Archive for November, 2011

Steps to Financial Freedom: Teaching Children Smart Financial Habits

Wednesday, November 30th, 2011

Encourage clients to take the time to engage their child in the shopping process by explaining what’s happening, asking questions, and answering their child’s questions.

Contributions by Molly Herndon and Carolyn Bird

One of the most important things a parent can instill in their child is a sense of financial responsibility, but talking to children about money is often not a priority for parents. Parents who model smart financial behavior teach even very young children how to make decisions that align with their values and goals. A very basic message parents can share with children is that financial decision-making is about making choices. Parents who are intentional about children how to make choices among many options have a better chance at being successful in helping their children develop the practice of active decision-making. The best news is a little effort can have a big payoff, as these lessons are likely to be carried into adulthood. Here, in the final installment in the November-long “Steps to Financial Freedom” series we offer tips PFMs can suggest to families to teach their children to be savvy consumers.

Look for Teachable Moments
A family’s day is made up hundreds of opportunities to talk about money. Whether your client’s family is shopping, watching television commercials, running errands, paying bills, or buying gas, each consumer exchange presents a chance to teach valuable lessons. Encourage clients to take the time to engage their child in the process by explaining what’s happening, asking questions, and answering their child’s questions. A teachable moment can be as simple as letting the child know that if they spend all their money at the fast food restaurant, then there won’t be enough money to buy the action figure when you go to the store later that day or week. It won’t take long for the child to understand that once the money is spent that other items cannot be purchased. Soon, the child will begin to prioritize what is important to them without parental coaching.

Parents don’t have to go it alone. The program Thrive by 5 is designed to teach preschoolers about saving and spending. Here is a list of 17 things that 5 year-olds should know about money. Involving your older children in your decision process can provide valuable lessons. Encourage your clients to help older children learn to be savvy decision-makers by helping their parents identify sales and better prices. Soliciting children’s observations about banking and credit processes gives parents an opportunity to gauge the child’s understanding, correct misperceptions, and to reinforce valid observations. However, the most valuable moments are the observations children make are those of their parent’s financial management practices. So, a great place to start in teaching financially savvy children is to support clients in striving to be a financially responsible role model.

Use Current Events
Some parents may avoid topical conversations about the economy and finances in front of their children out of a fear of making their children anxious. PFMs, you can teach your clients that talking about the economy may actually decrease children’s anxieties. Tell clients they don’t have to shy away from discussing the current state of the economy; just find a way to reach the child on their level. The NYU Child Study Center has some suggestions on how to approach the topic of the economic downturn, by a child’s developmental stage.
It is important to talk to children if a friend or relative has lost a job. Tell clients to explain why this happens and talk about any anxiety the economy may be causing for their children. Specific to military families, openly discussing how deployment impacts a family’s finances can relieve children’s fears. Prompt clients to talk about changes to a family’s finances and the adjustments that will need to be made.

Family Engagement
America Saves has a Military Youth Saves program in which kids can take a pledge to save, get tips for saving, and parents can read suggestions for smart saving strategies. We will highlight the Military Saves campaign in a future posting, when the campaign gets up and rolling in the early part of 2012.

Families should look for ways to save and budget together so that children can learn by contributing to the development of a healthy spending plan. Tell clients to ask children to come up with new ways to save money in the house. For example, parents can ask children to determine which pizza coupon offers the better deal.

Some families might decide to give children allowances in exchange for chores; suggest clients assign a monetary value to certain tasks in the home so that even very young children may begin to understand the consumer process. Parents should also be encouraged to help their child manage their money by supporting their saving for goals, which teaches the lesson of being rewarded for saving.

Making savings and smart financial decision making a part of the daily family conversation is an excellent way for parents to encourage this responsible behavior.

What strategies for teaching children about smart spending have you heard about? What works well? What doesn’t work so well?

Other resources:
http://www.extension.org/pages/35906/when-should-i-begin-teaching-my-child-about-managing-money

http://www.extension.umn.edu/distribution/youthdevelopment/DA6116.html

Google+, What’s the fuss?

Tuesday, November 29th, 2011
If you are interested in learning a bit more about Google+, join +Kevin Gamble and +Stephen Judd for a free eXtension webinar on Friday December 2, 2011 at 2 PM EST.

Launched less than six months ago (June 28, 2011), Google+ is a social networking service provided by Google, Inc. As a social network, Google+ shares traits (ability to share updates, links, photos, and videos) with other large social networks like Twitter and Facebook.

