Military Saves

Julie KyrazisAssistant Director

Military Saves Campaign Overview

• Origins• Relevance• Goals• Saver Drive/Enrollment• Motivational Tools• Guard TSP status• DoD Financial Education

Responsibilities• Resources• Deployment Savings Opportunities

Campaign Origins

Campaign Origins• Active duty AF Chaplain• Noticed a common theme in

counseling cases: financial problems• Started offering financial counseling

in the Chapel

Campaign Origins“We had this fabulous program and

people were changing their minds about saving money, but they would go from the chapel to their offices or shops or to the flight line and they’d be encouraged to overspend instead of being encouraged to build wealth through saving and debt reduction.”

Campaign Origins• Discovered America Saves

– Social marketing campaign to persuade Americans to get out of debt and save money

• Worked with the America Saves and Eglin AFB to pilot program

• Left active duty and joined Guard to spearhead Military Saves full-time

Campaign Origins• Sponsored by the Consumer

Federation of America• Part of America Saves Campaign and

DoD Financial Readiness Campaign• Launched in 2007 throughout all

Services– 2007: 7,740– 2008: 22,747– 2009: 22,989

Overall and this year’s totals

Why do we care about financial readiness?

Financial Problems• Stress

– Unhealthy coping behaviors• Smoking, drinking, overeating

– Sleep deficit—immune problems—reduced cognitive abilities

– Unhealthy emotions– Anxiety, frustration, hopelessness,

depression• Top Ten Reasons People Divorce• A Top Reason for Suicide

Security Clearance Issues

• CY 07: AFCAF denied/revoked 2722 security clearances – 36% for financial considerations

• CY 08 thru Oct 31: AFCAF denied/revoked 2919 security clearances – 38% for financial considerations

• Follow “whole person” concept and look for patterns of irresponsibility

Personal Savings RateNot always a nation of over-spenders• Parts of 1970s and 1980s – 10%• 2005/2006/2007/2008 – Below 1%• Currently – Above 4%

Tough times equating to good news for personal savings rate!

12

Campaign Goals• Fostering and encouraging military

members to save money– Positive peer pressure

• Reinforced by units pledging to become Military Saves units

• Members work with each other to promote positive financial habits

– Saver drive• Encouraging military members to

donate a portion of their paycheck each month to savings and paying down debt

Detail Chinhae

• 23 members of detail enrolled in Military Saves

• Most investing in TSP or other outside investments

• Emphasize financial education and sign up for personal investment classes

14

15

Social Marketing Campaign• Military Saves encourages:

– Have a personal financial plan– Establishing good credit– Saving a portion of each paycheck– Enrolling in SGLI, TSP, and (when

eligible) SDP– Have an Emergency Savings Fund!

Marketing

• Marketing works otherwise companies wouldn’t have huge advertising budgets

• Debt, consumer debt, and consumption beyond our means marketed for decades

• Incredible level of comfort with debt– Credit card, car loans, etc.

The Secret?• No magic bullet to change financial

situation• 4 core principles of personal financial

survival– Spend less (less than you earn),

save the difference– Pay off high cost debt, as fast as

possible– Invest in appreciable assets– Save for retirement

17

18

Desired Outcomes

• Increased household savings for short- and long-term needs

• Decreased consumer debt• Command climate and overall culture that

supports prudent financial behavior over consumption

• Demand for financial literacy education and counseling

• Supply of financial products that encourage saving, especially regular (automatic) deposits, systematic increase in amount of deposits, and advance planning for purchasing and investing

In a nutshell

Be financially fit!

