A Financial Education Event
 

Financial First Aid Kit – Military Appreciation Month

In honor of military appreciation month, I’d like to highlight our Army son, Joshua. When he was born we started saying, “If he had been our first, he would have been our last.” That little boy had more energy and could get into more scrapes than all our other children combined. When he was eighteen months old, he stripped down to his diaper, took a plastic sword and chased his four older siblings around the house, thus earning the nickname “Conan, the baby barbarian.” By that age, he had also jumped off the top bunkbed (three stitches) and “flown” off our travel trailer (four stitches). Joshua was the reason we purchased a serious first aid kit. He’s now an Army Lt jumping out of airplanes at Fort Benning.

Just as every family needs a good first aid kit for those unexpected accidents, they also need a financial first aid kit, or practical ways to help safeguard their financial future.

  1. An Emergency Savings Account – This account is not an investment account, it doesn’t include IRAs, retirement accounts or CDs. Its purpose is not growth, but safety. These are funds that are accessed in the event of spouse unemployment, emergency home repairs, or unexpected auto repair bills. The best way to build this account is to establish a family budget. Go to your base’s Family Readiness Center to develop a budget for your current season of life. I recommend automatically transferring funds from a paycheck or checking account into a savings account every week. A good guideline is to save three months of living expenses for dual income households or six months for a single income family.
  2. Life & Health Insurance – For life insurance, you will need enough money so that your dependents could invest the money and live modestly on the proceeds. For military members, the best buy is still SGLI, or Servicemember’s Group Life Insurance. Members are automatically insured for the maximum amount of $400,000 unless an election is filed reducing the insurance by $50,000 increments or canceling it entirely.  Family Servicemembers’ Group Life Insurance (FSGLI) is a program extended to the spouses and dependent children of members insured under the SGLI program. FSGLI provides up to a maximum of $100,000 of insurance coverage for spouses, not to exceed the amount of SGLI the insured member has in force, and $10,000 for dependent children. The rates are inexpensive. If your situation requires additional life insurance or you are transitioning out of the military, look at USAA for the best rates for military members and their families. For health insurance, there’s healthcare.gov where you can find out about open enrollment season and how to get insurance plans changed or updated. Another good place to research a variety of plans is found at eHealthInsurance where you can compare plans. There’s also
  1. A Will –Here’s another easy one, that’s as easy as making an appointment with the JAG or taking advantage of mobile services that are sometimes offered at military conferences such as Yellow Ribbon. The main section of this critical document will assign a guardian for your children. In many states, the surviving spouse may only get one-third to one-half of the assets that were in your sole name. Your children get the rest and if they are minors, a court administrator could handle their money until they become adults. Make sure that the beneficiary designations on any 401(k) plans, IRAs, life insurance and bank accounts are also up to date. Another option is legal zoom, which can prepare a quick will at a low cost.
  2. A Retirement Account –A surprising number of military spouses, or reservists do not take advantage of the terrific tax-deferred accounts offered by their employer, which include 401(k) plans. The Thrift Savings Plan (TSP) is a Federal Government-sponsored retirement savings and investment plan and has great rates with low fees for administering the account It’s part of the new Blended Retirement System that is currently in place. This plan offers the similar tax benefits that many private corporations offer their employees under 401(k) plans and they are full portable upon leaving the military. Be sure your current TSP funds are not in the “G” fund for maximum benefit.
  3. A Good Credit Rating – The best way to rebuild good FICO, or credit score, is found in three steps: pay more than your minimum payment (even if it’s only $5/month more), pay a day early rather than a day late (set up automatic transfers from your checking account to your credit card company for minimum payments) and never let your available credit fall to less than 30% of the total credit available (for example, $2000 on a $6000 credit line.)  Each year, get a free copy of your credit report by going to Annual Credit Report or go into the base’s Family Support Center where they can also run a free copy of your report and check your score.
  4. A College Fund for Those Babies!–Select a college savings account that has low fees, a good selection of investments, plus a tax break. One of the many options is a Qualified State Tuition Plan, also known as 529 Plans. Be sure to research your state of record and their plans. These contributions will be tax-deferred and could even be tax-deductible from your state income tax if you are a resident of that state (check with your tax specialist). When the money is withdrawn for college, it is only taxed at the student’s income tax rate. If the child does not go to college, the money can be designated for another beneficiary or removed at a 10% penalty.

 

If you’re a family with a “Conan,” then make sure you have a First Aid Kit on hand. But don’t forget the fact that your family need a Financial First Aid kit as well.

I wanted to issue a special thank you to all our military families who serve, we appreciate you!

Rent-To-Own: Is It Ever A Good Idea?

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You’ve moved into a new place, started a new job and you’re beginning another phase of your life. The only problem is that you don’t have enough furniture for the new place and you realize you’ll also need a washer/dryer.  Then, miraculously, an ad pops up on social media for a place where you can go get name brand appliances and choose from dozens of options on exactly the kind of furniture you need—all for only $21.99 a month! YEA!!!  You’re saved! After all, you have a good job, the monthly payments aren’t going to break you and you deserve to make your new place comfortable, right?

Wait a minute, not so fast.

Is rent-to-own the best option? The answer is:  it depends.

How Does Rent-to-Own Work?

Usually, you’re renting from a well known store, but, in most cases, you’ll have to sign a third party contract. I remember one time when we bought a refrigerator and my husband thought, “Let’s use someone else’s money at 0% interest.”  The only problem was the third party contract indicated that those 0% payments were only for a fixed introductory period, then there were three options. We could buy the item, continue making payments (at 200% APR interest) or return the item to end our lease. We bought it out early, so that we were in the clear and vowed to never buy into this kind of a contract without understanding the fine print first.