I began using Google+ when it first became available in a field-trial status, and have been impressed with its ease of use and the level of interaction among the users. Because users can comment on posted content, there isn’t a length constraint, and comments remain with their original post, conversations are easier to have than they are on Twitter. I’ve also found the ability to share to limited groups easier to use than similar features in Facebook.

With the recent advent of Pages in Google+, businesses and organizations can also interact with other Google+ users. I’m holding off on fully endorsing the use of a Google+ page, until features like multiple administrators are made available.

Below is some basic information about Google+ and how it works:

Your Profile:
At the core of Google+ is your personal profile, information you enter about yourself and can include: an Introduction, occupation, employment history, education, places you’ve lived, contact information, demographic information, photos, and related links. There are privacy settings to control which information is visible publicly, versus visible to people you connect to on the service.

The Network:
The usefulness of Google+ will depend on who is using Google+ among the folks you want to interact with and on making those connections. When you first start using the service, you can search for people in your address book you may know are using Google+, or by searching by name or topic of interest. As you add people to your network, you place them in Circles, which later allow you to publish updates to selected Circles, or view updates from one Circle at a time.

Following people is not strictly reciprocal:
With Google+, you can follow an individual without them following you back, and vice versa. (This is in contrast to the way Facebook originally worked, where the process of “friending” someone, required the agreement of both parties. Facebook has since introduced the subscribe feature, which changes this dynamic.) However, you do have the ability to block a person, so he or she can’t comment on your posts and will only be able to see information you post publicly.

Posting:
You can publish content to Google+ through the web interface, mobile applications, Google Reader, or through +1 buttons on various websites. Unlike Twitter, there’s no character limit for Google+ updates, and they can include embedded photos, videos, and links. However, formatting options are limited to bold, italics, and strikethrough. When you publish content, you can choose the people to share that content with, by making it Public or sharing it only with selected individuals or Circles. The users you share a post with will have the ability to comment on or reshare the post, unless you have locked the post or disabled comments.

Reading posts:
By default, Google+ will display content that people you follow have posted. These posts may have been shared publicly, or shared with you directly or via a Circle the poster has you in. You will also see your own posts. You can comment on, reshare, or +1 these posts. You can filter this view by selecting to view the posts from an individual Circle instead.

Other features:
Google+ has several other features in addition to content-sharing:

  • Hangouts (group video chat for up to ten participants) (I have found this to be one of the most useful tools on Google+ for enabling real-time collaboration with geographically dispersed groups)
  • Messenger (group text chat for up to 50 people, available through mobile application)
  • Games
  • Search (ability to search–based on people and content–and save searches)
  • Photos (share photos from Picasa, and instantly upload photos from mobile devices)
  • Pages (a way for companies, organizations, brands, and other non-persons to share content and interact with other Google+ users)

Overall, Google+ has become my preferred social network and I look forward to using it as it continues to change. Like any social network, it will benefit from wider adoption, so that I can find more interesting folks to interact with.

If you are interested in learning a bit more about Google+, join me and +Kevin Gamble for a free eXtension webinar on Friday December 2, 2011 at 2 PM EST. Details are at: http://www.extension.org/learn/event/372

More information:

Author: Stephen Judd (+Stephen Judd, @sjudd)

Creative Commons License This work is licensed under a Creative Commons Attribution 3.0 Unported License.

Steps to Financial Freedom: Saving & Investing

Wednesday, November 23rd, 2011

Contributions by Molly Herndon and Carolyn Bird

In this third installment in this series, we’ll tackle the steps of saving and investing. By now, we’ve covered budget tracking, credit scores, and now we’re on to an important cornerstone of a sound financial wellness plan.

Step 5: Saving

Savings are a key component to a successful financial wellness plan.

Savings are a key component of a successful financial wellness plan. An “emergency” savings fund acts like an insurance policy to meet unplanned expenses. We know that things are bound to break, we just don’t always know when. An emergency savings account can help keep credit card debt under control by providing the means to, for example, replace a flat tire, buy a new washing machine, or to repair the furnace. An emergency savings fund should be quickly and easily accessible, without fee or early withdrawal penalty and is a vital component to a smarts savings strategy. Without an emergency fund unexpected expenses can wreak havoc on a budget. Taking money from retirement account is typically not best approach since that jeopardizes your future financial security and costs you money in penalty charges. Encourage your client to research high-yield savings options with your client to assure their money is earning the most interest, and garnering the fewest fees, possible. You may also want to discuss the importance of being adequately insured and other measures that can reduce economic hardship during disasters. An amount for saving should have been determined when your client was creating his or her monthly budget tracker. Now, work with your client to evaluate progress toward savings goals. Discuss any savings plans the client may already have through the military. Service members may already be contributing to the Thrift Savings Plan (TSP), and if not, walk though the benefits of these defined contribution plans. You may also want to review monthly expenses to determine if they could increase the monthly amount going into the TSP account. Here are some simple ways to decrease monthly expenses and increase savings.Participation in the TSP is a great way to start or to supplement a retirement savings fund. Early contributions toward retirement are an important practice for service members who are establishing sound financial management strategies. The amount of money needed at retirement is shaped by the sort of retirement a person envisions. For many of our service members, retirement is decades away. So, for now, the best plan is to put the power of time and compound interest to work. In the future, the service members will a great resource available as they begin to seek guidance to tailor their retirement savings and investment plan. Service members with children may be interested in starting a college savings accounts for their children.