20

Annual Saver Drive• Annual during “Military Saves Week”

– Last Sunday/Feb to first Sunday/Mar– In conjunction with America Saves Week

• Military Saves Week 2010:21 February – 28 Feb 2010

21

Campaign Method• Modeled on the Combined Federal

Campaign drive• Recruiting method is one-on-one

personal contact of all personnel (military and civilian)

• Supported by visible leadership, emails, website, public affairs, partnerships, posters, special events, fun challenges, and outreach to family members, contractors, and the general community

22

Military Saves Week/America Saves Week

Use it as a AAA check up:

1. Yearly reminder to Assess your savings status

2. Act to improve3. When you act, act Automatically-

through automatic savings

Guard• Needs national, state and key leader

support to succeed• Just like CFC – if there is not

leadership emphasis, campaign will fizzle

• Great tool to focus on Financial Readiness and encourage Guard members to save

24

Ongoing Saving/Debt Reduction Campaign

• Enrollment open 24/7 year-round• Run a campaign at any time during

the year and focus on:– 4 Quarterly themes: • Save & Invest• Military Youth• Debt Reduction• Retirement

25

Saver Drive• An organized effort to enroll as many

people as possible in Military Saves

26

27

Ultimate Goal• 10% or more of military personnel,

civil servants, and defense contractor employees worldwide enrolled as Military Savers - 300,000

• Guard – 450,000 x 10% = 45,000

What will you give me?• Financial Security• Savings Reminders: Receive

electronic newsletters for financial readiness and savings tips

• Your part: Encourage savers to get involved in encouraging others to:– Build wealth. Not Debt.

• Everyone wins!!!

America Saves E-Wealth Coach

29

Military Saves Newsletter

30

What tools motivate people to change their behavior?

Success Stories

Sailor

• Divorced single mom with lots of debt

• Self-educated• Went on a financial diet and used

cash for everything• When out of debt, put all bonus and

extra money into savings and TSP• Owns own home, puts 20% into TSP,

has college savings for children• Still drives her 95 Toyota Camry

33

Airman

• Came to the service with lots of debt• Took advantage of educational resources

available• Used money from TDYs and deployments

to pay off her bills• Has all the things Military Saves

advocates:– A Good Basic Need Budgeting Plan – Money Market Emergency Fund – Roth IRA – TSP

34

Colonel

• Paying forward what he’s learned• Teaching classes during his

deployment to Kuwait• Using common sense principles• Taking the PhD-level wording and

bringing it to a level a Private First Class can understand

35

Savings Tips

Tips from Savers• Put away money monthly into a

vacation and a Christmas fund – start small and increase with salary raises

• Avoid the temptation to shop impulsively—stop reading fashion magazines and catalogs

• Buy the new washable utility uniforms and save money on dry cleaning

• Shop at the commissary

37

38

- $78 for a movie for a family of 4

Squeeze 5 More Years Out of Your Vehicle

39

- Maybe not 35 years!- Or, weigh the options, do the math, buy a used car

Not Necessarily a Good Savings Tip

40

- Cut your own hair

Messages

42

43

Where does the Guard stand on TSP?

AF Apr-09  

     

RESERVE PERCENTAGE

GradeParticipant

s Percentage

     

E1 28 2.0%

E2 57 7.1%

E3 1117 8.2%

E4 3828 16.4%

E5 8096 23.6%

E6 9157 29.9%

E7 6714 31.5%

E8 2431 35.8%

E9 908 35.6%

O1 448 15.4%

O2 587 39.6%

O3 2242 33.8%

O4 2260 28.4%

O5 2562 31.4%

O6 569 30.2%

O7 48 31.0%

O8 18 27.7%

O9 0 0.0%

O10 0 0.0%

W1 0 0.0%

W2 0 0.0%

W3 0 0.0%

W4 0 0.0%

W5 0 0.0%

  41070  

     

Total Officer %: 29.9%

Total Enlisted %: 24.0%

TSP Air Guard Participation

- Dramatically increases at E-5- Overall less than 25% participation in enlisted ranks

ARMY Apr-09  

     

GUARD    

Grade ParticipantsPercentage

     

