Personal Financial Management Upperclassmen Learning Topics Importance Student

Personal Financial Management Upperclassmen Learning Topics Importance Student

Personal Financial Management Upperclassmen Learning Topics Importance Student Loans Pre-Commissioning Loans Navy Salary Investing Stocks 401k Roth IRA Sailors Problems

Importance Money is one of the biggest concerns of most people in the world It influences everything you will be able to do The Navy pays a lot of money and you have to be able to manage your money

and deal with the monetary issues of your sailors If you dont know what youre doing, your sailors will not take your advice seriously Student Loans Many of you will not have loans because of the NROTC scholarship

If you do have loans make sure you pay them off as soon as possible Delaying the payment of loans will only cause you to pay more money in the end Pre-Commissioning Loans USAA offers a

$25,000 loan to senior MIDN who are about to commission This loan has a very low interest rate compared to other student loans It would be wise to use this loan to pay off higher interest

rate loans Navy Salary (O-1) Navy Salary (E-2) Credit Cards If you spend $4,000 on credit cards at 18.5% interest and pay

only the minimum payments, it will take you 11 years to pay off ($7,800 total) Pay off you credit bills on time to build good credit Credit Card Tricks The old bait and switch Musical Address

Over the limit fees Cash advance fees and rates Increasing the rate based on other accounts Signs of Predatory Lending 1. Triple digit interest rate: Payday loans carry very low risk of loss, but lenders typically charge fees equal to 400% APR and higher

2. Short minimum loan term: Payday customers unable to repay their loan within two weeks are forced to get a loan "rollover" at additional cost. In contrast, small consumer loans have longer terms 3. Lenders who advertise to E-1, E-2, and E-3s are often looking to take advantage of their lack of financial management experience 4. Single balloon payment:

Unlike most consumer debt, payday loans do not allow for partial installment payments to be made during the loan term. A borrower must pay the entire loan back at the end of two weeks Personal Finance Savings Short term investments Emergency Fund

Investing Short to Intermediate Term Mutual funds, stocks, bonds, money markets, CDs, etc. Long Term Individual Retirement Accounts (IRA) Federal Thrift Savings Plan (TSP) 401(k) Employer Retirement Plans Insurance

Service members Group Life Insurance (SGLI) & Family SGLI Term vs. Whole Life Emergency Fund Rainy days will happen Rule of Thumb: You need 3-6 months of income saved and available The more secure your job, the less you need (Military 3 months) Aim for $15,000, liquid More responsibilities = larger savings needed

Thrift Savings Plan (TSP) Similar to a civilian 401(k) retirement plan Funded with before tax dollars Earnings grow tax deferred & taxes are owed on the interest and capital gains when withdrawn Can withdraw the money at 59 years old $16,500 annual contribution limit

Roth IRA Usually invested inside mutual funds or a brokerage account with individual stocks Funded with after tax earnings Earnings grow tax free & no taxes are owed on interest and capital gains when withdrawn Can withdraw the money at 59 years old $5,000 maximum contribution limits ($416 a month) Investing $5,000 a year starting at 22 yearsold, earning 8% annually, will grow to over $2.2

million at age 62 (your investment =$245,000) Dealing with Sailors Financial Problems Become an expert at your own finances so you can help your sailors deal with their problems If you cant manage your own life no one serving for you is going to take any of your

advice seriously Expand your knowledge of different financial situations and options Conclusion Start saving NOW! Educate yourself and your sailors on financial options Be wise with your credit

References Roth IRA archive/2006/st0309.htm Social Security Online About

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