crm lesson plan report€¦ · instructor material: each primary facilitator should possess a...
TRANSCRIPT
CRM LESSON PLAN REPORT
PERFORM PERSONAL FINANCIAL MANAGEMENT
805A-AAF6B101 / 4.2 ©
Approved 10 Aug 2015
Effective Date: 10 Aug 2015
SCOPE: None ____________________________ Distribution Restriction: Approved for public release; distribution is unlimited. Destruction Notice: None Foreign Disclosure: FD1 - This training product has been reviewed by the training developers in coordination with the Fort Jackson, SC foreign disclosure officer. This training product can be
used to instruct international military students from all approved countries without restrictions.
1
SECTION I. ADMINISTRATIVE DATA
All CourseMasters/POIsIncluding ThisLesson
Courses
CourseNumber
Version Title Phase Status
542-36B10 4.2 Financial ManagementTechnician AIT
N/A Analysis
POIs
POI Number Version Title Phase Status
542-36B10 4.2 © Financial ManagementTechnician
0 Analysis
Task(s)Taught(*) orSupported
Task Number Task Title Status
ReinforcedTask(s) Task Number Task Title Status
Knowledge Knowledge Id Title Taught Required
K23507 Identify a Personal Financial ManagementPlan
Yes No
Skill Skill Id Title Taught Required
S3021 Create a Personal Financial ManagementPlan
Yes No
Administrative/AcademicHours
The administrative/academic (50 min) hours required to teach this lesson are as follows:
Academic Resident Hours / Methods
Yes 0 hrs 15 mins Practical Exercise (Hands-On/Written)Yes 7 hrs 35 mins Discussion (Small or Large Group)
________________________________________________________________________Total Hours(50 min): 8 hrs 0 mins
InstructorActionHours
The instructor action (60 min) hours required to teach this lesson are as follows:
Hours/Actions
0 hrs 15 mins Classroom Setup________________________________________________________________________
Total Hours (60 min): 0 hrs 15 mins
Test Lesson(s) Hours Lesson Number Version Lesson Title
None
PrerequisiteLesson(s) Hours Lesson Number Version Lesson Title
None
2
TrainingMaterialClassification
Security Level: This course/lesson will present information that has a Security Classification of:U - Unclassified.
ForeignDisclosureRestrictions
FD1. This training product has been reviewed by the training developers in coordination withthe Fort Jackson, SC foreign disclosure officer. This training product can be used to instructinternational military students from all approved countries without restrictions.
ReferencesNumber Title Date
ATP 5-19 (Change 00109/08/2014 78 Pages)
RISK MANAGEMENThttp://armypubs.army.mil/doctrine/DR_pubs/dr_a/pdf/atp5_19.pdf
14 Apr 2014
TRADOC PAM 600-4 The Soldiers Blue Book 09 Jun 2010TRADOC REG 350-6 (C1) Enlisted Initial Entry Training Policies and
Administration07 Nov 2013
Student StudyAssignment TRADOC PAM 600-4, The Soldier's Blue Book, Appendix A - Army Resources.
InstructorRequirements One (1) primary instructor. Instructor must review lesson plan material and associated multi-media one day prior to the
actual date of instruction. Instructors should be prepared to add relevant experience to assist in learning.
SupportPersonnelRequirements
None
AdditionalSupportPersonnelRequirements
NameStudent
Ratio QtyMan
Hours
None
3
EquipmentRequiredfor Instruction
ID - Name StudentRatio
InstructorRatio Spt Qty Exp
5965-01-C11-8844 - MicrophoneDynamic, w/Connector andCable: Desktop GooseneckShure
0:0 0:0 Yes 1 No
5965-01-C12-2937 - MicrophoneWireless, W/Dynamic High:EW112E Sennheiser
0:0 0:0 Yes 1 No
5965-01-T00-0117 - IndoorSpeakers: DI5 Tannoy
0:0 0:0 Yes 6 No
6150-01-398-2605 - POWERSTRIP,ELECTRICAL OUTLET
0:0 0:0 Yes 4 No
6720-01-C15-4950 - ImagingCamera: Wolf Vision VZ8LTG
0:0 0:0 Yes 2 No
6730-00-402-6437 - Screen,Projection, Ceiling and Stand andWall
0:0 0:0 Yes 2 No
702102982124/70209N -Computer, Personal System
0:0 0:0 Yes 26 No
7025-01-328-5540 - Printer,Automatic Data Processing,Laser Printer
0:0 0:0 Yes 1 No
7025-01-586-0523 - Monitor,Desktop
0:0 0:0 Yes 27 No
7025-01-C09-1799 - Touchpanel,Color: TPS-3100l Crestron
0:0 0:0 Yes 2 No
7025-01-C12-4825 - ComputerDell Precsion T3500 2 Each
0:0 0:0 Yes 2 No
7050-01-C14-4309 - InteractivePen Display: ID422W Smart
0:0 0:0 Yes 1 No
7110-01-334-7082 - Board,Marker
0:0 0:0 Yes 1 No
7195-01-C05-1326 - Mr PodiumMP42-T Lectern
0:0 0:0 Yes 1 No
(Note: Asterisk before ID indicates a TADSS.)
MaterialsRequired Instructor Materials:
Instructor Material: Each primary facilitator should possess a lesson plan, slide deck, lesson handout, pre/post test,
appicable regulations, and student critique.
Student Materials:
PFMT Handout.
NOTE: Students should bring a copy of their own LES if available.
Classroom,Training Area,and RangeRequirements
ID - Name Quantity StudentRatio
SetupMins
CleanupMins
17120-M-1200-30Classroom, Multipurpose, 1200 Square Feet,30 Students
1:25 5 5
4
AmmunitionRequirements DODIC - Name Exp
StudentRatio
InstructRatio
SptQty
None
Instructional Guidance/Conduct of Lesson NOTE: Before presenting this lesson, instructors must thoroughly prepare by studying this
lesson and identified reference material.
Throughout this lesson, solicit from students the challenges they experienced in the current
operational environment (OE) and what they did to resolve them. Encourage students to apply
at least 1 of the 8 critical variables: physical environment, political stability of the state,
sociological demographics, infrastructure, military capabilities, information, time, and
economics.
Proponent LessonPlan Approvals Name Rank Position Date
Reid Bonig Not available Approver 10 Aug 2015
5
SECTION II. INTRODUCTION
Method of Instruction: Discussion (Small or Large Group)Mode of Delivery: Resident Instruction
Instr Type (I:S Ratio): Contractor, (1:25)Time of Instruction: 15 mins
MotivatorWhatever your reason for joining the Army there is one unavoidable fact: it is your Duty as a Soldier to fulfill your
financial obligations and to provide for the needs of your family if you have one. The purpose of this training is
to provide information that will help you prepare for your financial readiness.
NOTE: At this time, pass out Pre-Assessment to students and give them 10 minutes to complete. Go over the
Pre-Assessment (no more than 5 minutes) and have them pass the test back to you. Explain to the students
that this just gives them an idea of where they are knowledge wise. Tell them to not worry about how well they
did because you will cover all of the material during the training.
TerminalLearningObjective
NOTE. Inform the students of the following Terminal Learning Objective requirements.
At the completion of this lesson, you [the student] will:
Action: Perform Personal Financial ManagementConditions:
In a classroom environment using facilitated group discussions, shared
personal experiences, applicable Army administrative publications and
forms, and access to internet resources.
Standards:Demonstrate basic knowledge and comprehension of the following
learning activities:
1. Financial Ethics
2. Leave and Earning Statement / myPay
3. Spending Plan
4. Managing A Checking Account
5. The Essentials of Credit
6. Consumer Awareness
7. Car Buying
8. Meeting Your Insurance Needs
9. Investments / Savings
LearningDomain - Level:
Cognitive - Applying
No JPMELearning AreasSupported:
None
SafetyRequirements In a training environment, leaders must perform a risk assessment in accordance with FM 5-
19, Composite Risk Management. Leaders will complete a DA Form 7566 COMPOSITE RISK
MANAGEMENT WORKSHEET during the planning and completion of each task and sub-task
by assessing mission, enemy, terrain and weather, troops and support available-time available
and civil considerations, (METT-TC). Note: During MOPP training, leaders must ensure
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personnel are monitored for potential heat injury. Local policies and procedures must be
followed during times of increased heat category in order to avoid heat related injury. Consider
the MOPP work/rest cycles and water replacement guidelines IAW FM 3-11.4, NBC Protection,
FM 3-11.5, CBRN Decontamination.
No food or drink is allowed near or around electrical equipment (computers, printers,
projectors, etc.) due to possible electrical shock or damage to equipment. Exercise care in
personal movement in and through such areas. Avoid all electrical cords and associated
wiring. In the event of an electrical storm, you will be instructed to power down equipment.
Everyone is responsible for safety. A thorough risk assessment must be completed prior to
every mission or operation.
Risk AssessmentLevel
Low - Electrical shock, fire, slippery floors, physical injure/strain, and tripping tight;
spaces in classroom.
Assessment: Low
Controls: Primary Instructor (PI) will ensure: All electrical cords are properly stored under
desks, liquid containers have lids on them and all spills are immediately cleaned and mopped
and allowed to completely dry before allowing students/personnel to walk on them. All chairs
are ergonomically designed, adjust to individual preference and that all students are awake and
paying attention in class. All cables/cords are properly plugged in, sheathed, and secured
along tables, walls, and ceilings. No damaged or frayed cords/cables will be used. PI will brief
proper hand washing techniques, the use of hand sanitizer, and evacuation procedures. All
trash will be removed daily.
Leader Actions: Detailed in-brief covering all aspects of safety to include daily classroom
inspections, spills cleaned immediately, emergency exit plans, leader checks, hygiene
procedures, and weekly safety briefings.
EnvironmentalConsiderations NOTE: Instructor should conduct a Risk Assessment to include Environmental Considerations
IAW FM 3-34.5, Environmental Considerations {MCRP 4-11B}, and ensure students are briefed
on hazards and control measures.
Environmental protection is not just the law but the right thing to do. It is a continual process
and starts with deliberate planning. Always be alert to ways to protect our environment during
training and missions. In doing so, you will contribute to the sustainment of our training
resources while protecting people and the environment from harmful effects. Refer to FM 3-34.5
Environmental Considerations and GTA 05-08-002 ENVIRONMENTAL-RELATED RISK
ASSESSMENT.
InstructionalLead-in The proper management of your personal finances can have a long-lasting and far-reaching impact on you as a Soldier
or a civilian. The last thing you want to be thinking about while patrolling the mountains of Afghanistan is if you are
being paid properly or if your Family is financially stable back at home.
7
SECTION III. PRESENTATION
TLO - LSA 1. Learning Step / Activity TLO - LSA 1. Financial Ethics
Method of Instruction: Discussion (Small or Large Group)Mode of Delivery: Resident Instruction
Instr Type (I:S Ratio): Contractor, (1:25)Time of Instruction: 30 mins
Media Type: Handout / PowerPoint PresentationOther Media: Unassigned
Security Classification: This course/lesson will present information that has aSecurity Classification of: U - Unclassified.
SHOW SLIDE 1-1: Personal Financial Management
INTRODUCTION: The proper management of your personal finances can have a long-
lasting and far-reaching impact on you as a Soldier or a civilian. The last thing you
want to be thinking about while patrolling the mountains of Afghanistan is if you are
being paid properly or if your Family is financially stable back at home.
MOTIVATOR: Whatever your reason for joining the Army there is one unavoidable
fact: it is your duty as a Soldier to fulfill your financial obligations and to provide for
your family. The purpose of this training is to provide information that will help you
prepare for your financial readiness.
SHOW SLIDE 1-2: TERMINAL LEARNING OBJECTIVE
Go over the Action, Conditions and Standard with students.
SHOW SLIDE 1-3: Financial Ethics
SHOW SLIDE 1-4 : WHY ARE WE HERE?
Ask students the question. “WHY ARE YOU HERE?” (Wait for students to answer.)
Answer: Several recent analyses have shown that many junior Army personnel have
problems managing their money. These problems adversely affect both individual
members and the Army as a whole.
SHOW SLIDE 1-5: WHY SHOULD I CARE?
In a 2012 Military Survey of the National Financial Capability Study by FINRA Investor
Education Foundation, 41% of active duty service members reported at least some
difficulty making ends meet. This is a 5% increase in 3 years.
SHOW SLIDE 1-6: WHY SHOULD I CARE? CONT’D.
More than one out of every three junior service members have taken non-bank loan
products (pay day loans) which tend to be more expensive than bank loans and which
can be indicative of a poor financial situation.
SHOW SLIDE 1-7: WHY SHOULD I CARE? CONT’D. EFFECTS ON THE ARMY
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(1) Administrative costs for processing Letters of Indebtedness, garnishments, and bad
checks
(2) Roughly 6 out of every 10 security clearances were revoked because the member
had financial problems--problems that could make them more vulnerable to
approaches by enemy agents.
(3) Millions of dollars in bad checks are written at Army Exchanges worldwide each
month.
SHOW SLIDE 1-8: ARMY CORE VALUES
NOTE TO INSTRUCTOR: Ask class how Core Values apply to their personal
finances.
Focus for just a moment on what you think the relationship of the Army Core Values is
to your personal financial management.
1. Loyalty – Bear true faith and allegiance to the U.S. Constitution, the Army, your unit
and other Soldiers.
2. Duty - Duty means fulfilling your obligations. It often takes courage to meet your
financial responsibilities. Resisting personal desires and peer pressure to spend
beyond your means, particularly at this state of your lives, often requires great inner
strength.
3. Respect - Treat people as they should be treated.
4. Selfless-Service - Put the welfare of the Nation, the Army, and your subordinates
before your own.
5. Honor - Live up to all the Army values. Applied to this subject, honor means being
completely honest about your financial obligations. It means facing the reality of what
constitutes a reasonable lifestyle in concert with your financial resources.
6. Integrity - Do what’s right, legally and morally.
7. Personal Courage - Face fear, danger, or adversity. This value includes being
committed to positive change and constant improvement. You must be committed to
yourself to maintain sound finances.
SHOW SLIDE 1-9: COMMON PROBLEM AREAS
There are five areas where Army lawyers and financial counselors see many
problems. During these discussions, remember that I am not a lawyer. However, you
do have legal advice readily available to you, and I strongly encourage you to seek that
advice any time you are not sure of your legal rights or responsibilities.
SHOW SLIDE 1-10: DOMESTIC RELATIONS
The first problem area for Soldiers is in domestic relations. We will address your
responsibilities regarding separation, divorce, and children.
SHOW SLIDE 1-11: SEPARATION OR DIVORCE
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If you find yourself in a separation or divorce situation, organize all your personal
documents and marital property, and close all joint credit accounts. Create a new
financial plan according to your changed status. BE SURE to have any agreements
reviewed by an attorney. Check your credit report to avoid surprises. After a divorce,
re-title property and change legal documents and insurance papers.
NOTE: Discuss that “marital property” generally means items acquired by the parties
during the marriage. Note that your retired pay is usually considered marital property.
The Uniformed Services Former Spouse Protection Act governs division of retired pay
during a divorce.
SHOW SLIDE 1-12: SPOUSE AND CHILD SUPPORT
The Army provides counseling services to family members and also requires
commands to counsel service members when a nonsupport complaint is received.
The Army does not have the direct authority to force a service member to provide
support. However, the DOD Financial Management Regulation states that when
members receive BAH at the “with dependents” rate, that money is to be used for the
support of dependents. Failure to do so could result in recoupment of the difference
between the “with dependents” and “without dependents” rates and disciplinary action
up to court martial.
SHOW SLIDE 1-13: CHILD SUPPORT
Failure to meet court-ordered support payments usually results in a judgment against
the member, which is enforced by garnishment or involuntary allotment. Be aware that
an involuntary allotment for child support will take priority over all other debts, except
those owed to the Government.
A few additional words about child support. If you are responsible for child support, pay
it! Keep records of what you pay and when. If paternity is in doubt, get a paternity test,
and refrain from doing anything that could be construed as support until the results of
the test are in. If you are due child support and are not receiving it, visit the local child
support enforcement office and seek help from the Army Legal Service Office and/or
the Army Community Service (ACS) Center.
SHOW SLIDE 1-14: LANDLORD/TENANT TRANSACTIONS
Another place Army lawyers see many problems is in the area of Landlord/Tenant
transactions. There are a few items you should consider before becoming a tenant.
(1) You should begin your search for suitable housing by visiting the Housing Office.
You can find information on where and where not to rent.
(2) If you should rent an apartment or house, make sure your lease specifies the exact
rental period as well as the lease termination procedures.
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(3) There is no Federal law requiring a "military clause"; however, several states
require one. You should always insist on one since it will allow you to terminate your
lease if you are transferred, ordered to move into base housing, or discharged.
(4) You should always carry a separate renter's insurance policy to cover your
personal belongings. The landlord is only liable for your property if it is damaged due to
his negligence.
(5) Inspect the premises thoroughly before moving in and note any discrepancies IN
WRITING. State laws on the landlord's ability to keep a security deposit vary widely.
Normally, your deposit may not be retained unless you damage the property in some
way.
SHOW SLIDE 1-15: CREDIT CONTRACTS
Credit contracts are another place a lot of Soldiers get into trouble. Contracts are
legally binding and difficult to cancel. Always read the fine print! Be sure the whole
contract is filled in--leave no blanks! Above all, don't sign anything under pressure.
Step away and return the next day if necessary.
SHOW SLIDE 1-16: SERVICE MEMBERS CIVIL RELIEF ACT
Another problem area deals with the Service members Civil Relief Act. Army Legal
Service Offices also receive many inquiries about protection under this act, often
because Soldiers mistakenly believe this act offers them more protection than is
actually the case. There is much more in the Act that we can cover here, so we
encourage you to read the act yourself.
The Act covers Reservists and National Guardsmen while on Active Duty. It applies to
Reservists from the point of receipt of orders to the point that Active Duty is terminated.
For National Guardsmen, they are also included if they have more than 30 consecutive
days of service when called to respond to National Emergency.
The provisions of the Service members Civil Relief Act:
This act does allow you to request a stay of default judgments if military duties
preclude your appearance in court; It protects you from having to pay state income
taxes and personal property taxes in states other than your legal residence; It places a
6% interest cap on any pre-service debts. The creditors cannot bill you for the excess
or add to the loan after the military service is over.
Interest cap includes credit card debt accrued prior to service entry-but not if debt was
added after entry to service.
SHOW SLIDE 1-17: SERVICEMEMBERS CIVIL RELIEF ACT Cont.
WHAT IT DOES NOT PROVIDE: help you rescind a rental or purchase agreement
entered into after you entered the service; exempt you from local real estate taxes; or
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assist you in avoiding court on a criminal charge.
SHOW SLIDE 1-18: MILITARY SPOUSE RESIDENCY RELIEF ACT
A military spouse is exempt from income taxes in a state where income was earned
when all four qualifications are met:
(1) The spouse currently resides in a state different than the state of his or her domicile
(2) The spouse resides in the state solely to live with the service member
(3) The service member is present in the state in compliance with military orders
(4) The spouse and service member are both able to claim the same domicile.
Notes: Spouse pays income taxes for state domiciled, if state taxes income.
Some states may still tax spouse on income that is not earned income or income from
services provided– such as rental income, some business income, and capital gains.
If service member gets a second job – it is taxed in the state he or she has the job.
Some states provide that ONLY military pay earned while living outside of a particular
state such as Ohio, Pennsylvania, Oklahoma, etc. is exempt in the domiciled state. No
state provisions for spouse pay earned outside of state. This simply means that a
spouse CANNOT get out of paying tax unless their domicile is in a state that does not
have state withholding from pay. Most states require proof that the Military Spouse
Residency Relief Act applies.
SHOW SLIDE 1-19: Federal Student Loans
To defer payments current law requires service during war time, national emergency,
or certain contingency operations. You may be able to stop the accrual of interest as
well, but certain requirements must be met.
For the Public Service Loan Forgiveness payments must be made for 10 years (120
payments) and then the balance of student loans can be forgiven.
Some private student loan providers offer some relief, modifications, and some other
options to make repayment easier. At least one allows military members to defer for 3
years. But you need to ask and research. Often it takes more effort than just talking to
the first representative you get on the phone. Make sure you understand any
repercussions that any action may have.
SHOW SLIDE 1-20: SOURCES OF ASSISTANCE
Throughout this course we will emphasize that you, as members of the military, have a
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wide range of assistance available to you absolutely free of charge. Among these are
the Army Community Service Center and Army Emergency Relief. Rely on these
sources for help.
The Consumer Financial Protection Bureau is a relatively new Federal agency to
provide some protection for Consumers. You can file complaints regarding many of the
financial products and practices we are talking about today. They have a department
that specializes in assisting military members and their families. You can file
complaints at consumerfinance.gov.
Check on Learning: Show slide 1-21: Check on Learning
NOTE: Conduct a check on learning and summarize the
learning activity.
Show slide 1-22: Check on Learning
Q: About six times out of ten, when a security clearance is
revoked, it is because the member has financial problems.
A: True
Show slide 1-23: Check on Learning
Q : You should always insist on including a Military Clause
in a housing lease.
A: True
Review Summary: Show slide 1-24: SUMMARY
We discussed why this course is important to you and how
the Army Core Values apply to your responsibility for sound
financial management. We also discussed the most
common problem areas of Soldiers as seen by Army
lawyers and financial counselors.
Summary Questions
1. What is your personal obligation toward good financial
management?
2. Where can I go to get a contract reviewed prior to
signing it?
3. Why should I get a contract reviewed prior to signing it?
4. Where can I go for help with my finances?
TLO - LSA 2. Learning Step / Activity TLO - LSA 2. Understanding the Leave & EarningsStatement (LES)/myPay
Method of Instruction: Discussion (Small or Large Group)Mode of Delivery: Resident Instruction
Instr Type (I:S Ratio): Contractor, (1:25)Time of Instruction: 30 mins
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Media Type: Handout / PowerPoint PresentationOther Media: Unassigned
Security Classification: This course/lesson will present information that has aSecurity Classification of: U - Unclassified.
SHOW SLIDE 2-1: Understanding the Leave & Earnings Statement (LES)/myPay
INTRODUCTION: During this learning activity, we will discuss the importance of
monitoring your pay and entitlements as reflected on your Leave and Earnings
Statement, or LES. We will examine the components of the LES and talk about how to
identify any errors in your net pay.
SHOW SLIDE 2-2: myPay Login
(1) During in-processing, all of you signed up for a bank account so you could receive
your pay from the Army. Once your pay account is established and you start receiving
pay, you can sign up for a myPay account.
(2) Sign on to the myPay website at https://myPay.dfas.mil You will have two options:
a. If you have already established an account, enter your Login ID and password
(you have the potion of typing in your password or, if you prefer more security, you can
click on the On-Screen Keyboard link) and then select the “Go” button, or
b. If you have not established an account, enter your Social Security Number
(SSN), select the “Go” button, and follow the instructions to establish your account.
(3) You will be directed to a System Message screen. Read the information, then
Click the box in front of the “I agree to the terms of the User Agreement” statement,
and then click on the “OK” button.
(4) You are now at the “Main Menu” screen where you have access to you pay
account.
(5) You may also use you Department of Defense Common Access Card (DoD CAC)
or Health and Human Services Employees ID badge (HHS PIV) ID badge to sign into
myPay, just click on the SmartCard Login box.
SHOW SLIDE 2-3: myPay Main Menu
You have several options at the myPay Main Menu that you can take advantage of to
affect your pay without even having to fill out any paperwork at the S-1 or finance
office.
(1) Leave and Earnings Statement (LES). You can view, and if you want, print your
last 12 LESs if you are active duty and 3 if you are a reservist.
(2) Personal Statement of Military Compensation (PSMC). You can view, and if you
14
want, print your PSMC. This statement is intended to outline the total value of your
military pay, allowances and benefits. By making your compensation more “visible,”
this statement could be useful when applying for credit or loans (including home loans)
from businesses or lending institutions.
(3) Savings Deposit Program (SDP) Statement/Withdrawal Request. You can view
and print a copy of your SDP statement. Members of the Armed Forces serving in
specified combat zones or in support of a contingency operation are authorized to
make deposits or request to withdraw money from their SDP account.
(4) Pay Changes. You can start, change or stop allotments, and start or change
Savings Bonds (you cannot stop bonds through myPay). Combined Federal Campaign
(CFC) option allows military personnel to establish a CFC allotment within the CFC
open season. You can also turn on or off hard copy delivery of your LES.
(5) Direct Deposit. You can change your direct deposit information in myPay under
the Direct Deposit option. Net Pay EFT: You can view or change your Direct Deposit
for your paycheck. Travel EFT: You can setup or change your travel pay to be directly
deposited to a bank. Miscellaneous EFT: You can view or setup/change your Direct
Deposit for miscellaneous reimbursements.
(6) Taxes. You can change your Federal or State marital status and exemptions. You
can view and print your W-2. If you are in the Student Loan Repayment Program
(SLRP), you can view and print your SLRP W-2. You can turn on or off hard copy
delivery of your W-2. You can also view and print a SDP tax statement (1099-INT), if
you are in the program and you can turn on or off hard copy delivery of your IRS Form
1095 (you’ll need this form to report Affordable Care Act health insurance information
starting with your 2015 federal income tax return).