E1 939 3.4%E2 1932 8.3%E3 4651 10.6%E4 9315 9.5%E5 9388 14.2%E6 6179 20.3%E7 3118 23.0%E8 1433 25.4%E9 365 27.1%O1 689 16.5%O2 1681 25.7%O3 2103 28.2%O4 1330 29.9%O5 923 33.0%O6 284 29.5%O7 53 35.6%O8 13 22.4%O9 0 0.0%

O10 0 0.0%W1 362 28.1%W2 691 35.0%W3 440 37.2%W4 429 38.6%W5 99 37.5%

  46417   

Total Officer %: 28.1%Total Enlisted %: 12.1%

TSP Army Guard Participation

- Overall around 12% participation in enlisted ranks- Dramatically increases at E-6

Your Results as a Uniformed Services Participant

Growth of your future contributions and earnings $ 125,733 Growth of your existing account balance $ 0 Total estimated TSP account balance $ 125,733

Your Results as a Uniformed Services Participant

Growth of your future contributions and earnings $ 57,832 Growth of your existing account balance $ 0 Total estimated TSP account balance $ 57,832

$1500 per year for 20 years @ 6%

$1500 per year for 30 years @ 6%

Your Results as a Uniformed Services Participant

Growth of your future contributions and earnings $ 1,257,332 Growth of your existing account balance $ 0 Total estimated TSP account balance $ 1,257,332

Your Results as a Uniformed Services Participant

Growth of your future contributions and earnings $ 578,327 Growth of your existing account balance $ 0 Total estimated TSP account balance $ 578,327

$15,000 per year for 20 years @ 6%

$15,000 per year for 30 years @ 6%

1 5 10 15 20

$3,098

$17,898

$130,232

$79,241

$43,271

$3,000

$15,000

$60,000

$45,000

$30,000

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

Year

The Power of Compound Earnings*

Contributions

Account Balance

*The chart assumes a $250 contribution at the end of every month and a 7% rate of return. It is for illustrative purposes only and is not intended to represent an investment in any specific security.

1 5 10 15 20

$3,098

$18,927

$163,561

$94,576

$48,772

$3,000$15,000

$60,000

$45,000

$30,000

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

$180,000

Year

The Power of Compound Earnings*

Contributions

Account Balance

*The chart assumes a $250 contribution at the end of every month supplemented by a 3% annual cost of living allowance and a 7% rate of return. It is for illustrative purposes only and is not intended to represent an investment in any specific security.

What we are vs. what we aren’t• We don’t provide financial education• We do endorse financial education• We are the bridge• Knowledge is great but doesn’t

necessarily equate to actions• We are the action piece• Just save!!

Where to get financial education• On base bank and credit union• FPA Pro Bono • Military Homefront on-line request

through State/Wing Family Program Managers

• State/Wing Family Program Manager receiving Command Financial Specialist Training—limited counseling

• DoD Road Shows• Military OneSource

DoD FMR 7000.14-R, V 5, Ch 34 Sept 07 Procedures Governing FIs on DoD Installations • Encourage and assist duly chartered

financial institutions on domestic DoD installations to provide complete financial services to include, without charge, basic financial education and counseling services.

• Financial education and counseling services refer to basic personal and family finances such as budgeting, checkbook balancing and account reconciliation, benefits of savings, prudent use of credit, how to start a savings program, how to shop and apply for credit, and the consequences of excessive credit.

DoDI 1342.27 12 Nov 04 Personal Financial Mgmt for Svc Members

• Implements policy, assigns responsibility, and prescribes procedures under references for the education and training of military members in personal financial management

• Applies to the Office of the Secretary of Defense, the Military Departments…, the Army, the Navy, the Air Force, the Marine Corps, and the Coast Guard … including their Reserve components.