 

Rent-to-own also means that if you fall behind on the payments, the leasing company can repossess your leased item and you don’t get any money back. There may be cheaper ways to pay because even if you have bad credit the options of  layaway, sub-prime credit cards or  bad-credit personal loans, which run 36% APR are better than the 200% APR of many rent-to-own programs.

 

When Is Rent-to-Own A Good Idea?

 

Despite the typical APR rates north of 200% for this kind of contract, there may be some anomalies when this option is not a bad thing for your bottom line. In fact, there are some instances, when using a rent-to-own option make sense:

 

  • If the interest rate stays relatively low (less than 3%) during the entire leasing term, and the term is 24 months or less, then you aren’t losing much. But read the fine print.
  • If you believe you’ll have the money to buy the item outright at the end of the low, fixed rate introductory period, then it could be a good way to keep some money in a rainy day account while you save up for the buy out.
  • If you need to diversify your loans to improve your credit score, and you qualify for low interest, then this kind of financial contract could help your credit score. But since diversification of loans only represents 10% of your credit score, it’s not worth paying higher interest rates to diversify.
  • If you are only in a location for a short amount of time (our sons have military training at bases for anywhere from 3 months to 10 months), and your interest rate is low, you could rent and turn the item back in when you move. But make sure the contract allows you to do so. If you must move yourself and your company doesn’t pay for a move, then renting a truck and moving that furniture cross country could cost more than it’s worth.
  • If you have the good credit score amongst your roommates and you all need to get furniture for the main living areas, then you could work a deal where they use your credit (your contribution) and they pay their part of the monthly payments (their contribution). But make sure the interest rates are low for the entire contract and that you trust your roommates enough to make the payments to you (on time) so that you can make the payment. At the end of the lease, you keep the furniture. This option may be more of a hassle than it’s worth. But if you are cash strapped, it might be just what you need.

 

Before You Sign

Let’s say that you’ve decided that Rent-to-own is the route that will work best for your budget and lifestyle. Here is your checklist before you ink that contract, if any of these are not clear are it’s revealed that they are not to your advantage, then think twice about this option. Here’s the list:

  • What are the monthly payments (including all fees)?
  • When are the payments due?
  • What is the total cost to own this item (all payments, interest and fees)?
  • Who insures damaged or theft?
  • If you miss a payment, will it be automatically repossessed?
  • Is the item new or used?

After You Sign

 

Let’s say you already signed a contract before you read this blog. Or, you’ve followed all the advice shared and decide that the contract will be a good option for you. Take these steps to protect yourself:

 

  • Follow the money. Make sure you are keeping your payment records because some rental companies have had problems with giving their customers credit for payments made.
  • Pay on time. Since 35% of your credit score is your credit history, it’s crucial that you make your payments on time or even before they are due. If possible, set up the payments to transfer from your bank account so that you never miss a payment.
  • There’s a chance your debt might be sold to a debt collector Know your rights in this situation as the Fair Debt Collection Practices Act requires debt collectors from harassing customers, calling them excessively and using abusive or deceptive practices to collect on the debt. 

In the Kay family, we like to live a debt free life and will usually save up to buy furniture or appliances before we would go into debt. This isn’t always possible for American consumers, in which case it’s good to know the nuances of Rent-to-Own for you or those you care about.

What has been YOUR experience with Rent-to-Own?

Smart Money Habits for Millennials (and Their Mamas)

The Kay Family had five babies in seven years. That roughly adds up to 3 kids in diapers at once, 10 years of not sleeping through the night, 4 teenage drivers at the same time, 3 kids in college at once and today, we have 5 millennials in their 20’s simultaneously.

Fun .

But the good news is that they eventually slept, pottied, drove, graduated and even mastered money habits in the journey. Here are the habits we helped teach our millennials to make sure they didn’t have to move home, they could remain financially independent, have a great start for their families, and still buy their mama nice birthday gifts.

Habit #1 – Create and Live By a Spending Plan

Many millennials have heard of the value of creating a budget and even have apps that help. But it’s of little use if they don’t know how to stick to it. Here are my favorite apps to help:

  • Mint Budgeting App – I met the founder of Mint, Aaron Patzer, in a green room, years ago, when we were both going to be on ABC News in NYC. At the time, he was building his success with Mint. I just remember him being (as he says in the video) “full of myself.” Ha! But his budgeting app is probably the best out there because it makes it easy to create a budget. You connect the Mint app to your bank and the app uses your details to help create a personalized budget.
  • PocketGuard Budget App – This app also connects to your bank accounts and shows you what you currently have in your pocket. It tracks your money to show what you are spending and automates where you’re going off budget and where you need to cut back.
  • You Need a Budget – This app’s claim to fame is that it creates a budget you can stick to based on the info provided in your bank accounts and spending habits. It even teaches you what to do if you overspend and how to live on last month’s income. This is the only app that cost money in my list and it’s $50 for the year, but there are hoards of devotees that say this app helped them to finally live on a budget.
  • GoodBudget – Back when dinosaurs roamed the financial space, there was an “envelope system” where you put the money you needed in each envelope labeled with expenses such as gas, food and entertainment. It helped Bob and I get out of 40K in consumer debt in only 2.5 years when we were first married. This app is the digital version of that system, making sure that everyone knows how much is left in the “envelope.”

You might need a money buddy to stay on track, too. Tiffany Aliche, The Budgetnista, talks about her journey on our fun podcast The Money Millhouse and how she went from broke to anything-but-broke through techniques that kept her on track.