(7) Traditional Thrift Savings Plan (TSP) and Roth TSP. You can start enrollment of
TSP at any time, unless you make a financial hardship withdrawal. You may not make
contributions for six months following the withdrawal. You can start or change
percentages at any time, and cancel (stop) contributions at any time. We will discuss
the TSP in more detail later.
(8) TSP Catch-Up – Traditional and Roth. If you are age 50 or over or will become 50
this calendar year, you may be eligible to make additional contributions to TSP, called
“catch-up contributions". For the initial start of your catch-up contributions, if you have
a current regular traditional or Roth election, you may use myPay to submit your
elections.
(9) View Court Orders. Allows Soldiers to view documents issued by U.S. civil courts
or military service related to any garnishment on their pay.
15
(10) Travel Voucher Advice of Payment (AOP). You may be called on to perform
Temporary Duty (TDY) travel. You will file a travel voucher when you complete your
TDY. When DFAS pays your travel, you will receive an Advice of Payment statement.
If DFAS-Cleveland, DFAS-Indianapolis, or DFAS-Columbus pays your travel vouchers,
you can view and print your Travel Advice of Payment (AOP) on-line.
(11) Email Address. You can add, change or delete a personal email address. To
change a pre-registered/work email (AKO - us.army.mil), contact your local site’s email
administrator or go to https://www.us.army.mil. myPay receives and updates these
email addresses weekly.
(12) Security Questions for Password Resets. You have the option to change the
security questions for resetting your password.
(13) Personal Settings Page. Click on the “Click here for details” area to receive
information on what you can do.
SHOW SLIDE 2-4: SAMPLE LES
Note: Refer to handout for explanation of LES terms.
This statement is called the Leave and Earning Statement, or LES for short. The LES
is your detailed pay statement, which is issued at the end of each month. It shows
your entitlements, deductions, and allotments, and it provides a summary of all pay
transactions. It also shows your end-of-month pay and where your pay is being
deposited. It is your duty to review the LES and ensure the information is correct. If
you find an error, report it to your chain of command immediately. By honestly
reporting any pay discrepancies, you uphold the Army values of honor and integrity.
SHOW SLIDE 2-5: PERSONAL INFORMATION
The top portion of the LES contains information about the member to whom it was
issued, the office that issued it, and the pay period covered by the statement.
(1) The first block contains your name in Last, First, Middle Initial format.
(2) The next block is your Social Security number. Make sure it is correct!
(3) Your pay grade is next - a good thing to check the next payday after you get
promoted.
SHOW SLIDE 2-6: PAYDATE
(4) Pay Date. The next box is a very important one. It is your Pay Date. Note that this
is NOT the day on which you are paid, but rather the date you entered active duty for
pay purposes. Like your Social Security number, it should NEVER change, unless it is
16
inaccurate and you take steps to correct it.
(5) The next box reflects a two-digit number showing the number of whole years of
creditable service you have completed. Check to see that this number changes every
time you complete a full year of service. It is very important because some of your
entitlements increase with years of service.
(6) The ETS box shows the expiration of your current term of service. It is a six-digit
figure with the first two digits indicating the year, the second two the month, and the
last two the day.
(7) Your branch of service is shown next.
(8) The ADSN/DSSN is the code that identifies the finance office that maintains your
pay records.
SHOW SLIDE 2-7: PAY PERIOD
(9) The last block on the top line shows the pay period covered by the LES. Note that
it is NOT the same as your Pay Date.
SHOW SLIDE 2-8: ENTITLEMENTS, DEDUCTIONS, ALLOTMENTS, & SUMMARY
The next area down on the LES will probably be the first place you look. Your net pay
and the items used to calculate it are shown here.
SHOW SLIDE 2-9: ENTITLEMENTS
The Entitlements block shows the amount of entitlements and allowances for the pay
period, including any retroactive monies. If you have more than 15 allowances or
entitlements, this block may be continued in the Remarks Section.
SHOW SLIDE 2-10: DEDUCTIONS
Deductions including taxes, SGLI, mid-month pay, and the dependent dental plan,
including any retroactive deductions will be shown in this block. If there are more than
15 deductions, this block may also overflow into the Remarks Section.
SHOW SLIDE 2-11: ALLOTMENTS
This block lists all of your allotments. If you have more than one allotment of the same
type, for instance two savings allotments, the only differentiation may be the dollar
amount. Like the other two categories we just discussed, allotments over 15 will show
in the Remarks Section.
Some allotments are prohibited: new allotments to purchase, lease, or rent personal
property.
Examples of prohibited allotments are: Vehicles (e.g., automobiles, motorcycles,
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boats);Appliances or household goods (e.g., washer, dryer, furniture);Electronics (e.g.,
laptop, iPad, cell phone, television)
SHOW SLIDE 2-12: SUMMARY
The next section provides a math summary that leads to the "bottom line" or your
"EOM" - end of month pay for the period covered by the LES.
(1) The Amount Forwarded, shows the amount of all unpaid pay and allowances, if
any, due you from the prior LES. The totals found in the Entitlements, Deductions, and
Allotments blocks will appear in this summary. Make sure they are correct!
(2) Total Entitlements, Total Deductions, and Total Allotments totals should match the
amount found at the bottom of each section.
(3) Net Amount, will be the amount of your entitlements less your deductions and any
allotments.
(4) Carried Forward, is any amount that is to be carried forward to the next LES.
(5) The final block is probably where your eyes will go first on your Leave and
Earnings Statement as it shows the end-of-month, or EOM, pay that should have been
deposited in your account.
SHOW SLIDE 2-13: DIEMS
DIEMS. This box contains the date you initially entered the military service (delayed
entry). This date may be different from your Pay Date if you came in on the delayed
entry program.
SHOW SLIDE 2-14: RETIREMENT PLAN
Retirement Plan. In this box you will find your choice of a Retirement plan. If you have
less than 15 years, no choice will be shown.
NOTE: The High 36 calculator is also known as the High-3. Inform students if they
hear “High 36” or “High-3”, it is referring to the same calculator.
SHOW SLIDE 2-15: LEAVE
Now we get to the Leave portion of the LES. You earn 2.5 days per month or 30 days
per year. You may accrue (bank) up to 60 days of leave as of 1 October each year.
Some special cases can accrue more.
SHOW SLIDE 2-16: LEAVE INFO
The BF BAL block shows your brought forward leave balance.
(1) The BF BAL block shows your brought forward leave balance.
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(2) ERND shows the cumulative amount of leave earned in the current fiscal year, or
current term of service if you have re-enlisted or extended since the start of the fiscal
year. Increases by 2.5 days each month.
(3) In the USED block you can find the cumulative amount of leave used during the
current fiscal year, or term of enlistment.
(4) CR FWD, is your current leave balance as of the end of the period covered by the
LES. It should be the balance forward, plus leave earned, minus leave used. If your
days off are as important to you as mine are to me, you might want to check the
computer's math from time to time.
(5) The ETS BAL, shows the projected leave available through your current Expiration
Term of Service. This figure could help you make appropriate plans if you do not plan
to re-enlist.
(6) The next block shows any leave that you may have lost, usually because of having
too high a balance at the end of the fiscal year.
(7) Block 29 shows the number of days of leave for which you have been paid
(8) Here is another high interest block on your LES. This block shows the number of
days of leave that you must "use or lose" before the end of the fiscal year - and that
happens every year on 30 September, unless Congress decides to make a change. If
you have a significant number of days in this block, it's time to talk to your supervisor
about when you may be able to take some leave without adversely affecting
operational readiness.
SHOW SLIDE 2-17: FEDERAL TAXES
Just to the right of your leave information, you will find information about your Federal
Income Tax Withholding, or FITW.
(1) The first block shows the amount of your wages that are subject to Federal Income
Tax Withholding during this LES period. Remember that some of your entitlements are
NOT taxable.
(2) The next block shows the money you have earned this calendar year-to-date
(YTD) that is subject to Federal Income Tax.
(3) This important block indicates the marital status used to calculate your Federal
Income Tax Withholding. Be sure this is accurate. An incorrect status could result in
too much money being withheld from each paycheck, or, worse, not enough, leaving
you with a large tax bill for the year.
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(4) The next block indicates the number of exemptions used to calculate tax withheld.
Again, ensure this number is accurate, particularly immediately after any dependent
changes.
(5) The Add Tax block will show any additional dollar amount you have requested to
be withheld in addition to the normal amount for your marital status and number of
exemptions.
(6) The last block in the Federal Income Tax area shows the cumulative amount of tax
withheld for the calendar year to date. The amount in this block on your December
LES could prove useful if you desire to get an idea of your possible tax refund, or tax
liability, prior to receiving your W-2 forms.
SHOW SLIDE 2-18: SOCIAL SECURITY & MEDICARE
The section of the LES immediately below your leave information deals with Social
Security and Medicare taxes. These fall under the Federal Insurance Contributions
Act, hence the acronym FICA.
(1) The first block on this line shows the amount of your wages that were subject to
FICA during the LES period. This will probably not be the same figure as the WAGE
PERIOD figure for Federal Income Taxes depending on your entitlements.
(2) The next two blocks show the wages subject to Social Security taxes and the
amount of such taxes withheld to date during the calendar year. A side note here: the
amount of Social Security you will draw when you become retirement eligible will be
based on the contributions you made throughout your working life. Therefore, it's a
good idea to keep all your end-of-December LES’s in a secure spot to document your
Social Security contributions -- at least until you start to receive letters of eligibility from
the Social Security Administration.
(3) The year-to-date wages and withholdings eligible for Medicare Taxes can be found
in the last two blocks.
SHOW SLIDE 2-19: STATE TAX
The area to the right of the FICA information contains information about state income
taxes. It contains much of the same information as the section relative to Federal taxes
with one key addition.
(1) The ST block contains the two-letter postal identifier of the state where you claim
domicile. As I mentioned earlier, several states do not have a state income tax and
there are legal and ethical ways to establish your domicile in one of them.
(2) One other word on state income taxes. The Service Members Civil Relief Act
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prohibits states from collecting state income tax on military pay of members who are
stationed in that state, but domiciled elsewhere. However, the state may collect these
taxes on monies you or your spouse earns from civilian employment.
SHOW SLIDE 2-20: ADDITIONAL INFO
The last line of your LES titled Pay Data contains information that is used to determine
the rate and type of your dependent entitlements, as well as information about your
charitable deductions.
(1) The BAQ, or Basic Allowance for Quarters, (also referred to as BAH-Basic
Allowance for Housing) and BAQ dependents blocks are used to determine the
amount of money you will be paid for housing. It is your responsibility to ensure that it
is correct.
(2) The next block over, VHA ZIP, shows the ZIP code used to determine your
housing allowance. Because your housing allowance is designed to defray actual
expenses, it will not be as great in, for example, El Paso as it will be if you are
stationed in or around Washington, D.C.
(3) The JFTR block that appears stands for Joint Federal Travel Regulation. Many of
the allowances you may receive during your career will be based on comparative cost
figures contained in this manual. On the LES, the JFTR code is used to determine your
eligibility for, and amount of any Cost of Living Allowance, or COLA, you may be draw
due to assignment, or location of dependents, in a high-cost area.
(4) Glance at the TPC block when you get your LES. This Block is not used, if there is
an entry in this block it is reason to check the accuracy of your LES with your local
finance office.
SHOW SLIDE 2-21: THRIFT SAVINGS PLAN (TSP) INFO
The TSP blocks on your LES show the percentages and amounts that have been
withheld from your various pays. They also give your year to date balances. We will
discuss the Thrift Savings Plan in more detail in another lesson.
SHOW SLIDE 2-22: REMARKS
The bottom portion of the LES is a Remarks Section. This will show starts, stops, or
changes in any of your pay items. It will always contain year-to-date entitlements and
may contain general notices from various levels of command.
Check on Learning: SHOW SLIDE 2-23: Check on Learning
NOTE: Conduct a check on learning and summarize the
learning activity.
SHOW SLIDE 2-24: Check on Learning
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How often will you receive an LES?
a. Every six months
b. Once a year
c. Every two weeks
d. Once a month
Answer: d. Once a month
SHOW SLIDE 2-25: Check on Learning
In what column on your LES would you find your End of
Month Pay?
a. Deductions
b. Allotments
c. Entitlements
d. Summary
Answer: d. Summary
SHOW SLIDE 2-26: Check on Learning
Which of the following is true concerning the “Pay Date”
shown on your LES?
a. It is the day on which you are paid
b. It is the date you entered the Army for pay purposes
c. It is the last day of your current enlistment
d. It will always be the first day of the current month
Answer: b. It is the date you entered the Army for pay
purposes
Review Summary: SHOW SLIDE 2-27: SOURCES OF HELP
The Leave and Earnings Statement is certainly a "busy"
document, but the information is presented in a logical
format that will allow you to determine the accuracy of your
pay and entitlements each month. Remember that it is your
personal responsibility to do so. If you ever believe that
information shown on your LES is not accurate, visit your
local finance office as soon as possible to discuss your
concerns.
Summary
During this class, we stressed the importance of monitoring
22
your Leave and Earning Statement to detect any errors in
your pay and allowances. We discussed all of the
information provided in the various sections of the LES, and
we identified where you should go for help if you believe
your pay and allowances are not accurate. I hope you will
use this information to keep your pay and allowances
accurate throughout your military career. We also
discussed myPay to include how to sign up and what
options you have.
TLO - LSA 3. Learning Step / Activity TLO - LSA 3. Develop a Spending Plan
Method of Instruction: Discussion (Small or Large Group)Mode of Delivery: Resident Instruction
Instr Type (I:S Ratio): Contractor, (1:25)Time of Instruction: 40 mins
Media Type: Handout / PowerPoint PresentationOther Media: Unassigned
Security Classification: This course/lesson will present information that has aSecurity Classification of: U - Unclassified.
SHOW SLIDE 3-1: DEVELOP A SPENDING PLAN
Introduction: During this learning activity, we will discuss the importance of developing
and following sound financial planning. We will examine the elements of a successful
financial plan and determine the components of a spending plan, including how to
identify discretionary and non-discretionary spending.
SHOW SLIDE 3-2: WHY HAVE A GAME PLAN?
Why Have a Game Plan? A good game plan is the key to success in any endeavor. I
am not here to tell you what to do with your money. I'm here to challenge you to think
before you spend. The most effective way to get your dollar's worth is to ensure that
you have a written plan.
SHOW SLIDE 3-3: WHY HAVE A SPENDING PLAN?
You may have already heard about a personal spending plan--it is also commonly
referred to as a budget. But why would anyone need it? A good spending plan can
improve your life in several ways.
(1) It’s most immediate contribution will be helping you live within your income.
(2) It can reduce stress that is often associated with financial problems. Remember we
talked about this as a problem area for young Soldiers.
(3) It will help you establish and maintain a good credit history.
(4) All of this will help you on the road to financial confidence and achievement of
personal goals.
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SHOW SLIDE 3-4: ELEMENTS OF PERSONAL FINANCIAL SUCCESS
3 Elements of Financial Success. A spending plan is only one component of Personal
Financial Planning. There are two additional parts that must be completed as well.
They are: Current Net Worth and Goal Setting. Let's begin by investigating these
parts first.
SHOW SLIDE 3-5: DETERMINING YOUR NET WORTH
Determining your Net Worth. It's difficult to chart a course to a destination if you don't
know where you are. That's the primary reason for determining your net worth -- which
is nothing more than your total assets minus all your liabilities. An asset is anything
you own that has value. A car is a good example. A liability is something for which
you owe. Recognize that the fact that decreasing, or making a conscious decision not
to increase your liabilities, directly and positively affects your net worth.
NOTE: Direct students to their handout on page 2: Statement of Net Worth. Have
students fill out this page to determine their individual net worth. Not all students will
have the information handy to fill the statement out. Tell them if they don’t know the
information, then they can fill the statement out at a later time.
SHOW SLIDE 3-6: THE FINANCIAL PYRAMID
Financial Pyramid.
SHOW SLIDE 3-7: SETTING GOALS
Categories. There are two categories of goals: short-term goals: those that can be
accomplished in a year or less; and long-term goals which may take years and require
a higher degree of commitment to your spending plan. The most important thing about
setting goals is getting started. If you have a financial dream, doing nothing will get
you nowhere.
SHOW SLIDE 3-8: GOAL SETTING STEPS
Steps for Goal Setting. Goal setting is accomplished in the steps shown here. When
setting your goals write them down! There may be times when unexpected obstacles
will challenge you. Keep your goals flexible and re-evaluate them periodically.
Keeping a written financial outline will keep you going in the right direction.
SHOW SLIDE 3-9: SPENDING PLAN
Definition. After you have determined your net worth and set some goals, it will be
time to develop your personal spending plan. A personal spending plan is similar to a
budget. By determining what income you have coming in each month and where it is
going you can identify your spending habits and keep your spending in check. It is
flexible so that it keeps with the ups and downs of your changing finances. Think of
your spending plan as a roadmap--you wouldn't want to take a trip without it.
NOTE: Direct students to page 3 in their handout: Preparing a Monthly Spending Plan
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SHOW SLIDE 3-10: DISCRETIONARY vs. NON-DISCRETIONARY SPENDING
Discretionary vs. Non-Discretionary Spending. The biggest obstacle most people,
particularly young people, face in even starting to save for the future is that savings
must be "paid" with discretionary funds. Discretionary funds are used for WANTS;
they are the dollars left over after paying for your monthly needs. These are the dollars
used for savings. Non-discretionary funds are used for living expenses and debts.
This is the money used for your NEEDS. There are three things you can do if you
want to increase the amount of discretionary funds available for savings.
SHOW SLIDE 3-11: WHERE DOES YOUR DISCRETIONARY MONEY GO?
Increasing your discretionary funds.
The first way to increase your discretionary funds is to control your spending. Take a
closer look at what you are spending your money on each day. Where can you reduce
spending?
To give you an idea of how much discretionary income you use in a year, look at this
slide. Imagine if you cut down on eating fast food for a year. You could save up to
$1800 or more in a year! Reducing your discretionary spending will increase your
ability to save.
SHOW SLIDE 3-12: THREE WAYS TO INCREASE DISCRETIONARY FUNDS
The first way to increase discretionary funds is to control spending.
The second way to increase discretionary funds is to GET PROMOTED!
The third and final way for you to increase your discretionary funds is to reduce your
debt.
SHOW SLIDE 3-13: CHARACTERISTICS OF A SPENDING PLAN
Characteristics of a spending plan. A good spending plan is a guide. Here are some
characteristics of a sound plan.
(1) A spending plan is a general guide. Everything does NOT have to be figured down
to the penny.
(2) It is UNIQUE to you and therefore reflects YOUR needs, wants, values, and goals.
(3) To be practical and realistic, your plan should be based on your current income and
expenses, yet still allow for future possibilities.
(4) Times and circumstances change, so your plan should be FLEXIBLE enough to
adapt.
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(5) A reasonable plan should allow for LEISURE as well as necessities.
SHOW SLIDE 3-14: PREPARING A MONTHLY SPENDING PLAN
We will now spend some time reviewing the personal spending plan of Pvt Smith.
Remember that this plan is a living document, and I strongly encourage each of you to
create your own personal spending plan.
NOTE: Again direct students to page 3 of their handout where they will find a blank
Monthly Spending Plan they can use to create their own spending plan.
SHOW SLIDE 3-15: DEBT-TO-INCOME RATIO
Debt-to-Income Ratio Definition. The debt-to-income ratio is a percentage assigned
the amount of your debt in relationship to your income. Simply speaking this is the
amount of your monthly debt payments divided by your monthly income, times one
hundred. Mortgage payments, if you have them, are not included as debt because real
estate is considered an investment.
SHOW SLIDE 3-16: DEBT-TO-INCOME RATIO EXERCISE
NOTE: Demonstrate determining Debt-to-Income Ratio.
NOTE: Direct the students to page 4 of their handout to complete the Debt-to-Income
Ratio exercise. Not all students will have the information handy to fill the statement
out. Tell them if they don’t know the information, then they can fill the statement out at
a later time.
SHOW SLIDE 3-17: DEBT-TO-INCOME RATIO
SHOW SLIDE 3-18: ONLINE BUDGETS AND COMPUTER SOFTWARE
NOTE: Discuss the advantages of financial planning online.
SHOW SLIDE 3-19: ONLINE BUDGETS AND COMPUTER SOFTWARE CONT.
NOTE: Discuss the disadvantages of financial planning online.
SHOW SLIDE 3-20: ONLINE BUDGETS AND COMPUTER SOFTWARE CONT.
NOTE: Mint.com was described as “the best overall site” for budgeting by Kiplinger’s
Success With Your Money quarterly magazine (Winter 2012). However, each website
or software option works differently and if you choose to use one of these options you
should explore several and pick the one that is best for you. Powerpay.org is very
useful in developing a spending plan and also to develop a debt elimination plan.
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SHOW SLIDE 3-21: SOURCES OF ASSISTANCE
Sources of Assistance. If you think you are already in debt trouble, or if you need help
in the future with any of the things we discuss in this course, don't be timid about
seeking assistance from any of the sources shown here.
*Contact information for each installation’s ACS is located on the PFMC website as an
easily accessible resource for the Soldiers.
Check on Learning: SHOW SLIDE 3-23: CHECK ON LEARNING
NOTE: Conduct a check on learning. Slides 24-28 contain
a question and answer.
SHOW SLIDE 3-24: CHECK ON LEARNING
NOTE: Click enter for the answer to appear on slide.
Question: How can you increase your discretionary funds?
Answer: b. get promoted
SHOW SLIDE 3-25: CHECK ON LEARNING
NOTE: Click enter for the answer to appear on slide.
Question: True of False. A spending plan is unique to you
and reflects your needs, wants, and goals.
Answer: True
SHOW SLIDE 3-26: CHECK ON LEARNING
NOTE: Click enter for the answer to appear on slide.
Question: Which of the following is true concerning your
personal spending plan?
Answer: b. It will help you live within your means.
SHOW SLIDE 3-27: CHECK ON LEARNING
NOTE: Click enter for the answer to appear on slide.
27
Question: Which of the following statements best describes
the purpose of a spending plan?
Answer: a. Spending plans help you live within your
income.
SHOW SLIDE 3-28: CHECK ON LEARNING
NOTE: Click enter for the answer to appear on slide.
Question: What are Discretionary Funds used for?
Answer: b. wants
Review Summary: SHOW SLIDE 3-29: SUMMARY (CAN YOU AFFORD
THIS?)
Summary. During this lesson we've talked about the
advantages of a sound spending plan and steps for
preparing your plan. We discussed some key economic
concepts such as debt-to-income ratio and the discretionary
funds that are necessary to establish a savings program.
We also identified ways to increase discretionary funds and
sources of help for any of your financial concerns.
TLO - LSA 4. Learning Step / Activity TLO - LSA 4. Managing a Checking Account
Method of Instruction: Discussion (Small or Large Group)Mode of Delivery: Resident Instruction
Instr Type (I:S Ratio): Contractor, (1:25)Time of Instruction: 40 mins
Media Type: Handout / PowerPoint PresentationOther Media: Unassigned
Security Classification: This course/lesson will present information that has aSecurity Classification of: U - Unclassified.
SHOW SLIDE 4-1: Managing a Checking Account
SHOW SLIDE 4-2: Dishonored Checks (1 of 2)
Before we start our discussion of personal checks, deposit slips, and withdrawal slips,
let us talk about dishonored checks (bad checks) and what can happen to you if you
write a dishonored check. By knowing what can happen, you may take this training
more seriously. If you should write a dishonored check, one or more of the following
consequences occur:
(1) Your bank and the institution to which the check was written or debit card used may
each assess a service charge, as much as $25.00 or higher.
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(2) Your reputation and credit rating may be damaged. If your credit rating is
damaged, it will cost you more to get credit, if you can get it at all.
(3) You will be counseled by your chain of command, regardless of the circumstances.
(4) You may be added to the dishonored (bad check) list on post.
(5) Your check cashing/debit card privileges may be suspended on post for six months,
a year, or indefinitely. This means you will not be able to write checks or use your
debit card on post.
(6) You may be reprimanded by your supervisor or commander.
SHOW SLIDE 4-3: Dishonored Checks (2 of 2)
(7) You may be given a bad efficiency report.
(8) You may be reduced in rank.
(9) You may receive an Article 15 or court-martial.
(10)You may be barred from reenlistment.
(11)You may be separated from the Army.
The punishment you receive depends on how many times you have written dishonored
checks. As you can see, the Army takes writing dishonored checks seriously. This
crime is punishable under the Uniform Code of Military Justice (UCMJ), Article 123a –
Making, drawing, or uttering check, draft, or order without sufficient funds. Your loyalty
to the Army, your unit, your family, and yourself requires you to manage your finances
efficiently. Any indebtedness may require administrative action, which means the
involvement of your supervisor, commander, and other Army personnel.
Consequences could also include an adverse effect on the unit’s mission as well as
the Army’s reputation.
