Personal financial security

GOODFELLOW AIR FORCE BASE, Texas -- A sage supervisor once told me, "There are two ways to get yourself in trouble that were faster than another way in the military: money and security." Hopefully, none of you had a problem with getting your security clearance
 
Money is another subject altogether. The military has enjoyed sizable pay raises over the last ten years; however, some of us will not serve until retirement to get a portion of it for the remainder of our lives. You need to have a plan.

Rule 1: Develop a budget that pays you first. Sit down with the financial advisors in the Airmen and Family Readiness Flight. They can help you break down what you have and what you really need to have. In that plan, you need to build a nest egg for a rainy day. That should be at least one month's pay. Some sources say 3-6 months of expenses. The idea is to start! This is your safety net when your "reliable" vehicle becomes unreliable or needs a new set of tires.

Developing a budget also gives you map of where your hard-earned money has to go and where you want it to go. The Thrift Savings Plan is a fantastic opportunity. Even if you plan not to make the military a career, you can transfer the amount you've accumulated to a 401K or traditional IRA.

Your contribution comes out of your check untaxed and goes directly to the investments you want. Investment options are diverse but still simple enough for the layman. TSP is one of the best benefits that we have in the Department of Defense, and yes, you can become a millionaire by investing in TSP!

Rule 2: Get out of debt. Our society has become very materialistic. We want everything right now and credit gives us the means to have it right now. This pitfall pushes us into bad debt.

CNNMoney.com defines bad debt as "debt you've taken on for things you don't need and can't afford." It usually also has the highest interest rates. The Federal Reserve Board's survey of consumer finances shows that credit card debt for adults 18 to 24 rose from $1,461 in 1992 to $2,985 in 2001; that is a 104 percent increase. Three out of four people in this age group carried balances on their cards month to month and because of this nearly 30 percent of their household income went to pay that credit card debt. Additionally, one in five of these households missed or were late on payments in the last year.

Rule 3: Build your credit. Here are the basics. Pay the bill on time, every time. Creditors want to see consistency. Credit cards do not make money that way. They want you to carry a balance so they can get a percentage of your money. Did you know that credit card companies charge retailers for each transaction in which their card is used? They get a percentage of your charge from the retailers then they make money off you again if you do not pay the balance in full. The bottom line is that your goal is to pay the bill off at the end of the month.

Other ways to build that credit rating which are considered "good debt" are educational loans and home loans. Usually the interest rates are low and in most instances can be deductible on your federal income taxes. Shop around. Look for the best rates as well as fees associated with the loans. A fraction of an interest point can add up to a large sum of money over the life of the loan.

There are literally thousands or web sites, books and agencies that are willing to help you be financially solvent. The A&FRF is right here on base for you and the cost is nothing but your time and initiative.

Take the time now to invest in your future. You are your own best advocate.