Step 6: Investing

Service members who are meeting their monthly financial obligations may be interested in earning more from their savings. Start by determining your client’s level of risk tolerance. Young and financially secure clients may be willing to tolerate larger losses for the opportunity to gain higher returns, but this is not always the case.

The Thrift Savings Plan is an excellent way for service members to invest and save up to $16,500 pre-tax dollars a year, but some service members may also be interested in the benefit of opening an IRA to enrich their savings plan. In addition, active duty service members may be interested in the Department of Defense Savings Deposit Program (SDP), which was established to provide members of the uniformed services serving in designated combat zones the opportunity to build their financial savings. The SDP offers a guaranteed interest rate, currently at 10 percent annual interest, while the service member is in a combat zone and for up to 90 days after departing the combat zone.
To be eligible for the DSP, the service member must be receiving Hostile Fire Pay and be deployed for at least 30 consecutive days or at least 1 day in each of 3 consecutive months. Your client may want to consider timing the receipt of a re-enlistment bonus to meet the DSP guidelines. Amounts up to $10,000 may be deposited and will earn the 10 percent annual interest (compounded quarterly). Wouldn’t this be a great way to maximize that bonus? You will wan to be sure your client understands that interest does not accrue on amounts over $10,000 and that interest on balances up to $10,000 will cease on the 91st day after leaving a declared combat zone. Service members will want to have a plan for those funds after this period to keep their money working for them. Withdrawals can be made through a service member’s myPay system.

Working with service members to evaluate their savings and investment goals and expectations is a crucial step in developing a sound financial management plan. Next week we will discuss raising financially fit children, and the importance of modeling responsible financial behavior for the next generation.

What savings strategies do you suggest to clients? What hinders a successful savings plan?

Mapping the Networked Future

Thursday, November 17th, 2011
AleX NetLit

This is part of the “Hi, AleX” series — advice to AleX NetLit about enhancing her levels of network literacy through day-to-day personal and professional social networking. AleX Netlit is a fictional persona created by Network Literacy Community of Practice to serve as a guide to Military Families Service professionals, Cooperative Extension educators and others seeking to learn more about using online networks in their work.

@AlexNetLit on Twitter
More about Alex NetLit

 

 

Hi, AleX:

You’ve heard all this talk of flat worlds, emergent and open-source learning environments and you’re probably still a bit bewildered.

With that in mind, I wanted to point you to another great networking resource: informal learning expert Jay Cross’s brilliantly conceived map of the new flattened learning and networking landscape. It’s got to be one of the best graphic depictions in terms of demonstrating what will be required of us as professionals in the 21st century.

If two words best describe this new flattened learning environment they are freedom and informality. People are freer than ever to share ideas and seek feedback from others.

The Web made all of this possible.

The informal networks springing up across the world are also subverting traditional hierarchies. Consequently, the old plan-and-push approach  — the way you were trained a decade ago to develop and deliver your programming —is quickly being brushed aside within this flattened communications landscape.

Learning is now emergent.  Yes, I know, that sounds a bit obtuse to a newcomer like you, but it strikes at something very significant and remarkable about this new world.  Knowledge is no longer being handed down from on high by information brokers.  Tens of millions of people, many of them rank amateurs and even novices, are using the enhanced opportunities for conversation and sharing afforded by these new networks not only to learn on their own but also to expand their opportunities for learning.

They don’t need trained professionals or educators as they once did, because learning is now being constructed from the bottom up rather than from top down.

Granted, people are doing what they’ve always done — forming communities of practices among likeminded people — only now these communities are encompassing considerably wider scales that often transcend state, national and even continental boundaries.  Participants within these networks are gaining wider and deeper perspectives as a result.

Public and private entities are slowly beginning to get the picture.  They’re learning that the old plan-and-push approaches — conferences and workshops — account for only 10 to 20 percent of what their employees learn at work.