SHOW SLIDE 4-4: Personal Check
Inform students that checks must always be filled out in ink and must be legible. *Refer
students to page #7 of their handout to view examples of blank checks.
Most transactions you perform with your checking account can be accomplished with a
debit or ATM card. However, some transactions, such as paying rent or utility bills
may require you to write a check. This portion of the instruction covers the proper
procedures for writing a check.
(1) Determine the amount for the check, verify that your current account balance is
enough to cover the amount of the check and any check fees, and obtain the next
29
available blank check.
(2) Write the current date on the check (#1).
(3) Write the full name of the payee (the person or company to whom you are writing
the check) (#2).
(4) Write the money amount on the check, using figures (#3).
(5) Write the same money amount in longhand, this time using words; include both
dollars and cents. Cents are written as “XX/100” (#4). Make sure to begin writing as
far to the left as possible on this line and then draw a line after the written money
amount extending to the preprinted word “Dollars.”
NOTE: Explain that this action is necessary for security to prevent someone else from
altering the amount.
(6) Although not required, it is good practice to write a short description or key word
representing the transaction in the MEMO space (#5).
(7) Sign your payroll signature on the line in the lower right-hand corner. This should
exactly match the signature you used when you opened your checking account (#6).
(8) If you make a mistake, you must start over; you cannot erase or cross out errors.
Write “VOID” in large letters on the incorrect check. Make a note in your checkbook
register, indicating that check number XXXX was voided and destroyed. This will help
you maintain an accurate account.
(9) On occasion you may need to deposit a check or cash to your account. Many
banking institutions offer ATM machines that you can make deposits. Therefore, you
need not physically make a deposit slip for the transaction. If you do need to make a
deposit with a teller, however, follow the requirements of your banking institution for
making a deposit in person.
(10)You may also have to make a withdrawal from your banking institution. If you have
an ATM or Debit Card, you don’t have to fill in a withdrawal slip. If you do need to
make a withdrawal with a teller, however, follow the requirements of your banking
institution for making a withdrawal in person.
SHOW SLIDE 4-5: Check Register
There are five basic types of transactions that must be posted to a checkbook register:
(1) Debit card transactions.
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(2) Personal checks written by you. Also include voided check(s).
(3) All deposits to the checking account (in person, ATM, SURE PAY, etc.).
(4) Withdrawals (not by check) from the checking account (in person, through an ATM,
preauthorized transfer (PAT), etc.).
NOTE: Define PAT as recurring withdrawals automatically taken from the account.
Examples: insurance premiums, car payment, savings transfer, etc.
(5) Monthly adjustments (fees, interest, etc.).
ATM/PAT withdrawals are often the culprits in accounts that are overdrawn or cannot
be balanced. Remember, your personal honor and integrity are at risk when you fail to
properly manage your finances.
(1) It is very important that you indicate the ATM or PAT transaction correctly in your
checkbook register before or immediately after the transaction has been made.
(2) If you have a PAT in place, make sure you add deposits to your balance and
subtract withdrawals.
(3) “In person” deposits or withdrawals affect your account just as ATM and PAT
deposits or withdrawals do. Many banks charge for withdrawals at ATMs and at tellers
in excess of established withdrawal transaction limitations. These withdrawal charges
must also be entered in your register.
NOTE: Demonstrate. Have the students go to page 8 of their handout. Click the
mouse on Slide 4-11 each time you describe the following steps and have the students
follow along by writing each step in their check register in the handout:
(1) Write check number 2047 in the number column (#1).
NOTE: Click mouse once.
(2) Write the date of the transaction in the date column (#2) (4/01).
NOTE: Click mouse once.
(3) Write a description in the “description of” transaction column (#3) (AAFES DPP
Payment).
(4) Write the money amount ($200.00) in the appropriate column (record withdrawals
and/or checks in the payment/debit column or record deposits in the deposit/credit
column)(#4) .
31
(5) Subtract or add the money amount to the balance figure (numbers in the
payment/debit column are subtracted or numbers in the deposit/credit column are
added) (#5).
NOTE: Click mouse once.
(6) Write the new calculated balance in the checkbook register (#6).
SHOW SLIDE 4-6: Check Register
Instruction Note: Refer students to pages 6 thru 8 in their handout to practice writing
checks and recording transactions in a checkbook register. Inform them that during the
next few slides, they will be required to post the shown transactions to the checkbook
register, and practice writing checks.
SHOW SLIDE 4-7: Check Register
**Refer students again to page #7 of their handout to practice writing checks that
coincide with this check register ( Check #’s 2048, 2049, 2050).
NOTE: Inform students they will be required to complete the check register. Allow time
for students to complete each transaction. The check register is located in the handout
on page #8.
NOTE: Ask students if they have any questions. Have students enter a Debit Card
ATM deposit for $25.00 on April 2nd and a Debit Card ATM withdrawal for $50.00 on
April 4th to the checkbook register. Have students post the following transaction in
their checkbook register:
(1) Post mid-month pay from LES ($584.82) dated 15 April 20XX.
(2) Write check #2048 for $20.00, dated 20 April 20XX, payable to the Commissary
and post it to the checkbook register.
(3) Void check #2048 and post it to the checkbook register.
(4) Write check #2049 for $25.00, dated 20 April 20XX, payable to the Commissary
and post it to the checkbook register.
SHOW SLIDE 4-8: Check Register
(5) Bring the Balance forward from the previous page.
(6) Enter deposit mailed to bank of $50.00 on 22 April 20XX.
(7) Write check #2050 for $26.49, dated 30 April 20XX, payable to Wal-Mart and post it
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in the checkbook register.
(8) Post end-of-month pay from LES ($584.83) dated 30 April 20XX.
The ending balance should be $1900.80. Each transaction must be properly posted.
SHOW SLIDE 4-9: Using Debit Cards
What is a debit card? Debit cards are a way to pay for things. You get a debit card
from your bank or credit union when you open a checking account. Sometimes a debit
card is free to use. Sometimes you will pay a fee to use the card.
Debit cards look like credit cards. But they do not work the same way. Credit cards use
money that you borrow. Debit cards use money that is already in your checking
account.
Why would I use a debit card?
(1) Debit cards let you buy things without carrying cash. You can use your debit card in
most stores to pay for something. You just swipe the card and enter your PIN number
on a key pad.
(2) Debit cards take money out of your checking account immediately. Therefore, you
should always keep a receipt when using your card so you can post it to your
checkbook register. This enables you to keep track of your debit card use and your
current account balance.
(3) Debit cards let you get cash quickly. You can use your debit card at an automated
teller machine, or ATM, to get money from your checking account. You also can get
cash back when you use a debit card to buy something at a store.
What is a PIN? A “PIN” is a security code that belongs to you. PIN stands for personal
identification number. A bank or credit union gives you a PIN when you get a debit
card. You can change your PIN to a number you will remember.
When you use your debit card, you need to enter your PIN on a keypad. This is one
way the bank tries to stop dishonest people from using your debit card to get your
money.
Never share your PIN with anyone. Remember it. Do not keep it in your wallet or on
your card.
How do debit cards work? When you open a checking account at a bank or credit
union, you usually get a debit card.
A debit card lets you spend money from your checking account without writing a check.
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(1) You can use your debit card to buy things in a store
(2) You can use it at an ATM to get cash
When you pay with a debit card, the money comes out of your checking account
immediately. There is no bill to pay later.
How do I know where I used my debit card? Every time you use your debit card, you
should receive a receipt, which you should keep to post to your checkbook register.
Your bank or credit union gives you a “statement” every month. Your statement shows:
(1) where you paid with your debit card and how much you spent
(2) where you used the ATM, how much you withdrew, and what fees you paid
(3) who you wrote a check to and for how much
Your statement can help you track your spending and create a budget.
SHOW SLIDE 4-10: Using Debit Cards (Continued)
How is a debit card different from a credit card? When you buy something with a credit
card, you are borrowing money from the credit card company. The credit card
company will send you a bill every month for the money you borrowed to buy things.
When you use a debit card, you are using money in your checking account to buy
things. For example, with debit cards:
(1) You can get a debit card from the bank when you open a checking account
(2) Money comes out of your checking account when you pay with a debit card
(3) You don’t pay extra money in interest when you pay with a debit card
(4) You can use a debit card at an ATM to get money from your checking account
(5) You do not build a credit history using a debit card
With credit cards:
(1) You apply for a credit card at a bank or store
(2) You get a bill once a month for everything you buy with a credit card
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(3) You might pay extra money in interest if you don’t pay all of your credit card bill
every month
(4) You can use a credit card as a safer way to pay for things online
(5) You can build a credit history using a credit card if you pay the whole bill every
month when it is due
Can I use my debit card to buy things online? Your debit card will work online. But
debit cards are not a good way to pay when you shop online.
Credit cards are safer to use when you buy things online:
(1) You might have a problem with something you buy online. It is easier to get your
money back if you use a credit card.
(2) Someone might steal your credit card number online. The law says you can lose
only $50 if you report it right away.
(3) Someone might steal your debit card number online. The thief can take all your
money out of your bank account.
What if I use all the money in my checking account? You might not have enough
money in your checking account. That means your debit card will be “declined.” You
will not be able to buy things.
Some banks and credit unions might let you sign up for “overdraft protection.” That
means you can use your debit card even when you do not have enough money to pay
for the things you are buying. But you might have to pay a fee to the bank. Some
banks might charge this fee for every purchase until you put enough money in your
account to pay for the things you are buying.
For Example:
I did not know my checking account balance was $1.78.
I used my debit card three times. I paid for groceries, coffee, and my cable bill.
My bank charged a $25 overdraft fee every time I used my card.
The good part: My debit card was never declined. I could buy what I wanted.
The bad part: Now I owe the bank $75, plus the money I spent.
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Debit cards are a way to pay for things. They use money from your checking account
at the bank. They can be convenient. But to avoid spending more money than you
have, keep track of how much you spend.
SHOW SLIDE 4-11: Using Debit Cards (Continued)
How do I choose a debit card? A bank or credit union usually gives you a debit card
when you open a checking account.
Compare the services and fees at a few banks and credit unions. Go to the website or
visit in person. Find out what the fee is if you:
(1) have a checking account
(2) use a debit card
(3) get cash from ATMs at other banks
(4) have less money in your account than the bank requires
(5) spend more money than you have in your account
Compare the answers. Find the bank or credit union that meets your needs.
How can I protect my debit card?
(1) keep your debit card number and PIN private
(2) do not use your debit card to buy things online
(3) if you lose your debit card, report it to your bank or credit union right away. Ask
your bank to cancel the card and send you another card
(4) ask for account alerts by email or text message. This can let you know if your
account has less money in it than you think
How can I keep track of my money? To keep track of your money:
(1) write down how much money you spend with your debit card (keep receipts and
post all transactions to your checkbook register)
(2) write down how much money you take out of the ATM. Remember to add the fees
(keep receipts and post all transactions to your checkbook register)
(3) use your monthly budget to schedule payments for regular bills
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(4) look at your bank statement whenever it comes. Make sure it is what you expected
(balance your checkbook register to your bank statement)
(5) ask your bank or credit union to send you email or text alerts. Some banks contact
you if your balance goes below an amount you set
SHOW SLIDE 4-12: Bank Statement
NOTE: Refer students to page #9 of their handout to follow along with the “Bank
Statement” slide.
(1) Use the statement received from the bank to determine which debit card
transactions, checks, deposits, or withdrawals have been processed by the bank. Only
those items appearing on the statement can be counted as processed.
(2) Place a mark beside each item in your checkbook register only if it appears on the
bank statement. You may want to mark items on the bank statement as well.
(3) Find the last balance in your checkbook register (where you have entered your
most recent debit card transaction, check, withdrawal, or deposit that made up a
portion of the bank statement’s balance).
(4) Draw a line in the checkbook register under the last item shown processed in your
bank statement. This is the balance you will reconcile.
NOTE: Explain that there may be checks, withdrawals, and/or deposits “unmarked” in
the register. These will be taken care of later in the reconciliation process.
(5) On the back of your bank statement, write your underlined balance and subtract
any service fees or other charges shown in your bank statement that you have not
already entered and marked off in your checkbook register. Calculate a subtotal.
Make sure you also post these charges and service fees in your checkbook register on
the next available line. After you post them, do not forget to place a mark in your
“check off” column.
(6) Add to the subtotal calculated above any interest that you earned during the month
on your account balance, if your account is an interest bearing account. Calculate a
new total. This is your adjusted checkbook register balance. Make sure to enter the
amount of earned interest in your checkbook register and check it off by placing a mark
beside it.
(7) Using the bank statement you received, find the ending checking account balance,
and write it down next to the adjusted checkbook register balance.
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(8) Look at your checkbook register to find the balance you underlined:
(a) Are there any deposits above the line that have not been marked off yet? If
there are, the bank has not processed them yet. Add the deposit amounts to the
ending checking account balance shown on your bank statement. Subtotal.
(b) Are there any checks which are not checked off yet that make up your underlined
checkbook register balance? If there are, subtract them from the subtotal and
calculate a new adjusted statement balance.
NOTE: Emphasize that deposits and checks made after the underlined balance in
your checkbook register should not be used for reconciliation, whether they are
marked off or not.
(9) Compare your adjusted checkbook register balance with your adjusted statement
balance. If they match exactly, your account is reconciled.
(10)If the two balances don’t match, check your calculations to make sure that you
added and subtracted correctly.
(11)If your calculations are correct and the two balances do not match:
(a) Make sure you wrote all debit card, ATM, or PAT transactions in your checkbook
register.
(b) Make sure you added or subtracted any charges that the bank processed
against your account:
(aa) Interest you earned on your account (add)
(bb) Monthly service charge (subtract)
(cc) ATM charges (subtract)
(dd) Flat fee for each check written (subtract)
(c) Make sure that you did not count checks or deposits made after the underlined
balance in your checkbook.
(d) Verify that the withdrawals, canceled checks, and/or deposit amounts listed on
your bank statement exactly match what you wrote in your checkbook register.
(e) Check the bank statement from last month for a check that was not cleared from
last month. Some people may hold a check for several months before they cash it.
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(12)If you cannot find your error, have your spouse or a friend help you look for the
mistake. If you still cannot find your error, take your statement and all receipts to your
immediate supervisor for help in reconciling your account. If your chain of command
cannot find and resolve the error, the bank must be contacted for help in the
reconciliation of your account. Again, remember that your honor and integrity are to a
great degree measured by your financial trustworthiness. Make sure you accurately
balance your accounts to avoid financial difficulty.
NOTE: Emphasize that this should be the last resort, since most banks charge a fee to
perform the reconciliation service. Many banks do not provide this service at all.
SHOW SLIDE 4-13: Check Register
SHOW SLIDE 4-14: Check Register
(1) Now take the items that are have not been checked off from the Bank Statement
and enter in the check register.
(2) Be sure to put a check mark now in both the bank statement and check register.
(3) Find the last balance in your checkbook register (where you have entered your
most recent debit card transaction, check, withdrawal, or deposit that made up a
portion of the bank statement’s balance).
(4) Draw a line in the checkbook register under the last item shown processed.
SHOW SLIDE 4-15: Monthly Bank Reconciliation
Using the Reconciliation Sheet, go to your check register and enter any deposits,
checks and any other entries that do not have a check mark next to them. You should
end up with a zero “Difference” on the last line. If not, check for math errors. If you still
have a different figure, enter this amount back to your check register and this will be
your new balance.
The difference is: interest $5.25, an ATM withdrawal not recorded in the check register
($25), and the ATM fee ($1.50).
**Refer the students to their Monthly Bank Reconciliation page 5 in their handout.
SHOW SLIDE 4-16: Online Banking
Can make managing finances easier and is very common now.
Some services offered:
(1) Access to accounts and transaction history
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(2) Paying bills online
(3) Transferring money between accounts
(4) Deposit checks by scanning checks
(5) Automatic payments
(6) Paperless statements
SHOW SLIDE 4-17: Online Banking
Many people use online banking to effectively monitor their financial transactions and
even link their accounts with financial software that helps them with budgeting.
NOTE: Always safeguard your username and password. It can be devastating if it gets
in the wrong hands.
Check on Learning: SHOW SLIDE 4-18: Check on Learning
NOTE: Conduct a check on learning and summarize the
learning activity.
SHOW SLIDE 4-19: Check on Learning
Q: What must you do before you write checks or use your
debit card on a new account?
A: Verify your pay was deposited in your new account by
first reviewing your LES or checking your account online.
SHOW SLIDE 4-20: Check on Learning
Q: Name three consequences that could happen to you if
you write a bad check.
A: Separation, Barred from re-enlisting, UCMJ action,
Reduced in rank, Bad efficiency report, Reprimand, Check
cashing privileges suspended, Counseling, Bank service
charges, Damaged reputation, Damaged credit report
SHOW SLIDE 4-21: Check on Learning
Q: What must you always verify before you write a check?
A: Verify you have enough money in your account to cover
the amount of the check.
SHOW SLIDE 4-22: Check on Learning
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Q: Why do you start the words of the amount of the check
as far to the left as possible and draw a line after the cents
all the way to the word “Dollars”?
A: For security so no one can alter the amount of the
check.
SHOW SLIDE 4-23: Check on Learning
Q: What are the five types of transactions you must post to
your check register?
A: Debit card transactions, personal checks written by you,
deposits, withdrawals (not by check), and adjustments such
as interest, ATM charges, etc.
SHOW SLIDE 4-24: Check on Learning
Q: What is a PAT and give an example?
A: Preauthorized transactions are reoccurring withdrawals
you arrange to be automatically deducted from your account
such as car payments, insurance payments, utility bill
payments, etc.
SHOW SLIDE 4-25: Check on Learning
Q: Why must you keep up with posting all transactions to
your checking account?
A: So you don’t over draw your account.
SHOW SLIDE 4-26: Check on Learning
Q: What is the bank form you use to reconcile your
checkbook register to?
A: The checking account bank statement.
SHOW SLIDE 4-27: Check on Learning
Q: What do you do with entries that are listed on your
checkbook bank statement but are not in your checkbook
register?
A: Verify the transaction and then post it to your checkbook
register.
SHOW SLIDE 4-28: Check on Learning
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Q: What are some common errors associated with
balancing a checkbook register?
A: Math errors, not posting entries to the register, and
posting erroneous entries to the register.
Review Summary: SHOW SLIDE 4-29: SUMMARY
During this lesson, we discussed how to write checks, and
how to balance your checkbook. We also talked about debit
cards, reconciling your checkbook, and online banking.
Keeping your finances in order is your duty as well as your
responsibility. Remember, bouncing checks is a crime in
the Army and is punishable under the UCMJ.
TLO - LSA 5. Learning Step / Activity TLO - LSA 5. Identify the Essentials of Credit
Method of Instruction: Discussion (Small or Large Group)Mode of Delivery: Resident Instruction
Instr Type (I:S Ratio): Contractor, (1:25)Time of Instruction: 40 mins
Media Type: PowerPoint PresentationOther Media: Unassigned
Security Classification: This course/lesson will present information that has aSecurity Classification of: U - Unclassified.
SHOW SLIDE 5-1: IDENTIFY THE ESSENTIALS OF CREDIT
SHOW SLIDE 5-2: THE ESSENTIALS OF CREDIT
The word credit defines a number of possibilities. You can take out a loan or use a
credit card. Your ability to do this is dependent on the essentials of credit. These
include your credit history, interest rates, fees, payment schedules, etc. Do you make
your payments on time? Do you use your credit card without considering the
purchase? Do you carry your credit card with you at all times?
SHOW SLIDE 5-3: TYPES OF CREDIT
There are three types of credit:
Credit cards
Short-term loans
Long-term loans
SHOW SLIDE 5-4: CREDIT CARD FACTS
Credit Card Facts. VISA International has determined that just placing a credit card in
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someone’s hand will cause an increase in spending of 32%; there is over $886 million
of debt on credit cards held by U.S. consumers. Over 26% of Americans have 4 or
more credit cards (2014 FINRA Financial Capability Study). The Federal Reserve
Survey of Consumer finances for 2013 estimates indicate that the average household
credit card balance is $5,700; and Experian, based on a June 2014 sample of credit
reports looking at 24 months of payment history, estimates the average indebted credit
card balance is $7,743. These averages are still skewed by deeply indebted
households, but overall, credit card debt per household is down. Unfortunately, falling
indebtedness is largely due to defaults rather than repayments.
CreditCards.com reported that the average annual percentage rate (APR) on credit
card balance is 15.00 percent (as of July 2015) and the Federal Reserve reported that
the total U.S. consumer debt was $3.3 trillion (as of December 2014).
SHOW SLIDE 5.5: CREDIT EXAMPLE
Look at this credit example. If you charge $5,000 at 18% and make only a minimum
2% monthly payment, it will take 46 years to pay off this debt! You will have paid
$18,931!!
SHOW SLIDE 5-6: SHORT-TERM LOANS
SHORT-TERM VERSUS LONG-TERM LOANS To use credit to your advantage, you
should understand the differences between short-term and long-term loans, so let’s
examine the advantages and disadvantages of each. Incidentally, the terms “short-
term” and “long-term” are relative, not associated with any particular time period.
Short-term Loans. Short-term loans usually offer a better interest rate than longer-term
loans. In addition, even if rates are the same, the short-term loan will save you money
in interest over a longer loan. Their down side is higher monthly payments.
SHOW SLIDE 5-7: LONG-TERM LOANS
Long-term Loans. The primary advantage of a long-term loan is that it lowers your
monthly payments. Disadvantages are an increase in the amount of interest paid, and
the fact that some items purchased with long-term loans may wear out before the debt
is paid in full.
SHOW SLIDE 5-8: HOW CREDIT WORTHY ARE YOU?
Are you a good credit risk? Before deciding whether or not to grant you a loan, or
other types of credit, and at what interest rate, a financial institution or company will
evaluate the probability that you will make required payments on time. The three
factors that weigh heavily in those decisions are: character, capacity, and collateral.
SHOW SLIDE 5-9: CHARACTER
Character. Do you have a history of repaying loans on time? Stability (length of time
on the job and in a location), age of accounts, and checking and savings account
records are also taken into consideration. If you've bounced checks or have been late
43
on your bills, it may prevent you from obtaining credit.
SHOW SLIDE 5-10: CAPACITY
Capacity. What is the likelihood you can repay the loan on time? Factors include your
income, how much potential credit you hold (number of cards, number of inquiries),
and total debt are considered.
SHOW SLIDE 5-11: COLLATERAL
Collateral. What, if any, additional security is there to ensure the loan will be repaid?
Collateral is normally required for any large loan, such as for a home or car.
SHOW SLIDE 5-12: THE ABC’s OF APPROPRIATE CREDIT USE
Appropriate uses for credit. The best use of credit is to purchase assets - things that
will grow or increase in value over time, like your own business or buying a home or a
rental property. Credit is also useful for convenience - avoiding having to carry large
sums of cash or as a management tool. Wise use of credit virtually always falls into
one of these two categories - Assets or Convenience. Sometimes use of credit for
major consumer goods (so-called "Big Ticket" items) cannot be avoided; few of us can
purchase our first car without a loan. This, too, is an acceptable use of credit.
SHOW SLIDE 5-13: INAPPROPRIATE USES OF CREDIT
Inappropriate uses of credit. Credit becomes more dangerous when used to purchase
consumables. Furniture, clothing, sporting equipment, meals out, and vacations lose
much or all of their value immediately after purchase. Such unwise use of credit is
often motivated by one of four factors.
SHOW SLIDE 5-14: MOTIVATIONS TO ABUSE CREDIT
Motivations to abuse credit:
Availability of credit can lead to a "buy now, pay later" mentality. Impulse buying on
credit can result in your purchasing an item you would never have bought if you had to
pay cash. Distinguish between needs and wants.
Spending on credit to impress others is another common trap. An example would be
advertisements portraying people using a credit card to treat their friends. This can be
a huge temptation. Living within your means can prevent unwise decisions.
More common in marriages is the lack of, or failure to adhere to, an agreed-upon
family spending plan. It can be another cause for an unwise use of credit. Your partner
deviates from the plan and therefore you feel you can do the same. These behaviors
are preventable. Communication is the key.
Believe it or not, spending to feel good can become an addictive behavior. Avoid this
trap by asking yourself if you really need, and can afford to pay for, an item before you
44
charge it.
SHOW SLIDE 5-15: DEBT WARNING SIGNS
Warning signs of too much debt. There are several warning signs, in addition to your
debt-to-income ratio, that you are on the wrong road. They are:
Not paying off most of your cards every month could be a sign of trouble--especially if
higher and higher percentages of each month's pay go to service your debt. When
you start to fall behind on payments, and/or need loans or cash advances for daily
living expenses, it's time to seek help! Limit the number of credit cards to only one or
two.
Additional clues may include not having at least one month's pay in savings, being at
or near the limit on all your credit cards, or relying on a second job or spouse's income
to make ends meet. Remember that outside income and your spouse's employment
can be impacted by an extended deployment or Permanent Change of Station.
