PER$ONAL FINANCIAL MANAGEMENT OPNAVINST 1740.5B YN1 Amita Jenkins TOPICS OF DISCUSSION MILITARY SAVES THRIFT SAVINGS PLAN (TSP) CREDIT SCORING TAKING STEPS TO AVOID IDENTITY THEFT PERSONAL FINANCIAL MANAGEMENT (PFM) PAYDAY LOANS HOME DOWN PAYMENTS & CLOSING COSTS STIPENDS AVAILABLE TO TROOPS BUYING A NEW OR USED CAR MILITARY SAVES The first step is to set a savings (or debt reduction) goal. People with written goals and plan to reach them are much more likely to succeed. If you have a written savings goal, you’re likely to save twice as much money as someone who does not have a goal! When you set your first goal, remember the SMART goal-setting guidelines. Make sure your goal is: • Specific, significant to your situation and the goal should not stretch you beyond your means. (i.e.) the set goal is more than you are able to go; • Measurable, so you are able to track your progress easily. It should also be meaningful to you and your family and should motivate you to want to achieve your goal; • Achievable, make sure the goal is agreed upon and includes your spouse if you’re married, and ensure you are both action-oriented and on the same page; • Results-oriented, realistic in light of your personal situation as well as a rewarding experience for all involved; • Time-based, Set a date that is comfortable for your budget. The target goal should also be tangible, and as we discussed before trackable. Make your Money Grow !! • PERSONAL FINANCES • THRIFT SAVINGS PLAN (TSP) • TSP is comprised of six funds. Sailors can allocate savings to any or all of these funds to match their financial objectives. • The six funds are: - Government Securities Investment (G) Fund — invested in short-term, risk-free U.S. Treasury securities that are specially issued to the TSP. - Fixed Income Index Investment (F) Fund — invested in a bond index fund that tracks the Lehman Brothers U.S. Aggregate (LBA) bond index. - Common Stock Index Investment (C) Fund — invested in a stock index fund that tracks the Standard & Poor’s (S&P) 500 stock index (which comprises large companies). - Small Capitalization Stock Index Investment (S) Fund — invested in a stock index fund that tracks the Wilshire 4500 stock index (which comprises small and medium companies). - International Stock Index Investment (I) Fund — invested in a stock index fund that tracks the Morgan Stanley Capital International EAFE (Europe, Australasia, Far East) stock index (which comprises stocks in 21 countries). - Lifecycle (L) Fund—diversified account among the G, F, C, S, and I Funds, using professionally determined investment mixes that are tailored to different time horizons. • All these funds except the G Fund may lose money and past rates of return are not indicative of future performance. Before investing, Sailors should look at their current financial situation, time until retirement and investment risk tolerance. Armed with complete, accurate information, Sailors and their families can decide how much to invest in which fund. CREDIT SCORING • PERSONAL FINANCES • CREDIT SCORING • Lenders use a system to grade, or score, your credit. Paying your bills late can negatively impact your credit history, which directly affects your credit score. Lenders use this score to decide if you are a good credit risk. If your score places you in an increased-risk category, you may still qualify for the loan, but at a higher interest rate. To start understanding your credit standing, check with credit reporting agencies such as Equifax, Experian, and Trans Union to monitor what would-be lenders are seeing. If you have been denied a loan because of an adverse credit rating, you can receive a free copy of your credit report if you request it within 60 days. If you want a copy of your credit report independent of the loan process, it's available for free from AnnualCreditReport.com. TAKING STEPS TO AVOID IDENTITY THEFT.. • Identity theft, according to the Federal Trade Commission, occurs when someone uses your personal information, such as your name, Social Security number (SSN), credit card number or other identifying information, without your permission to commit fraud or other crimes. • Always be alert and take nothing for granted when it comes to your identity. Someone could be watching and I can assure you it isn’t GEICO • The best way to deter identity theft is to make it harder for thieves to gain access to your personal information. Guard your SSN, and never put your SSN on your checks or any other paperwork that without a privacy act cover sheet if at all possible. • It’s best to check your credit report at least twice a year, making sure you get reports from all three of the major credit bureaus. • You may be surprised by how much information a thief could get just by rummaging through your trash. A cross shredder is a great investment to ensure potential compromise control. • Keep an eye on your mail to ensure that bills and other financial documents arrive on time, and follow up with creditors if they don’t. • Robust passwords, a good firewall, regular updates to your operating system and regular