We live in an era of “unconferencing.” Employers are discovering that their top performers are skipping conventional approaches — conferences and workshops — opting for informal learning opportunities instead. Yet, if you think about it, that stands to reason:  People have always learned the most through informal conversation, trial and error and simply associating and working with people they know.

Networking is simply making all of this easier — not to mention, more fun.

A few employers are even beginning to realize that networking and emergent learning are doing most of the heavy lifting for them in terms of preparing their employees for the demands of the 21st century.

Finally, AleX, take special note of the section on conversations in the left-hand corner of the Jay Cross’s map.  In the end, that’s what all of this is about — conversation.  Cross is right: “Conversations are the stem of learning.”

People love to talk and the frequent and open conversations that are incurring from all this talking within formal networks is driving innovation.

Yes, I know you’re still a bit spooked by all this, AleX.  You fear that that networking will erode the daily conversations you undertake with valued clients — just understand that casual conversation is as vital and integral a part of this new communications order as it was in the old one.

The only difference is that you’ll being carrying on conversations within an even wider circle of people, gaining insights that you then can share with more intimate contacts.

So, relax, AleX, things are going to be fine: You’re soon going to discover that there is far more promise than peril in this new flat world.

Author: Jim Langcuster (@extensionguy)

Creative Commons License
This work is licensed under a Creative Commons Attribution 3.0 Unported License.

Born at 11:11am on 11/11/11

Tuesday, November 15th, 2011

Happy Veterans Day!

What better way for a veteran to celebrate Veterans Day than to bring a new little one into the world?

According to an article in the Huffington Post, that is exactly what happened to Air Force Staff Sgt. Christopher Saydeh and his veteran wife (also Air Force), Danielle.

On November 11, 2011 at 11:11am at the Virtua Memorial Hospital in Mount Holly, N.J., the couple’s newest addition to the family was born.

Jacob Anthony Saydeh entered the world at the perfect time to help his veteran mom celebrate Veterans Day.

Jacob who weighed in at 8 pounds, 13 ounces was born to a third-generation military family. Any predictions on his career goals?

So, what about your family? How was your Veterans Day? Share your memories in the comments section below.

Children of Wounded Warriors: Guidance for Caregivers

Monday, November 14th, 2011

Have you recently received a call that your service member has become very seriously injured (VSI) or seriously injured (SI)? Do you have a child who will be affected by your wounded warrior’s injury? Are you struggling to prepare your child for the emotional impact that your wounded warrior’s injury may have on his or her life?

If so, you can strive to overcome these challenges by preparing your child for what may occur during the first visit to your wounded warrior’s bedside. No one knows how your child will react when first seeing your wounded warrior; however, understanding your child’s emotional needs, planning ahead, and providing support to your child before, during, and after the initial visit may set the tone for how he or she will interact on future visits.

Developmental approach to the emotional care of children

Seeing a seriously injured service member can be emotionally distressing to children and teenagers. One aspect of preparing young people for the experience is knowing how to communicate with children of different ages.

Infants, toddlers, and young school-age children

According to the Center for the Study of Traumatic Stress (CSTS), young children are less likely to need to know the details about the injury that a teenager would require. Depending on your child’s age, use appropriate language that he or she will understand. Describe your wounded warrior’s injury from a child’s point of view. Younger children may find it helpful if you show where your wounded warrior is injured by using a doll, puppet, or other prop. Be aware of certain disclosures when talking to younger children about your wounded warrior’s condition. Do not provide details to a child who is not ready to hear them.

School-age children, preteens, and teenagers

School-age children, preteens, and teenagers are able to understand certain concepts and definitions, making it easier for you to explain certain medical terminology associated with your wounded warrior. Also, teenagers may feel as though they are being drawn back into their parents’ lives at a time when they are learning to become independent. Parents or guardians should not expect a teenager to take on the adult role in the family now that the service member is wounded.

Regardless of your child’s age, provide reassurance that your wounded warrior is still the same person even though he or she may look different. Provide comfort by letting your child know that it is okay to be angry, frightened, or sad.

Support for the first visit to your wounded warrior’s bedside

Knowing what actions to take before, during, and after your child’s first visit to your wounded warrior’s bedside will help all members of the family cope with the situation. Find out how you can prepare your child by going to: Children of Wounded Warriors: Guidance for Caregivers.

 

Steps to Financial Freedom: Know the Score

Friday, November 11th, 2011

Carolyn Bird and Molly C. Herndon

Last week, we discussed the first three steps PFMs can take with service members to get their finances on track: 1. Assess the situation; 2. Find the Motivation; and 3. Recruit Your Team. We also linked to free online tools that are useful in managing personal finances. This week, we’ll discuss credit scores and how you can guide your clients to improve their credit score..