SHOW SLIDE 5-16: CONSEQUENCES OF DELINQUENT ACOUNTS
Delinquency commonly refers to a situation where borrowers are late or overdue on a
payment, such as student loans, income taxes, mortgage loans or automobile loans.
There are long-term consequences for delinquency, depending on the type of loan and
the duration and cause of the delinquency.
For example, assume a Soldier takes out a loan from a bank and is delinquent on his
loan for 90 days. His credit score would decrease for a considerable period, affecting
his credit rating for multiple years (seven to ten years depending if he files for
bankruptcy or not). Long-term delinquency could cause the loan to default, which
would cause the bank to foreclose on his home. This would further affect his credit
rating and make it difficult for him to obtain credit card accounts, mortgages or
automobile loans.
Similarly, assume a recent college graduate obtained student loans throughout his stay
at college. Suppose too he fails to make his first loan payment. Consequently, his loan
becomes delinquent until he repays the owed amount. If his loan remains delinquent
for 270 days, it goes into defauLt and he must pay the entire balance and fees
immediately. The long-term effects of his delinquent account include damage his credit
rating, making it harder for him to obtain other loans, and garnishment of his wages
and withholding of his tax refunds.
SHOW SLIDE 5-17: INDICATIONS OF SERIOUS CREDIT PROBLEMS
Indications of Serious Credit Problems. You should acknowledge that things are
critical when you start skipping some bill payments, using credit to pay credit, using or
even considering a debt consolidation loan, being denied additional credit, or hiding
bills and lying to members of your family.
45
SHOW SLIDE 5-18: CREDIT BUREAUS
Credit Reports. A credit report is information about you and your credit experiences,
such as your bill-paying history, the number and type of accounts you have, late
payments, collection actions, outstanding debt, and the age of your accounts. A good
report can open many doors for you, and a bad report will be a major obstacle in
realizing future goals and aspirations. We'll discuss who keeps these reports, what
they contain, how they are used, and what you should do to ensure your report is
accurate.
Credit Bureaus. Most credit reports are compiled by three major companies: Equifax;
Experian; and TransUnion. A list of these companies and contact information can be
found on the PFMC website. In some states, these companies may charge you for
your credit report or, if you were denied credit, you can request a copy of your credit
report FREE of charge within the time limit set by law. These companies are
competitors, so they do not share their information, and therefore, the information in
your report with each of them may be different.
SHOW SLIDE 5-19: REPORT COMPONENTS
Components of a credit report. Your credit report has four major components:
Personal Information. Your name, address, former address/es, SSN, and estimated
date of birth. You may not want a great deal of personal information to go on file,
however, if you refuse to provide it the creditor can deny you credit.
Credit History. This section contains the history of all your accounts of which they
have information. It shows all of your credit information: the type of account, the date it
was open, your payment history, and the current status of the account. This
information is used in evaluation of your creditworthiness. This section will contain your
history of late or missed payments - definite adverse entries. You should ensure all
closed accounts are reflected as such because potential credit, as well as actual debts,
may be used by the lender to compute your debt-to-income ratio. Be sure the report
shows that such accounts were closed at your request; otherwise it is left open to
question that it might have been closed for cause, more potential adverse information.
Public Records. This section will contain any judgments that have been entered
against you. Any bankruptcy information will remain on your report for 10 years from
the date of filing. Unpaid tax liens may be reported depending on your state of
residence. Paid tax liens may be reported for 7 years from date of payment. Other
judgments such as foreclosure, criminal convictions, and even some driving infractions
may be found on your credit report. You may be required to explain public record items
to potential creditors.
Inquiries. This section contains a record of all who have requested and been provided
46
with copies of your report. It is especially useful if correcting erroneous information -
the credit bureau is required by law to provide corrections to all who received your
report within the past six months.
SHOW SLIDE 5-20: CREDIT SCORING SYSTEM
Credit Scoring System. Creditors use the credit scoring system to determine whether
or not you are a good credit risk. Points are awarded for each factor that predicts
reliability for debt repayment. Each of the 3 major credit bureaus (Equifax, Experian &
Trans Union) uses a different variation of the Classic FICO (Fair, Isaacs, and
Company) formula. It should be noted that the differences between each of the credit
bureaus' credit scores and the Classic FICO formula are minute, and basically they
share the same formula/algorithm. One difference between FICO and Beacon scores
is the scale; while Classic FICO runs from 300–850, Beacon Credit Score runs from
350–850. For this reason, your Equifax Beacon score will not be the same as your
score from Experian or Trans Union.
Credit Scores. The three credit bureaus charge for your credit score. However there
are three places where you can get your scores for free.
The first place is through the FINRA Investor Education Foundation by way of your
local Army Community Service Center. This not-for-profit foundation has a website
(SaveAndInvest.org) that provides financial tools and information for military families.
One of these tools is a free credit score and analysis tool that enables you and your
spouse to get your FREE FICO score. To use the tool, your first step is to contact a
military financial educator (sometimes called a “PFM”) at your nearest Army
Community Service or their equivalent). Your Financial Educator or PFM can assist
you in obtaining your free credit score. See more at:
http://www.saveandinvest.org/ControlDebt/CreditScore/P124370#sthash.EpdvSNkr.dp
uf
The second place is Credit Karma at creditkarma.com. Most “free credit score”
companies, when you sign up for their service, ask for your credit card and then, a
month later, you’ll unsuspectingly get charged. After going back to read the fine print,
you’ll notice that free was really only free for the first month, and if you didn’t cancel
your subscription, you’ll get a monthly charge. That’s why they asked for your credit
card. Credit Karma does not ask for your credit card. You do have to give them your
social security number. This is how all credit is tracked, after all. You have to supply
your SS# with all the credit bureaus, all other credit score sites out there, and any time
you apply for credit. Once you provide specific information, Credit Karma will provide
you with a completely free look at collections, credit card utilization, and pulls your
scores from both TransUnion and Equifax.
The third place is Credit.com. Like, Credit Karma, Credit.com does not ask for a credit
card. They ask basically the same questions as Credit Karma and you receive your
47
basic data in a snapshot providing information on all of your accounts, as well as,
credit scores from Experian and a VantageScore 3.0. They also show you on a scale
where your score falls compared to the state you are in and also the national average.
Credit.com gives you a letter grade of each of the categories that make up your score
(Payment History 35%, Debt Usage 30%, Credit Age 15%, Account Mix 10%, and
Credit Inquiries 10%) and offers an action plan on how you can improve your score.
They also provide expert advice in the way of articles just for you based on your credit
profile and action plan.
SHOW SLIDE 5-21: WHAT IS A GOOD CREDIT SCORE?
While there are many credit scoring systems, it is generally accepted that any score
above 720 is considered a GOOD credit score. To help you visualize this, here’s a
rating scale (there are no official brackets and this is just an approximation of a
continuous range:
Credit Score Description
750+ Excellent credit score. You should qualify for the best interest rate and loan
terms.
700 – 750 Good credit score. There won’t be any problem in getting a loan at a good
interest rate.
640 – 700 Average credit score. You may qualify for the loan but not at a good interest
rate.
580 – 640 Poor credit score. You will have a tough time getting a loan or a credit card.
below 580 Bad credit score. It’s doubtful that you will qualify for a loan or a credit card.
Read more: http://www.moolanomy.com/1805/credit-score-rating-and-
scale/#ixzz2TxELz5uZ
SHOW SLIDE 5-22: HOW CREDIT REPORTS ARE USED
Uses for credit reports. Potential employers may access your credit report as a
character check. But by far the most common use is by potential landlords, mortgage
companies, banks and other lending institutions, and merchants offering charge
accounts and credit cards to determine how creditworthy you are. Insurance agents
have also begun using credit reports to determine whether or not you are a good risk
for their insurance policies.
SHOW SLIDE 5-23: ENSURING ACCURATE REPORTS
Ensuring Accurate Reports. Approximately 20% of all credit reports contain inaccurate
information. It's up to you to ensure erroneous information is corrected or your version
is included in your file.
Get Copies. The first step you must take is to get copies of all your credit reports. If
you were denied credit, your copy will be free. Names, addresses, and phone
numbers of the major bureaus are in your handout. The Fair Credit Reporting Act
48
(FCRA) requires each of the nationwide credit reporting companies — Equifax,
Experian, and TransUnion — to provide you with a free copy of your credit report, at
your request, once every 12 months. The three nationwide credit reporting companies
have a central website, a toll-free telephone number, and a mailing address through
which you can order your free annual report. To order, visit annualcreditreport.com,
call 1-877-322-8228, or go to http://www.consumer.ftc.gov/articles/0155-free-credit-
reports and download the free Annual Credit Report Request Form and mail it to:
Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. Do
not contact the three nationwide credit reporting companies individually. They are
providing free annual credit reports only through annualcreditreport.com, 1-877-322-
8228 or mailing to Annual Credit Report Request Service. You may order your reports
from each of the three nationwide credit reporting companies at the same time, or you
can order your report from each of the companies one at a time. The law allows you to
order one free copy of your report from each of the nationwide credit reporting
companies every 12 months.
Disputed Items. If you dispute an item on your report, by law the credit bureau must
investigate it, and if it is found to be incorrect, they must correct it. If they do not
complete the investigation within 30 days, they must drop the disputed item from your
report.
Your version. If the information in your report is accurate, you have the right to have a
statement of your version of what happened included in your report. The credit bureau
must send a copy of it to anyone who received a copy of your report in the past 6
months. If the information is confirmed, however, it becomes very difficult to remove;
there are no quick "fixes" available for a bad credit record.
SHOW SLIDE 5-24: CONSUMER CREDIT PROTECTION LAWS
Truth In Lending Act. The Truth In Lending Act of 1968 and amendments ensure
customers are given information about the cost of the credit for which they are
applying. Lenders must disclose the cost of any loan expressed both as the annual
percentage rate of interest and as the total finance charge in dollars. It applies to
single purchases made on credit as well as purchases by credit cards. Additionally,
the Act provides three business days in which you may cancel a transaction that used
your home as security or that took place at your residence (door-to-door sales). You
must do this in writing. This does not apply to all purchases, for example, there is no
cooling off period on car purchases. This law also limits your liability for lost or stolen
credit cards to $50 per account, if you notify the issuing company. Contact them
immediately and follow up in writing.
Fair Credit Billing Act. This act protects you from billing errors and allows you to
dispute charges in writing within 60 days. You may also withhold payment for items
purchased on your credit card which do not meet the quality standards the seller
promised if your good faith try to remedy with the seller fails. You should review your
49
statement each month to be sure you recognize all charges.
Fair Credit Reporting Act. This act provides for your right to know what is on your credit
record and provides for the dispute and deletion of inaccurate information. The credit
bureau must first request confirmation from the business that originally made the
disputed entry; if unable to get confirmation, the information is supposed to be
removed, since the consumer has the benefit of doubt. This act allows you a free
credit report if denied credit and limits the time information stays on your credit file. It
also requires each of the nationwide credit reporting companies — Equifax, Experian,
and TransUnion — to provide you with a free copy of your credit report, at your
request, once every 12 months.
Fair Debt Collection Practices Act. This act determines the means by which debt
collectors can contact you. Debt collectors can not contact you before 0800 or after
2100 your local time. You are protected from unfair practices from third party debt
collectors. They cannot be abusive, harass you, tell anyone else about your debt, or
threaten you. You can write to debt collectors and tell them to stop contacting you.
You can also sue them for breaking this law.
SHOW SLIDE 5-25: CONSUMER CREDIT PROTECTION LAWS (Cont.)
Equal Credit Opportunity Act. This act provides for granting of credit regardless of
race, gender, marital status, age, religion, color, national origin or RECEIPT OF
PUBLIC ASSISTANCE.
Fair Credit and Charge Card Disclosure Act. This act requires that credit cards
solicitations inform you of their total cost. This includes APR, grace period, annual fee,
finance charge, other fees, and the method for calculating the balance.
Credit Card Act. The Credit Card Act (2009) provides many consumer credit
protections. For example, your credit card company generally cannot increase the rate
on your existing balance and must tell you forty-five days before increasing the rate for
new transactions. The Act also places new limits on fees and rate increases and
requires consistency in payment dates and times.
State Protection. Federal laws do not regulate interest lenders may charge you! Some
states may provide additional protection in credit matters; however, many have few
credit or consumer protection laws. In particular, in some states there is no effective
cap on interest rates. Arm yourself with information!
SHOW SLIDE 5-26: DEALING WITH CREDITORS
Even though you may have legal protections as just discussed, there are right ways
and wrong ways to deal with creditors if you find yourself in financial difficulty. Here
are some positive actions you should take:
50
Stay in contact with your creditors; let them know if there is a problem. If a friend owed
you money and was avoiding you or not returning phone calls, you would think he or
she was trying to “stiff ” you. Businesses are the same way. Just talk to them.
Be honest.
Approach them with a plan, but be careful of promising more than you can deliver.
SHOW SLIDE 5-27: SITUATIONS TO AVOID
Conversely, there are some things you should not consider:
Credit clinics. Many of these charge up-front fees promising to “clean up your credit
report” fast and get you out of debt. They cannot do anything for you that you cannot
do for yourself. Charging up front fees for debt counseling is illegal in a number of
states.
Debt consolidation loans. Debt consolidation loans are not always bad, but they are at
best a temporary fix. They will not work without a change in your behavior. A study by
American Express indicated 78% of all consumers who take out bill consolidation loans
have a higher debt-to-income ratio 18 months later than when they first took out the
loan.
Bankruptcy. Declaring bankruptcy does not allow you to walk away from all past
problems. This is a last resort option that may have lasting consequences. It may
severely impact on your ability to get credit in the future, in addition to the potentially
negative career implications.
SHOW SLIDE 5-28: HOW TO ESTABLISH CREDIT
No. 1: Check your credit. If you haven't established credit, this advice may seem odd.
However, children are sometimes the prime target of identity theft and some young
adults who apply for credit for the first time discover their information has already been
used by someone else to get credit, oftentimes a close relative!
No. 2: Get your first credit reference. Your first credit reference will establish your
credit history but it can "take credit to get credit." That's why a secured credit card is
often a popular way to get started. With a secured card, you'll place a security deposit
with the financial institution and, in turn, get a card with a credit limit that is usually
equal to the deposit. Besides a secured card, typically a gas card or a department
store card are easiest to get. Be wary of interest rates, they can be high, and shop
around.
No. 3: Use it but don't abuse it. Use your new secured card to purchase things but
don't charge it up to the limit. Ideally, you want to use about 10% to 20% of your
available credit in order to maintain a positive "debt-to-available-credit ratio." That
51
means that if you have a card with a $300 credit limit, you'll want to charge only about
$30 to $50 a month on the card.
No. 4: Pay your bills on time each month. Your payment history counts for about a third
of your credit history, so make sure you pay your bills on time. One late payment can
mean a big drop in your credit scores. Set up online alerts or mark your calendar so
you don't let a due date slip by.
No. 5: Get another card and round out your references. The best credit scores go
people with a well-rounded credit history that includes different types of loans.
No. 6: Monitor Credit report – Maintain your credit and make sure it doesn’t get
messed up. You can get your free credit reports each year at AnnualCreditReport.com.
You can also get a free credit score or approximation of your credit score at credit.com
or creditkharma.com.
SHOW SLIDE 5-29: HOW TO IMPROVE YOUR CREDIT
Get copies of your credit reports. The Fair Credit Reporting Act (FCRA) requires each
of the nationwide credit reporting companies — Equifax, Experian, and TransUnion —
to provide you with a free copy of your credit report, at your request, once every 12
months. The three nationwide credit reporting companies have a central website, a toll-
free telephone number, and a mailing address through which you can order your free
annual report. To order, visit annualcreditreport.com, call 1-877-322-8228, or go to
http://www.consumer.ftc.gov/articles/0155-free-credit-reports and download the free
Annual Credit Report Request Form and mail it to: Annual Credit Report Request
Service, P.O. Box 105281, Atlanta, GA 30348-5281.
Pay your bills on time. Your payment history counts for 35% of your credit history, so
make sure you pay your bills on time. One late payment can mean a big drop in your
credit scores. Set up online alerts or mark your calendar so you don't let a due date
slip by. You can set up automatic payments from your bank account to help you pay
on time, but be sure you have enough money in your account to avoid overdraft fees.
Understand how your credit score is determined. Your credit score is usually based on
the answers to these questions:
Do you pay your bills on time? The answer to this question is very important. If you
have paid bills late, have had an account referred to a collection agency, or have ever
declared bankruptcy, this history will show up in your credit report. Negative credit
history stays on your report for seven years, bankruptcies for ten years.
What is your outstanding debt? Many scoring models compare the amount of debt you
have and your credit limits. If the amount you owe is close to your credit limit, it is likely
to have a negative effect on your score. Your goal should be to keep the ratio of what
52
you owe (credit balance) to your total debt limits to under 10%. For example if you
owe $500 and your credit limit is $10,000 then your ratio is 5% (500/10000).
How long is your credit history? A short credit history may have a negative effect on
your score, but a short history can be offset by other factors, such as timely payments
and low balances.
Have you applied for new credit recently? If you have applied for too many new
accounts recently, that may negatively affect your score. However, if you request a
copy of your own credit report, or if creditors are monitoring your account or looking at
credit reports to make prescreened credit offers, these inquiries about your credit
history are not counted as applications for credit.
How many and what types of credit accounts do you have? Many credit-scoring
models consider the number and type of credit accounts you have. A mix of installment
loans and credit cards may improve your score. However, too many finance company
accounts or credit cards might hurt your score.
Improving your score significantly is likely to take some time, but it can be done. To
improve your credit score under most systems, focus on paying your bills in a timely
way, paying down any outstanding balances, and staying away from new debt. To
learn more about credit scoring, go to the Federal Trade Commission's website and
click on the Tips & Advice (for consumers) tab at the top of the page.
Learn the legal steps to take to improve your credit report. The Federal Trade
Commission has information on disputing errors on credit reports, tips on dealing with
debt, and more. Credit.com also has information on how to dispute errors.
Beware of credit-repair scams. Sometimes doing it yourself is the best way to repair
your credit. The Federal Trade Commission's “Credit Repair: How to Help Yourself”
explains how you can improve your creditworthiness and lists legitimate resources for
low-cost or no-cost help.
Maintain your credit and make sure it doesn’t get messed up. You can get your free
credit reports each year at AnnualCreditReport.com. You can also get free credit
score or approximation of your credit score at credit.com or creditkarma.com.
SHOW SLIDE 5-30: SOURCES OF ASSISTANCE
As a member of the military, there are several sources you can turn to for assistance to
assist you in properly managing credit. They are:
Chain of Command
53
Your PAC is always a good place to start.
Army Community Service Centers. Your local ACS center may have a Financial
Educator on staff to provide personal financial information and counseling. They
normally work closely with the PAC’s at the local commands.
Legal Services can provide assistance in a dispute over a bill or contract. They
strongly encourage service members to come in with a copy of the contract before
signing it when making any major purchase.
Financial Institutions often have financial counselors available who can provide a
range of services to members, up to and including full-scale debt management
programs.
Army Emergency Relief provides no-cost financial counseling and emergency financial
assistance.
SHOW SLIDE 5-31: Questions
NOTE: Ask students if they have any questions.
Check on Learning: SHOW SLIDE 5-32: CHECK ON LEARNING
NOTE: Conduct a check on learning. Slides 5-33 through
5-38 contain a question and answer.
SHOW SLIDE 5-33: CHECK ON LEARNING
NOTE: Click enter for the answer to appear on slide.
Question: True of False. A credit repair company can
erase a poor credit history.
Answer: False
SHOW SLIDE 5-34: CHECK ON LEARNING
NOTE: Click enter for the answer to appear on slide.
Question: Name Five Warning Signs of Financial Trouble.
Answer: Debt Consolidation Loans, Using Credit for Basic
Needs, Falling Behind on Payments, At or Near Credit
Limits, Lack of Savings
SHOW SLIDE 5-35: CHECK ON LEARNING
NOTE: Click enter for the answer to appear on slide.
Question: True of False. You will have lower monthly
54
payments with a long term loan.
Answer: True
SHOW SLIDE 5-36: CHECK ON LEARNING
NOTE: Click enter for the answer to appear on slide.
Question: True of False. If someone uses your lost or
stolen credit card, you are liable for no more than $50.
Answer: True
SHOW SLIDE 5-37: CHECK ON LEARNING
NOTE: Click enter for the answer to appear on slide.
Question: True of False. If you pay a bill late, your creditor
can report this information to a credit bureau.
Answer: True
SHOW SLIDE 5-38: CHECK ON LEARNING
NOTE: Click enter for the answer to appear on slide.
Question: Under the Truth in Lending Act, what is one
thing a lender MUST disclose to you when you apply for a
loan?
Answer: a. Annual Percentage Rate
Review Summary: SHOW SLIDE 5-39: SUMMARY
Credit is something you will use throughout your lifetime. It
can be a valuable tool; however, it can also be a source of
long lasting difficulty. The availability and over extension of
credit has contributed significantly to the rise in personal
bankruptcy rates in the past 20 years. Wise use of credit
can be a key element in achieving financial independence;
misuse can be a ticket to financial ruin. To help you make
wise credit decisions, we have discussed factors that affect
the cost of credit, appropriate and inappropriate uses of
credit, and warning signs of too much debt. We also
discussed what credit reports are and steps you should take
to ensure yours is accurate and reflects favorably on your
ability to manage your finances. Lastly we identified
55
sources of help should you encounter problems properly
using credit.
TLO - LSA 6. Learning Step / Activity TLO - LSA 6. Consumer Awareness
Method of Instruction: Discussion (Small or Large Group)Mode of Delivery: Resident Instruction
Instr Type (I:S Ratio): Contractor, (1:25)Time of Instruction: 40 mins
Media Type: PowerPoint PresentationOther Media: Unassigned
Security Classification: This course/lesson will present information that has aSecurity Classification of: U - Unclassified.
SHOW SLIDE 6-1: CONSUMER AWARENESS
INTRODUCTION: Unfortunately, a large percentage of our population doesn't see
anything wrong with "exaggerated product claims," or high-pressure sales tactics.
Young military members and their spouses are common targets of many who conduct
frauds and cons. It is impossible to cover all of the frauds, cons, and rip-offs currently
in existence. New scams pop up everyday. Gathering accurate statistics about the
number of frauds committed is difficult because some people are embarrassed to
admit that they've been cheated. During this lesson we will cover some of the most
common types of fraud, cons, and rip-offs, how marketing and advertising play a part,
and where you can go to find assistance with complaints. We will also explore what
identity theft is and how you can protect yourself from becoming a target.
SHOW SLIDE 6-2: THE PSYCHOLOGY OF ADVERTISING
To better understand how a person becomes susceptible to being scammed it is
important to recognize the psychology that might be used--especially through
advertising. Let's look at a few ways that advertising and marketing can influence the
decisions you make.
Types of Advertising - The goal of advertising is to get you to buy a product or service,
to buy more than you planned to buy, to spend more than you intended to spend, and,
if possible, to get you to buy something that you did not want or need in the first place.
There are several common types of advertising.
(1) Personalized - Designed to make the individual think that the salesman or
advertiser wants him or her, personally for a customer. May include 'personalized' junk
mail or phone calls. Preys on the idea that we all want to have friends, and here is one
- as long as you buy the product.
(2) Association - Uses familiar people from the entertainment and sports industry to
sell the product. The idea is that you can associate with that person on a personal level
if you buy the product they endorse.
(3) Buzz Words - Words and phrases created to catch your attention, to make you
56
think the product is somehow special or better than the former version or the
competition's version. The idea is to make you want to get rid of the other stuff and buy
this one in order to have the newest, latest, best. This is often called "baiting a sale".
Examples include "Clearance," "Sale," "Closeout," and "Liquidation.“
(4) Fear - Part of the emotional appeal approach. Plays on your fear of rejection or loss
if you don't use the favored product. This often includes the idea of personal ruin if this
product is not used or purchased.
(5) Berating (Put Down) - The goal is to convince you that something is wrong with you
if you don't buy their products.
SHOW SLIDE 6-3: DEFINING DECEPTION
You now have a little knowledge about how people influence you let's look at some of
the techniques they use. You've seen them everywhere -- people trying to convince
you that you must have or do something. There are a number of ways that they can
convince you of those needs. Here are the most common types of misrepresentations.
(1) Fraud - Fraud is a deliberate deception. It is intentional and usually relies on a
twisting of the facts. People who convince people of a fake identity, are frauds.
(2) Con - A con is similar to fraud except that the con artist first wins the CONfidence of
the person being defrauded. They convince the unwitting person that they are a friend,
and as such, they have their best interests in mind.
(3) Rip-Off - Rip-offs are unfair acts of exploitation, they are not necessarily illegal. Rip-
offs take advantage of areas where there are no consumer laws to provide protection.
Remember, the bottom line for all of these scams is to separate you from your money.
SHOW SLIDE 6-4: SCOOP ON SCAMS
There are a number of ways unwitting people become targets of dishonest dealings.
Here are a number of common scams you should be aware of.
