Friday, October 26, 2007

The Rainy Day Fund

Murphy's law dictates that if anything can go wrong it will. In my short time here on earth I would have to say that Murphy was a pretty smart guy. One of the first steps of financial management is starting a emergency savings account . Experts say that a minimum 3-6 months of basic living expenses is needed to cover the unexpected. Maintaining a Rainy Day Fund is important for many reasons, but to keep this short I will cover the three goals of a rainy day fund.

  • Staying Liquid- By definition an emergency is something unexpected so keep your money easy to reach. Certificates of Deposit, and other like investments are inappropriate due to the fact that there will be fees, and penalties if the cash is needed. Your cash needs to be completely liquid. A high yield savings account, or high yield money market account are prime parking spots for your cash.

  • Beating inflation- Inflation is a virus to your cash. It will slowly eat up all of your purchasing power. There is nothing worse than your hard earned money being close to worthless when you need it. When holding cash for emergencies, use a high yield savings, or money market account the average rate for a high yield savings account right now is about 4.25% APY, and the average rate of inflation is about 3%. So just by finding the prime place to stash your cash you can keep the power of your dollar.

  • Stay out of debt- Debt is a scourge, debt and reckless spending are the two main enemies of financial freedom. Having an emergency savings account means that you do not have to feed the beast by using a credit card for those unexpected circumstances. Credit Cards are a last option, not a first resort.

Having an emergency savings account is one of the first, and most important steps in your quest for financial freedom. If you are having a hard time saving just think small. A little bit every month adds up to big savings.

Monday, October 22, 2007

Squeezing my SDP until it screams

I don't think I have mentioned that I have been deployed here in Iraq for thirteen months now. One of the many benefits offered to us simple Soldiers while serving in a Combat Zone is the Savings Deposit Program. The Savings Deposit program is a form of a CD, but the yield is much higher. One of features is I get to keep my cash in the SDP for an additional 90 days, still earning interest after I redeploy. I have also been extended for 90 days so I emailed DFAS asking if I get an additional 90 days of interest on my deposit. This extension has taken everybody by surprise, but I hope the people at DFAS will have some good news for me.

Thursday, October 18, 2007

Using Mypay to make saving automatic

I am going to be using a lot of links in this post. If you use Internet Explorer 7, just right click on the links and choose open in new tab. This will allow you to stay on this site, yet still explore the information in the links I provide.

Trying to save money? Mypay is a great tool for service members interested in taking more control over their financial future. Using Mypay you have many options when it comes to controlling your paycheck. Some of the options available are: Starting your Thrift Saving Plan, Change your Federal, and State income tax withholding, you can even change your account for direct deposit. One of the best features Mypay offers is the ability to start, stop, or change a financial allotment.

There is no better way to saving money than having a small portion of your paycheck automatically deducted from your paycheck. It is as simple as gathering your savings account, and routing number, choosing the amount you want deducted and clicking submit.

Making it automatic is the most important thing you can do when it comes to saving money. In my next post I will show you how a High Yield Savings Account, and an automatic savings plan can put you on the path to financial freedom.

Wednesday, October 17, 2007

Photobucket Album

First thing first. Eliminate that debt.

Debt is bad. In the financial world debt is called a liability. When you have debt, not only do you owe what the item you bought cost, you also owe interest for borrowing that money. The average Annual Percentage Rate for a consumer credit card is 13.37%. For example you have $2,000 on your Star Card and you make a minimum payment of $32 a month. It will take you nine years, and cost you a total of $3448.87 to eliminate that debt, and that is assuming you have not made any late payments, and you do not use the card for anymore purchases. That is $1448.87 paid in interest that could have been making money for you. So how do you eliminate your debt?

It's simple. Spend less than you make. Living below your means is the most important step when it comes to saving money. Here are a few tips.

1. Eat at the Chow hall. Even if you are not a Meal Card holder.

2. If the Chow Hall's five star cuisine is too much for, you pack a lunch.

3. Make all your large purchases at the P.X. You will save hundreds of dollars in sales tax.

4. Ask for a Military discount everywhere you go.

5. Find out who in your unit lives close, and carpool to work.

There are hundreds of ways to save money. All you have to do is look at what you spend money on, make the necessary sacrifices, and pay off that debt.

Just another Squirrel trying to get a nut

Hi I'm Rob. I am a Sergeant in the United States Army. I have noticed that there are few resources on the Internet dedicated to simplifying money matters for members of the Armed Forces. I am here to change that. There is far too much mystery surrounding day to day financial management, also there are far too many young Soldiers thrust into the Army without any guidance on what to do with that huge paycheck they receive every two weeks. I do not want to fool you, I am not a financial expert I am just a simple Soldier here to help my fellow Soldiers.