Habit #2 – Cook Creatively and Consistently

Money evaporates when you order out for lunch or dinner more than one or two meals a week. Bob took leftover dinners (the

re’s a microwave and fridge at work) for our entire marriage and we calculate that he’s saved $20,000 by doing this! Make Pintrist your pal or watch The Food Network to learn easy ways to create nutritious and tasty meals. Ask for an Instant Pot for your next birthday and make more than you need for dinner so you’ll have leftovers for either lunch or dinner later in the week. Or freeze the leftovers. My daughter lived with roommates for a few years and they would assign different nights for each of them to cook to simplify the work. Cook more and your wallet and your waistline will thank you.

Habit #3 – Care About Your Retirement

When we take our Heroes At Home Financial Event on the road, we teach young service members the miracle of compounding interest with the mantra: start early, start small and stay committed. Be sure to start with funding a Roth IRA and take advantage of your company’s matching portion of your 401(k). Lacey Langford, an Accredited Financial Counselor gave some great tips on a segment called “I Aint Afraid of No Money.”  She discussed retirement planning from her experience in working with the military (but many tips apply to civilians as well.) If you’re military, be sure to go into your Family Readiness Center to discuss the Blended Retirement System and what your options are for your situation. It’s free and a benefit you can use early and often.

Habit #4 – Count the Cost of Debt

The average millennial college grad owes 37K in student loan debt and the average household owes $8500 in credit card debt. Work on minimizing the debt you accrue and pay off the debt you have so that you’ll have the flexibility to move or wait on the right job. One of my sons worked for JC Penney, and they eliminated his entire department. Most employees were freaking out because they had student loan debt, consumer debt and car debt—but not our son. He made a practice of living on less so he wouldn’t accrue debt and he was able to have less worry in the process of finding a new job.

Be sure you also pay attention to your credit score. Rod Griffin, from Experian, came over for a discussion on coffee and credit. He works with us on our tours and he teaches that if you have bad credit, you’ll pay an average of 360K more (over your lifetime) for the use of basic credit, than the person who has a good score. Improve your score by paying on time, paying more than the minimum balance due and make sure you never use more than 30% of your available credit.

Habit #5 – Choose Contentment

This is a tricky habit because it’s a mindset that you choose. There will always be something to spend money on to make you go off budget or get into financial trouble. There’s the new phone, tablet, car, vacay, boyfriend/girlfriend, baby, or a plethora of other reasons to want to spend more and have more. This is where your friends, family and even faith come into play. Coveting what others have or do is a lesson in futility and discontentment. Your friends either contribute to this mindset or they keep you focused on what matters most. If keeping up with their lifestyle is an important platform in your friendship, then you may want to find new friends. Remember that this financial journey is a marathon not a sprint. I’ve always said, “you can have it all—just not at the same time.”

What is one habit you are good at? What is one habit you want to improve upon? Share it with us, a friend or even a money buddy, so that you can be fiscally healthy in 2018 and for a lifetime.

 

The Money Millhouse – Podcast Extraordinaire

Live, from Ellie’s kitchen table… it’s The Money Millhouse!

WELCOME TO THE FINANCIAL SHOW ANYONE CAN LISTEN TO!

The conversation gets lively and somewhat ridiculous when Ellie and Bethany share a cup of coffee (or four) over Ellie’s kitchen table. They not only have fun at The Money Millhouse, their conversations about saving money, couples communication, spend plans, super heroes and more make you feel like you are drinking coffee right along with them. Coffee, friends, money, sometimes random singing… what could be better?

Each week on this little-over-20-minute podcast, a special guest joins Ellie and Bethany at the table to discuss relevant money-related issues. From saving for retirement and credit chats, to home-based business tips and maybe a thing or two about what Star Wars has to do with coffee, there is always something to talk about.

The Money Millhouse will teach you while entertaining you with offbeat humor, geek-speak and money tips you never knew existed. If you can put up with Ellie’s annoying dogs announcing the next guest to come to Ellie’s door for a cup of Joe and a light hearted but important conversation, then you’ll get the maximum return on your time investment.

Come on in to The Money Millhouse, where we brew up money saving tips and tricks for anyone’s lifestyle. You might even learn a few secrets in the Millhouse closet.

The Money Millhouse is a production of Heroes at Home, a non-profit organization that gives financial education to military families around the world. To find out more about Heroes at Home, visit heroesathome.org.

The Money Millhouse Crew:

Ellie Kay is the wife of the “World’s Greatest Fighter Pilot”, mother of 5 children, 3 fur-babies, and best-selling author of fifteen books and a popular media guest on Fox and ABC News, among others. Ellie is the founder of the non-profit “Heroes at Home” and has taken this financial literacy tour around the country and the world for the last decade. Ellie loves roller coasters, ziplining and all kinds of adventure and once took a ride in an F-15 E Strike Eagle, which she said it was less scary than walking into her youngest son’s dorm room. Find Ellie’s personal blog at EllieKay.com.

Bethany Bayless is the wife of Travis, mother of London (goldendoodle puppy), and Director of Communications for Heroes at Home. She holds a Bachelor of Arts in Communications from Moody Bible Institute, Chicago, IL, and has been a social media coordinator for several organizations including two international groups. She is a self-professed geek, aspiring home-cook, and globe-trotter (not the basketball kind). In her spare time, Bethany draws and handletters, throws tennis balls for her puppy, London, and quotes movie lines with her family near and far. Find her blog at wanderlust4less.com.