Memo to Endorse Military Saves• To enhance financial readiness• Annual program to encourage, motivate

and educate Service members and their families

• Year round program with quarterly themes

• Command initiative to change financial culture

• Encouraged all commanders and civilian directors to participate in Military Saves week 2009

55

Resources

Website

57

Facebook

Resource Kit

Downloadable Graphics

Web Ads

61

Request Resource Updates

62

Profile Center

63

Military Youth

Military Youth Facebook

Deployment Savings Opportunities

Using deployment financial opportunities to boost savings

Deployment and savings

• Making a budget is like deciding how to divide up the pie

• Deployment offers opportunities to make the pie larger

• Having more pie doesn’t mean you have to eat more pie

67

Deployment and financial benefits

• Deployment offers allowances, tax breaks, incentives and special pay

• The Department of Defense currently has 70 types of special pays and allowances, depending on your deployment and duty status, branch of service, and duty station on the books

• Find detailed information through your service financial office or online through myPay

68

What to save during deployment

• Combat zone tax exclusion• Pay yourself instead of the

government– As an E-6 with 6 years, you earn

approximately $35,410 per year– The taxes generally add up to $8,800.00

– Set aside $8,000 in a retirement account with 2% interest for 10 years

– Saving earns you $1,769.60

69

What to save during deployment

– Make extra payments on credit cards, student loans, car loans or mortgages.

• A credit card with a $15,000 balance will never be paid off with the minimum payment

• With a payment of $500/month, it will take nearly 3 years and over $2,000 in interest to pay off

• A lump sum payment of $8,000 towards this debt saves more than $1,500 in interest payments

70

What to save during deployment

• Per diem while TDY– Minimize spending,

maximize income and saving

• The difference that $5-$10/day can make…

– Over a week: $35-$70– Over a month: $140-$240– Over a year: $1820-$3640

• Small saving can be the difference between 1 cup of designer coffee per day and an HDTV

– Paid in cash– No debt and no interest

payments

71

VS

What to save during deployment

• Family Separation Allowance– FSA is payable at

$250.00 per month and accrues from the day of departure from the home station and ends the day prior to arrival at the home station, in addition to any per diem or other entitlements

• Use this cash for taxes, retirement, credit card and loan payments, college savings, home repairs, etc

• Also consider using it for something that the whole family will enjoy for years

72

What to save during deployment

• Maybe you are considering a family vacation after your deployment ends…and nothing says family like Mickey Mouse!

• 4 passes for 4 days in Disney World cost $1076

• If you pay in cash with your Family Separation Allowance Savings, you pay $1076

• If you put this on a credit card and only pay the minimum, you will pay more than $2,600 over 14 years

73

What to save during deployment• Live alone?• Going to be gone for 3

months? 6 months? a year?

• Consider renting out your house or apartment for extra cash

• Subletting allows you to cover your housing costs while you still collect BAH

• Do you rent? – This is a great way

to set aside money for a down payment for your first home

• Do you own? – This is a great way

to put money aside for home improvements

74

Ways to save during deployment

• Create a rainy day fund– Cash has its

advantages that credit and long-term accounts don’t offer

– Short term savings can really save you from the unexpected

75

Ways to save during deployment

• See you local credit union or military bank to learn more about:– Basic Savings

Accounts– Certificates of

Deposit– College Savings

Accounts– IRAs and other

retirement accounts– Investment options

76

Ways to save during deployment

• Get sound advice.

• Online, check out saveandinvest.org for Money & Mobility, information specifically for military personnel and their families

• See a Personal Financial Manager at you Installation or arrange a consultation with a Certified Financial Planner through Military OneSource.

77

Ways to save during Deployment

• Saving Deposit Program (SDP)– For military

members deployed in combat zones, qualified hazardous duty areas, or certain contingency operations

– Annual interest rate of 10%

• E-6 salary after 6 years=$35,410

• Save 10%=$3,451• After 12 months in SDP

savings = $3,809• Reward for saving =

$358• Save the maximum =

$10,000• After 12 months in SDP,

savings = $11,038• Reward for saving =

$1,038

78

Ways to save during deployment

79

• TSP is a Federal Government-sponsored retirement savings and investment plan

• For more detailed information, visit http://www.tsp.gov

Join a community of savers

80

Questions?