Still here

Folks, I have been away for almost a year now, not blogging my experience. I have changed duty stations and I have enjoyed working in the service in my new job. I am currently traveling all over the country. Maybe I should start blogging about money again since our recession is still ongoing.

Retirement Benefits May Change For Military

I think everyone should read this and I would like to start a dialog about this article.

Panel Recommendations for Retirement
August 06, 2008
Air Force Print News|by Jim Garamone

WASHINGTON -- A panel looking at military compensation has recommended dramatic changes in the military retirement system.

The recommendations are part of the second volume put out by members of the 10th Quadrennial Review of Military Compensation.

The first volume, released in March, looked at cash compensation. Retired Air Force Brig. Gen. Jan D. "Denny" Eakle was director of the panel, and she briefed the press during a Pentagon news conference Aug. 5.

General Eakle said critics of the current military retirement system say it is not equitable, it is not flexible and it is not efficient.

"There is a perception that the system we have today is inequitable because only 15 percent of all enlisted personnel and less than half of officers will ever receive anything in the system," she said.

Reserve-component personnel also believe the current system discriminates against them, especially at a time when reserve forces are being called on more, she said.

The retirement proposal would offer a defined benefit, defined contributions, "gate" pays and separation pays.

The defined benefit would be 2.5 percent of the average basic pay for the highest 36 months of the individual's career multiplied by the number of years of service, with servicemembers vested at 10 years of service. Payments to retirees would begin at age 60 for those with less than 20 years of service and at age 57 for those with 20 years of service or more.

Servicemembers could opt for an immediate annuity, but the payout would follow the Federal Employee Retirement System methodology: a 5 percent penalty per year for early withdrawal.

The defined contribution portion would be an automatic government-funded Thrift Savings Plan. Servicemembers would not have to match any government payment. The government would not put any money in for the first year, but would put in 2 percent of base pay for two years of service, 3 percent for three and four years of service, and 5 percent for five and more years of service. Again, this would be vested after 10 years of service.

The military also would make "gate pays" to servicemembers who reach specific years of service. These would vary by years of service and skills, General Eakle said.

"This is a payment made for achieving a particular year of service," she explained. "And within the services, they would have the flexibility to vary this by year of service as well as by skill. That way, they could begin to shape the skills by dragging people further into their career by offering them an incentive."

Finally, the system would include separation pay to servicemembers that would also vary by years of service and skills.

"The separation payments would be made available by the service to members that they wished to entice to leave," General Eakle said. This would be a permanent tool services would have available, she added.

The panel used a Rand Corporation computer model to test the recommendations, but General Eakle said the panel members would like a large-scale test in the Defense Department.

"Therefore, the recommendation of this QRMC is that the Department of Defense conduct a multi-year test of this system," General Eakle said. "The way the test would work is this: All four services would be asked to identify some skills that have different types of retention patterns -- some that stay not very long, some that stay longer periods of time -- and ones they wish to influence."

The test would offer people in those skills in the first eight years of service an opportunity to volunteer.

"If someone was selected for the test, they would be paid all of the TSP that they should have earned up until that point, and it will be put in their TSP account for them," she said. "The program's vesting rules would in fact apply to all those individuals. So should they achieve 10 years of service while they are in the test, they would fully own it."

At the end of the test period, people who are in the new system who wish to revert to the original retirement system would be allowed to do so, she said.

Any change in the retirement system would require action by Congress. DOD officials said they will carefully examine the panel's recommendations and then decide if they should move forward. The study will take at least six to 12 months, so any decision would be made by the next administration, DOD officials added.

Inflation

If you think the the United States inflation is out of control than you may want to stand by and take a look at this.

Zimbabwe's troubled central bank introduced $100 billion banknotes Saturday in a desperate bid to ease the recurrent cash shortages plaguing the inflation-ravaged economy.As high as they are, though, the bills still aren't enough to buy a loaf of bread. They can buy only four oranges.

The new note is equal to just one U.S. dollar.

Once-prosperous Zimbabwe has seen an unprecedented economic meltdown since it gained independence in 1980, with the official inflation rate now at 2.2 million percent.

That is right you see it 2.2 million percent inflation!!! So can you imagine all of the money you are getting for each paycheck. You would have to spend the money that day otherwise it would be worthless. Now we complain about the gas price, increase of milk in on year etc. Look at those people in Zimbabwe!!! What would you do if inflation was that high. i probably would ask my money to be paid to me should be in American Dollars or the Euro. It one couldn't do that I would ask my payment be in gold at this part of the game.
So in short would complain that much as long as we don't have that much in inflation.

President signs GI Bill

President Bush today signed legislation ushering in a new era in GI Bill benefits. The legislation, which the Senate last week passed overwhelmingly, is part of a $162 billion war spending bill.

"We are very excited that after 18 months of working on the GI Bill that it's been passed into law," said Patrick Campbell, legislative director for IAVA. "Now veterans everywhere will see their opportunities greatly expanded."We also owe a debt of gratitude to our nation's military families. They endure sleepless nights, and the daily struggle of caring for children while a loved one is serving far from home," he said. "So I'm pleased that the bill I sign today includes an expansion of the GI Bill. This legislation will make it easier for our troops to transfer unused education benefits to their spouses and children."

