Sea Legs - Personal Finance
It is important for all Coast Guard members to develop a basic understanding of personal finances to build a secure future. How we handle our finances and the decisions we make about money will significantly impact our quality of life. We all want to be financially secured and enjoy the good things that life has to offer; yet most of us have little formal training in financial management to help us attain our goals successfully.
Please contact your Personal Financial Manager (PFM) at your HSWL Regional Practice or unit’s Command Financial Specialist (CFS) to find out what type of financial counseling, financial education (to include free classes), and other financial resources are available in your area. Additionally, the CG SUPRT Financial Wellness program can provide you one-on-one money coaching, financial webinars and much more. To access CG SUPRT online visit www.cgsuprt.com. Click on My CG SUPRT and log in. Additionally there is a CG SUPRT app available in for download for your smart phone/device. Lastly, you can also visit www.dcms.uscg.mil/financial/ for additional information and resources..
We all want enough money for everything we desire, but the reality is most of us have to be mindful of our spending habits. By establishing a sound financial plan and committing yourself to following it, you can achieve your financial goals.
The biggest step is to get started. Take the time to develop a financial plan that will provide security for your family in case you are faced with an emergency. You can secure your financial future by budgeting your money, not overspending, and investing wisely in opportunities that will make your money grow.
The more money you save now, the more you will have in the future. Stretch your hard-earned dollars and get the most for your money by involving the entire family and showing them how much money is coming into the household and how it is being spent. They can help save for large item purchases like a television or a vacation.
Coast Guard policy states that service members are responsible for paying their debts in a timely manner. Incurring debts beyond their ability to pay is evidence of irresponsibility and may jeopardize the member’s security clearance status, duty assignment and qualification for reenlistment or extension of enlistment. In cases that are more serious, indebtedness may become grounds for disciplinary action or other than honorable discharge.
Military Spouse Residency Relief Act (MSRRA)
MSRRA pertains to residency, taxes and voting. It allows a military spouse to retain the same place of residency that their service member has established so long as the military spouse has also established residency in the same state. You’ve probably lived in a number of interesting places during your service member’s career and might like to claim residency in one of those places, but this law does not permit you to choose any state you desire for residency. Not all residency requirements are the same, so spouses will need to check the specifications for their particular state. Ways to establish residency may include voting, paying taxes, owning a home and registering a vehicle in that state.
MSRRA is complicated, but can be helpful once you understand its basic benefits. We recommend you seek assistance from a military legal assistance office to get information that pertains to your particular situation.
Service Member Civil Relief Act (SCRA)
The SCRA offers financial and legal protections for active-duty service members and their families. Some protections of SCRA include:
Reduced interest rates (applies to before active- duty debt or liabilities; can be challenged by creditor)
- Prevent Evictions (depending on monthly rent amount)
- Postponement of foreclosures
- Ability to terminate residential or automobile leases (depending on PCS or deployment orders)
- Protections in civil court proceedings
There are several other protections that are not listed above. For more details, contact you nearest legal assistance office.
When the service member is preparing to file their taxes, they can also retrieve their military W2 from Direct Access. If a spouse or family member is filing a tax return for the service member then a power of attorney form needs to be completed. For assistance with tax planning or basic tax -related questions, you may contact www.CGSUPRT.com or the designated PFM specialist at your HSWL Regional Practice. Additionally, CG SUPRT offers free tax filing.
Thrift Savings Plan
The Thrift Savings Plan (TSP) is an excellent way to save for retirement. A range of investment options is offered. Contributions to your TSP account yield tax benefits and savings; it is safe and offers flexible options for contributions and fund growth. A TSP account can be started with a monthly contribution as little as a 1% of your base pay or as much as TSP’s monetary cap, which varies yearly. Your contribution and fund election can be adjusted as your base pay increases. Visit www.tsp.gov for more information.
The Blended Retirement System enrolls all service members joining the military after January 2018 into the Thrift Savings Plan, with automatic and matching DoD contributions. After completing two years of service, the service member is vested and that money belongs to them. If they leave the military, that saved money goes with them. For more information on BRS, visit www.dcms.uscg.mil/brs.
Military Saves is a social marketing campaign to persuade, motivate and encourage military families to save money every month and to convince leaders and organizations to be aggressive in promoting automatic savings. For more information, visit http://militarysaves.org/.
In today’s economy, borrowing on credit can be a necessity. However, careless use of credit can make each purchase cost more over the long run, once interest charges are added. If possible, pay in cash to avoid high finance charges. Using credit unwisely is a dangerous trap. Be cautious. A website is available at www.annualcreditreport.com where consumers can request, view and print their free credit report. This is the only authorized website to request your free report. The report is also available by calling toll-free at 877-322-8228 or by writing to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.
Leave and Earnings Statement
Each service member has access to an electronic copy of his or her Leave and Earnings Statement (LES) posted monthly to Direct Access. The LES contains a monthly accounting of your leave and earnings. Members should read their LES consult “Military Accounts Support (MAS) Branch. For information about pay, rates and benefits visit https://www.dcms.uscg.mil/ppc/mas/rates/#contents.
For more information regarding the PFMP visit www.dcms.uscg.mil/financial or contact the designated PFM specialist at your HSWL RP.
Predatory Financial Services
Located near many U.S. military bases are questionable businesses that consumer advocates describe as being predatory. These businesses offer services such as payday loans, rent-to-own furniture, electronics and appliances, check cashing, pawn options and advance tax refunds. While the services offered may seem very attractive, they come at a high cost and often trap the consumer in an endless cycle of debt. Often times, service members are not equipped with the financial education to protect themselves against these predators. The issue has received so much attention that there is a division of the Consumer Financial Protection Agency (www.consumerfinance.gov) aimed at curbing such practices directed toward military service members. It is important to the financial well-being of service members and their families to educate themselves on these practices and learn to avoid them.
Payday lending (also called a “cash advance”) is the practice of using a post-dated check or electronic checking account information as collateral for a short-term loan. To qualify, borrowers need only to provide personal identification, a checking account and income from a job or government benefits, such as Social Security or disability payments.
Research shows that the payday lending business model is designed to keep borrowers in debt — not to provide one-time assistance during a time of financial need. For more information and to keep from falling prey to the “debt traps” associated with payday lending, contact the designated PFM specialist at your HSWL Regional Practice.
Military Lending Act (MLA)
This federal regulation limits creditors from charging more than 36% annual percentage rate on certain loans such as payday loans, vehicle title loans and tax refund anticipation loans. These three types of loans have high interest rates and coupled with short payback terms. The MLA also prohibits mandatory arbitration clauses, mandatory allotments to repay the loan, and prepayment penalties. The MLA applies to active duty, reserve members (activated 30 days or more), and their family members enrolled in DEERS. If your rights have been violated under the MLA, you may file a complaint with the Consumer Financial Protection Bureau at www.consumerfinance.gov/complaint.
Identity theft is a crime in which an imposter obtains key pieces of your personal information, such as your Social Security number or driver’s license number and uses it for their personal gain. Be sure to utilize the ability to obtain a free credit report and review it for skeptical activity at https://www.annualcreditreport.com/. For tools and resources to protect you from identity theft or if your identity has been stolen, visit https://www.identitytheft.gov/.
If you think someone else is using your Social Security number, report the problem to the Social Security Administration at 800-772-1213. You can also check your earnings record by calling the above number or by making a request online at https://www.ssa.gov/. Your PFM at your HSWL RP center or your nearest legal assistance office may also be able to assist with ID theft and fraud cases if you are a victim of this crime.