SHOW SLIDE 6-5: AUTO REPAIR RIP-OFFS
Auto repair rip-offs consistently rank as the number one consumer complaint
throughout the nation. One shady practice is misdiagnosing -- telling you a major repair
is needed when only a minor one will do. You also need to be alert for installation of
lesser quality parts than what you are charged for. Request to see your old part. A
"rebuilt" part should look new. A dirty or rusty part may have been "salvaged" from a
junkyard for about 10% of the cost of a rebuilt or refurbished part. Be aware that most
states have laws that require auto repair facilities to give you a written estimate of what
their work will cost. If they exceed the written estimate by more than 10% without your
permission, you are not required to pay.
57
SHOW SLIDE 6-6: BAIT AND SWITCH
In this ruse, stores advertise fabulous bargains just to get you in the door, then try to
sell you something more expensive. More often than not, the advertised item is not
available for any number of reasons: there aren't any left. . . you can't get delivery for
six months, etc. If you encounter a "bait and switch", leave immediately. IF IT SEEMS
TOO GOOD TO BE TRUE, IT PROBABLY IS.
SHOW SLIDE 6-7: INVESTMENT SCHEMES
Investment schemes promise high rates of return with minimal risk. You may have
heard these commonly referred to as Ponzi or Pyramid schemes. Promoters of
investment schemes often operate a particular scam for a short time, quickly spend the
money they take in, then close down before they can be detected. In their sales pitch,
they'll say that they have high-level financial connections; that they're privy to inside
information; that they'll guarantee the investment; or that they'll buy back the
investment after a certain time. To close the deal, they often serve up phony statistics,
misrepresent the significance of a current event, or stress the unique quality of their
offering. These schemes are a good investment for the promoters, but not for the
participants.
SHOW SLIDE 6-8: PRIZE PROMOTIONS
Have you ever surfed the net and found that while you were visiting various sites
blinking boxes arrive congratulating you on winning a fabulous prize? Most times you
can buy them for an attractive price and you are always "specially selected" for this
opportunity. Sound fishy? You bet. The scam is that most unsolicited commercial e-
mail goes to thousands or millions of recipients at a time. If you've won a cruise, it
may be on a tug boat or the hotel accommodations you've won are in a shabby motel.
If you want something better, you may be required to pay an additional fee.
Remember, if you buy into this scheme, you'll get what you pay for.
SHOW SLIDE 6-9: TITLE LOANS
In a title loan transaction, you keep your vehicle and drive it. The lender keeps the title
as security and, usually, a copy of your keys. Say for instance you need $1000. If you
take your vehicle title to a title loan officer he'll give you a loan for $1000 at an
enormous interest rate--using your car as collateral. Forget to make one payment and
your car will be immediately repossessed--even it it's the last payment you owe. The
lender will sell it, and pocket whatever money they get. They can do it--you gave the
title, and your keys, away when you took out your loan. Stay away from these loans!!
SHOW SLIDE 6-10: TITLE LOAN EXAMPLE
SHOW SLIDE 6-11: PAYDAY LOANS
SHOW SLIDE 6-12: WHAT IS A PAYDAY LOAN?
What Are Payday Loans? Payday loans (also called post-dated check loans) are small
58
loans that you can take out several days before payday and then repay as soon as you
get paid. Most of these places have you write a post-dated check for collateral. The
typical interest for a payday loan can be as much as 700%.
SHOW SLIDE 6-13: FACTS ABOUT PAYDAY LOANS
Here are some interesting statistics on Payday Loans:
(1) The typical two-week payday loan has an annual interest rate ranging from 391 to
521 percent
(2) Since its inception in the 1990s, the payday lending industry has established over
22,000 locations which originate an estimated $27 billion in annual loan volume
(3) The typical payday borrower remains in payday loan debt for 212 days of the year
(4) Studies have shown that payday borrowers are more likely to have credit card
delinquency, unpaid medical bills, overdraft fees leading to closed bank accounts, and
even bankruptcy
As you can see it is easy to get trapped with these loans.
- See more at: http://www.responsiblelending.org/payday-lending/tools-resources/fast-
facts.html#sthash.k08xwDl3.dpuf
SHOW SLIDE 6-14: QUESTIONABLE CHARITIES
At some point in time, you will receive countless solicitations asking for donations to
what may seem like worthy causes. The problem is how to distinguish between the
legitimate and the scam. Solicitors requesting donations for law enforcement or
emergency services groups cannot claim that you may receive reduced services if you
fail to donate. Donating to a law enforcement "association" will NOT save you a
possible ticket. Copycat organizations may use a name similar to a well-known charity
to confuse you into giving. Beware! If you are sincerely interested in donating to the
cause, request the information be mailed to you. That way you'll have it in writing and
can keep a personal record of your donation.
SHOW SLIDE 6-15: CREDIT REPAIR SCAMS
Credit Repair clinics make many offers to miraculously erase negative information from
your credit files. Not true. Only time, a deliberate effort, and a personal debt
repayment plan will improve your credit.
SHOW SLIDE 6-16: CREDIT REPAIR CRIME
Some credit repair schemes promise you that they can "hide" bad credit by helping you
to establish a new credit identity. If you pay a fee for such a service, the company may
direct you to apply for an Employer Identification Number (EIN) from the Internal
59
Revenue Service, and to use the EIN in place of your social security number when you
apply for credit. You may also be instructed to use a new mailing address. This
practice, known as file segregation, is a federal crime.
SHOW SLIDE 6-17: TIPS ON INTERNET SHOPPING
The Internet provides consumers with a wide range of information, and sellers with a
new way to promote their products or services. "Cyber shopping," "banking online,"
and other conveniences will spur an increasing number of consumers to do business
by computer. But crooks also recognize the potential of cyberspace. The same scams
that have been conducted by mail or phone can now be found on the Internet, and new
technologies are resulting in new ways to commit crimes against consumers. Let's
look at a few ways to protect yourself.
(1) Do business with companies you know and trust. Be sure you know who the
company is and where it is physically located. Businesses operating in cyberspace
may be in another part of the country or in another part of the world. Resolving
problems can be more complicated in long-distance or cross-border transactions. You
can also ask consumer agencies and the Better Business Bureau about the company's
complaint record. But keep in mind that fraudulent companies can appear and
disappear quickly, especially in cyberspace.
(2) Understand the offer. Look carefully at the information about the products or
services the company is offering, and ask for more information, if needed. A legitimate
company will be glad to provide it; a fraudulent marketer won't. Be sure you know what
is being sold, the total price, the delivery date, the return and cancellation policy, and
the terms of any guaranty. Print out the information so that you have documentation if
you need it.
(3) Be careful with financial or other personal information. Don't provide bank account
numbers, credit card numbers, social security number or other personal information
unless you know the company is legitimate, the site is secure, and the information is
necessary for the transaction. Even with partial information, con artists can make
unauthorized charges, deduct money from your account, and impersonate you to get
credit in your name.
(4) Take your time to decide. While there may be time limits for special offers, high-
pressure sales tactics are often danger signs of fraud.
(5) Be aware that there are differences between private sales and sales by a business.
All sorts of goods and services are sold or traded by individuals through unsolicited e-
mails, newsgroup postings, chat room discussions, web auctions and online classified
advertisements. While most people are honest, your legal rights against the seller may
not be the same as with a business, and you could have difficulty pursuing your
complaint if merchandise is misrepresented, defective or never delivered.
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(6) You may be better off paying by credit card than with a check, cash or money
order. When you use your credit card for a purchase and there is a problem, you have
the right to notify your card issuer that you are disputing the charge, and you don't
have to pay it while your dispute is being investigated.
(7) Don't judge reliability by how nice or flashy a website may seem. Anyone can
create a website; it's relatively easy and inexpensive. Know that people in cyberspace
may not always be what they seem. Someone sharing a "friendly" tip about a money-
making scheme or great bargain may actually have a piece of the action. "Friendly"
people can turn out to be crooks!
SHOW SLIDE 6-18: IDENTITY THEFT
Whenever you use a credit card, write a check, or give your name and address, you
share personal information –information that can be used by identity thieves. In this
part of the lesson we will show you how to protect yourself from identity theft.
SHOW SLIDE 6-19: IDENTITY THEFT FACTS
(1) A Billion records leaked. According to IBM, more than one billion records containing
personally identifiable information were leaked in 2014 alone. An identity thief only
needs a few data points like the kind found in many data breaches to tap into your
financial life.
(2) There Is No Anonymity. You can do everything right and still get “got.” The
fraudsters out there mining the veins of personal data for financial gain are good at
what they do. However, if you assume you are going to get got and take some
proactive steps – including monitoring your bank and credit accounts regularly for
signs of fraud – in many cases you can have a head start when it actually happens.
(Keeping a tight rein on your social media posts and making them private can also help
give fraudsters less access to you.)
(3) Your Medical History Can Be Compromised. With more than 2.32 million victims
thus far — 500,000 last year alone — medical identity theft is a crime on the rise. It can
cause medical histories to get changed, and benefits fraudulently used by others can
bar a victim from getting medical treatments – making it a dangerous crime. Unlike
credit card fraud where liability is often zero, a recent study by the Medical Identity
Theft Alliance found that more than 60% of medical fraud victims had to pay an
average of $13,500 to resolve the crime. Your best bet is to check every statement
that comes in, and make sure the treatments listed on your Explanation of Benefits
summaries sent out by your insurer match the care you’ve received.
(4) Your Tax Refund Is Under Attack. Tax-related identity theft is a big-money crime,
and the statistics prove it. The IRS stopped 19 million suspicious tax returns last year,
and stopped more than $63 billion in fraudulent refunds. A whopping $5.8 billion in tax
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refunds were paid out to fraudsters. In 2012, the Treasury Inspector General for Tax
Administration projected that fraudsters would net $26 billion into 2017.
(5) It’s Becoming More Common For The Ones Stealing Your Identity To Be Those
Closest To You. Studies have shown that it’s becoming more common for the ones
stealing your identity to be those closest to you. One study found 32% of identity theft
victims discovered a family member or relative was responsible for stealing their
identity. That same study found 18% were victimized by a friend, neighbor or in-home
employee.
SHOW SLIDE 6-20: IDENTITY THEFT - HOW?
No one can steal your identity without some amount of personal information. They may
get this from a stolen wallet or purse, they may buy it from "inside sources," they may
go "dumpster diving" and obtain it from bills and receipts carelessly deposited in your
garbage, or they could steal or re-direct your mail.
SHOW SLIDE 6-21: IDENTITY THEFT - WHAT?
Armed with enough information, a crook can open a bank account in your name and
write bad checks on it. They can use your credit card, or apply for a new card in your
name. If they have diverted your statements, you may not be aware of what is
happening to you until well after the fact. They could even obtain a drivers license in
your name.
SHOW SLIDE 6-22: PREVENTING IDENTITY THEFT
(1) One way to protect yourself from identity theft is to minimize personal information,
credit cards carried.
(2) Use a cross-cut shredder to dispose of receipts, copies of credit applications,
insurance forms, checks, bank statements, expired charge cards, and any credit offers
you get in the mail prior to discarding.
(3) Use strong passwords for all of your online accounts. Use at least 8 characters,
alpha numeric, symbols, and upper/lower case.
(4) Read credit reports annually by going to Annualcreditreport.com for a free credit
report.
SHOW SLIDE 6-23: WHAT TO DO IF YOUR IDENTITY IS STOLEN
(1) First, contact the fraud department of one of the three major credit bureaus. The
company you call must tell the other companies about your fraud alert. An initial fraud
alert can make it harder for an identity thief to open more accounts in your name.
When you have an alert on your report, a business must verify your identity before it
issues credit in your name, so it may try to contact you. Be sure the credit reporting
companies have your current contact information so they can get in touch with you.
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The initial alert stays on your report for 90 days. It allows you to order 1 free copy of
your credit report from each of the 3 credit reporting companies. Remember that a
credit report details all of your financial transactions for approximately seven years and
it can give you some indication of how much damage to your credit has been done.
(2) Second, contact your creditors, even those that have not been opened by you.
Follow up with a letter.
(3) File a report with your local police department. Keep a copy in case your creditors
need proof of the crime.
(4) As an identity theft victim, you have protections under federal law for ATM or debit
card transactions. Federal law also limits your liability for the unauthorized electronic
transfer of funds that result from identity theft. It’s best to act as soon as you discover
a withdrawal or purchase you didn’t make or authorize. Many card issuers have
voluntarily agreed that an account holder will not owe more than $50 for transactions
made with a lost or stolen ATM or debit card. However, under the law, the amount you
can lose depends on how quickly you report the loss. If you don’t report within 60 days
of the day your institution sent you the account statement showing the unauthorized
withdrawals, you could lose all the money an identity thief took from your account.
(5) An identity thief may steal your paper checks, misuse the account number from the
bottom of your checks, or open a new account in your name. If this happens, contact
your bank or financial institution and ask them to close the account as soon as
possible. Federal law doesn’t limit your loss if a thief forges your signature on your
checks or uses your account number to buy something by phone, but most states hold
banks responsible for losses from those fraudulent transactions. However, banks
expect their customers to take reasonable care of their accounts. That means you
might be responsible for a loss if you know about a problem but don’t report it to your
bank quickly.
(6) Your liability for credit card charges that you didn’t authorize is limited to $50 per
card. To dispute fraudulent charges, contact the credit card issuer within 60 days of the
day the credit card issuer sends you the bill showing the fraudulent charges. What if an
identity thief changed the address on your account and you don’t get your statement?
You are responsible for keeping track of your statements. If your statement doesn’t
arrive on time, contact your credit card company.
(7) If you believe someone filed for bankruptcy in your name, contact the U.S. Trustee
in the region where the bankruptcy was filed. The U.S. Trustee Program refers cases
of suspected bankruptcy fraud to the United States Attorneys for possible investigation
and prosecution. The U.S. Trustee can’t provide you with legal help, so you may need
to hire an attorney.
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SHOW SLIDE 6-24: HOW TO PROTECT YOURSELF
There are several things you can do to protect yourself from Identity Theft.
(1) Be a Skeptic. No one is going to give something for nothing. If somebody has a
business proposition to make thousands of dollars in your spare time, they aren't going
to be selling it in a newspaper ad for $50.
(2) Do Research. Find out how long the company has been in business and research
its past successes and failures. Check out the person or business your dealing with.
Call the Better Business Bureau or a research the company at the local library or on
the Internet.
(3) Get it in writing. There's an old quote that says, "A verbal promise isn't worth the
paper it's written on." If you don't have it in writing, it is your word against the
salespersons.
(4) Use caution. Be leery when dealing with unknown businesses that are located out
of state, use P.O. Box addresses, and when buying over the Internet. It can be very
difficult and expensive to recover your money if the business is hard to locate and
fraudulent companies know this. If you need to speak with a person directly you may
be out of luck.
(5) Think before you buy. Analyze your needs and wants before you buy. Nothing is a
bargain if you didn't need it in the first place.
(6) Save your receipts. Keep your receipts and take prompt action if the product isn't
what you want or doesn't live up to advertising or the salesperson's claims.
(7) Remember that nothing is really free. Companies can't stay in business if they give
away their merchandise. There will ALWAYS be a hidden cost or ulterior motive.
Check on Learning: SHOW SLIDE 6-25: CHECK ON LEARNING
NOTE: Conduct a check on learning and summarize the
learning activity.
SHOW SLIDE 6-26: CHECK ON LEARNING
NOTE: Click enter for the answer to appear on slide.
Question: When should you consider getting a payday loan?
Answer: d. You should never consider a payday loan.
SHOW SLIDE 6-27: CHECK ON LEARNING
NOTE: Click enter for the answer to appear on slide.
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Question: True or False. A company that creates a
connection between a celebrity and a product uses
‘association’ in their advertising.
Answer: True
SHOW SLIDE 6-28: CHECK ON LEARNING
NOTE: Click enter for the answer to appear on slide.
Question: What type of advertising presents “just the facts?”
Answer: b. Informative
SHOW SLIDE 6-29: CHECK ON LEARNING
NOTE: Click enter for the answer to appear on slide.
Question: What is the first step you should take when your
identity has been stolen?
Answer: c. place a fraud alert with the credit bureaus
SHOW SLIDE 6-30: CHECK ON LEARNING
NOTE: Click enter for the answer to appear on slide.
Question: What does a criminal need to steal your identity?
Answer: b. Your social security number
SHOW SLIDE 6-31: CHECK ON LEARNING
NOTE: Click enter for the answer to appear on slide.
Question: What is the best way to successfully wipe out
excessive debt?
Answer: b. Time
Review Summary: SHOW SLIDE 6-32: SOURCES OF ASSISTANCE
SUMMARY
In the area of consumer awareness, as is the case in most
other topics we've covered, you are not alone. Several of
the sources of assistance shown on this slide are available
only to you, the military member. More specific information
on how to contact each of these sources is included in your
handouts. Remember both spouses are legally and
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financially liable for debt.
TLO - LSA 7. Learning Step / Activity TLO - LSA 7. Car Buying
Method of Instruction: Discussion (Small or Large Group)Mode of Delivery: Resident Instruction
Instr Type (I:S Ratio): Contractor, (1:25)Time of Instruction: 40 mins
Media Type: PowerPoint PresentationOther Media: Unassigned
Security Classification: This course/lesson will present information that has aSecurity Classification of: U - Unclassified.
SHOW SLIDE 7-1: CAR BUYING
SHOW SLIDE 7-2: DO YOUR RESEARCH
Many people begin the car-buying process by visiting a dealership - which should be
one of the last things they do. Unfortunately, for the average consumer, the process
often ends right there with the purchase of a vehicle at too high a price. Dealers will
ask about financing and trade-ins before offering a bottom-line price. They will then
use this information to calculate their profits to your disadvantage. You can save
yourself hundreds, if not thousands, of dollars on your next purchase by doing some
homework BEFORE you step on the lot. This puts you in control of the buying process.
Let's look at some areas that warrant attention before you set out on your journey.
SHOW SLIDE 7-3: STEPS TO SUCCESSFUL PURCHASES
Steps to successful purchases. The following steps can help ensure that you are
satisfied with your purchase.
(1) Determine how much you can afford. Refer to your spending plan.
(2) Determine the type of vehicle you want to buy that fits into your budget.
(3) Determine where you will buy the vehicle.
SHOW SLIDE 7-4: HOW MUCH CAN YOU AFFORD?
Determine what you can reasonably pay and then select a car and options in that
range. Four factors should be considered:
(1) Total Cost. Shopping for a vehicle based on what you want to spend each month is
one of the most common errors consumers make. You risk paying too much for the
vehicle when using this logic.
(2) Down Payment The more you put down, the less you have to finance. This will
lower both your monthly payments and total cost.
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(3) Monthly Costs. Face Reality! You won’t enjoy your car very much if you don’t have
enough money to put gas in it. What will your monthly expenses be? We’ll talk about
how much you should plan on spending for monthly costs in a moment.
(4) Insurance Costs. This cost is considerable for soldiers at your age. Shortly, I’ll
show a slide with an example of what your insurance costs could be. Be sure to
include an estimate when determining how much you can pay for a car payment.
SHOW SLIDE 7-5: MONTHLY COSTS
Monthly Costs. Financial advisors suggest keeping total car expenses to no more than
25% of your net (after tax) income. This includes car payments plus expenses, such
as insurance, maintenance and operating costs (fuel, oil, etc.). As a general guide you
can use 15% of your net income for the car payment and 10% for associated costs.
You should always compute what your debt-to-income ratio would be with any loan
you are contemplating. Most financial institutions won't grant you a loan that has a high
potential to get you in trouble. BEWARE some dealers might. Borrowing from a
relative can only worsen your plight. It is always better to live within your means.
SHOW SLIDE 7-6: AUTOMOBILE INSURANCE COSTS
As you can see by this slide, auto insurance can be a huge cost when purchasing a
car. It is imperative that you add these costs to your monthly payments. Otherwise,
you might find yourself overextended.
SHOW SLIDE 7-7: SELECTING A CAR
What type of car should you consider? The vehicle you purchase must strike the right
balance between what you want, what you need, and what you can afford. Everyone
has different preferences. Factors to consider include:
Size – (Compact, Sedan, Coupe, etc.); Manual or Automatic Transmission; 2-, 4-, or
all-wheel drive; Use (family, recreation, commuting); Style; Safety; Ownership and
Operating Costs; Performance vs. Practicality?
SHOW SLIDE 7-8: NEW or USED
Once you have made some choices about type and style, you have another choice
that will significantly affect the cost of ownership - new or used? Each has positive and
negative aspects. There are no absolute answers to the question of new vs. used. You
might consider "splitting the difference" with a "Program Car" that was a lease or rental
unit and still has a good part of the new car warranty remaining.
SHOW SLIDE 7-9: NEW CAR CONSIDERATIONS
(1) Cost - more than a used car of same make and model.
(2) Mechanical problems - likely fewer than a used car.
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(3) Depreciation - The value of a new car diminishes rapidly following the purchase,
anywhere from 10% to 40% in the first year. To get the full value of a new car, many
consumers plan on owning it for several years (four, five, or more).
(4) Warranties - Usually 3 yrs/36,000 miles is provided, and can be extended at
significant extra cost.
SHOW SLIDE 7-10: USED CAR CONSIDERATIONS
(1) Cost - Often less than a new car.
(2) Mechanical Problems - Likely to have more than a new car. Repair costs can
significantly increase the cost of owning and operating a car.
(3) Depreciation - Usually less than with a new car because much of it may have
already occurred.
(4) Warranties - May or may not have any remaining. Service contracts will add
significantly to the cost of the car.
SHOW SLIDE 7-11: EVALUATING DEALERS
Where should you buy? Car buyers should research a minimum of three potential
sellers. There are no absolute guidelines to follow when selecting a dealer, a
salesperson, or an individual from whom to buy a car. Do your homework, and you
should get a fair deal no matter where you buy. If you're looking for a new car, you'll
have to go to a dealer eventually. Here are some things to consider when evaluating
dealerships:
SHOW SLIDE 7-12: EVALUATING DEALERS Cont.
(1) Years in business: Although being in business for a long time does not
necessarily mean the dealer is straightforward, the worst dealers (in terms of how
buyers are treated) seem to go out of business fairly quickly.
(2) Complaints: Check with the Office of Consumer Affairs of the (state) Attorney
General, the Better Business Bureau, and any professional associations to which the
dealer belongs for any complaints filed against them.
(3) Salesperson and mechanics: How long have they been with the company? Are
the mechanics certified by an accredited agency, such as ASE (Automotive Service
Excellence). Don't be reluctant to ask questions.
(4) References - Senior enlisted and some of your contemporaries assigned to your
duty station for a while may have recommendations. You can probably trust such
references, but be leery of references volunteered by a dealer.
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(5) Professional memberships - Membership in the Better Business Bureau, National
Automobile Dealers Association, or National Independent Automobile Dealers
Association doesn't guarantee you a fair deal. It does, however, give you some
reassurance that there are avenues for you to address problems that cannot be
resolved with the dealership.
SHOW SLIDE 7-13: FAIR PRICE
Auto dealers have a right to make a reasonable profit on the sale of a car. What
constitutes a reasonable profit? To know this you must know what fair price is.
SHOW SLIDE 7-14: INFORMATION SOURCES
All pricing components, including base and option costs at invoice and Manufacturer's
Suggested Retail Price (MSRP), as well as things like destination charges, are
available from a variety of resources.
Price your vehicle at invoice, subtract any dealer holdback or incentives, add a 3-5%
profit, and you will have a good price goal for your vehicle. When working with a dealer
who provides you with pricing information, make sure you know the source - it could be
biased. Your best bet will be to do price research on your own from sources you know
are reliable. Additional resources include:
(1) Public Libraries - One of the very best sources of information on car pricing is the
public library. Most Army bases have libraries as well.
(2) Kelley Blue Book - Lists suggested retail and loan values for specific makes and
models of used cars. This is a guideline, not a law. Factors such as mileage, options,
and physical condition of the car will affect its value. This will give a good ballpark
figure. It can be found on the internet at www.kbb.com.
(3) IntelliChoice Car Cost Guides - Besides the dealer cost and sticker prices, this lists
items such as resale value, economic value, maintenance, costs, etc. The site
www.cars.com uses IntelliChoice pricing.
(4) Consumer Reports/Consumer Union Price Service - Each April issue is devoted to
cars and pricing, and they offer a low cost service to provide the dealer cost for
particular makes, models, and options.
(5) Edmund's Car Prices Buyer's Guide - Available in hard copy as well as at their
internet site. Similar to IntelliChoice guide.
(6) Car-Buying Services. Many organizations offer their members buying services, in
which the consumer indicates the make, model, year and exact options they want and
the organization does the shopping for them.
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SHOW SLIDE 7-15: PURCHASE NEGOTIATIONS
Salespeople are trained in the art of selling. In the majority of instances, their pay
includes a commission based on the sale price of the vehicle, so they have a vested
interested in getting as high a price as possible for the car. Your goal is to get as much
car as you can for as little as you can. Determining a price, trade-in value, and
financing options are three separate events. Don’t offer what you know about your car
before finding out what the price will be for the car. It could affect how much you’ll pay.