Credit Card Choices — Big Benefits With Right Choices

Southwest Airlines is running a credit card offer for qualifying applicants where they will get a companion pass for the rest of this year and all of 2018, plus 40,000 points. My daughter uses credit cards sparingly and her score is in the 800s (on a FICO scale up to 850). She decided to get the card and is thrilled to add her husband a companion to her recent round

trip purchase from Burbank to San Francisco for only $59. Pretty good deal for her. Since I already have a companion pass on a #SWA card, it wouldn’t be a good deal for me.

But not all deals are that good. How do you know which choice is best for your needs?

On my recent trip to #USAA, I learned a lot about the latest offerings in credit cards.

In fact, Yasmin Ghahremani, a writer with USAA, contributes the following information on how to navigate your first rewards card in three easy steps.

Credit cards that offer rewards like airline miles or a percent of cash back on everyday purchases can be a pretty great deal. But with so many different rewards credit cards available, choosing one that’s right for your lifestyle can feel overwhelming. Not only that, are you sure a rewards credit card is a smart financial move?

First off:  rewards credit cards aren’t for everyone. If you’ve never owned a credit card before or have a not-so-great credit score, you may not even qualify for a rewards card in the first place. And because interest rates for rewards cards tend to be higher than most credit cards, if you are the type to miss payments, make minimum payments only, or carry a hefty balance, your best bet is to look for a credit card with a low interest rate.

Once your cash flow and spending habits are more favorable, you can give rewards cards another look–otherwise, the interest you’ll pay on a carried balance will easily outstrip the value of any rewards you’ll receive. “Rewards cards are really best for transactors: those who pay off their balance every month,” says Mikel Van Cleve, Advice Director and CERTIFIED FINANCIAL PLANNER™ with USAA

That said, if your credit card hygiene is superb and you make a habit of paying off the balance in full each month, then you’re probably ready for your first rewards card!

1. First, consider the kind of rewards you’d like to earn. If you’re a jet-setter and love to take frequent vacations, travel rewards cards that can earn airline miles, waive luggage fees, grant access to posh airline lounges and more might be right up your alley.

Not the globe-trotting type? Then a cash-back rewards card might be more your style. These essentially give you a small percentage discount (anywhere from 1–5%) on the stuff you’re already buying with your credit card, like groceries, gas, online purchases and more.

Once you’ve identified the type of rewards you’d like to earn…

2. Match your spending habits to your overall rewards card management. Take a look at how much you actually spend in certain categories on an annual basis to pinpoint where you could earn the most rewards. If you’re single and eat out a lot, a card that offers extra cash back for grocery spending might not be the best fit.

Plus, not all rewards cards work the same way: some offer more complex variations, like extra cash-back percentage points for spending in certain categories, such as 3% at supermarkets and 1% on all other kinds of purchases.

Other kinds of rewards cards offer additional percentage points on a rotating calendar for certain types of purchases, with bonus categories changing every quarter. For example: you might earn 5% on groceries one quarter, 5% on gas the next quarter, 5% at restaurants for another quarter, etc.

Complex earning structures may ultimately earn you more, but only if you’re really familiar with your own spending habits and the amount of time you care to spend tracking expenses and managing rewards redemption. Depending on the card you choose, you’ll need to keep up with rotating categories that may require an opt-in action (like visiting a website or filling out a form) every quarter, or you miss out on the perks.

If you don’t want to hassle with that, consider choosing a card with a flat base earning rate. Many credit cards now offer 1.5% or even 2% on every purchase you make. For instance, if the card offers 1% cash back for every dollar you spend on the card and you’ve spent a total of $2,500, you can earn $25 cash back. Even better, you often have a choice on how to spend those rewards, usually via a check, a credit to your statement, or points good towards purchases with other retailers. (Beware the latter as it may encourage you to spend needlessly!) 

3. Examine the fine print of any offers you see. Does the card charge an annual fee that costs as much or more than you will likely earn back via rewards? If you feel pressured to spend more just to get enough rewards to justify the annual fee, that card might be causing you to spend more than you normally might.

Does the card place limits, or “cap” how many rewards you can earn in bonus categories? Some cards allow you to earn 3% on only the first $3,000 a year you spend on groceries, and after that rewards may diminish or disappear entirely. You’ll want to factor those considerations into your decision.

“Make sure you know how the cards you’re considering work, and figure out which one works best for your habits,” advises Van Cleve. “If you do that the rewards can really help you save some money and work toward other goals that you have.”

Before You Say “I Do” – Premarital Financial Counseling

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“Bye, bye!”  I smiled and waved from the front porch, Bob by my side, “Nice to meet you!”

Speaking like a ventriloquist, I continued to wave at my son and his girlfriend,

“I give It less than one week” I told my husband, “two weeks tops.”

Bob smiled, giving his very poor ventriloquist rendition, “I don’t know, she was, ah, very conversational.”

“Yeah,” we turned to walk back in, “and her favorite topic was herself!”

We had just entertained one of our sons and a girl he brought home to meet us. In our family, we are predisposed to like the significant others that our children bring home because our kids have very good judgement. Contrary to popular belief, we aren’t sitting on “no” when it comes to these friendships that could blossom into something more.

One week later, we got a call from our son letting us know that he and the girl were not going to work out.

“Yeah,” our son reported, “I realized that the only thing we had in common was that we both thought she was pretty.”

The Kay whammy had struck again.

“What is the Kay whammy?” you ask.  It’s pretty simple, when our kids bring a special person home to meet our family, they either stay together for life and get married. Or, they break up within two weeks.

We are an intense family and we tend to drive away the faint of heart. But we are also a loving, loud and loquacious family and that attracts the brave hearts.

