoid the shackles of life long debt and put you on the road to financial freedom.
By: Vince Shorb
Archive for November, 2009
One thing is certain with healthcare: premiums continue to climb higher.
As a result, more employees may find that health-savings accounts (HSA) have been added to their benefits packets this year, in some cases replacing HMO and PPO offerings.
HSAs are tax-free accounts tied to an insurance policy with a high deductible of $1,250 for an individual and $2,500 for a family. After the deductible is reached, policy holders receive comprehensive coverage.
To ease the burden of those out-of-pocket costs, participants can contribute, pre-tax, up to $2,650 for an individual and $5,250 for a family into an HSA. Withdrawals from HSAs are tax-free as long as they are used for medical purposes.
Unspent HSA money automatically rolls year to year and those funds can either earn interest or be invested into participating mutual funds for greater returns – potentially building a tax-free nest egg for healthcare costs.
Consider it the 401(k) plan for healthcare
Victoria Craig Bunce, director of research and policy at the Council for Affordable Health Insurance, said employers can save between 25 percent and 30 percent on health premiums by switching to an HSA. Those savings usually translate into lower premiums for employees – savings that employees can use to maximize their health savings accounts.
A study by Mellon Human Resources and Investor Solutions in May indicated that 7 percent of the over 360 employers surveyed already offer HSA plans to employees and 32 percent plan to offer them in 2006.
While it sounds like a win-win for both employers and employees, it’s still a hard sell for some companies. With some current healthcare deductibles as low as $150, employees may get put off by HSA’s much higher ones. And there’s something disconcerting about paying the entire cost of a doctor’s visit up-front, rather than the standard $15 or $20 co-pay.
David Bauer, past chairman of the Independent Insurance Agents and Brokers of New York, said in New York, many carriers have filed HSA offerings but despite interest from employers, clients are still cautious about signing up for these products.
“With these high deductibles, employers are skeptical about HSA renewal the following year,” he said.
He added that the perception that HSAs are for the “healthy and wealthy,” rather than the average wage earner, is also proving to be a hurdle for early adoption.
Wave of the future
But advocates insist that HSAs, which only became available in January 2004, are the wave of the future.
“It’s common that people are afraid of change,” said Dr. Stephen Neeleman, chief executive of HSA provider HealthEquity, and co-author of The Complete HSA Guidebook. “In 1981, when people began opting for 401(k) plans from traditional pension plans, we saw slower adoption.”
Neeleman added that of the 800 businesses HealthEquity services, over 90 percent of employers also contribute a portion of their cost savings towards partially funding high deductibles – making HSAs an increasingly attractive option.
Consumers may also want to consider the extra control they have over the type of healthcare they receive through an HSA, said Tom Richards, senior vice president of products at CIGNA.
HSA participants are no longer bound by referrals to receive medical care and, in some cases, physicians are willing to negotiate lower prices for up-front payment because it saves them the trouble of dealing with insurance companies.
Richards added that HSAs are also appealing because of their portability – if an employee leaves his company, he can transfer the funds to his new company’s HSA. Considering the benefits, CIGNA expects overall consumer driven plans to account for 3 percent to 5 percent of its market next year, he said.
Not for everyone
HSAs, however, aren’t for everyone. It’s generally a good idea to sit with a financial planner to see if the savings really do add up. Keep in mind that while savings are accumulating in the first year, if there is a sudden expensive health emergency, you may not necessarily have the funds to cover it in your HSA. That mean you’re responsible for those out-of-pockets costs.
But analysts expect HSAs to become an increasingly common choice for employers.
Peter Delano, senior analyst at research and consulting firm Tower Group said that HSA assets will reach between $10 billion to $26 billion by the end of 2010. Just don’t expect traditional healthcare plans to fall by the wayside, he said.
By: Tushar Mathur
A free savings banking account is a zero balance savings account. The greatest advantage of having such an account is that it saves you from the hassle of maintaining the average quarterly balance. All you have to do is to simply pay a small annual fee and you can enjoy a host of free benefits and services. The wide array of advantages include International Debit Card, Payable at Par Cheque Book, Insurance, Internet Banking, Any Branch Banking, Family Account facility, Phone Banking, Mobile Banking, Electronic Funds Transfer, Statement of account by e-mail, and Utility Bill Payments.
You can use your debit card offered by your free savings banking account to access your account at any of the ATMs of your bank. With this debit card, you can perform a range of transactions, including balance enquiry, cash or check deposit, cash withdrawal, print or view mini-statement, fast withdrawal of cash on default account, pin change, check book request, statement of account request, funds transfer, and even mobile recharge.
Electronic Funds Transfer facility, offered by your free savings banking account, is a powerful funds transfer product through electronic means. Using this facility, you can transfer funds from your free savings banking account to any other bank account directly by electronic means without the use of
physical instruments such as cheque, demand drafts, or pay orders. Most banks offer this facility free of cost. However, you can also find many other banks that charge a certain amount of fee against this service.
By: John Gutenburg