Personal Financial Management

1
Personal Financial Management
2
NAVYS PFM PROGRAM

• Why be concerned about your finances?
• Keep money in your pocket, by developing good
  spending and saving habits.
• Stay financially afloat
• You need it!

3
SPENDING PLANS

• Live within your income
• Realize personal goals
• Maintain a good credit history
• Get more for your money
• Reduce financial stress and arguments
• Achieve competence and confidence

4
EXAMPLE SPENDING PLAN
5
ELEMENTS OF FINANCIAL PLANNING

• Income - Pay and allowances income
• Expenses - Family and personal expenses
• Indebtedness - Amount owed to creditors
• Savings - Pay Yourself First

6
INCOME PLANNING

• Basic budget guidelineNot a rule
• 70 for Family/Personal Living Expenses
• 20 for Indebtedness
• 10 for Savings

7
DEBT-TO-INCOME RATIO

• 15 - 20 Fully extended
• 21-30 Overextended
• 30 Seek help immediately
• Formula
• Monthly debt payments/monthly income x 100

8
CREDIT CARD FACTS

• Cards Cause a 32 Increase in Spending
• Average Family Has Nine Credit Cards
• Average Total Balance Is 8000 (18)
• 43 Make Only Minimum Monthly Payments
• Debt Payments Consume 19 of Income

9
CREDIT EXAMPLE

• Amount Charged 500
• Interest Rate 24
• Monthly Payments 10 (2)
• Time To Pay Off Debt 30 YEARS!!!
• Total Interest
  3,610.00

10
APPROPRIATE USES OF CREDIT

• To Purchase Assets
• For Convenience
• Big Ticket Items

11
INAPPROPRIATE USES OF CREDIT

• Furniture
• Clothing
• Sports Equipment
• Entertainment
• Daily Living Expenses

12
MOTIVATIONS TO ABUSE CREDIT

• Impulse Buying
• Spending for Status
• Retaliatory Spending
• Spending to Feel Good

13
WARNING SIGNS OF TOO MUCH DEBT
14
DEBT WARNING SIGNS

• Carrying Credit Card Debt
• Increasing Income Committed to Debt
• Falling Behind on Payments
• Needing Cash Advance for Essentials
• Using Credit for Basic Needs

15
MORE WARNING SIGNS

• Lack of Savings
• Being At or Near Card Limits
• Needing Income from a Second Job

16
INDICATIONS OF SERIOUS PROBLEMS

• Skipping or Rotating Bill Payments
• Using Credit to Pay Credit
• Debt Consolidation Loans
• Being Denied Credit
• Dishonesty With Family

17
CONSUMER CREDIT PROTECTION LAWS

• Truth In Lending Act
• Fair Credit Billing Act
• Fair Credit Reporting Act
• Fair Debt Collection Practices Act
• Equal Credit Opportunity Act
• Fair Credit and Charge Card Disclosure Act
• State Laws

18
DEALING WITH CREDITORS

• Stay In Contact
• Be Honest
• Have a Plan

19
THINGS NOT TO DO

• Credit Clinics
• Debt Consolidation Loans
• Bankruptcy
• Pawn Shops
• Pay Day Loans

20
SOURCES OF HELP

• Command Financial Specialist
• Fleet and Family Support Centers
• Navy Legal Services
• Defense Credit Unions
• Consumer Credit Counseling Services
• Navy Marine Corps Relief Society

21
CORE VALUES AND FINANCIAL PLANNING

• Honor - Be true to self regarding debt, spending,
  and saving
• Courage - To live within your means
• Commitment - To stay financially free

22
SUMMARY

• Navys Personal Financial Management Program
• Personal and family financial planning
• Basic uses of credit
• Appropriate and Inappropriate Uses for Credit
• Warning Signs of Too Much Credit
• Credit Rights and Dealing with Creditors
• Sources of Help

23
THRIFT SAVINGS PLAN I

• Began on 9 October 2001
• Is open to all service members
• Deposit pre-tax dollars into tax deferred
• plan
• Up to 5 of base pay per month plus total amount
  of any special pays and bonuses (maximum
  10,500/year)
• No government match

24
THRIFT SAVINGS PLAN II

• All money belongs to service member
• Upon separation or retirement, you can
• take cash (minus taxes), keep in TSP, transfer
  to new employers plan or
• own IRA
• Substantial penalties for withdrawing money
  prior to age 59 ½
• Some options for borrowing against plan while
  still on active duty

25
THRIFT SAVINGS PLAN III

• Three investment options
• C fund (common stock index fund)
• F fund (bond index fund)
• G fund (government securities fund)
• Two additional options planned
• I fund (international stock index fund)
• S fund (small cap stock index fund)
• Participant directed

26
References

• OPNAVINST 1740.5A
• U.S. Navys Personal Financial Management
  Standardized Curriculum
• OPNAVINST 1740.1
• Command Financial Specialist Training Manual
• Navy Legal Services Office
• http//www.lifelines2000.org
• http//www.moneycentral.msn.com
• UCMJ Articles 123a and 134
• http//www.a-home-mortgage-credit-card-debt-loan.c
  om