When it comes to a spouse, our kids look for certain qualities and when they get serious, we ask for a credit report.

I’m kidding.

Not really.

Knowing your future mate’s money habits is a significant part of deciding if they are a “forever” friend or not. Since “money matters” is cited as the #1 reason for divorce in America, it’s important to be on the same page regarding this topic. So far, all of our kids have opted for premarital counseling before the big day and this counseling should include the topic of money management.

Here’s a quick list of the financial topics that should be covered before you say I do.

8 Topics to Cover in Financial Premarital Counseling

Your Family of Origin’s Financial Situation

How did your parents manage money? What did they teach you about money? Chances are good you may manage your finances the way that your family did and this may be different from your significant other’s point of view. Did your parents save, believe in tithing, pay cash for everything or did they live paycheck to paycheck? Hashing out the differences, finding the similarities and developing a new plan for you and your spouse will be topics you cover under this heading.

Your Spend Plan

Do you currently have a budget? Go over both of your current budgets. If you don’t have one, then that is also a discussion point. Decide on what a new budget will look like for you as a couple when you are married. There’s a great app I use called Mint that can be accessed and updated by both parties at any time. This is especially good for military families who are apart but want to keep track of mutual spending.

 Holidays, Birthdays and Vacations

How do you spend money on vacations and holidays? Some families spend so much on Christmas, that it takes until the following May to pay off that debt. Others never take a family vacation. Our family had a low-key Christmas where each child got three modest gifts so the emphasis could stay on the Christ child. Then we went all out on their birthdays where the child was so celebrated that it became a highlight of the year for them. All these different approaches will impact your budget and your relationship.

 Born Spender or Saver?

What is your money personality? You could take the Money Harmony Quiz to see whether you are a born hoarder, spender, money monk, avoider or amasser.  Bob was a born spender, I was a born saver and we made it work nonetheless. But it took a lot of discussion and an action plan to learn to live in harmony with an opposite type of money personality.

 One Checkbook or Two?

Are you each going to keep your own checking account or are you going to combine them? Who will pay for which bill? What about savings accounts and credit cards? Will those be combined or remain separate? Now is a good time to download my free Sixty Minute Money Workout to help you learn how to discuss this topic and others within a time frame that minimizes conflict and maximizes the work you are doing in this area.

 Your Credit History or Debt

You and your significant other need to bring your credit reports to a premarital financial counseling session. Depending on what is there, it may be a wee bit uncomfortable. I married into 40K of consumer debt I didn’t know about and it had a huge impact on our lives together. Your mate may not count student loan debt as debt and you may find out there is an 80K loan that will impact your marriage. You can get a copy of your credit report, once a year, for free at Annual Credit Report and get one for each of the three reporting bureaus at this site. You can also get a copy of your credit score (different from a report) at Credit.com where they will also tell you ways to improve your score. Be prepared to enter your social security number to get this information. Talk about these debts and discuss a repayment plan.

Long Term Financial Priorities

My adult daughter says that life is about investing in experiences, not things. Her priority is travel over a newer car or designer clothes. Her husband’s priorities are slightly different because he’s a born saver. They learned how to discuss these diverse perspectives by doing a Sixty Minute Money Workout so they can get on the same page.  Your mate may want to buy a house as soon as possible and would forgo vacations to make that happen. You may not care that much about home ownership but really want to go home for the holidays. It’s important to discuss topics like housing, retirement, vacation and other long term goals before you get married. I like to say that you can have it all, but not at the same time. Bob and I chose to put our kids in private schools rather than drive new cars. Today, our kids are done with school and we drive the newer cars. We just have to choose the timing on our purchases.

 

Who Does the Math?

Someone is going to need to balance the checkbook, pay the bills and set up the budget. Yes, you should set up your spend plan together, you can even pay the bills together, but that’s usually the exception rather than the norm. One of you may be predisposed to balancing the books better than the other. One of you may actually enjoy paying the bills. In our family, I’m the financial expert and my husband flies jets, so you would think I balance the checkbook. But I also know that my husband needs to be aware of the bottom line because he’s the born spender, so he keeps the books and I review the statements. There needs to be a check and balance. One person should not have absolute control over the couple’s money. Sometimes, he who controls the money controls the house. So it’s important that both partners have access so that there’s no abuse of power.

Which of these topics have you already discussed with your significant other? Which topics still need to be explored? Set a day, time and topic to talk about money with your mate and don’t forget to get the free Sixty Minute Money Workout download.

 

MilCents Helps Build Your Financial Foundation

BGadmin

Are you ready to understand, manage, plan, and protect your money? I know I’m ready and helping others do the same!

I love creative ways to learn about money that are easy and interactive. That’s why I work in Washington DC on the advisory panel of the Military Family Advisory Network (MFAN).  I am writing to share an exciting update about MilCents — MFAN’s financial education social learning program.

Over the last few months, MFAN has worked with financial education experts to develop five customized program tracks that correspond with stages within the military life cycle.

While our Heroes at Home Financial Event helps families learn in a live show, MilCents goes further online and at your own pace. Stages include: ROTC/Service Academies, actively serving, transitioning military, veteran, and retiree. The customized tracks allow users to get the tailored information they need, when they need it. In addition, they’ve enhanced their monitored social community, added gaming elements, and refreshed all MilCents content — especially the content focused on military retirement. 

Are you confused about the changes to military retirement? Don’t worry — MilCents breaks it down so it’s easy to understand in the retirement section.

BONUS: The first 150 participants to complete MilCents and earn all the program badges will receive a $20 Amazon gift card.

Click here to get started. And make sure to tell your friends and family — learning’s more fun when you’re doing it with others.