Bush said the expanded benefits will help "to recruit and reward the best military on the face of the Earth."

The new education benefits are forecasted to go into effect in mid-2009 and will be available to all servicemembers and veterans -- including members of the Guard and Reserve -- who have served on active duty for at least 90 consecutive days since Sept. 11, 2001. The benefits are paid in increments which are determined by the amount of time served on active duty.

The New GI Bill

The new "Post 9/11 GI Bill" will soon be heading for the President’s desk. This new benefit will give servicemembers and veterans who have served on active-duty since Sept. 11, 2001, a new education benefits package worth up to roughly $3,000 a month. The same legislation includes a change to the current Montgomery GI Bill that will increase the monthly payment to $1,321 a month -- a total benefit of more than $47,000. The new law also enables servicemembers to transfer their GI Bill benefit to their dependents.

Benefits Start Date

This new GI Bill is set to go into affect on August 1, 2009. However, as with any new legislation, it could take some time for the Department of Veterans Affairs (VA) to begin paying benefits.

Eligibility for the New GI Bill

If you have served a total of at least 90 days on active duty in the Armed Forces you’re eligible. However, the amount of benefits you receive under this program are determined by the actual amount of accumulated post 9/11 service you have.

To be eligible for the full benefit, you must have three years of active duty service after 9/11 or have been discharged due to a service-connected disability.

If you are an officer who graduated from a service academy or received ROTC scholarships, you also qualify for the new GI Bill benefits. However, your ROTC/Service Academy associated obligated active-duty service time does not count toward the three years necessary to qualify for the full benefits.

Note: You didn’t have to opt-in for the Montgomery GI Bill to be eligible for this program
New GI Bill Payment Rates

The Post 9/11 GI Bill will provide up to 100% of your tuition. In addition, the program provides a monthly housing stipend a stipend of up to $1,000 a year for books and supplies. If you attend less than full-time will receive a portion of the payment based on the number of units of study. Your 36 month benefit entitlement will charged for each month you use any combination of the tuition and stipend benefits.
The amount of tuition and stipends paid under the Post 9/11 GI Bill will vary depending on your state of residence, number of units taken, and amount of post Sept. 11, 2001 active-duty service. Here is a quick reference showing the percentage of total combined benefit eligibility based on the following periods of post 9/11 service:

100% - 36 or more total months
100% - 30 or more consecutive days with Disability related Discharge.
90% - 30 total months
80% - 24 total months
70% - 18 total months
60% - 12 total months
50% - six total months
40% - 90 or more consecutive days
Tuition Rates

Under the new GI Bill you will be provided tuition at a rate equal to the highest established charges for full-time undergraduate students charged by the public institution of higher education in the State in which you are enrolled.
One of the added features of this tuition payment plan is that the tuition will be paid directly to the school, relieving you of the responsibility. This is similar to the process used for military tuition assistance.

Monthly Housing Stipend

If you attend a traditional college program, you will be paid a monthly housing stipend equal to the monthly amount of the Basic Allowance for Housing (BAH) for an E-5 with dependents. The average housing stipend will be approximately $1,400 a month. However if you attend distance learning programs such as correspondence courses and online you will not qualify for this stipend.

Book and Supply Stipend

You will receive a lump sum payment the first month of each quarter, semester, or term. The payment will help cover the cost of books, supplies, equipment, and other educational fees for that academic term. The payment amount will be equal to either a quarter or half of the annual $1,000 cap for that academic year, depending on how the academic year is divided – quarter or semester terms.

Benefits Expiration Date

Unlike the Montgomery GI Bill, the new GI Bill will allow you to use this benefit for up to 15 years after your last discharge or separation from active duty.

Licensing and Certification Payments

This new GI Bill will provide up to $2,000 to cover the cost of one licensing or certification test. This benefit is not charged against your 36 month entitlement.

Tutorial Assistance

Like the Montgomery GI Bill, the new GI Bill will provide up to a maximum of $1,200 for tutorial assistance. The program will pay up to $100 per month, for a maximum of 12 months. This benefit is not charged against your 36 month entitlement.

Benefit Transferability

Although the details have yet to be worked out, the new GI Bill will enable you to transfer a portion of your 36 month benefit entitlement to a designated dependent. This will likely require you to re-enlist to take advantage of this feature.

