Filed under: Finances
Check your money assumptions
Continuing our series on keeping the happy in the holidays this year, this week’s tip is to check your money assumptions. Finances can be strained during the holidays. This is not just an emotional problem, but how you think about money can affect you emotionally. Do you find yourself thinking, “I must give my family as good a Christmas as I had as a kid” or “I should be able to buy my kids whatever they want”? The fact is, you may like things to be different, but must or should they? Get rid of words such as “must” or “should” and focus instead on thoughts such as “What can I afford?” and “Are there ways I can make the holidays special without spending a lot of money?” Then notice how you feel without the constraints of what you must or should do. Instead, give yourself permission to give your family the holiday you can afford this year.
Identity theft is a serious crime that can completely disrupt your life through credit card charges and ruined credit history if the theft is not caught quickly. So, what is identity theft? It’s what happens when someone assumes your identity by using your personal information or property—typically your Social Security number or credit cards—without your permission. According to the Bureau of Justice Statistics, there are three general types of incidents:
- Unauthorized use or attempted use of existing credit cards
- Unauthorized use or attempted use of checking accounts
- Unauthorized use or attempted use of personal information to get credit cards, accounts, or loans or to commit other crimes
Homes unoccupied for extended periods may be goldmines for thieves to dig through trashcans, dumpsters, or storage areas at homes or apartment buildings for documents with useful pieces of information. Or it may be as easy as stealing a credit card from your mailbox or directly from your wallet.
When getting ready for deployments, you can place an active duty alert on your credit reports that lasts for one calendar year. For more information and tips, review the Federal Trade Commission (FTC) handout for Warfighters and their families.
Pre-deployment can mean a number of things to a Warfighter, from intense training or drills to saying farewell to family and friends. Preparation for deployment can be over months or at a moment’s notice with little or no time to settle your affairs. It’s important to have a checklist and contact list ready to use prior to your departure so you’re ready, whatever the scenario.
Having your personal finances in order should be a high priority. Options for being ready might include contacting a financial advisor, setting up automatic deposits and withdrawals, creating a monthly budget, checking into over-withdrawal options, adding a close friend or family member to your account to act in your absence, and reviewing your financial information and account numbers with a responsible person. Once all your financial ducks are in a row, your finances will be easy to maintain.
Your checklist should also include items such as legal documents, personal property review, auto and home insurance and maintenance, medical information, and international phone coverage.
One of the top personal sources of stress for Warfighters (according to a 2011 DoD survey) is money. Not enough money, not enough savings, or a bad credit history—all contribute to financial stress. For information and ideas on budgeting and saving money, check out this recent HPRC article. Another tool in your financial arsenal is the credit report. But first: What is a credit report?
A credit report is simply a record of your credit history. It includes your name, social security number, home address, credit cards, loans, collections, open amounts (how much you owe), and whether you have paid your bills on time (if late, it shows how late: 31-45 days past due, 46-60 days past due, etc.). In fact, you have more than one credit report; there are three major ones, so you need to pay attention to them all.
It’s important to have good credit reports—they have the information businesses look at to determine if they want to do business with you. This means if you apply for a credit card or loan, (1) are you worthy to get credit; (2) if you qualify, then what would the interest rate be; and (3) for an interest-free credit card or loan, what would the payback period be.
A number of businesses look at your credit reports: credit card companies, banks, mortgage lenders, cell phone companies, and even your insurance company. Employers can look at your credit history as well, but they must ask for your permission first.
It’s important to look at your credit reports for accuracy, especially with identity thefts, and to review the list of open credits that you may no longer use. Open credit is open credit—it can limit you in the long run because creditors know you have open lines of credit to use. The great news is that you can ask for a free credit report every 12 months from each of the three major companies, thanks to the Fair Credit Reporting Act (FCRA). Visit the Federal Trade Commission’s (FTC) website to see how to get your free credit reports.
Personal finances can be a major source of anxiety for Warfighters and family members. Creating a monthly budget can help. A budget is simply tracking money that comes in (income), goes out (expenses), and sticks around (your savings) each month. It does take some effort in the beginning to set up a budget, but once it’s done, it’s easy to update. If you don’t like using computer spreadsheets or writing things down in a ledger book, there are free apps you can use or budgeting programs you can buy. Or check around online—MilitaryOneSource has a budget worksheet. Or get help—some of the Military and Family Life Counselors (MFLC) are Personal Financial Management (PFM) counselors too. They are familiar with military life and its financial challenges, and using their services is free. Visit Military INSTALLATIONS to find the closest PFM to you. Finally, most banks offer tips on their websites on how to save and manage debt, and your local branch may offer free financial seminars.
The key to reducing expenses in order to save is easy—spend less. Many people, however, have a hard time cutting back on spending. A budget can help you keep on track. Saving money takes effort, but it’s worth it for your financial future.
Basic Formula: “Money In” minus “Money Out” equals “Money Retained.”
Preparing federal and state tax returns can be a time-consuming and aggravating task. Good news: There’s help out there! Most military bases offer free tax advice for Warfighters and their families through the Volunteer Income Tax Assistance Program, with certified volunteers trained by the IRS to know military-specific tax issues. Also, if you are eligible, Military OneSource offers federal and up to three state returns online free.
If you are deployed, you and your spouse may quality for a tax return deadline extension up to 180 days after you return from theater. For more helpful tips—including acceptable deductibles on out-of-pocket moving, travel, and uniform costs—visit the IRS and DoD YouTube video resources.