There’s also a better way to budget. Take control of your money by joining the @Military Family Advisory Network’s customized online #MilCents financial education program and get help with your spend plan.

To the partners who helped make MilCents possible — thank you. We know this program will continue to help families within our broad military community.

Ellie Kay

Advisory Board Member

Military Family Advisory Network

 

Do You Believe in Good Credit?

BGadmin

I love a good hero.

When I was a little girl, I saw “Peter Pan.” I fell in love with Tinkerbell for all her spunk and fairy dust, she became my hero. I believed in fairies. I was convinced that if I wished hard enough and focused on happy thoughts, I could fly like Peter and Tink!

My BFF, Nanette Woffard, and I made fairy wings out of panty hose, wire hangers and glitter. We began to exercise our belief by jumping off her circular second story stairway, climbing a step higher each time. We were (five-year-old) girls interrupted when, about step number 8, her mom walked through the room with a load of laundry and discovered our exploits.

Mrs. Woffard encouraged our creativity, but grounded us from flight school. We wallowed our disppointment in homemade chocolate chip cookies and milk.

But I never forgot about my hero and how she could fly.

As a young adult, I met a hero who could fly—for reals (that’s millennial-speak for really and truly).

He flew jets and his wings were hard earned through Air Force pilot training.

We’ve had a fairy tale life so far and raised a passel of Kay kids who also learned to dream, believe and soar to greater opportunities than they thought possible. One of those kids even earned his own set of pilot wings last month. Flying, in life and in dreams, is something we’ve always encouraged.

But there’s nothing that will bring a dream crashing down faster than financial difficulties. That’s why we taught our millennial children how to manage credit and earn great credit scores.

When each of the Kay kids graduates from college, they have a good-to-excellent credit score at the age of only 22. It can be done, but the first step is to understand how credit and credit scores work.

Credit scores impact interest rates, insurance premiums, security deposits, employment and even security clearances. In our Heroes at Home Financial Events, we have various segments. I teach on spend plans and car buying. USAA sends JJ Montanero to speak on saving and investing. But we also have an entire segment on how to develop and maintain good credit in order to keep their security clearances so they can do their jobs.

Gerri Detweiller has been writing in the consumer credit space for years and as one of our speakers, she can attest that credit and debt are themes that bleed into all financial areas. A lot of what I’ve recently learned comes from Rod Griffen a financial educator from Experian, who teaches me the latest nuances in this sometimes complicated space.

What do you believe about credit and are those beliefs fact or fantasy? Here’s a quick quiz for you to gauge how much you know about today’s world of credit.

Answer the following as either FACT or FANTASY:

  1. If I have never had a credit card or debt, then I won’t have a good credit score.
  2. Carrying over a balance on my credit card helps me build good credit scores.
  3. My credit history is the area that has the greatest impact on my score.
  4. If I pay off my balances each month, then I don’t have to worry about Debt Usage or Utilization (the amount of debt to credit available).
  5. If I co-sign a loan for someone else, it will still be their debt and not mine.
  6. I have three credit scores.
  7. I can get a free copy of my credit report at Annual Credit Report for each of the three main credit reporting bureaus.
  8. My credit report and my credit score are both free and they are basically the same.
  9. It’s a smart credit move to repeatedly take advantage of introductory APR rates by opening new credit cards and transferring these balances to the lower APR. Then cancel the cards and you will still have a good score while taking advantage of the lower rates.
  10. If I only have credit cards and student loan debt, then it’s important for me to get a car or motorcycle loan for the expressed purpose of building diversification to help my credit score.

Answers

  1. Fact. No credit history means you haven’t started to positively build your credit score. This means you would have a low score on many of the scoring models.

FIX: Start out with a secured credit card where you can’t charge more than you have secured in the credit card account. You can review cards at Bankrate but read the fine print to know what you are getting. This will establish a history and help you start to develop good credit.

  1. Fantasy. Carrying over a balance only means you’re paying interest every month on the balance you carry—which isn’t a smart credit move. Maintaining a credit card balance doesn’t help to build your credit.

FIX: Pay your credit bills on time, carry lower balances and have credit cards for a longer period of time in order to build positive credit.

  1. Fact.  Credit history accounts for 35% of your score and Debt Usage (Utilization) accounts for 30% of your score.

FIX: Concentrating on these two areas (Credit History and Debt Usage) are the most effective means of helping you build good credit.

  1. Fantasy. Even if you pay off your balances every month, you could take a hit in the Debt Usage area if you charge more than 30% of the available credit at the time that the snapshot of your account is taken. So if you have 10K available on the credit card and you’ve charged 9K in order to get points, you’ll have a 90% utilization record if this account is recorded before you pay the balance when the bill is due.

FIX: If you charge items to get points and your utilization is high, then transfer a payment BEFORE the bill is due. You’ll still get your points, but you get ahead of the Debt Usage scenario.

  1. Fantasy. Once you co-sign, then you are responsible for the debt if the other person doesn’t pay. If they pay, it’s not problem, but if they don’t, you will.  You’ll have to pay off that motorcycle, the remainder of the lease or the credit card, should that person default.

FIX: Don’t co-sign on a loan. We’ve lost friendships and relationships with family members when they tried to take us hostage by trying to force us to co-sign. If the lender determines they won’t take a risk on them without a co-signer, then why would you take the risk?

  1. Fantasy. Rod Griffin from Experian, our Heroes at Home credit educator says he could probably pull 80+ scores on any of his audience members. There are three main credit reporting bureaus, but many credit scoring models.

FIX: To know if you have a good credit score, pay attention to the scoring model. On some scales 750 is a good score and on other scales, it could be average.

