Veterans benefit from financial planning, just like everyone else

Everyone can benefit from financial planning.
Period.
One group of people who may not think so is veterans of the military.
“For members of the U.S. military, traveling and re-locating often, returning home following a lengthy deployment and living with uncertainty isn’t always easy,” according to an article on the website of Ameriprise.
Establishing a routine after a big life event like a re-location, deployment or completion of your military service can be challenging, and comes with many new decisions, including new or changing financial choices and obligations.”

English: PACIFIC OCEAN (July 16, 2009) Sgt. Kh...

English: PACIFIC OCEAN (July 16, 2009) Sgt. Khristian Colon, armory chief of Command Element, 13th Marine Expeditionary Unit (13th MEU), cleans the upper receiver of an M16A4 service rifle aboard the amphibious assault ship USS Boxer (LHD 4). Boxer and the 13th MEU/Boxer Amphibious Ready Group are underway in the Pacific Ocean returning from a 7-month deployment. (U.S. Marine Corps photo by Lance Cpl. Jesse D. Leger/Released) (Photo credit: Wikipedia)

The Kiplinger Newsletter recently offered a series of financial planning tips geared specifically toward members of the military.
These include:

  • “Take advantage of low-cost investments. Service members are lucky to have access to one of the lowest-cost retirement-savings plans around. The Thrift Savings Plan charges just about 25 cents a year for every $1,000 invested, and it lets you choose one of five index mutual funds or a target-date fund.”
  • “Benefit from tax-free in, tax-free out. Saving in a Roth IRA can be a particularly good deal if you’re receiving tax-free combat-zone pay. In that case, your money goes into the Roth tax-free and your contributions as well as your earnings come out tax-free, a double tax benefit that’s tough to beat.”
  • “Sign up for inexpensive life insurance. Service members have access to one of the lowest-cost life insurance programs available”
  • “Take advantage of low loan rates. The Service Members Civil Relief Act provides special legal benefits for service members, including an interest-rate cap of 6-percent on any loans you took out before you were called to active duty. You have to apply to the lender for this benefit, which is intended to help you if your ability to pay is affected by military service, as it may be if you take a pay cut when activated to the Reserve or National Guard.”

Loans To Family Members Can Lead To Major Problems

What might seem like the easiest source of money in a tight situation might be the most difficult.
Family members who borrow or lend money from one another, regardless of which side of that equation they are on, face some potential emotional perils.
It’s one thing to disappoint officers with a bank or savings and loan by not being able to keep up with payments on interest and principle; they’re sort of used to it.
It’s quite another thing, however, for parents or other family members to be left in the lurch.
“In today’s tight credit market, a growing number of adult children are turning to the Bank of Mom and Dad,” according to a recent Forbes.com piece by Frank Jaffe. “Many parents have an impulse to be generous as they watch adult children in their 20s and 30s struggle with an unbending job market and unforgiving economy. Parents are lending their children money to help pay for everything from graduate school to starting a business or buying a home.

Money - Black and White Money

Money – Black and White Money (Photo credit: @Doug88888)

“Still, for many Baby Boomers, this poses a dilemma. On the one hand, we want to be there for our children and help them to succeed; on the other hand, if they don’t pay us back, it could jeopardize our own retirement.”
“When a friend or family member asks to borrow money, think about why they’re asking you and not someone else,” suggests J.D. Roth in a piece on Entrepreneur.com. “They may see lots of money coming into your business, payroll being met, maybe your nice house and car. What they don’t see is the credit line that keeps your doors open or how thin your profit margins really are
“Still, that hasn’t stopped many business owners from learning the hard way that family, friends and finances don’t always mix.”
In his piece, Roth offers five suggestions for those who decide to extend loans to family members anyway:
1. Discuss other options.
2. Lend only the amount you can afford to lose.
3. Be clear about your expectations.
4. Get it in writing.
5. Deal with problems right away.
A sixth piece of advice, get the advice of an attorney before entering into such an arrangement, might also be wise to include.