How to Become Rich Slowly

1) Make a lot of money
a. Get well educated AND learn a trade/job skills/a profession that pays well. It is much easier to have a high net worth when you have a high income
b. Don’t stop learning when you leave formal schooling
c. Work hard
d. Be willing to take reasonable risks
e. Consider being an owner rather than an employee

2) Don’t spend a lot of money
a. Start saving early. Remember that every dollar you save in your twenties and thirties is 8 times as valuable as one saved in your fifties
b. Don’t be all hat and no cattle
c. Rent your lifestyle (Don’t buy a boat, a time-share, a second house, a plane etc) Keep your fixed expenses low so when hard times come you can cut your lifestyle back rapidly
d. Realize that buying a house or cars that are too expensive for you will likely keep you from getting rich. The big things matter most
e. Be prudently frugal and selectively extravagant. Be sure that you are spending your money on the things you value most
f. If you can’t afford to pay cash for it, you can’t afford it. The only exception is a house (because it will generally appreciate at just over the rate of inflation), where the rule is if you can’t afford to put 20% down and use a 15 year fixed mortgage you can’t afford it
g. Marry well, marry once, marry someone who shares the same thoughts on “The Big Three” (Money, Religion, and Sex) and STAY MARRIED
h. Credit cards aren’t for credit; if you have paid interest at a higher rate than 3% or paid a late or over-the-limit fee more than once you shouldn’t use a credit card

3) Make your money work as hard as you do
a. Read at least one good basic personal finance book, one good investing book, and one good behavioral finance book. Consider Personal Finance for Dummies , The Boglehead’s Guide to Investing, and Why Smart People Make Big Money Mistakes and How to Avoid Them.
b. Get the market return; use fixed asset-allocation, index mutual fund investing as your default strategy
c. Minimize taxes. Know the basics of the tax code, max out tax-advantaged savings accounts, and use them to your advantage
d. Keep investing expenses low
e. Understand basic financial calculations and lingo. Understand compound interest, the time value of money, financial risk, and the expected rate of return of various financial assets. Know how to use the excel functions-FV, XIRR, PMT, PPMT etc
f. Simplify your financial life. Put bills on automatic payment and investments on automatic withdrawal. Minimize the number of accounts you hold and the number of investments you have as much as possible
g. Understand why your savings rate matters a lot when you’re young and very little as your approach retirement. Understand why your investment return matters little when you’re young, more as you approach retirement, and a great deal during your first decade after retirement. Understand the concept of a safe withdrawal rate
h. See the end from the beginning. If you fail to plan you plan to fail. Have a written investment plan you can refer to when contemplating portfolio changes.

This advice comes from one of the bogleheads on the forum that I talked about awhile back on www.diehards.org
I really think that all of these tips will help us a military members.

Social Security numbers

I thought this article was worth posting for everyone to see. It is a article from Stars and Stripes.

When Social Security numbers were essentially worthless, they used to be stitched and spray-painted on troops’ duffel bags.

Now that identity thieves can parlay the numbers into thousands of dollars or more, the Department of Defense is trying to make them invisible. And not just to the naked eye.

The DOD recently announced it will begin truncating Social Security numbers on military identification cards in December. Only the last four digits of the number will appear on the card. Along with limiting their visibility, military agencies are also moving toward using the shortened versions when sharing records.

The plan is part of a bigger federal fight against large-scale cyber crime rings.

"Data breach, that’s been the focus of our attention," said Mary Dixon, director of the Defense Manpower Data Center, a DoD clearinghouse for personnel and training databases in Arlington, Va. "Many more people have been affected that way."

Incidents such as the 2006 Veterans Affairs Department flap — in which the sensitive records of millions of veterans were compromised when an employee’s laptop was stolen — are driving the effort, she said.

It’s being accomplished by constantly enhancing computer network security, vetting information handlers more often before trusting them with sensitive records, encrypting more data and steering away from tying Social Security numbers to as many personal records, Dixon said.

The measures are not unique to the military.

"This is something the whole government is trying to do," said Betsy Broder, an ID-theft expert with the Federal Trade Commission.

A presidential task was established in 2006 and incorporates 17 federal agencies in an effort to reduce ID theft both in the public and private sectors, said Broder, assistant director of the division of privacy and identity protection at the FTC, which tracks ID-theft data used by local, state and federal law enforcement authorities.

Before the Internet revolution increased the reach and ease of communication and commerce, stealing someone’s identity was more difficult. That’s changed in recent years with the proliferation of online public records systems, search engines and other sources of official and unofficial documents floating around cyber space.

"Technology has made it much easier for ID thieves to ply their trade," and has led to a wholesale information black market that criminals use to sell, buy and trade large amounts of sensitive data, Broder said.

The Social Security number is often the key to breaking the code into someone’s financial, medical and other personal records. What’s more, the number and the name attached to it are often all that’s needed to fraudulently open a line of credit or buy property.

Rolled out in 1937 to implement President Franklin D. Roosevelt’s government welfare program, Social Security numbers have evolved into much more and are now required for getting a job, securing insurance, buying a house and paying taxes.

"If [Social Security numbers] were only being used for the purpose they were designed for we wouldn’t have this discussion," Dixon said. "But everybody uses the Social Security number for everything."

That’s why it will take the military until the end of 2009 to remove the full Social Security number from all 8.2 million ID cards currently issued worldwide. The phase-in will give time to process all the new cards that will have to be issued, plus, more importantly, time for military agencies that have built their records and operations systems around the nine-digit numbers time to change the way they do business, Dixon said.

"It’s not difficult technically. The software is easy, but everyone who uses the Social Security number is going to have to prepare for a big change, and that takes a little bit of time," she said.