Here's a "Hero Shot" of hubby Bob and his F-4 Phantom, that he flew up until last year when a jet incident caused him to break his back. Thankfully, he is fully functional, but his injuries will not allow him to fly an ejection seat aircraft. The good news: he's gainfully employed flying "regular" airplanes and also the Global Hawk UAV (think the high tech airplane on Transformers).We had a lot of questions when he had that accident and I speak with a lot of military members and their families who have questions about their lives and finances as well. Some of these fine people were on ABC News with me recently for a Q&A. Here's the recap for you to share with others you know who are in our armed forces. The questions that made it on ABC NEWS won a free copy of their choice of my books! But here are the answers to many more questions.
Q. Is SGLI enough insurance for families or do you need an additional supplemental insurance? From Melody O’Sullivan
ELLIE: SGLI is relatively cheap, term group life insurance that is offered to members of the military on active duty, in the ready reservists, members of the National Guard, members of the Commissioned Corps of the National Oceanic and Atmospheric Administration and the Public Health Service, cadets and midshipmen of the four service academies, and members of the Reserve Officer Training Corps. The insurance is also offered to spouses as well.
Servicemembers’ Group Life Insurance coverage is available in $50,000 increments up to the maximum of $400,000 for members of the military. The price for this insurance is very cheap, so it’s certainly a good value. But is it enough? If you are a young family with only one or two children, then it could be enough. But if you are a more senior servicemember with a lot of family members depending on you, then you might want to buy some term supplemental insurance. Remember that once you leave the military, SGLI is no longer available to you. So if you know you are going to separate in the next couple of years, then it would be a good idea to get a modest supplemental life insurance policy in place.
Q. As a “Key Spouse” how do we encourage other spouses to take advantage of all the benefits the military has to offer? From Starr Vuchetich
ELLIE: Thank you, Starr, for your volunteer work with other spouses, you are to be commended as should ALL our Key Spouses! There’s an old saying that “you can lead a horse to water, but you can’t make it drink.” Your job, as a key spouse, is a difficult one. You know the benefit of taking advantage of the services and perks available to military families, but others have to decide for themselves. The best thing you can do is to lead those spouses by example and express the benefits you are personally receiving from taking advantage of, such as free childcare for volunteering, free financial counseling, free oil changes (or whatever program your base offers), as well as the many benefits listed at sites such as www.militaryonesource.com or www.ourmilitary.mil
Q. How did you arrange childcare during deployments with very little money and how did you maintain sanity with so many small children on a tight budget?
From Jana Baez
ELLIE: I do remember what an incredible challenge it was when all my kids were so young and my husband was gone for weeks (or months) on end. But the first thing I did was plug into all the “free babysitting” I could get. Go to the Family Support Center and see if they offer free childcare for those who volunteer. I also got on site childcare provided when I attended Army Family Team Building classes, so sometimes you can get a break and learn something, too. Don’t forget the community outside of the base gates, either. There are a number of churches, community centers and MOPS (Mothers of Preschoolers) groups that try to support military families during deployments by offering free “Mother’s Day Out” programs or onsite classes where childcare is provided. Last, but not least, form a babysitting co-op, where you get tickets for every child you babysit for every hour. You can “redeem” your tickets with other co-op members and it serves as a way to escape for a while as well as a playgroup when you are watching other children.
Q. How does one begin a business without acquiring debt?
From Chana Montgomery
ELLIE: In the case of a military family, you need to start a business that is completely portable and can move with you. It’s important to select a homebased business that requires little initial investment and will still yield an income to keep you in the black. Do your research and talk to a mentor at SCORE.org where you can get free business counseling in your desired field. If you follow your passion, you’ll be far more likely to succeed. Just email assistant@elliekay.com and ask for the “Homemade Business” file, we’ll send it to you for free as it contains all the information you need to be successful in your endeavor.
Q. When you have extra income flowing in, is it better to work on paying off debts or continue paying normal payments and stash the money into savings?
From Emily Haffner
ELLIE: The answer is “both” if you pay even $5 to $10 more on your credit card minimums, you’ll improve your FICO score and begin to pay down that debt. But you also need a safety net in savings just in case your car breaks down and your husband is downrange and not home to fix it. The optimum savings goal is to have 12 months worth of living expenses. But even if you just save up to 3 months (and keep adding to it little by little) you’ll be better prepared for rainy days.
Q. I have three children and I wanted to know if I should apply the new 9-11 GI Bill to the first child (not knowing how long it will be around) or should I split it up among the children.
Stephanie Berg
ELLIE: Because the Post 911 GI bill is relatively new, and because we don't know how Congress will vote to continue this practice, it may be best to take the money while you can. It's still important to have your child go to the most affordable school possible, get scholarships and other means of payment. But go ahead and use as much of that GI Bill money as you can to pay what you can on your oldest child's college. In the meantime, the money you would have put toward his/her college (from your own 529 plan or other savings vehicle) put into another college fund for your other two children.
By funding more on the other two children's accounts, your money will continue to grow as the market continues to rebound. But in the meantime, you will also be able to take advantage of the current bill. Do not give your first child his/her saved "college money." Instead, put whatever you have saved toward the other two. You can tell your oldest that his/her college money is coming in the form of the POST 9ll GI bill. Because you don't want the youngest two to be stuck with student loan debt that the oldest child did not have to accrue.
Q. With limited funds, what should be the priorities for the best use of financial planning? Should I invest in the TSP (Thrift Savings Plan), IRA, life insurance or mutual funds? Major Anthony Smith
ELLIE: Once you’ve paid off your credit cards and funded a 12 month savings account, then you are ready to take your investments to the next level. It will depend on your family size, retirement needs and current income. I do not recommend life insurance as a good investment tool, even though agents may point you toward that route since the commissions are significant. Better to max out your TSP benefit since those funds will still be available to you if you do not make the military your career for a twenty year retirement requirement. It’s also a good idea to get a ROTH IRA or regular IRA. Go to your Airman and Family Readiness center and ask for an appointment with a financial counselor. It’s free advice and the expert there can look at your entire financial picture to help you come up with the best method of investing. Or try the military friendly company, USAA, they help to fund a lot of military events and can offer good advice on mutual funds.
Q. Being that you moved many times during your military career and have many children, how did you present it to the children when you had to PCS (Permanent Change of Station)? From Kristie Fromer
ELLIE: This is the hard part of military life, Kristie, and thank you for your willingness to go through this. One of the advantages of having so many kids is that they were sure to have built in playmates wherever they went! When we told our kids they would have to leave their friends, we allowed them the freedom to grieve and be sad over leaving. But we were also positive about where we were going. We printed out materials about the new base and all the places we could visit and where we would go camping along the way. By focusing on the positive, while allowing them the freedom to express their feelings, we had healthy, adjusted kids and a well bonded family.
Q. If your auto is less than two years old, is it a good time to refinance? We retire in 2011 and will be buying a house wherever my husband starts his second career. Is this wise to do before buying a house? From Lisa McClain
ELLIE: Refinancing a car will cause a hit to your FICO score, but it can be a good idea in order to get you a lower interest rate. I offer two words of caution: 1) refi at least six months before you get a home loan in order to give your credit time to recover and 2) refi with payments that will end at the same time your original loan would have ended (otherwise, you're just paying interest over a longer period of time.) For example, if you have 3 years left on your car loan. Then refi the loan for 3 years (instead of 4 or 5).
Thank you for your service, military members and your families. Remember three things:
- America loves you
- We support you
- And together we'll be all right!
Ellie Kay
America's Military Family Expert (TM)
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