Finances & Banking

Finances

The information on this page will save you thousands of dollars over your career in the military. In fact, we should be charging you to look at this page and the information contained in it. There are a great number of finance books at various book stores that offer big strategies to be financially set.  The one true time tested way to make your money work for you is this; invest as young as you can in a 401K or similar saving/investing device and small investments over time will create bigger money for you. The money you set aside will start to grow fast over the years with amortization. You will see it with every month that you contribute, and especially if you are matched by your civilian employer.
There are professional lawyers, doctors, CEOs, and managers out in the civilian world that are very successful at what they do. The unfortunate part is that as smart as some individuals are they may not be “Money smart”. Yes, I said “Money Smart!” Some people live well beyond their means, over-spend, go into debt, gamble, don’t know how to manage their money, or are unwise in the bank they use (see below for advice on this part). The earlier you learn how to control your money will limit the time your money (or lack or it) has control over you. The more you control your money the less it will control you. The old saying that “a fool and his money are easily parted” is demonstrated everyday in Las Vegas and other gambling establishments. A fool’s money that comes to Las Vegas usually stays in Las Vegas.
Many wealthy individuals are very frugal, cheap, and thrifty. The Boy Scouts also practice being thrifty as part of their 12 points of the Scouting Law. The Scout Law consists of being trustworthy, loyal, helpful, friendly, courteous, kind, obedient, cheerful, thrifty, brave, clean, and reverent if you were wondering. The whole point is to be wise in all the financial decisions you make daily. Wealthy people are usually not glitzy, not always glamorous, and always find ways to hold on to their money. Poor people always find ways to spend their money.  The only thing that keeps them poor is that they lack the knowledge on how to make their money work for them.  There are poor doctors, laywers, and other profesionals out there.  The individual may be good at what they do, but lack the ablility to control their money wisely.

Case in Point

In 1995, I was a Marine Squad Leader in charge of 13 Marines. I was always in competition with another Marine Corporal (E-4) named Corporal Menge. He was a Squad Leader as well and he had a good group of Marines. One rotation we got some real winners that needed lots of work and we pointed it out to each other of who had the runt (not GRUNT) of the pick. One Monday a Private First Class (E-2) named Rivera , a Marine that CPL Menge was in charge of, approached us as we were discussing our weekend events before morning muster at 0700 (07:00 am). This PFC began to tell us how he traded in his old used Buik for a better used Ford Mustang. He began to tell us how he haggled with the dealer to get a low price and that he even got a great annual percentage rate (APR). As company policy, squad leaders were to be consulted with by their men if they were ever to make any life changes (get married in a short time period) or make any large financial changes in their life (like buying a car). So, we asked him what percentage rate he got and he proudly stated that he got a great 27% APR that he talked the sales person up from the 16% that he had offered. CPL Menge and I couldn’t believe what we were hearing. This PFC did all this Friday night, drove the car to LA to show it off to some friends, drove those friends to Las Vegas Saturday night, back to LA on Sunday, and drove back to the base in the early morning of Monday. So, after the morning formation, I went with CPL Menge and PFC Rivera to see if the Judge Advocate Generals (JAG) Office could help. The JAG Officer we talked with was very pissed at what we told him and he instructed us to follow him to the dealership. Apparently this dealership made it an art form to cheat Marines out of their hard earned money. We all went inside to the dealership and the Marine JAG Officer had a heated discussion with the owner of the dealership. We couldn’t hear exactly what they were yelling at each other, but we could see them in the typical glass office that dealerships usually have. It was awhile before the JAG Officer opened the door and yelled at CPL Menge and myself to go get the piles of newspapers in the passenger seat of his car. There were two heavy bundles of Marine Corps Time that were on the passenger seat. We brought them into the auto dealer owners office as instructed. The JAG Officer told the owner that he was going to give him some free publicity about how his dealership cheats Marine out of their money. The owner of the dealership protested and said it would be slanderous, but when the JAG Officer told him that the Marine Corps times has a special section in the paper that forbids Marines from transacting with listed businesses. After some heated words the dealership owner capitulated and reversed the whole deal with the two cars. The PFC received his old Buick back and handed over the keys to the Ford Mustang. His Buick was washed, detailed, tires were rotated and balance, oil changed, windshield wipers replaced, and smelled clean. The Mustang had an additional 800+ miles added to it and smelled like smoke. The PFC was counseled, instructed to take a correspondence course called “Finances for Marines”, and had to give a class on why dealing with a car dealership by yourself can be tricky business. That PFC later became a becon for the same class to be given to other Marines.-

The military offers a “Thrift Savings Plan” (TSP) that allows you to invest up to a certain persentage amount of your base pay into a savings plan. You get to choose the alphabet of plans (C,G,I,F…). There is the “G” fund, “I” fund and many more. Each offers a different variety of investment strategies to fit your needs. You can also choose multiple funds to invest in. These funds offer low to high capacity investing with high to low volatility. What this really means is that if the investment is high volatile that is can swing high or low in the money it returns for your investment. You can loose a lot of money or gain a lot of money (volatile). Low volatility means that you will not gain or loose as much money in a short amount of time. The trick is to choose the mixture that fits you. If you like cell phone companies and you think they will make lots of money in the next five to ten years then you can invest in the fund that holds a great amount of telecommunications technology, cell towers, or has cell phones in its portfolio.