  1. Fact. You can and should get your free copy of your credit history from each of the three main reporting bureaus listed at Annual Credit Report. But be careful, you have to opt out of paying for scores, monitoring or other services.

FIX: When you order your free score at this site, don’t ever give your credit card info or you could inadvertently be signing up for a product or service you don’t want. However, you do need to be prepared to give your social security number at this secured site.

  1. Fantasy. A credit history is different from a credit score. The history gives a list of all the various credit accounts/debt you’ve have in your lifetime. The credit score is a number that determines your credit worthiness to lenders. The credit history is free at Annual Credit Report.

FIX: Free credit scores are available at Credit.com and CreditKarma.com. But make sure you are getting the free service and not accidentally signing up for a paid service. You can also check your credit card bill to see if your company provides a free copy of your score. If you are military, get a free score at your Family Readiness Center.

  1. Fantasy. This is a good way to deteriorate your credit score. Lenders can see you are transferring balances and taking advantage of a new card’s APR offer. It can even look like you are floating the note or trying to pay Peter by robbing Paul. When you open and close multiple accounts, you shorten the overall length of your credit history and can ruin your score.

FIX: Pay attention to your credit history and remember that every new card you open shortens the overall credit history length of all your accounts combined. Open new credit accounts sparingly and don’t credit card jump to try and save money.

  1. Fantasy. While it is true that different kinds of loans build diversification in your credit profile, diversification only accounts for 10% of your score. So the idea that you SHOULD go out and buy a car or motorcycle (and finance it) in order to get a better credit score is pretty ludicrous.

FIX: Buy a car or motorcycle because you need one and you can afford it. Make sure you budget to be able to pay the note, insurance and other vehicle ownership expenses.

 

Scoring

10 Correct

 Superstar – You know a lot about credit, so you are probably: 1) in the financial industry or 2) really well informed and good with money or 3) you cheated. If you didn’t cheat, you might even qualify to be one of our superstar speakers at Heroes At Home because you certainly know enough to teach this topic!

 

8-9 Correct 

Excellent – You may be kicking yourself or crying “trick question” because you got almost all the right answers. Nonetheless, even experts can learn a few things about the ever-changing world of credit. Be sure you are giving your mentees up to date advice and pay attention to the nuances of building excellent credit.

 

6-7 Correct

 Good – You have a good working knowledge of credit, but you’re no expert. You’ve believed a few fantasies instead of the facts in some of these areas. Pay attention to the questions you missed and make it a point to readjust your thinking so that you can build even better credit.

 

5 or less Correct

 MEH – You know just enough to be dangerous and you are at the greatest risk of crashing and burning when it comes to credit mistakes. Study the wrong answers and make sure you understand how credit works before you open new lines of credit, cosign a loan or try to get a loan for a new vehicle.

 

 

 

 

 

The Heroes at Home Financial Event Tour Update

We’ve visited JBSA, San Antonio, Lackland AFB, Randolph AFB, Laughlin AFB and the last stop was Sheppard AFB. At every base there are things that are the same: 1) we have a lot of fun presenting financial education to our military audiences 2) everyone wants to win the iPad 3) they are surprised that they can learn and have a good time simultaneously and 4) we are always grateful to USAA for providing for so many aspects of this tour. But

Friends and family at every base!

at every base there are also challenges that our military members face that are unique to that base.

At JBSA there are 11 different units from all branches and consequently we have a “purple” audience with Airmen, soldiers, Marines and sailors in attendance. As a mom with sons in each of these branches, I can still relate to my audiences. At Lackland, which is “out in the middle of nowhere” they were so appreciative that we came “all the way out” to Del Rio, TX, (right by the border) to spend time with them. They were a welcoming audience and have a unique mission of training pilots who will go into all parts of the world, flying different kinds of airplanes. We called them “the little base with a big mission,” they also have big hearts.

This past week, we went to Sheppard AFB and saw yet another demographic of Airmen who are in freshly out of boot camp and in military training for their big world mission. Many are mechanics, but there are all kinds of technical professions trained there as well—60,000 per year. There’s also ENJPT (Euro NATO Jet Pilot Training) where future fighter pilots are trained (about 200 per year).

One of the unique challenges of Airmen at Sheppard is that they are vulnerable

A Full house at Sheppard AFB. Photobombing my fellow speakers Ingrid Bruns from USAA and Bethany Grace our high energy emcee!

financially in two areas: family and love. Some of these young military members are pressured by extended family members to send money back home. We stressed that when you are getting a flight briefing from the flight attendant on a commercial airline, she says, “If the cabin depressurizes, air masks will fall from the upper compartment. If you are traveling with someone who needs assistance, put on your own mask first, then assist them.” That’s the same premise we stressed with our young Airmen, “take care of your own finances first and get financially fit and healthy, then teach your family how to do the same.” From the platform, I stressed the old adage, “You can give a man a fish, and feet him for a day. But you can teach him how to fish and feed him for a lifetime.” Yep! We gave some fishing lessons.

The other thing that slips up Airmen is love. They spend money they don’t have trying to impress a significant other by going out to eat, to movies and even buying them jewelry. Some of the jewelry stores convince these young Airmen to sign on the bottom line and they end up paying for years at 30% interest for a necklace or a ring. At one point, I almost shouted from the stage, “If you don’t remember anything I said today, remember this: NEVER SIGN FOR A LOAN WITHOUT HAVING SOMEONE LOOK IT OVER!” I believe the 1300 trainees in the audience got that point. “There are folks at Airmen and Family Readiness who would be more than happy to review a loan before you sign it.” This tip alone could save them thousands of dollars on auto, jewelry, computer and personal loans.