Here are some negotiating tips to help you hone your skills:
SHOW SLIDE 7-16: NEGOTIATING TIPS
(1) Information - The salesperson's goal is to get as much personal information about
you as possible. With your name, military status, and particularly your social security
number, a car dealer can determine what you might pay for a car and institute a credit
history check (without your knowledge or permission!). You need only give them your
first name.
(2) Trade-Ins - The dealer will try to combine purchase price, financing, and your
trade-in. You need to keep them apart. Practice saying "That's not important right
now." You will probably get more for your vehicle if you are willing to sell it yourself.
This may be difficult if you owe more on the vehicle than it is worth, but in that case,
you shouldn't be buying a new car.
(3) Driver's License - Some car dealers tell you they must make a copy of your driver's
license prior to taking a test drive. After making a copy they will run a credit check on
you while you’re out for a test drive. Don't fall for this trap!
(4) Deposit - Don't advertise how you will pay for the car. Again, use the phrase
"That's not important right now." If they ask for a deposit, do not pay it. (Unless you are
absolutely certain you will buy the car). Research clearly shows that people who put
down a deposit are much more likely to buy even if they prefer something else! You’ll
have to return even if you change your mind and may have trouble getting your money
back. If the car you were looking at actually is sold, they will find another for you to
purchase, so don't feel pressured.
(5) Don’t like the car. One of the salesperson's goals is to get you to say you "like" the
car. The sooner they establish an emotional connection between you and the car, the
more likely you are to buy it. Stay detached.
SHOW SLIDE 7-17: MORE NEGOTIATING TIPS
(6) Discounts - If the salesperson offers a discount, ask if it will apply a week from now
(in many cases, it will). If they don't bring up the subject, ask for one. Even the "one
price/no haggle" dealers might discount options, etc. You never know unless you ask.
(7) Shop Twins - Some models have identical twins on the other car lots with different
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nameplates on them (for example, the Chevrolet Blazer and GMC Jimmy). If a car you
are interested in is one of them, be sure to consider its twin and choose the one that
gets you the best deal.
(8) Financing - Stating up front that you intend to pay cash could work against you.
The dealership and the salesman make money when they find financing for you. If you
tell the salesman that you will use 100% financing, they may give you a better deal on
the sale because they can make up the profit on the back end. This gives them an
incentive to offer a discount. The best route, however, is to refuse to address financing
at all until you have negotiated a fair price.
(9) Options - Dealer-installed options are frequently available at other sources and
much cheaper than buying through the dealer. Often, they are unnecessary (like rust
proofing), cheaper if done yourself (like fabric and paint protection) and sometimes
even void your warranty (like undercoating). If there are options already on a car that
you don't need, tell them to remove the options. Many times they will just leave them
on and not charge you.
(10) Road Test - This is one of the most overlooked steps in buying a car (particularly
a used car). When you road test a car, ROAD TEST THE CAR! Drive it as closely as
you can to your actual driving conditions: stop and go traffic, long trips, highway
acceleration, rough roads, etc. Turn the radio off and listen carefully. Try every knob
and switch. Leave the salesperson behind if possible; if not ask him or her to be quiet
and even sit in the back seat. If you are considering buying a used car, be sure to have
a trusted independent mechanic check it out before you make the purchase.
SHOW SLIDE 7-18: MORE NEGOTIATING TIPS
(11) Extended Warranty - They are meant to take over when the manufacturer's
warranty runs out. New cars have excellent reliability, often making an extended
warranty completely unnecessary. If you do decide to purchase an extended warranty,
shop around. This is something you can always do later.
(12) Best Time to Buy - There is absolutely no consensus among experts as to when
is the best time to buy. Therefore, buy only when you need a new vehicle and have
done all of your homework.
(13) Walk Away - If you don't like what you hear, don't be shy about turning around
and leaving. Remember: It's your money and your decision!
(14) Don't Rush - Never buy the first thing you see. Sleep on such a major decision
overnight. There will always be others to choose from if "your car" is sold.
SHOW SLIDE 7-19: TRICKS OF THE TRADE
Most salespeople are reasonable, honest individuals. Some, however, are not above
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techniques designed to pressure you into making a commitment. Be aware of these
tactics. Should you encounter them, ask to see a different salesperson, or simply
leave.
(1) Bait and Switch. The dealer advertises a certain car or model at an unbelievable
low price. Problem is that car has just been sold, but the salesman will show you more
expensive models.
(2) Mutt and Jeff. This is like "good cop, bad cop" where the salesman is the good guy
and the sales manager is the bad guy. They may even stage fake arguments in front of
you. Once you believe the salesman is on your side, you become an easy mark.
(3) Low-Balling. Here the salesperson quotes you a price well below the going market.
This will get you to return before you buy elsewhere, at which time the "bad old sales
manager" just won't let the car go for the low ball price given you (verbally, of course)
by the salesperson.
(4) High-Balling. In this twist, the salesperson quotes you a price for your trade-in that
is significantly above fair market value. Of course when you return to actually do the
deal, that trade-in value won't be approved by the "nasty old manager."
(5) Put-to-Ride. Here the salesperson convinces you to take the car home for the night
or even the weekend. You'll have to leave your potential trade-in with the dealer (so
you can't show it to other dealers). They want you and your family to become attached
to the car. Also, you may feel pressure to buy, less your friends think you couldn't
afford the "new" car you were driving.
(6) Padding. This involves adding charges for things such as undercoating, rust
proofing, protection packages, etc. to the contract before you sign it. Negotiate these
out of the contract before you sign.
(7) Name-Dropping. Be leery if the salesperson uses the name of someone you know,
or may know of, as a third-party endorsement of the dealership.
(8) Ownership. Be aware of any comments the salesperson makes about "your" car.
The idea is to get you to believe that the car actually is, or at least should be "yours,"
and you join the salesman to overcome any obstacles to "rightful" ownership.
(9) Fixed-Price. If a dealership claims to offer only one firm fixed-price, you can bet the
invoice has been marked up considerably and/or there are a lot of unnecessary add-
ons (padding). Turn to leave and see if the price becomes "un-fixed" before you get to
the door.
SHOW SLIDE 7-20: FINANCING
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There are a number of places to finance your new car. Be choosy. Rates could differ
greatly depending on where you go.
(1) Credit Unions - A good place to look because of their nonprofit status and
competitive terms. By law, federal credit unions can only calculate interest using the
"simple" method. Also, your credit union may have an in-house buying service
available. You must be a member and have fairly good credit.
(2) Banks - Usually the next best thing after a credit union, but still requires good
credit.
(3) Auto Dealerships - Usually don't have the amount of cash on hand needed to
finance a purchase, so they commonly have a relationship with a finance company for
this purpose.
(4) Finance Companies - These vary widely in interest rates, and often cater to credit
risks by charging very high rates. Some are affiliated with a particular manufacturer
and can have special rates as incentives.
SHOW SLIDE 7-21: FINANCE CHARGES
Finance Charges. You'll need to know some financing terms in order to understand
your financing. First, let's talk about different types of interest. Interest is expressed as
an Annual Percentage Rate (APR) but is computed in several different ways.
SHOW SLIDE 7-22: Add-On or Simple Interest?
Add-on interest . Interest for the total amount of the loan is computed for the length of
the loan and added to the principal. This is an expensive option, since you pay interest
on the entire loaned amount for the entire year, even though you are reducing the
balance you owe each month. For example, financing $1000 for one year at 12% add-
on interest would result in a finance charge of $120.00.
Simple interest - This is paid on the outstanding balance only, which is by far the most
reasonable to the consumer. Credit unions are required by federal law to charge
simple interest only. For example, financing $1000 for one year at 12% simple interest
would result in a finance charge of $66.19.
SHOW SLIDE 7-23: USURY LAWS
In some states there are no usury laws; laws that limit the amount of interest that can
be charged on a loan. Know what the limits are in your state and read your contract
thoroughly before signing. As we discussed earlier, the Federal Truth-in-Lending law
requires that the Annual Percentage Rate (APR) be disclosed in the financing
documents. Read the fine print and have legal review your contract for free.
SHOW SLIDE 7-24: CONTRACTS
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Dealers make a profit from the sale of the car, as well as from extra fees, options, and
services they add to the contract. Carefully considering which options or services you
need ahead of time will help avoid unnecessary expense. If you are not prepared, the
first you will hear of some of the extra profit-makers will be when negotiating the
contract. Let's look at some practices regarding your contract to purchase a car.
(1) Read the Fine Print. Be sure you understand every word on the contract. Take it
to your Legal Services Office for an explanation before you sign. If the dealer refuses
to let you take it with you before signing, WALK AWAY; this is a sure sign something is
not quite right.
(2) Federal Truth-in-Lending Disclosures. Federal law requires these boxes to have
certain appearance and to include the annual percentage rate, total finance charge,
total amount financed, total of payments, and the sales price. Look for, read, and
understand all of them.
(3) Physical Damage Insurance. This is required, but can almost always be obtained
elsewhere more cheaply. The property liability insurance offered by some dealers is
only for their protection, not yours; in the event the car is totaled, it will compensate
them for their loss and do nothing for you.
(4) Credit Life/Disability Insurance. Credit life or disability insurance is seldom
necessary for members of the military. Often it is very high-priced for the amount of
coverage involved and protects the only the dealer or finance company.
(5) Options - Examine these carefully and ensure you really need it, and it cannot be
obtained more cheaply elsewhere (they usually can).
SHOW SLIDE 7-25: OTHER CONTRACT TIPS
(1) Taxes, License, Registration, Title, And Processing Fees. Try to pay as many of
these up front as possible, to avoid having to pay interest on them if they are included
in the financing. Be sure they are itemized so that you know which fees are truly the
government fees and which are processing fees (pure profit for the dealer).
(2) Power of the Pen. If you don't understand or approve of something in the contract,
line it out and initial it. This legally removes the item. Better yet, demand a new
contract with the offending items removed.
(3) Don't Leave Any Blanks. Everything should be filled in, and items left off should
read "$0.00", "N/A," be lined out, or otherwise denoted. Something simply left blank
could be filled in later to your detriment.
(4) Take it to Legal Before Signing It. If you aren't 100% sure of every word in the
contract, take it to legal for an explanation BEFORE YOU SIGN IT! Again, if the dealer
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refuses to let you take it with you before signing, walk away - this is a sure sign
something is wrong.
SHOW SLIDE 7-26: LEASING CONSIDERATIONS
We've discussed the purchasing aspect of vehicles, now let's look at another possible
option. Leasing. Again, you need to do your homework before making any decisions.
There are numerous options and plans to choose from. Before deciding to lease there
many things to consider.
To Lease or Not to Lease. That's the choice you face when mulling over makes and
models and which car deal best meets your needs. Leasing a car is not the same as
buying one. When you buy, you own the car. Customizing is not allowed on leased
vehicles. When you lease, you pay to drive someone else's. Although leasing can
involve lower monthly payments than a loan, at lease end you will have no ownership
or equity in the car.
Ask whether extra charges will be assessed for excessive mileage, wear and tear,
disposition and early termination. Find out the amount of these charges. In most
cases leases restrict taking the vehicle out of state or out of the country. Auto
insurance costs may be higher. Make sure you ask the question.
SHOW SLIDE 7-27: NEGOTIATING A LEASE
Negotiate all the lease terms, including the price of the vehicle. Lowering the lease
price will help reduce your monthly payments. Get all the terms in writing.
(1) Bargain on Price and Mileage. Just like a purchase, lease costs are negotiable.
Bargain for the best cost and mileage prices.
(2) Pay fees up front. It will be to your long-term financial advantage to pay any fees
up front if possible, including security deposits, taxes, destination charges, etc., to
avoid paying finance charges on them.
(3) Understand your lease. Before you sign the deal, take a copy of the contract to
Legal Services for review. This step is crucial to ensuring you understand the terms
completely.
SHOW SLIDE 7-28: CONSUMER PROTECTION
Consumers have some rights under federal laws, but additional rights vary from state
to state. Once again, the best legal preparation is to research the car purchase and
know what you are agreeing to before signing any contracts.
(1) State Lemon Laws. Most states have a Lemon Law, which enables consumers to
get either a new vehicle or get their money back when the vehicle cannot be repaired
to conform to the standards of the warranty. Some states also have Lemon Laws for
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used cars.
(2) Odometer Reading. It is illegal to ever turn back or reset an odometer, even if a
new engine is installed on the car. A statement of the odometer miles is required with
every purchase. Average mileage per year in America is 15,000 miles, and the
Attorney General estimates that one-third of all vehicles have had their odometers
spun. The DMV can provide you with the number of owners your vehicle has had, and
this information, plus the age and condition of the car, can help you estimate whether
the mileage is suspiciously low.
(3) "As Is" vs. Implied/Expressed Warranty. This sticker is required by Federal law to
be placed in the window of all used cars sold by dealers. For your own protection, any
used car should be inspected by an outside mechanic before you buy and any
promises made by a dealer should be put in writing. Very few assurances are provided
by "implied" warranties and you want everything to be "expressed."
(4) Magnuson-Moss Warranty Act. This is a federal law that protects the buyer of any
product that costs more than $25.00 and comes with an express written warranty. This
law applies to any product that you buy that does not perform as it should, including
cars. A consumer may pursue legal action in any court of general jurisdiction in the
United States to enforce rights under this law.
SHOW SLIDE 7-29: COMPLAINT RESOLUTION
Complaint Resolution. If you experience a problem, you should follow these
guidelines:
(1) Speak to the dealer first. In many cases, dealers have a reputation to protect and
may be willing to quickly resolve problems at this level.
(2) If the dealer is part of a chain, speak next to the regional representative of the
company since he or she also has an interest in preserving the company's good name.
(3) If you don't get resolution from the regional rep, you should contact the
manufacturer directly and address your complaints.
Check on Learning: SHOW SLIDE 7-30: CHECK ON LEARNING
NOTE: Conduct a check on learning and summarize the
learning activity.
SHOW SLIDE 7-31: CHECK ON LEARNING
NOTE: Click enter for the answer to appear on slide.
Question: What should you consider when evaluating a car
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dealer?
Answer: c. Years in business
SHOW SLIDE 7-32: CHECK ON LEARNING
NOTE: Click enter for the answer to appear on slide.
Question: The Manufacturer’s Suggested Retail Price
(MSRP) can be found in what publication?
Answer: b. Kelly Blue Book
SHOW SLIDE 7-33: CHECK ON LEARNING
NOTE: Click enter for the answer to appear on slide.
Question: When should you walk away from a car deal?
Answer: d. All of the above
SHOW SLIDE 7-34: CHECK ON LEARNING
NOTE: Click enter for the answer to appear on slide.
Question: True or False. You should always finance your
car through the auto dealership.
Answer: False
SHOW SLIDE 7-35: CHECK ON LEARNING
NOTE: Click enter for the answer to appear on slide.
Question: True or False. You should always compute your
Debt-to-Income Ratio before you take out any loan.
Answer: True
SHOW SLIDE 7-36: CHECK ON LEARNING
NOTE: Click enter for the answer to appear on slide.
Question: Which of the following is the best way to
determine how much you can afford when buying a car?
Answer: c. Refer to your spending plan
SHOW SLIDE 7-37: CHECK ON LEARNING
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NOTE: Click enter for the answer to appear on slide.
Question: A warranty that does not allow for future auto
repairs once you purchase a car is called?
Answer: c. An “As Is” Warranty
SHOW SLIDE 7-38: CHECK ON LEARNING
NOTE: Click enter for the answer to appear on slide.
Question: True or False. The terms of an auto lease
cannot be negotiated.
Answer: False
Review Summary: SHOW SLIDE 7-39: SUMMARY
During this lesson we discussed how to be a more informed
consumer when purchasing a vehicle. We covered the
steps you should take as part of the car-buying process,
including determining what you can afford, researching the
right car for you, selecting a dealer, negotiating a contract,
and your legal rights as a consumer. Various sources of
assistance you may rely on were also discussed at several
points in the lesson.
TLO - LSA 8. Learning Step / Activity TLO - LSA 8. Meeting Your Insurance Needs
Method of Instruction: Discussion (Small or Large Group)Mode of Delivery: Resident Instruction
Instr Type (I:S Ratio): Contractor, (1:25)Time of Instruction: 30 mins
Media Type: Handout / PowerPoint PresentationOther Media: Unassigned
Security Classification: This course/lesson will present information that has aSecurity Classification of: U - Unclassified.
SHOW SLIDE 8-1: MEETING YOUR INSURANCE NEEDS
Managing risk is a serious business and a big part of managing your financial future.
Insurance should be a major part of your risk-management strategy. What is
insurance, and how does it work? Insurance is the transfer of risk for a loss you
cannot afford to a third party (the insurance company) in exchange for your payment of
premiums to the company. In this lesson, we will discuss the different types of
insurance and how to define your individual insurance needs. We will briefly review
some of your insurance requirements and identify scams, frauds, and high-pressure
tactics often associated with the insurance industry. And, as in all our lessons, we will
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tell you where to go for assistance when you need it.
SHOW SLIDE 8-2: TYPES OF INSURANCE
The Four Types of Insurance. There are four types of insurance:
Renter’s/Homeowners; Automobile; Life; and Health.
SHOW SLIDE 8-3: RENTER’S INSURANCE
Renter’s Insurance. Renter's insurance covers the loss of your possessions due to fire,
theft, or storm and provides you personal liability protection. Many of you will need this
type of insurance when you rent an apartment, house, store your possessions in a
storage unit, or if you live in government quarters. You should always have your
personal property insured. This type of insurance does not cover the structure, since
you don’t own the property.
SHOW SLIDE 8-4: HOMEOWNER’S INSURANCE
Homeowner’s Insurance. Homeowner's insurance is a combined policy that provides
coverage for fire, windstorms, or theft as well as some level of liability protection. The
premiums are relatively low and the policy covers a particular structure and its
contents. If your dog bites a neighbor, a homeowner's policy will cover the medical
expenses and damages awarded as a result of a lawsuit. It is mandatory coverage if
you own a home with a mortgage. If you don't want to lose all of your savings in a fire,
tornado, or lawsuit you want to have this coverage. Certain risks like earthquake,
flood, war, or nuclear accident are usually not covered. These coverages are available,
often for an additional premium.
SHOW SLIDE 8-5: AUTOMOBILE INSURANCE
Automobile Insurance. Automobile insurance provides five basic protections;
Collision, Comprehensive; Liability; Medical; and Uninsured/Underinsured Motorists.
To make informed decisions about your particular needs, you must understand what
each of these does for you.
Collision. Collision coverage pays for damage done to your car by YOU. It has a
separate deductible and premium. Collision coverage is expensive as the probability of
damage from collision is the highest risk of car ownership. If you finance your car, the
lender will require this insurance, most likely with a very low deductible. Most
deductibles are $250 to $1000. The higher the deductible, the lower the premium. If
you have the cash, raise the deductible. Put the money you save into a savings
account.
Comprehensive. Comprehensive covers damage done by OTHERS, or damage while
you are not in the car, such as vandalism, broken glass, and so forth. Like Collision
coverage, Comprehensive has a separate premium and deductible.
Liability. This is the most important part of your coverage. It insures the damage you
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do to the "other guy". Physical damage to his/her car, and any lawsuit you may
encounter. Liability coverage is mandatory for all cars in every state. Liability is less
expensive than collision (unless you are under 25 or have some traffic tickets) yet it is
the most important coverage you can carry. Buy all that you can afford. A judgment
against you can follow you for the rest of your life - make sure you have enough liability
coverage.
Medical. This portion of your policy covers you and your passengers for immediate
medical treatment regardless of who caused the accident. Typical coverage here
ranges from $1,000 to as high as $10,000. It is very inexpensive and provides
immediate help.
Uninsured/Underinsured Motorist. You will need this coverage in the event that the
person who hits you has little or no insurance. If this happens, your insurance
company will pay you. They will then sue the uninsured/underinsured driver and try to
get any assets he may have, but the important point is you don't have to do that. If you
carry this coverage, your insurance company does it for you.
SHOW SLIDE 8-6: AUTO INSURANCE TIPS
Automobile Insurance Tips. Lastly, there are a few tips on auto insurance. If you get
traffic tickets or have several accidents, you will have to pay a much higher rate. In
fact, if your driving record is so bad that your carrier cancels your insurance, you may
have to pay a very high rate for what is called the "assigned risk pool" of bad drivers.
Shop for insurance. There are a lot of different rates. If you have had drivers training,
get the certificate and provide it. Most companies will reduce your premium. Anti-theft
systems can reduce your premium as well. Carry as high a deductible as your cash
situation, or your lender will allow. Carry as much liability as you can afford.
SHOW SLIDE 8-7: LIFE INSURANCE
Life Insurance. Life Insurance pays someone else if you die. Simply put, it insures
your future income. If you don't have anyone depending on you for their financial well
being, then you don't need life insurance. If you do, then you need to understand it and
know how to calculate how much and what type you need.
Determining your life insurance needs. Over the next 2-3 years, many of you will
marry, and many of you will start families. So listen up. You can take care of your
family and it is a profound responsibility to do so. Widows or widowers and children of
men and women who did not prepare suffer greatly.
NOTE: Refer students to page 10 of their student handout to complete the
“Determining the Life Insurance Need’s” exercise.
SHOW SLIDE 8-8: TYPES OF LIFE INSURANCE
Types of life Insurance. If you decide you need additional life insurance over and
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above the maximum you already get in your Army SGLI coverage, you will need to
understand the various types available to you. There are two basic types, Term
insurance and Permanent insurance.
SHOW SLIDE 8-9: TERM LIFE INSURANCE
Term Life Insurance. The advantages of term policies include:
(1) Term premiums are lower than those for permanent insurance so you get more
insurance coverage for less money. This allows you to buy more coverage when you
need it the most, such as when you have young children.
(2) Because term provides insurance for a specific period of time, it is ideal for
covering specific financial needs such as covering your life until your children are
through college, until they are self-supporting, or covering your life until you pay off
your mortgage.
The disadvantages of term policies include:
(1) Premiums increase every time a policy is renewed, so the cost of term insurance
can become prohibitive as you near your late 50s and 60s.
(2) Term life doesn't provide a savings feature known as cash value. Term policies
only pay benefits if you die while the policy is in force.
(3) If your insurance company wants you to take a medical exam when you want to
renew your policy, you may be turned down if your health condition has deteriorated.
(4) You could outlive your coverage, because term insurance is generally not
renewable after age 70 or 75, depending on your state’s insurance regulations.
SHOW SLIDE 8-10: Serviceman’s Group Life Insurance (SGLI)
Serviceman’s Group Life Insurance (SGLI). A term policy you should be aware of is
your Serviceman's Group Life Insurance (SGLI). It is provided to each member of the
Army for the ridiculously low price of 65 cents per ten thousand per month. It can
provide up to $400,000 in life insurance and includes a mandatory rider for Traumatic
Injury Protection Under Servicemembers' Group Life Insurance (TSGLI) and should be
your first life insurance consideration. TSGLI payments are designed to help
traumatically injured Servicemembers and their families with financial burdens
associated with recovering from a severe injury. TSGLI payments range from $25,000
to $100,000 based on the qualifying loss suffered. SGLI has also expanded to include
Family Coverage. Reservist and National Guardsmen qualify for full SGLI if they drill
12 times a year.
SHOW SLIDE 8-11: SGLI-FAMILY COVERAGE
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SGLI-Family Coverage. Spouses and children of active duty members, who are listed
on the service member's personnel file, are eligible for low cost insurance coverage.
Family coverage is available only to members insured under the SGLI program. It is
not available to those insured under the VGLI program. If you are covered under full-
time SGLI, you are eligible to insure your spouse, regardless of whether your spouse is
on active duty, retired, or is a civilian. Coverage starts at $10,000 and is available in
increments of $10,000 up to $100,000 at a cost of $0.50 per $10,000 of coverage for
spouses under the age of 35. Children are automatically covered for $10,000 at no
cost to the service member. SGLI family coverage is AUTOMATIC unless it is
declined, in writing. To do so, you must obtain a waiver statement from your personnel
office.
SHOW SLIDE 8-12: SGLI and other Life Insurance
If you decline SGLI (not recommended) or decide to add to it, ensure that any other
policies:
(1) Specifically cover loss of life due to war and combat.
(2) Cover loss of life due to suicide.
SHOW SLIDE 8-13: SURVIVOR BENEFITS (While on Active Duty)
In addition to SGLI, the Army and the American taxpayer provide these benefits:
(1) The death gratuity is $100,000, (100% tax free) and is paid to the next of kin for the
following armed service members: A member of an armed force under his jurisdiction
who dies while on active duty or while performing authorized travel to or from active
duty; A Reserve of an armed force who dies while on inactive duty training (with
exceptions); Any Reserve of an armed force who assumed an obligation to perform
active duty for training, or inactive duty training (with exceptions) and who dies while
traveling directly to or from that active duty for training or inactive duty training; Any
member of a reserve officers' training corps who dies while performing annual training
duty under orders for a period of more than 13 days, or while performing authorized
travel to or from that annual training duty; or any applicant for membership in a reserve
officers' training corps who dies while attending field training or a practice cruise or
while performing authorized travel to or from the place where the training or cruise is
conducted; or A person who dies while traveling to or from or while at a place for final
acceptance, or for entry upon active duty (other than for training), in an armed force,
who has been ordered or directed to go to that place, and who Has been provisionally
accepted for that duty; or Has been selected for service in that armed force.
