Member's Only Vacation

We heard about the Marines' Memorial Club through a public service announcement on the Armed Forces Radio and Television Service while living in Japan. When we moved to California last year we decided to give it a try.

All I can say is, "Amazing!" You can't ask for a better location, just around the corner from San Francisco's famous Union Square. From there you can grab a cable car ride to Fisherman's Wharf, eat a hundreds of great restaurants, visit museums, and just have a great time. And all of this at a very reasonable cost.

Membership is free for military members, and as a great added benefit, membership comes with reciprocal relationships at exclusive clubs all over the world.

Check out the Marines' Memorial at their web site.

Selling your car? Know the "facts"

If you're considering selling your car, make sure you know what's in your car's vehicle report. I found this out the hard way when I discovered that my low mileage VW Jetta had an error on it's Experian AutoCheck report. The report had an error that flagged my car with a possible odometer roll back. This made my car virtually worthless. We disputed the report with Experian Auto at 1-888-754-9977 and they agreed to remove the error.

The lesson learned here was that before you sell your car, it's definitely in your best interest to purchase an Experian AutoCheck report. Experian is considered the industry standard for vehicle reports, so if you have a problem, it'll likely show up here. Knowing what's on the report is just as important and receiving your own credit report once a year. Fix the errors before you offer it up for sale. This will save you thousands of dollars.

The Military Standard of Living

This Sunday's Parade magazine features an article entitled "Secrets of Thrifty Families." It includes the stories of two families who are living well on modest incomes.

For example, the Heinz family of six live on a $58,000 income. The Schenke's, a family of three, live on just $32,000 each year. Both families clip coupons, but more importantly, they avoid debt and consider reasonable options to high priced recreation and entertainment choices.

What about military families? We have access to commissaries, world class heath care, fitness centers, recreation centers, and many other privileges that come through service. In addition, our pay raises have historically been linked to inflation, so our standard of living has also been protected.

The danger for most military families is that we often fall for a "live for today" philosophy. We have endured so many separations and stresses that we sometimes fall for the trap that we deserve (fill in the blank) and should get it now, while we're in a position to enjoy it.

As an example, take a look at the parking lot at the commissary the next time you're there shopping. How many BMWs, Mercedes Benz, Cadillacs, or Lincolns do you see? How many of them do you think are paid for? What do you think the payments are? How much are those families putting away for a rainy day?

I suggest that once you prioritize your life you'll make better decisions about what's truly important to you.

Hey! Don't Panic!

Listening to Bob Brinker's Moneytalk today, I heard a call from a 63 year old retired teacher who was thinking of selling all of her stock funds and putting the money into CDs.

I'll bet a lot of people feel the same way. They've been watching their TSP or IRA accounts going nowhere but down for the entire year.

Consider this. What if you invested $10,000 the day before the stock market crash of 1987. Monday, October 19, 1987, became known as Black Monday, because on that day the market experienced the largest single-day decline in history, dropping more than 22%.

If you had been "lucky" enough to have purchased $10,000 in an S&P 500 index fund on Friday, October 16th, and been willing to hang on through the declines on the 19th and through the end of the month, that money would be worth more than $44,000 today.

Here is the lesson: if you need tomorrow that you're investing in stocks today, you're going to lose money, and plenty of it. If, however, you can wait more than 10 years, you're probably going to make money, lots of it.

Ray Lucia has a great strategy called buckets of money. He fills the first bucket with 7 years of safe money for living expenses in retirement. He fills the second bucket with 7 years of growth and income money, and he puts the rest in the third bucket, the long term growth bucket. Using this stategy you can rest easy knowing that your long term investments have plenty of time to work themselves out, while you maintain the standard of living that you've always desired.

Ben Stein likes this approach too. He's said so on Lucia's radio show, and on his blog.

So, keep the faith. Don't panic and keep investing!

"If you can keep your head when all about you are losing theirs...yours is the Earth and everything that's in it..."

Rudyard Kipling's "If"

Pay Yourself First

You've heard this before, but it is so important it should be repeated. Pay yourself first. Take a percentage of your paycheck, say 5-15% in a money market mutual fund, and set it aside before paying any other bills. Do this automatically if you can. If you have to write a check, you'll mess this up!

You can use a military allotment to do this. The advantage is that you never even see the money in your paycheck. The drawback is that DFAS doesn't make the payment into your savings account until the end of the month. The government gets to use your money for one month interest free! For this reason, I have my savings automatically deducted from my checking account on payday. I see the money moving, but I don't have to make the decision to save that month, it happens AUTOMATICALLY.

Pile the savings up until you have 3-6 months of living expenses set aside, then begin investing in low cost, no-load mutual funds. The cash buffer will keep you from liquidating the mutual funds when the prices are low (like now), and the invested funds will have a real chance to grow over time.

Financial Education Matters

If you've set aside some money to contribute to the Thrift Savings Plan, you are among a minority of wise military members who have taken advantage of a great program. You're work isn't over yet though. The allocation of where that money is invested can make all the difference.

If you don't select an option, the TSP administrators will deposit your entire investment into the G Fund, or the Government Insured Securities Fund. As the chart on the left shows, this fund has earned about 6% since April 1987. A $100 investment then would have been worth $364 in December 2007.

If you had instead selected the TSP C-Fund, a fund that mirrors the S&P 500 stock index, this fund would have returned more than 11% per year, on average. That same $100 would be worth more than $880!

The lesson here is that your TSP investment doesn't end when you sign up, it just begins! Keep an eye on TSP.gov and review the investment options. Select a combination of the funds to suit your needs and investment risk tolerance, or pick a life cycle fund and let the administrators build you a portfolio. The difference in returns is very significant, and since this money is for long term growth, it pays to do your homework.

Post 9/11 GI Bill Signed by the President

The biggest update to the GI bill in decades was signed by the President! It will more than double the benefit for military members who have served three years or more since 9/11/2001.

The feature that was most appealing for me was that your dependents can get access to your benefit! For my family, that will make a huge difference.

You need to get the details. Go to http://www.gibill.va.gov/ for the details.

Military.com also has a great breakdown of the benefit.