updates to your anti-virus software are necessary. • If you are a victim of identify theft close accounts that may have been tampered with or opened fraudulently; file a police report; and file a complaint reporting identity theft. PERSONAL FINANCIAL MANAGEMENT (PFM) • Make your Money Grow !! • In November 1990, the Navy mandated financial education, training, and counseling for Navy personnel with the issuance of OPNAVINST 1740.5B. This instruction mandates the Personal Financial Management (PFM) Education, Training and Counseling Program. In a cost conscious Navy, the PFM program makes good business sense for the bottom line. The Navy's Personal Financial Management Education Program is designed to prevent potential personal problems that could cost valuable time and money and could detract from mission readiness. Now, in its third revision, OPNAVINST 1740.5B, dated 7 May 2007, continues to mandate the Navy's PFM program. PAYDAY LOANS • Your thoughts • Good Idea/Bad Idea • Pro’s/ Cons • While these online advertisements may sound enticing to cash- strapped service members, they could ultimately cost them their jobs. Members of the military who unwittingly find themselves in dire financial straits with so-called “payday lenders” are often surprised when their security clearances are either revoked or denied, an increasingly common scenario that not only ruins career opportunities but hinders military readiness, according to Navy officials. Companies offer to lend you money until payday. All you have to do is write a postdated check for the loan amount plus interest or service charges. They tell you that your check will be cashed after payday or you can roll the loan over until the following payday for an additional fee. The extremely short term of the loan results in interest charges as high as 300 to 400 percent. • Please Note * A loan at 300 percent interest is not a good bargain. Military Housing Assistance Fund (MHAF) • DOWN PAYMENT, CLOSING COSTS, EVEN HOUSE PAYMENTS AVAILABLE TO TROOPS • A nonprofit organization, Military Housing Assistance Fund (MHAF), is offering a solution for our service men and women who want to buy a home but cannot afford the down payment and/or closing costs. • A concerned group of Denver and Memphis business people started MHAF when they realized how few military people own their own homes. The Department of Housing and Urban Development reports homeownership at an all time high, with 68.3% of all Americans owning their own homes. • Unfortunately, servicemen and women are being left behind. In a Rand Corporation study only 27.3% of military families own their own homes. When military families were asked why they do not own their own homes, nearly half said, "because they cannot afford to purchase a home." • Military Housing Assistance fund creates the opportunity for US service members to realize the American Dream of home ownership. It also offers private citizens the opportunity to contribute needed support to those in military uniform who protect the nation's freedoms every day. • MHAF gives 100% of the funds it receives to the intended beneficiaries. Every dollar the MHAF receives is given either as gifts to service men and women to assist them in purchasing their own homes, or to those serving in combat zones who are unable to make their monthly mortgage payments. BUYING A NEW OR USED CAR • There are many ways car dealers can rip you off for example charging more than a car is worth, offering fabulously low interest rates that are later switched to higher rates, charging for unnecessary luxury items that don’t exist, charging for unnecessary services, or requesting a down payment without a signed contract. • Do your research before you even set foot on the lot. Try the National Automobile Dealers Association or the Kelley Blue Book for pricing guidelines and car-buying advice that can help you make a cost-efficient purchase. • Once you've selected a car and negotiated the price, have your sales contract reviewed by Navy Legal Services or Marine Corps Legal Assistance, or by a financial counselor at the Navy Fleet and Family Support Center or Marine Corps Community Services. If the dealer won't wait or is evasive about financial details, find a new dealer. Another option is to go to your local bank open a savings account and have them do an analysis checking what the car you are looking at is worth. You can then opt to request that the bank write you a check for that car’s worth according to your credit eligibility. You arrive at the car dealership with your check and they then have a choice of letting you walk away with the car that you want or you walking away with a check worth X thousand dollars and getting that car at another lot. You then eliminate most of the risks mentioned before, For more information and helpful tips/ links please refer to http://www.lifelines.navy.mil/lifelines/MilitaryLife/PersonalFinances/index.htm That concludes the training on personal financial management… Hope you learned a lot. We will find out sooner rather than later because its… $$ GAME TIME $$ Come on down !!!