(2) Burial Benefits. DoD will process, transport, and inter remains. It provides a casket,
vault and headstone for interment in a government cemetery or may reimburse costs
of up to $7,700, if the family elects to make private arrangements. Transportation to
the burial for the immediate family is provided by the government at no charge, or may
82
be reimbursed up to the government rate. It is recommended that family members
make no travel arrangements until they have spoken with their casualty assistance
officer. The casualty assistance officer will guide the family through the specific
requirements and paperwork for the particular branch of service involved. Specific
information about burial benefits and military honors is available at:
www.militaryfuneralhonors.osd.mil.
(3) Round Trip Travel and BAH. P.L.109-163 made permanent the extended time that
surviving families may occupy government quarters or be paid housing allowances
from 180 to 365 days. Those eligible for Basic Allowance for Housing (BAH) will be
paid in one lump sum. Survivors are also authorized one relocation move at
government expense which must be completed within one year following the death of
the service member. Spouses are eligible for Commissary, Exchange, and Morale,
Welfare and Recreation activities privileges indefinitely unless they remarry. Children
maintain eligibility until age 18 or 23, if still enrolled full-time in college. Military
exchanges forgive Military Star credit card debt owed by families when their service
member is killed in combat. Survivors are also eligible for legal assistance advice on
benefits and entitlements, insurance or taxation.
(4) Arrears in Pay and Leave. Arrears of Pay is a one-time payment made to a
beneficiary after your death. The arrears of pay payment to your beneficiary will
include: The pro-rated amount of your final month’s pay, and Any other money owed to
you at the time of your death to include accumulated leave.
(5) Social Security. A one-time payment of $255 can be paid to the surviving spouse if
he or she was living with the deceased. If there is no surviving spouse, the payment is
made to a child who is eligible for benefits on the deceased’s record in the month of
death. Certain family members may be eligible to receive monthly benefits, as well.
For more information go to www.socialsecurity.gov or call toll-free, 1-800-772-1213.
(6) Dependent’s Indemnity Compensation (DIC). DIC is a monthly benefit paid to
eligible survivors of the following: Military service member who died while on active
duty, OR Veteran whose death resulted from a service-related injury or disease, OR
Veteran whose death resulted from a non service-related injury or disease, and who
was receiving, or was entitled to receive, VA Compensation for service-connected
disability that was rated as totally disabling for at least 10 years immediately before
death, OR since the veteran's release from active duty and for at least five years
immediately preceding death, OR for at least one year before death if the veteran was
a former prisoner of war who died after September 30, 1999.
(7) DIC Eligibility. The surviving spouse is eligible if he or she was married to a service
member who died on active duty. Dependency and indemnity compensation is paid to
a surviving spouse at the monthly rate of $1,254.19. Add $310.71 per child for each
dependent child under age 18.
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SHOW SLIDE 8-14: PERMANENT LIFE INSURANCE
Permanent Life Insurance. The other type of life insurance, other than term, is
permanent insurance. Permanent insurance provides lifelong protection. As long as
you pay the premiums, the death benefit will be paid. They are designed for you to
keep over a long period of time. If you don't intend to keep the policy for the life, this
may be the wrong type of insurance for you. There are a variety of permanent policies;
whole, adjustable, universal, and variable.
SHOW SLIDE 8-15: PERMANENT LIFE INSURANCE
Permanent Life Insurance. The advantages of permanent insurance are:
(1) You lock in a premium rate at whatever age you start the policy and the benefits
are guaranteed for as long as you live.
(2) Your policy accumulates cash value that grows tax-deferred. Your premiums are
invested by the insurance company in stocks, bonds, real estate, venture capital and
other funds, and you receive a return on your money in the form of annual dividends,
which increase your cash value.
(3) You can tap that cash value while you are alive with low-cost loans. Any
outstanding loans will reduce your policy’s cash value by the amount of the loan. Or
you can withdraw the cash value, though you will have to pay income taxes on those
withdrawals. You can also convert your cash value into an annuity that will provide
fixed-income throughout your retirement years.
(4) If you surrender your policy by discontinuing to pay premiums, you will receive any
accumulated cash value.
(5) Dividends can be used to pay your premium in whole or in part.
(6) Once you have passed the medical tests and have been issued a policy, your
policy cannot be cancelled for medical or any other reasons if you continue to pay the
premium.
The disadvantages of permanent insurance are:
(1) It is far more expensive than term insurance. This means that you can usually
afford far less permanent coverage than you can afford term. If you start a permanent
policy and then must drop it because you cannot afford the premiums, you will have
lost a great deal of money.
(2) Insurance companies invest your cash value quite conservatively so it is possible
that you could earn higher returns on your own if you are a skillful and knowledgeable
84
investor.
(3) The return you earn on your cash value is determined by current interest rates in
money markets. So if interest rates are high, your cash value will grow much more
quickly than if interest rates are low. Periodically, the insurance company deducts its
expenses and a mortality charge from your cash balance. The mortality charge is the
amount of money, based on a premium rate per thousands of dollars of death benefits,
required to provide you with life insurance. The company will guarantee a minimum
interest rate and a maximum mortality charge. Some will also guarantee a maximum
expense charge.
SHOW SLIDE 8-16: ARMY HEALTH COVERAGE
Army Health Coverage. The Army health umbrella covers all of your Medical and
Dental needs, while also affording low-cost options to your dependents.
(1) Medical Coverage. Health insurance covers several things, including doctors
visits, diagnostic tests, surgery, hospital stays, and prescription drugs. It also includes
disability insurance and policies that provide "no-strings" payments for such dreaded
diseases as cancer. It is probably the least of your insurance concerns.
While you are on active duty, the U.S. Army is going to take care of the health care
needs of you and your family. Army medical coverage is furnished by TRICARE
providers. They might be located in a TRICARE facility or a local Military Hospital. If
there are no care facilities local to you or your dependents, you could be responsible
for a small percentage of medical costs if care must be obtained in the civilian
environment. If you have large medical considerations a TRICARE supplement is
available. Such policies usually have a very low monthly cost.
(2) Dental Coverage. The TRICARE Dental Program (TDP) is a voluntary, high-quality,
cost-effective dental care benefit for eligible Family members of all active duty Soldiers
as well as Reserve Component Service members and/or their Families. TDP is offered
by the Department of Defense (DoD) through the TRICARE Management Activity
(TMA). The Metropolitan Life Insurance Company (MetLife) administers and
underwrites TDP for the TMA.
(3) TRICARE Reserve Select (TRS) is available worldwide to most Selected Reserve
(National Guard and Reserve) members and their Families when the military member
is NOT on active duty orders. It is less expensive than many healthcare plans and it
has co-pays and deductibles. As with other insurance you should shop around to find
out what has the best coverage and cost for you. For 2015, Member Only-$50.75 per
month; Member and Family-$205.62. per month.
SHOW SLIDE 8-17: FRIVOLOUS INSURANCE
Frivolous Insurance. There are several types of insurance policies that you should
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probably be quite leery of:
(1) Hospital Indemnity. This guarantees you continue to be paid while hospitalized. As
an active duty member of the military, you have little need to worry about this
coverage.
(2) Dreaded Disease(s). These policies, written for specific diseases such as cancer,
usually only pay for inpatient care. If you ever need a hospitalization policy, it should
cover required care regardless of cause.
(3) Student Accident Insurance. These policies normally have very low limits on what
they will pay. As a student you are medically covered by the Army. Your dependents
are covered also.
(4) Credit Life Insurance. These policies offer to pay off specific debts should you die
or, in some cases, become disabled. They are profit generators for the companies
selling them and seldom are a good value.
(5) Credit Card Loss. These policies are often quite expensive, and you should know
that your liability is generally limited to $50 per card.
SHOW SLIDE 8-18: MORE FRIVOLOUS INSURANCE
(6) Rental Car Collision (CDW). If you own a car, chances are your policy will cover
you when you are driving a rental. It also likely that your credit card provides some
degree of coverage. Be sure you really need this expensive addition to the cost of
renting a car before you agree to it at the counter.
(7) Accidental Death or Dismemberment. This feature, for an additional premium,
doubles your life insurance payoff if you die from an accident. Your insurance amount
should be based on your survivor's requirements, regardless of how you die. Also keep
in mind that most people, even those who die young, do so of natural causes.
(8) Flight Insurance. For example, you pay $14 per flight for a million dollar payoff if
you die on the flight. Better to buy 14 lottery tickets. You don't have to die to collect if
you hit the jackpot.
(9) Pet Insurance. Policies cost from $40 to $100 per year. They often don't cover
leukemia or other major illnesses.
(10)Extended Warranties. Most major purchases come with sufficient warranties to
protect you in the event you purchase a "lemon". Companies wouldn't offer these
extended warranties if they didn't think they would make money off them. Guess where
they make their money?
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SHOW SLIDE 8-19: INSURANCE SCAMS
Most individuals who work in the insurance industry are honest and ethical. However,
young Soldiers are often targeted by those who are not. A recent investigation by the
DOD Inspector General documented several instances of improper insurance sales
practices including misleading presentations, presentations by unauthorized personnel,
and agents trying to sell during duty hours or in the barracks.
Two tactics known to have been used by unethical salespersons are convincing the
young Soldier to drop SGLI because it does not build cash value, and claiming non-
existent dependents to decrease income tax withholding in order to "invest" the
"additional" take-home pay in high-cost cash value life insurance. In this latter case,
the Soldier gets a rude shock on April 15th when he or she discovers they must write a
sizable check for income taxes.
SHOW SLIDE 8-20: SOUND ADVICE
Here are some tips to help you through the insurance jungle. As with any major
purchase, don't be rushed in to making a decision. Any "good deal" available today will
likely be there tomorrow. Sleep on it, and be sure to have any contract reviewed by
Army Legal Services PRIOR to signing. Be sure to consider your military benefits
when determining your insurance requirements and don't get pressured into a
decision, like buying auto insurance at a car dealership. Shop hard using several
agents and the internet. A few hours spent now can mean thousands of dollars over
your lifetime.
SHOW SLIDE 8-21: SOURCES OF ASSISTANCE
As a member of the military, you have several sources of help in determining your
insurance needs and meeting your requirements. Army Legal Services is always
ready to review any contract your are considering. In addition, there are several
internet sites, not aligned with any insurance company that will assist you in finding the
lowest cost insurance policies to meet your needs.
Check on Learning: SHOW SLIDE 8-22: Check on Learning
NOTE: Conduct a check on learning and summarize the
learning activity.
SHOW SLIDE 8-23: Check on Learning
Q: What does Renter’s Insurance cover?
a. Your possessions and your house
b. Your possessions only
c. Your House only
d. Your vehicle
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A: b. Your possessions only
SHOW SLIDE 8-24: Check on Learning
Q: What is the most important, mandatory coverage in your
auto insurance policy?
a. Collision
b. Liability
c. Medical
d. Uninsured/Underinsured
A: b. Liability
SHOW SLIDE 8-25: Check on Learning
Q: What is one way to reduce your auto insurance
premium?
a. Attend a driver’s training class
b. Possess more than two tickets
c. Lower your deductible
d. Double your liability limits
A: a. Attend a driver’s training class
SHOW SLIDE 8-26: Check on Learning
Q: Permanent life insurance which is designed to provide
life long protection is called?
a. Whole Life
b. Adjustable Life
c. Universal Life
d. All of the Above
A: d. All of the Above
SHOW SLIDE 8-27: Check on Learning
Q: What is the maximum amount of Serviceman’s Group
Life Insurance (SGLI) coverage available to Soldiers?
a. $100,000
b. $150,000
c. $200,000
d. $400,000
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A: d. $400,000
SHOW SLIDE 8-28: Check on Learning
Q: True or False. You should never buy any insurance
under pressure.
A: True
SHOW SLIDE 8-29: Check on Learning
Q: True or False. SGLI family coverage is automatic
unless waived in writing.
A: True
Review Summary: SHOW SLIDE 8-30: SUMMARY
In this lesson, we discussed a subject of vital interest to you
for the rest of your lives - insurance. We covered four
primary types of insurance with particular emphasis on the
different automobile policy provisions and types of life
insurance available. We reviewed the military benefits that
you should consider when determining your personal
insurance requirements and we talked about some frivolous
insurance you might be tempted to purchase. We
concluded this lesson by telling you where you can find
assistance with your insurance needs.
TLO - LSA 9. Learning Step / Activity TLO - LSA 9. Investing / Thrift Savings Plan (TSP)
Method of Instruction: Discussion (Small or Large Group)Mode of Delivery: Resident Instruction
Instr Type (I:S Ratio): Contractor, (1:25)Time of Instruction: 1 hr 25 mins
Media Type: PowerPoint PresentationOther Media: Unassigned
Security Classification: This course/lesson will present information that has aSecurity Classification of: U - Unclassified.
SHOW SLIDE 9-1: INVESTING/THRIFT SAVINGS PLAN (TSP)
SHOW SLIDE 9-2: TODAY’S RETIREMENT CONCEPT
Retirement has changed significantly from the past. Many people are spending 20, 30,
or even more years retired. They retire younger, live longer, and are usually quite
healthy. Retirees not only live independently, but also enjoy more of the fruits of their
labors. Retirement income may need to equal or, depending on activities, even
exceed pre-retirement income.
SHOW SLIDE 9-3: REGARDING INVESTMENT INFORMATION
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Keep in mind as we start discussing investments that we will be providing you with
very basic investment information. We are not financial-planners, nor are we qualified
to recommend investing in any particular stocks, bonds, or mutual funds. You will
need to make these decisions for yourself as you mature and become more
knowledgeable about investment strategies.
SHOW SLIDE 9-4: SOURCES OF RETIREMENT INCOME
Retirement income is often described as a three-legged stool. The three legs are:
Social Security benefits; Retirement and/or pension payments; and Investment
income.
SHOW SLIDE 9-5: SOCIAL SECURITY
Social Security/FICA. The FICA withholding you see on your Leave and Earnings
Statement (LES) is your Social Security contribution. Persons your age will be eligible
to draw full Social Security benefits beginning at age 67. It will probably be about
$1,300 a month or less in terms of today's dollars. After you have been working for a
year or two, you should ensure the Social Security Administration is tracking your
employment by requesting an Earnings and Benefits Estimate. Go to
www.socialsecurity.gov to get a copy of your Social Security Statement online.
SHOW SLIDE 9-6: TYPES OF RETIREMENT PLANS
Types of Retirement Plans. The second leg of the retirement income stool is
Retirement Benefits and Pensions. Some of you may retire from the military, begin a
second career, and retire again. Others may leave the service prior to retirement and
become employed in the civilian world. In either case, I strongly suggest you examine
an employer's retirement plans and pension benefits when deciding to take, or remain
in, any specific job. At this time in your life you are in the military and we will
concentrate on military retirement benefits. There are two types of retirement plans,
Defined Benefit and Defined Contribution. Today's Army has both.
SHOW SLIDE 9-7: DEFINED BENEFIT PLANS
Defined Benefit Plans. Defined Benefit Plans are the more traditional type. The
employer funds them, and one must usually work a relatively long time to become
eligible for a pension check. The amount of monthly pension is normally based on
salary and the number of years worked, and is guaranteed for life. These plans may or
may not include cost of living increases (Military retirement does).
SHOW SLIDE 9-8: DEFINED CONTRIBUTION PLANS
Defined Contribution Plans. Defined Contribution Plans have become increasingly
popular over the last 20 years or so. These plans allow employees to contribute up to a
certain amount of their salary each month, before taxes, to a fund that they have a
significant amount of control over. Sometimes, frequently in the civilian world,
employers will match a portion of each month's contributions. The most common are
401(k) plans, named after the regulating paragraph in the Federal Income Tax Code.
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There is no guarantee with this type of plan. Many workers have options on how they
want to receive their funds at retirement. The options are a lump sum payout, which
they can then invest for future income; deferment of the distribution for a later date;
converting their funds to an annuity and then receiving periodic payments from the
annuity; or installment payments from their plan. These sums can be quite large,
however, the amount depends on how much the worker has invested, and the earning
of the specific investment plan.
SHOW SLIDE 9-9: TWO TYPES OF DEFINED CONTRIBUTION PLANS
Generally, when money is withdrawn in retirement from a traditional plan, it is taxed. It
is paid with tax deferred dollars and continues to grow tax deferred until withdrawn
when you are taxed on the money you withdraw.
For a Roth plan, when the money is withdrawn in retirement it is not taxed. A Roth
account is paid with after tax dollars and grows tax free, even when withdrawn (some
restrictions apply).
SHOW SLIDE 9-10: MILITARY RETIREMENT PLANS
Military Retirement Plans. Let's briefly summarize the two retirement options, the
"High 36" (High-3) or "CBS/REDUX," that you will have if you retire from the Army.
Members who entered service after 31 July 1986 must choose between the "High-3" or
the "CBS/REDUX" at the 15th year of service. If you decline to make a choice you will
automatically receive the High-3 retirement plan.
Under the High-3 and CSB/REDUX systems a member's pension is based on the
average of the highest 36 month's base pay. So if you retire at twenty years under
these systems you would get a percentage of the average of 36 months (3 years) of
your highest basic pay.
The Multiplier. The multiplier is the percentage of your base pay you receive for each
year of service. For the High-3 systems you earn 2.5% per year of service. That means
you get 50% for 20 years of service up to a maximum of 100% for 40 years.
The multiplier for the CSB/REDUX system is 2% per year for the first 20 years, but you
get an increase to 3.5% for each additional year past 20. That means you get 40% for
20 years, but up to 100% for 40 years. That is a significant difference.
Cost of Living Adjustment (COLA). All three retirement systems have an annual cost
of living adjustment. This is a subtle, yet very important detail. Over the lifetime of your
retirement the cost of living adjustment could more than double your retirement check.
The COLA for the final pay and high-3 systems is determined each year by the
national Consumer Price Index. But the COLA for the CSB/REDUX retirement system
is the Consumer Price Index minus 1%.
For Example: A retiree under the High-3 may see a COLA increase in their retirement
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check of 3.5% in 20XX, while a retiree under the CSB/REDUX plan would get a COLA
increase of only 2.5%. Note: There is one more twist to the COLA and multiplier for the
CSB/REDUX retiree. At age 62 the COLAs and multiplier are readjusted so that the
High-3 and CSB retirees get the same monthly pay. But, CSB/REDUX COLAs for later
years will again be set at CPI minus 1%.
The Bonus. When you reach your 15th year of service, you must choose between
taking the "CSB/REDUX" with a $30K cash bonus (approximately $21K after taxes)
and a 40% pension check, or the High-3 retirement system with no bonus and a 50%
pension check. This is a huge decision and cannot be made without some serious
consideration and a clear understanding of the details. If you select the CSB/REDUX
and you don’t complete the obligation of the twenty-year career, you must repay a pro-
rated share of the bonus.
Check My Benefits on the AKO website to learn more on your retirement options and
calculators.
SHOW SLIDE 9-11: USAR / NG RETIREMENT
Retirement is based on Rank, Points, and “Good” Years (based on your Retirement
Year Ending (RYE) date).
Need 50 points to have a “Qualifying Year” to count for retirement. A qualifying year,
under this system, is a year in which the Soldier earns at least 50 retirement points
during their retirement year. Inactive point credit is earned for inactive duty training,
Reserve membership, equivalent instruction, and correspondence courses. Points are
credited on the following basis:
- One point for each day of active service (active duty or active duty for training).
- 15 points for each year of membership in a Reserve Component (Guard and
Reserve).
- One point for each unit training assembly.
- One point for each day in which a member is in a funeral honors duty status.
- Satisfactory completion of accredited correspondence courses at one point for each
three credit hours earned.
Need 20 Good Years to receive a 20 year letter from HRC and receive retirement
benefit at age 60. National Guard and Reserve Soldiers who complete a minimum of
20 "qualifying" years of service (creditable retirement years) become eligible for retired
pay at age 60. Note: A law passed in early 2008 allows Reserve and Guard members
with 20 or more years to begin drawing retirement benefits before age 60 if they deploy
for war or national emergency. For every 90 consecutive days spent mobilized,
members of the Guard and reserve will see their start date for annuities reduced by
three months. But this law only applies for deployment time served after Jan. 28, 2008.
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Your RYE is based on when you entered service. The retirement year ending (RYE)
date is the annual date that a Soldier's retirement point record is closed out. It is used
when referring to retirement points accounting. The RYE is much like a Reserve
Soldier's "Anniversary" date and is a primary date captured in the Retirement Points
Accounting System (RPAS). The anniversary year periods listed on the AHRC Form
249-E are calculated from an anniversary date. The date to determine the anniversary
year is established by the date the member entered into active service or into active
status in a reserve component per DoDI 1215.07. For Example: entered service on 28
Jan. RYE is 27 Jan. You must earn at least 50 points between 28 Jan-27 Jan each
year.
SHOW SLIDE 9-12: USAR / NG RETIREMENT EARNING POINTS
Earning Points:
- You earn 4 retirement points during drill (IDT). Each drill weekend equals 4 unit
training assemblies and 4 retirement points. That’s 48 points.
- You earn 12-14 retirement points during Annual Training. One point per day. That’s
12-14 points
- You get 15 membership points.
- 48+12+15= 75 (77 if you do 14 days AT)
- 77 points makes a Good Year (minimum of 50).
SHOW SLIDE 9-13: USAR / NG RETIREMENT EARNING MORE POINTS
Earning More Points:
- Additional Duty Special Work (ADSW), Active Duty for Training (ADT, schools),
deployment, mobilization: one per day.
- Correspondence Courses: 1 point for every 3 credit hours.
- Submitting 1380 for non-paid IDT (weekend phases of WLC, ALC, SLC, ILE): one
point per day
- Special categories of paid IDT duty: ATA, RMA, ET
SHOW SLIDE 9-14: USAR / NG RETIREMENT ACTIONS
Actions at 20 Good Years:
HRC sends your 20 year letter/eligibility for retirement. The Secretary of the military
department concerned (Secretary of Homeland Security for the Coast Guard) notifies,
in writing, members of the Reserve Forces who have completed the eligibility
requirements for retirement and receipt of retired pay at age 60. Notice is sent to the
member within one year of reaching eligibility. Reserve Component members generally
have three options upon receiving notice of eligibility:
- Remain in Ready Reserve. Remain in the Ready Reserve and continue to perform
inactive duty training, annual training and active duty for training depending on their
training and pay category, or remain on the active status list of the Standby Reserve
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and continue to perform unpaid training for the purpose of accumulating retirement
points.
- Retire into Retired Reserves-GREY AREA Reservist. A member in this category may
participate in inactive duty training provided:
(1) Such training is at no expense to the Government.
(2) Members are not entitled to pay or retirement points.
(3) No official record of such participation is maintained.
- Resign or ETS. Request discharge from the Reserve Components. A member who
elects to resign or ETS is considered a former member. A former member is defined as
an individual who elected discharge rather than transfer to the Retired Reserve
anytime after receiving notification of eligibility to receive Reserve retired pay at age
60. In the case of a former member, regardless of the system under which the
individual will receive Reserve retired pay, longevity credit ceases on the date the
former member was discharged.
Note: Regardless of the option chosen, the member is entitled to receive retired pay at
age 60, but must apply for it.
SHOW SLIDE 9-15: CALCULATING MULTIPLIER FOR RETIREMENT
Here is an example.
You joined on 01 Jul 1990, and had 2 “bad” years. You would be able to retire on 30
Jun 2012.
Assuming that you earned 77 points every good year and 35 points in the bad years,
you would have a total of 1610 points (77 x 20 plus 35 x 2 which equals 1610). This
would equate to 4.47 years (1610 divided by 360 equals 4.47) for retirement
purposes. Your multiplier would equal 2.5 times 4.47 yielding 11 percent. Your
average monthly base pay for the last 36 months is calculated by adding the base pay
for the last 36 months, then dividing by 36. So, in this example, your monthly
retirement pay would be 11 percent times the average of your last 36 months base
pay.
SHOW SLIDE 9-16: RETIRED PAY EXAMPLE
To calculate your base pay for the last 36 months, take your LES and look at your
base pay for the last 36 months. In this example we will use an E8 pay grade. You’ll
notice that each year, you received a pay raise on 01 January. In this example, the
total base pay received in the last 36 months was $173,685.60. Divide this number by
36 and this will be your average base pay in the last 36 months.
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The multiplier that you use will be based on the number of years served and the plan
that you’re under (High-3 or Redux).
SHOW SLIDE 9-17: EFFECTS OF COMPOUND INTEREST
SHOW SLIDE 9-18: THRIFT SAVINGS PLAN (TSP)
In addition to your Defined Benefit Plan (High-3, CSB/REDUX), you and all other
service members will have access to a Defined Contributions Plan—the Thrift Savings
Plan. We will discuss the basics of TSP. You can go to the TSP website to learn more
about the program and the various investment funds. We’ll look at how it works and
what it can do for you.