     One of my favorite aspects of the Heroes at Home Financial Event is reconnecting with friends and family. In San Antonio, my BFF Brenda Taylor was there in the audience. A friend knows a lot about you, a BFF knows enough to blackmail you. Brenda can blackmail me many times over! At Laughlin AFB, my good friend Beth Runkle was not only instrumental in getting the spouses together the night before the financial event, but she also introduced me as well. I love the heroes in the Runkle family! At Sheppard, our longtime friends, BG Pat “Moon” Doherty and his wife Dee Dee were there to welcome us royally. I’d call him the World’s Greatest Fighter Pilot because he did fly me in an F15E Strike Eagle once, but Bob would beg to differ about that designation. These Heroes not only brought me out to Seymour Johnson AFB many “moons” ago, but they were instrumental in bringing this tour to the Air Force!

     But the one audience member on this tour whom I love more than life itself is my son Jonathan, who is a student at ENJPT and was a smiling face that I adore. I removed a slide or two that might prove embarrassing in front of 1300 Airmen and tried really hard to not highlight my son in my presentation or during the tour day. If you want to know if I was successful in this regard, you’ll have to ask Jonathan. Apparently, parents can embarrass their kids without even knowing they are doing that. There was just one time, when I ate a blue mint in the General’s office and then addressed his staff of 55 commanders that might have been a problem. I was told later, my teeth were Air Force Blue.

We may be coming to a base near you, this schedule is constantly changing and we are adding news dates regularly. Contact us at assistant @elliekay.com for more info and continue to Aim High!

Quick and Easy Steps to Healthy Finances in the New Year

With the hustle and bustle of the holidays at a close, I remember what it was like to play with the new toys from Christmas long after ringing in the New Year. It was the time of marbles, pick up sticks, and hot wheels racers sets. My favorite toy was a set of Klackers. These came on the market in the late 60s and lasted into the early 70s. They looked like glass, but were actually acrylic balls attached to a string with a ring or small handle attaching the two strings. The object was to get the two balls going up and down and have them “klick” and “klack” against each other. You would build up momentum until they were hitting on the top and bottom in an arc. It was very hard to do at first and when they hit your fingers instead of each other, it was incredibly painful, too. Without fail, every time I played with my Klackers I ended up with bruised and banged fingers. But I kept playing, day after day.
I’m reminded of my Klackers when I look at today’s economy. Consumers have been playing with debt for years and it’s been hurting them—but they just kept playing. In fact, between 1989 and 2001 credit debt nearly tripled from $238 billion to $692 billion and last year it was up to $937 billion. The average debt-laden American especially feels the pinch when the economy is lagging, gas prices are rising, home values are imploding and inflation is rising. But there is hope and a way to not only survive a possible recession—but thrive in the midst of it.

Here are seven basic tips to help you beware and prepare in the new year:

1. Credit Credibility ––The first step, no matter what your financial picture is to improve your FICO (Fair Isaac Credit Scores) as these scores can determine a variety of financial issues including auto insurance premiums, whether you’ll get the promotion or the job (many employers check FICOS), and whether you pay a security deposit for utilities. You can get a free copy of your credit report at credit.com . If you downsize a home or a vehicle, you’ll also need to have an excellent FICO to get the best APR rates. You can improve your FICO in three easy steps:

  • Pay your bills a day early (rather than a day late) by setting up payments online
  • Pay $5 to $10 more than the minimum balance which indicates paying down debt
  • Proportionality: make sure that you don’t have more than 50% of the available credit charged on any one card.

2. Savings Savvy– I get loads of emails every week from people who are cutting hundreds from their household budget by following simple savings tips. From insurance to groceries, there are savvy ways to save at your fingertips. I have a lot of these savings tips on my blog. Start to implement these tips and it will create good discipline that will prepare you for a recession. Use the money saved from these tips to pay down debt and build short term savings.

3. Debt Deal Dilemma: With a slowing economy comes an influx of those who want to “help” prepare you for the worse by consolidating your debt. However, most “for profit” debt counseling companies charge a hefty fee for their services which is usually tacked onto your debt load. Instead, go to the National Consumer Credit Counseling Service and use their free services.

4. Don’t Do Dumb Debt– As things begin to get tight, you might be tempted to get a HELOC (Home Equity Line of Credit) or refinance your home in order to pay consumer debt. Bad idea. This will only deteriorate the equity in your home and chances are really good you’ll be right back in that HUGE boat load of debt by this time next year. The better option is to cut costs, budget, and go to the NFCC.

5. Budget Baby and Learn – If you don’t have a budget, as part of your lifestyle, then yesterday was the day to start. Set one up with online budgeting tools, found at www.elliekay.com. It’s also important to learn how to budget, a great new program that helps military families with their money matters is supported by the Military Family Advisory Network called MilCents and it begins a new (free) course in February.

6. Repurpose Funds: My daughter loves to take antiques and even junk and repurpose it to give it more life (and save money in the process). As you save money in one area, it’s important to redirect it to another area through proactive actions such as writing a check to pay debt or to fund your savings account.

7. Plan With A Purpose – Whenever a “theory” is tested, it must stand up to a “proof” in order to be established as true. You can have all this good stuff on paper, but if you slap down the credit card to pay for a “40% off” killer Marc Jacobs suit, or use debt to fund a vacation–then your plan is only a theory. For it to become REAL, you need to make it part of your daily life. This means you start living with your plan and don’t incur more debt.

Happy Savings and Happy New Year!

Ellie Kay

 

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