A mixture of specific investments creates a fund and having a variety of funds is your portfolio. Just as an example: the “B” fund may invest in banks, US currency, gold, and silver. So, if you have money invested in this fund and the US Dollar is strong and is forecasted to be worth more then the Euro then this fund is for you. So, in this make believe portfolio there could be Pharmaceutical companies, Apple, Intel, Coca Cola, Disney, and Legos. This portfolio is age diverse where the older generation will contribute to the pharmaceuticals, the middle age will contribute to Apple, Intel, & Coca Cola, and the very young will drive contributions to Disney and the Lego Company. This is just one strategy of investing. There are literally hundreds of investment books out there to help you make strategic investment decisions. A portfolio is personal and is up to your where you want to focus your money.

The beauty of TSP is that it will automatically draw money from your pay and grow with you doing almost nothing or watching it like a hawk every month. TSP now has a web site to make your investment needs easier. The best time to start investing was yesterday. TSP is almost fail safe and should be contributed to the fullest percentage allowed. If the stock market is low then so will the amount of money in your TSP. It would be wise to just let it stay and grow again when the market gets stronger.

Banks

Some of the very best military friendly banks are…

USAAwww.usaa.com
United Services Automobile Association (USAA) started in 1992 by insuring military officers for their vehicles. From that small beginning in San Antonio Texas, the association has expanded to many other financial areas. The association has grown to become the USAA Federal Savings Bank. In 1996 it opened their services to all enlisted military, as well as officers, and they began to grow. They now offer its members a wider variety of services beyond insurance.
This bank now oferes its services to everyone who has honorably served, their dependants, their childeren, and their childeren’s childeren. It has become this countries 31st largest bank as far as deposits from its members. Ranked #17 on Fortune’s list of best companies to work for with room to expand. With a solid base of 61 million people serving in the military and all their relatives, USAA can grow to compete with other banking institutions that offer a lot less.
One of the first unique banking tools that USAA offers is mobile bank deposits. Using an iPhone (or any SMART phone device) you can take a picture of a check to be deposited with the app and them in a couple of minutes the check amount becomes a verified deposit from the pictures taken. This allows service members the mobility that is part of their military culture. This high tech advantage is being copied by CHASE, Wells Fargo, B of A, US Bank and other institutions that want their customers mobile needs met. USAA is not in any league with these banking giants, but they are taking notice of the power of a military focused entity. Isn’t that what all corporations should do.
CHASE and the other banks now want to play in the same sandbox that USAA has become the true leader in. USAA President David Bohne says, “The only sandbox we want to be in is with out military men and women.” USAA is ran primarily by retired military personnel or miltary related individuals. There is a vested interest to help our own, as evident by the CEO being Major General Joe Robles Jr. USA (Ret.) looking out for all the military members that his bank serves.

Never consider the big banks, such as Bank of America, Citi-Bank, Wells Fargo, Chase, or any other big name bank. These banks charge for every transaction and interaction you have with them to their advantage. The “Bank of America” name is a sham for the American public. If you travel from Southern California to Northern California you have to transfer your account to a local Bank of America. You’ll have to pay again for new checks to be sent to you, going in to talk to a teller, and a transfer fee for changing banks & closing an account. All these fees are just to remain under the name of “Bank of America” and does nothing for you except to spend your money.
A number of military members feel religiously loyal to banks that keep charging them money for needless reasons. The main reason is that when it comes to finances people are afraid or unwilling to make changes. Even if those changes are to their benefit. They usually answer with some statement like, “I’ve been with B of A since my Mom opened a checking account for me three years ago.” An automatic teller machine can process a transaction for as low as 10 cents to as much as 25 cents. The bank then charges you as low as $3.00 to as much as $10.00 a transaction, depending on where you are. Imagine a bank that repays you those ATM Fees as part of doing business with them (that would be USAA).  The message here is that the bank you are with should treat you as the valued customer that you are.  Pick and choose your bank for the most capabilities and flexibility it gives you. Again, choose wisely!