Benefits of TSP.
(1) It's easy to enroll and maintain your investment plan.
(2) Costs for management of the program by the TSP Management Board was .029%
per $1,000 invested annually (for 2014).
(3) Money contributed to a Traditional TSP account is Pre-Tax Dollars. It is NOT
counted as taxable income. You will eventually have to pay taxes upon withdrawal.
(4) Money contributed to a ROTH TSP account is taxed when earned. When
withdrawn in retirement, ROTH TSP withdrawals may be tax free.
How to Enroll in TSP. Enroll at the myPay website or by completing and submitting a
paper form.
NOTE: Unit should provide TSP-U-1 forms for the students. At this time, make sure
each student has the form to fill out if they would like.
Your local Finance Office or PAC will have the forms. Forms are also available at
www.tsp.gov. Follow the prompts to download and/or print.
SHOW SLIDE 9-19: THRIFT SAVINGS PLAN (TSP)
TSP Contribution Sources.
(1) You can begin making regular employee contributions at any time. These are
payroll deductions that are made from your basic pay. Each pay period, your agency or
service will deduct your contribution to the TSP from your pay in the amount or
percentage that you indicated when you submitted your contribution election
information.
(2) You can elect to contribute from incentive pay, special pay, or bonus pay, even if
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you are not currently receiving them. These contributions will be deducted when you
do receive any of these types of pay.
(3) You cannot contribute from sources such as housing or subsistence allowances.
(4) If you are receiving tax-exempt pay (i.e., pay that is subject to the combat zone tax
exclusion), your contributions from that pay will also be tax-exempt. You may also
contribute more of your pay to the TSP during the year.
(5) Be aware that if you do contribute tax-exempt pay, your total contributions from all
types of pay must not exceed the Internal Revenue Code (I.R.C.) section 415(c)
annual addition limit for the year. This limit does not include catch-up contributions you
may make during the year.
(6) You cannot make catch-up contributions from incentive pay, special pay, or bonus
pay. You are allowed to use tax-exempt pay to make Roth catch-up contributions but
not to make traditional catch-up contributions.
Select all the contribution sources boxes on the TSP Enrollment Form even if you are
not receiving special, incentive, or bonus pays. If you do not select the special,
incentive, or bonus blocks and then start receiving them you cannot contribute those
moneys into TSP until you resubmit the form.
Especially important is the bonus selection. If you do not select the contributing from
bonus block and you eventually receive one, you cannot put any of the money into
TSP. Once you receive the bonus money you cannot put it into your TSP account.
If you stop contributing from base pay all other sources of contributions stop.
SHOW SLIDE 9-20: THRIFT SAVINGS PLAN (TSP)
TSP Contribution Amounts. You can contribute up to 100% of your base pay and up to
100% of any special pays, incentive pays, or bonuses up to the IRS maximum,
currently at $18,000 per year (2015). If you are age 50 or older, you can make an
additional $6,000 in catch-up contributions. In a combat zone the limit is higher, up to
$53,000 per year (2015). However, contributions to the Roth TSP are still limited to
$18,000. These limits change periodically.
If you are a member of the Ready Reserve and you are contributing to both a
uniformed services and a civilian TSP account as a FERS employee, the elective
deferral and catch-up contribution limits apply to the total amount of employee
contributions you make in a calendar year to both accounts. If you are called to active
duty and make tax-exempt contributions to the TSP while deployed in a designated
combat zone, the sum of the employee and agency contributions to your civilian
account as well as the tax-exempt contributions made to your uniformed services
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account cannot exceed the annual addition limit ($53,000).
Currently there is no employer matching dollars from the Government.
SHOW SLIDE 9-21: THRIFT SAVINGS PLAN (TSP)
Control of your TSP Funds. Your contributions belong to you and you have control
over them. This control is exercised by directing which of six funds your money is
invested in. These funds are known as the G, F, C, S, I and L funds.
SHOW SLIDE 9-22: TSP “G” FUND
The G Fund will invest in Government securities and is guaranteed against loss.
Invested in non-marketable U.S. Treasury Securities with 1 to 4 day maturities.
No risk of loss (negative returns) in "G" Fund.
The "G" fund has never lost money although the rate of return on your investment is
usually between 1.5 and 7%. It has averaged 5.43% since its inception date of
04/01/87.
SHOW SLIDE 9-23: TSP “F” FUND
The F Fund will invest in corporate and Government bonds.
Invested in a bond index fund.
U.S. Government: U.S. Treasury and Agencies.
Mortgage-backed securities.
Rate Of Return - Between (-1.68%) and 18%. It has averaged 6.66% since its
inception date of 01/29/88.
SHOW SLIDE 9-24: TSP “C” FUND
The C Fund will basically track performance of the stock market.
Invested in a Standard & Poor's (S&P) 500 stock index fund.
S&P 500 index contains common stocks of 500 companies that represent the U.S.
stock markets.
Historical Returns Between (-37%) and 37%. It has averaged 10.43% since its
inception date of 01/29/88.
SHOW SLIDE 9-25: TSP “S” FUND
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The S Fund invests in small to medium sized U.S. companies.
Invested in a Wilshire 4500 stock index fund.
Wilshire 4500 index contains all common stocks (except those in the S&P 500 index)
actively traded in the U.S. stock markets on a daily basis.
Historical Returns Between (-38%) and 43%. It has averaged 9.19% since its inception
date of 05/01/01.
SHOW SLIDE 9-26: TSP “I” FUND
The I Fund invests entirely in non-U.S. companies.
Will be invested in a Europe, Australasia, and Far East (EAFE) stock index fund.
EAFE contains stocks that cover approximately 60% of the stock markets of the 20
countries included in the index.
Historical Returns Between (-42%) and 38%. It has averaged 4.51% since its inception
date of 05/01/01.
SHOW SLIDE 9-27: TSP “L” FUND
The L Funds, or "Lifecycle" funds, use professionally determined investment mixes that
are tailored to meet investment objectives based on various time horizons. The
objective is to strike an optimal balance between the expected risk and return
associated with each fund.
The strategy assumes that:
The greater the number of years you have until retirement, the more willing and able
you are to tolerate risk (fluctuation) in your TSP account value to pursue higher rates of
return.
For a given risk level and time horizon, there is an optimal mix of the G, F, C, S, and I
Funds that provides the highest expected return.
Use the L Funds if you are looking for a simple, low maintenance way of investing
money in your TSP account. The L Funds make the investing process easy for you
because you do not have to figure out how to diversify your account or how and when
to rebalance.
The L Funds are designed so that 100% of your TSP account can be invested in the
single L Fund that most closely matches your time horizon (or in the two L Funds
closest to your time horizon). Any other use of the L Funds may result in a greater
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amount of risk in your portfolio than is necessary in order to achieve the same
expected rate of return.
Choose If your target date is:
L 2050 2045 or later
L 2040 2035 through 2044
L 2030 2025 through 2034
L 2020 Now through 2024
L Income If you are already withdrawing your account in monthly payments.
Historical Returns Between (-32%) and 26%. It has averaged 4.42% (L), 5.98 (L2020),
6.56% (L2030), 6.93% (L2040), and 10.83% (L2050) since their inception date of
08/01/05 (L – L2040) and 01/31/11 (L2050).
SHOW SLIDE 9-28: TSP CONTRIBUTION ALLOCATION
After your initial enrollment and election request has been processed, TSP will deposit
your first contribution in to the G Fund.
Once the first contribution is received you will then receive a TSP PIN. You can then
begin making contribution allocations among the various funds using the TSP
Thriftline, Website, or via mail.
Allocations must be made between the funds in increments of 1%. E.g. If you elect to
contribute 3%, you may want to put 1% in the "G" Fund and 2% in the "C" Fund.
SHOW SLIDE 9-29: ADDITIONAL TSP BENEFITS
Loans. Two types of loans can be made from your TSP account, a general purpose
loan, or a loan for a primary residence. All loan payments, plus interest, is paid back
directly into your TSP account. Remember, TSP is an investment for your retirement.
It is not recommended to take a loan from your account as it has a negative impact on
the compound interest feature of the TSP plan.
Rollovers. On separation or retirement you can roll the funds in TSP to a qualified 401k
plan. While on active duty you can rollover a qualified Individual Retirement Account
(IRA) into TSP.
Interfund Transfers. You can move your invested money between the various funds,
once a month, 12 times a year.
Financial hardship withdrawals. Verifiable financial hardship. e.g. Medical bills. All
contributions to TSP will be terminated for six months after a hardship withdrawal.
Contribution allocations. You can increase or decrease the percentage you allocate to
each fund as often as you are paid, or twice a month.
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SHOW SLIDE 9-30: TSP OPTIONS UPON RETIREMENT OR SEPARATION
(1) Leave your money in the TSP. You cannot make further contributions but your
money continues to accrue.
(2) Take a Single payout. The payment is made directly to you after a deduction for
Federal Income Tax as required. Rollover into an IRA or 401k.
(3) Receive Monthly payments starting at age 59 ½. There are substantial penalties
for withdrawing the money prior to 59 ½.
(a) You may decide that you want income from your TSP account every month. You
have a couple of options:
- If you have a specific monthly dollar amount in mind, you can indicate it when
you complete your withdrawal request form. You will receive payments in the amount
that you request until your entire account balance has been paid to you. Note: The
amount of each monthly payment must be at least $25.
- If you want the TSP to compute a monthly amount for you based on your life
expectancy, you can choose that option when you complete your request form. Your
initial payment will be based on your age and your account balance at the time of the
first payment. Each year thereafter, the TSP will recalculate the amount of your
monthly payments based on your age and your account balance at the end of the
preceding year.
(b) You may have certain expenses in retirement that you know will continue
throughout your lifetime. If you need a guaranteed stream of payments to cover some
of those expenses, you could consider purchasing a life annuity. A life annuity is a
monthly benefit that is paid to you every month for the rest of your life. The cost of an
annuity depends on the type you choose and the options and features you select. You
don't have to use your entire TSP account balance to purchase the TSP annuity, but
the minimum purchase amount is $3,500.
SHOW SLIDE 9-31: YOUR RESPONSIBILITIES
Your responsibilities with TSP. Once enrolled in TSP you have additional
responsibilities:
(1) Make contribution elections.
(2) Make investment and allocation decisions.
(3) Keep accurate up-to-date personal information.
(4) Designate a beneficiary.
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TSP Website. For more in-depth information on the TSP program go to www.tsp.gov.
Then look under Uniformed Services. Frequently Asked Questions is an excellent
source.
SHOW SLIDE 9-32: SAVINGS VS. INVESTMENT
Saving vs. Investing. Recall that the third leg of our retirement planning stool is
investment income. There are several differences between investing money and
merely saving it. Recognize that the ultimate purpose of saving money is to
eventually spend it. Savings accounts are virtually 100% safe, as most are insured by
the Federal Government.
Conversely, the purpose of investing money is to allow it to grow. Investing is generally
thought of in terms of a significant time span, five years or more. Even optimum
savings instruments have limited ability to overcome the effects of inflation and taxes,
both of which decrease the value of our money. Wise investments will mitigate these
effects.
Investing involves some degree of risk. However, the greatest risk is not making
prudent investments, and therefore not growing your money to meet your retirement
needs. Because saving and investing have different purposes, different instruments
are used for each.
Instruments of Savings. Savings instruments that are highly safe, and liquid, but
provide relatively low yields include:
(1) Regular or share savings accounts.
(2) Certificates of deposit (CD).
(3) Money market accounts.
(4) U.S. savings bonds. Series I bond is tied to rate of inflation.
Investment Assets. Investment instruments fall into one of two categories:
(1) Equity assets, you invest as an owner.
(a) Growing assets are designed to grow your investment. They include
investments such as shares, alternative investments and property.
(b) Hard assets are investments with intrinsic value such as oil, natural gas, gold,
silver, farmland, natural colored diamonds and commercial real estate.
(2) Debt assets, you invest as a lender. Bonds (some can be used by companies and
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varying levels of government).
SHOW SLIDE 9-33: INVESTMENT INSTRUMENTS
Instruments of Investment. As you become more financially capable and
knowledgeable about investing you may want to consider other investment instruments
in addition to TSP, such as:
(1) Individual Retirement Account (IRA). Similar to TSP funds, but purchase through
financial institutions like banks, credit unions, or investment firms. Note: Unlike TSP
there will be fees, paid to the financial institution, associated with opening an IRA.
(2) Direct purchase of bonds or stocks through a brokerage house. Note: Unlike TSP
there will be fees, paid to the brokerage house, associated with purchasing bonds or
stocks.
(3) Mutual Funds. Purchase of stocks and bonds with a pool of investors who have
similar goals. Note: Unlike TSP there will be fees associated with purchasing mutual
funds.
NOTE: Historically, since 1926, large stocks returned an average of 9.8%, while long-
term government bond returns averaged 5% to 6%. However, you should recognize
that there are years, and periods of several years, where bonds significantly out-
performed stocks.
SHOW SLIDE 9-34: RULE OF 72
One quick and way to determine the effect of any particular return on an investment is
to use the Rule of 72. To apply the Rule, divide 72 by the expected annual percent of
return on your investment. The answer will be the number of years it will take for your
investment to double at the expected rate of return.
For example, if you earn 3% on your investment, it will take 24 years to double your
money. If you earn 7.2% on your investment, it will take 10 years to double your
money. If you earn 10%, you will double your money in 7.2 years. If you can earn a
15% annual return, your money will double every 4.8 years.
SHOW SLIDE 9-35: 7 STEPS TO ACCUMULATE WEALTH
No matter how you choose to invest your money, there are seven proven techniques
that will assist you in accumulating the funds necessary for savings and investment.
(1) The first rule is "Pay yourself first." Develop a spending plan that reduces debt and
provides a positive cash flow, Set aside a certain amount for savings and investment at
the top of your plan. Savings allotments and contributions to the TSP are two excellent
ways to "pay yourself first." You never miss the money because you never see it.
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(2) The second rule is to establish a realistic spending plan to systematically put
money aside.
(3) The third rule is to maximize tax-deferred investment opportunities. The TSP and
civilian 401(k) plans are excellent vehicles for this purpose. Individual Retirement
Accounts, or IRAs, are another. Make sure you increase your knowledge about
investing before looking at the many instruments available to you.
(4) The fourth rule is to don’t lose money. Greed causes people to invest in scams that
promise unrealistic returns – Taking prudent risks are OK but speculation is at best a
50/50 deal.
(5) The fifth rule is to persevere. If you see your account has grown, resist the urge to
spend it. After all, if it’s spent, its gone for good.
(6) The sixth rule is to compound your money. The royal road to riches is
compounding. It’s the safe road, the sure road, and fortunately anybody can do it. But
it takes perseverance.
(7) The seventh rule is dollar cost averaging. Invest a set amount every month
regardless of market performance. No one can predict the market. Over time, dollar
cost averaging will compensate for the market ups and downs.
SHOW SLIDE 9-36: CREATIVE SAVINGS STRATEGIES
Some of you may be saying this is all well and good, but where do you get the money
to save and invest? Let's look at a few things you can do:
(1) One way to quickly pad a savings account is to shift debt payments to savings
when the debt is paid off. Just start banking this amount when the loan is paid.
(2) If you unexpectedly receive a sum of money, put it directly into your savings
account and watch it grow.
(3) Select one month during the year and really be a miser. Only doing it for a month
may help to develop some excellent habits that will carry over into the future.
(4) Be very aware of just how much you spend on fast food and snacks. Keep a list of
what you spend for fast food and snacks for one month. That could be $50 a month
going into your savings and investment accounts.
When living off-post, see how much you can cut back on utilities for one month. Be
energy conscious. You could easily save 10% - 20% on your utility bill. Put the
difference in savings!
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SHOW SLIDE 9-37: SAVINGS DEPOSIT PROGRAM
Eligible if serving in an SDP-eligible combat zone , once you are deployed for a
minimum of 30 consecutive days or at least one day in each of three consecutive
months.
A total of $10,000 may be deposited for each deployment
Earns 10% interest annually, compounding quarterly. Interest is taxable. This is
guaranteed, so it compares favorably to the stock market.
Cannot close account while deployed. Money will continue to draw interest for 90 days
after you have returned.
120 days after returning, your money will be direct deposited, but you may request it
before the 120 days, via myPay.
You can withdraw money for an emergency withdrawal. This must be approved by
CO.
SHOW SLIDE 9-38: SOURCES OF ASSISTANCE
There is an art to choosing ways to invest your savings. Good investments will make
money; bad investments will cost money. Do your homework. Gather as much
information as you can. Seek advice from personnel at your bank or other trained
financial experts. Read newspapers, magazines and other publications. Identify
credible information sources on the Internet. Join an investment club.
Check on Learning: SHOW SLIDE 9-39: Check on Learning
NOTE: Conduct a check on learning and summarize the
learning activity.
SHOW SLIDE 9-40: Check on Learning
Q: What is the difference between savings and investing?
a. Savings is for short term buys and emergencies
b. Savings is for your retirement
c. Investing is for short term buys and emergencies
d. Investing is for impulse buying
A: a. Savings is for short term buys and emergencies
SHOW SLIDE 9-41: Check on Learning
Q: Which of the following is an example of an investment
instrument?
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a. Passbook Savings Account
b. Term Life Insurance
c. Certificate of Deposit
d. TSP/IRA
A: d. TSP/IRA
SHOW SLIDE 9-42: Check on Learning
Q: True or False? ROTH TSP contributions are tax free.
A: False (unless contributions are made in a combat zone)
SHOW SLIDE 9-43: Check on Learning
Q: How many investment funds are available in the Thrift
Savings Plan?
a. 3
b. 4
c. 5
d. 6
A: d. 6
SHOW SLIDE 9-44: Check on Learning
Q: In the Thrift Savings Plan, you must contribute first from
what pay source in order to contribute from future bonus
pays?
a. Incentive Pay
b. Base Pay
c. Combat Pay
d. Hazardous Duty Pay
A: b. Base Pay
Review Summary: SHOW SLIDE 9-45: SUMMARY
Retirement may look a long, long way off to most of you
right now, and may not be high on your priority list.
Unfortunately, there are many people who reach an age
where they would like to retire, but fail to have the resources
necessary to do so; people didn't plan to fail, they simply
failed to plan!
We’ve covered a lot of very important information during this
learning activity. We started by looking at how the concept
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of retirement has changed in just a few short years. We then
examined the three-legged stool of retirement income. We
talked about Army retirement systems, with particular
emphasis on those that will affect you. We discussed the
Thrift Savings Plan, a new benefit that can significantly
assist you in saving for your retirement years. We examined
the differences between saving and investing and talked
about why each is important. We examined various vehicles
you may use to invest for your future and discussed proven
techniques that will assist you in forming sound financial
habits.
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SECTION IV. SUMMARY
Method ofInstruction:
Discussion (Small or Large Group)
Mode of Delivery: Resident InstructionInstr Type(I:SRatio):
Contractor, (1:25)
Time ofInstruction:
5 mins
Check onLearning Show Slide #9-46: TLO Check on Learning
Facilitator Note: Each LSA will include a Check on Learning.
Review/Summary Summary: During this lesson we discussed the following areas:
1.Financial Ethics
2.Leave and Earning Statement / myPay
3.Spending Plan
4.Managing A Checking Account
5.The Essentials of Credit
6.Consumer Awareness
7.Car Buying
8.Meeting Your Insurance Needs
9.Investing / Thrift Savings Plan
The proper management of your personal finances can have a long-lasting and far-reaching
impact on you as a Soldier or a civilian. The last thing you want to be thinking about while
patrolling mountains of Afghanistan is if you are being paid properly or if your Family is
financially stable back at home. Whatever your reason for joining the Army there is one
unavoidable fact: it is your duty as a Soldier to fulfill your financial obligations and to provide for
your family. Hopefully, this training provided you with the ammunition you need to prepare you
for your financial readiness.
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SECTION V. STUDENT EVALUATION
TestingRequirements One Pre/Post Assessment
FeedbackRequirements
An AAR will be conducted after all presentations have been given. A student end of course
critique will be conducted at the end of the lesson.
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Appendix A - Viewgraph Masters
Perform Personal Financial Management805A-AAF6B101 / Version 4.2 ©
Sequence Media Name Media Type
1 01_Financial Ethics PPTX2 02_LES-myPay PPTX3 03_Spending Plan PPTX4 04_Managing a Checking Account PPTX5 05_Essentials of Credit PPTX6 06_Consumer Awareness PPTX7 07_Car Buying PPTX8 08_Meeting Your Insurance Needs PPTX
A-1
Appendix B - Assessment Statement and Assessment Plan
Assessment Statement: Conduct a pre-assessment after the introduction. Conduct a post-assessment after thesummary and any questions from the students.
Assessment Plan: None.
B-1
Appendix C - Practical Exercises and Solutions
PRACTICAL EXERCISE SHEET 805A-AAF6B101 PE1
Time: 0 hours 15 minutes
PRACTICAL EXERCISE(S)/SOLUTION(S) FOR LESSON 805A-AAF6B101 Version 4.2 ©
Title Post Assessment
LessonNumber/Title
805A-AAF6B101 Version 4.2 © / Perform Personal Financial Management
Security Classification Unclassified
IntroductionINTRODUCTION: The proper management of your personal finances can have a long-lasting
and far-reaching impact on you as a Soldier or a civilian. The last thing you want to be thinking
about while patrolling the mountains of Afghanistan is if you are being paid properly or if your
Family is financially stable back at home.
MotivatorMOTIVATOR: Whatever your reason for joining the Army there is one unavoidable fact: it is
your duty as a Soldier to fulfill your financial obligations and to provide for your family. The
purpose of this training is to provide information that will help you prepare for your financial
readiness.
TerminalLearningObjective
NOTE. Inform the students of the following Terminal Learning Objective requirements.
At the completion of this lesson, you [the student] will:
Action: Perform Personal Financial ManagementConditions:
In a classroom environment using facilitated group discussions, shared
personal experiences, applicable Army administrative publications and
forms, and access to internet resources.
Standards:Demonstrate basic knowledge and comprehension of the following
learning activities:
1. Financial Ethics
2. Leave and Earning Statement / myPay
3. Spending Plan
4. Managing A Checking Account
5. The Essentials of Credit
6. Consumer Awareness
7. Car Buying
8. Meeting Your Insurance Needs
9. Investments / Savings
SafetyRequirements No food or drink is allowed near or around electrical equipment (computers, printers, projectors,
etc.) due to possible electrical shock or damage to equipment. Exercise care in personal
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movement in and through such areas. Avoid all electrical cords and associated wiring. In the
event of an electrical storm, you will be instructed to power down equipment. Everyone is
responsible for safety. A thorough risk assessment must be completed prior to every mission or
operation.
Risk AssessmentLevel
Low
EnvironmentalConsiderations NOTE: Instructor should conduct a Risk Assessment to include Environmental Considerations
IAW FM 3-34.5, Environmental Considerations {MCRP 4-11B}, and ensure students are briefed
on hazards and control measures.
Environmental Statement: Environmental protection is not just the law but the right thing to do.
It is a continual process and starts with deliberate planning. Always be alert to ways to protect
our environment during training and missions. In doing so, you will contribute to the sustainment
of our training resources while protecting people and the environment from harmful effects.
Refer to FM 3-34.5 Environmental Considerations and GTA 05-08-002 ENVIRONMENTAL-
RELATED RISK ASSESSMENT.
NOTE: It is the responsibility of all Soldiers and DA civilians to protect the environment from
damage. Recycle all appropriate courseware material. Environmental protection is not just the
law but the right thing to do. It is a continual process and starts with deliberate planning.
Always be alert to ways to protect our environment during training and missions. In doing so
you will contribute to the sustainment of our training resources while protecting people and the
environment from harmful effects.
EvaluationStudents will be evaluated on how well they absorbed the material presented.
InstructionalLead-in Before presenting this lesson, instructors must thoroughly prepare by studying this lesson and
identified reference material. Throughout this lesson, solicit from students the challenges they
experienced in the current operational environment (OE) and what they did to resolve them.
Encourage students to apply at least 1 of the 11 critical variables: physical environment, nature
and stability of the state, sociological demographics, regional and global relationships, military
capabilities, technology, information, external organizations, national will, time, and economics.
ResourceRequirements Instructor Materials:
Enough copies of the pre and post assessment for each student. Answer key.
Student Materials:
Pencil or pen
SpecialInstructions Conduct a post-assessment after the summary and any questions from the students.
ProceduresConduct a post-assessment after the summary and any questions from the students. Hand out
the assessment and give the students ten minutes to complete the assessment. Go over the
assessment after they complete it.
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FeedbackRequirements Ask students if they have any questions or concerns. Answer all questions or concernes.
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SOLUTION FORPRACTICAL EXERCISE 805A-AAF6B101 PE1
Instructors will have a copy of the solution (answer key).
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Appendix D - Student Handouts
Perform Personal Financial Management805A-AAF6B101 / Version 4.2 ©
Sequence Media Name Media Type
1 PFMT Student Handout PDF9 09_Investing-Thrift Savings Plan PPTX10 Post-Test PDF11 Critique PDF
D-1