Step 4: Know the Score
Having service members identify their credit score is a vital step on the path to financial freedom. It is especially important for service members to know their credit scores well in advance of making a major purchase; such as, buying a home or car. Helping service members understand how their everyday decisions affect their credit score empowers them to build stronger credit scores. Credit scores are comprised of many factors. By asking a service member the following questions, PFMPs can assist service members in understanding how their actions may affect their FICO score:

1. Payment history-35%. Are bills late and how often?
2. Amounts owed-30%. Are you maxed out? How many accounts have balances?
3. Length of credit history-15%. How long have credit accounts been opened?
4. New Credit-10%. Are you opening accounts frequently? How many new accounts do you have?
5. Credit types-10%. Is there a good mix of credit (credit cards, mortgages, or personal loans)?

As a financial educator at your installation you can assist service members in receiving their FICO score at no charge. The FINRA Investor Education Foundation provides special access for PFMPs to allow service members and their spouses an annual free FICO score. Click here to learn more about this FINRA-supported program. Access to the free FICO score site is arranged through your service branch’s Headquarters PFMP.

If your client discovers a low credit score, suggest the myriad of ways available to raise the score before making big purchases. Low credit scores mean higher interest rates which translate into larger monthly payments. Once service members understand this relationship, they will understand that raising the score quickly is in their best interest.

Service members with a strong credit score may want to move forward with their purchase. Lets say the service member in your office is thinking of purchasing a car. There are several items to consider, in addition to credit rating, that you may want to share. The service member will need to decide what type of vehicle is to be purchased and whether it will be new or used. A review of the service members finances will either support the initial choice or may suggest a change in approach. Together, tally up the monthly expenses to determine the amount of money that is available each month for a car payment and car related expenses, including insurance, gas and maintenance. Refer the service member to websites such as www.edmonds.com and www.kbb.com, and to the credit union to research car prices before visiting auto dealerships. For help determining the best options for car insurance, click here. Many insurance companies offer military discounts and the Federal Citizen Information Center provides 9 tips to lower car insurance costs. You may also suggest your client refers to http://www.nhtsa.gov/ to find out all the facts on their desired car before making a purchase. Fuel economy and safety features should be considered before making such a large purchase.

Besides a car purchase, when else do clients typically come to your office seeking a credit score report?

Stress Relievers for Young Children

Monday, November 7th, 2011

Worried girl and adultIn an earlier post, we learned that young children are not immune from stress – they experience it in much the same way that we adults do. Even the youngest children in military families experience the stressfulness of major changes like the absence of a parent during deployment or moving to a new home. They are also very sensitive to the stress of the people they are around most often. When the homefront parent or caregiver is sadder or more anxious than usual or very preoccupied because of concern for the military parent, the child will notice the change and become anxious himself. Of course, major changes and stressors happen in many children’s lives, so learning how to help reduce the negative impact of stress during those times will be helpful as you care for all children.

Signs of Stress or Anxiety in Children

As a child care provider who regularly cares for children from military families, you are very likely to have times when you notice behavior clues that a child is feeling anxious or stressed. Those clues will look different depending on the child and the situation, but there are some common indications of stress in very young children:

  • Changes in appetite or napping;
  • Regressing to earlier behaviors like thumb-sucking or wetting her pants or bed;
  • Changes in mood, having less fun than normal, being irritable, or being more withdrawn or aggressive than usual;
  • Recurring troubling themes in artwork or pretend play (one sign that a child is especially stressed is when they keep replaying fear-themed scenarios without feeling any enjoyment or relief from the play).

Any or all of these clues might indicate anxiety or stress in a child. But they might also be the result of other things, such as illness. The important point is to notice changes, jot down your observations, and pay attention to how long they go on. Talk with the parent or caregiver about what you’ve noticed and how you are planning to help the child. But be sensitive to the fact that he or she is also under stress. Communicate calmly, positively and with confidence that together you will provide the support the child needs to cope well.

 Stress Relievers for Children

Although it’s likely that you won’t be able to change the circumstance that is causing a child’s stress, there are some ways that you can help children calm themselves and reduce their body’s response to it. Besides doing your part to make sure they are well-fed and rested, there are also certain kinds of activities that have been found to reduce stress and anxiety.

 Sensory experiences: It’s no surprise that a soft blanket or cuddle toy can calm a baby. Beside the fact that it’s a familiar object, it’s the soft feel of the object that somehow stimulates calming chemicals in the brain. In fact, you can probably think of things you still find soothing to touch as an adult! Sensory experiences that focus on touch can be very soothing to young children. Playing with water, sand, playdough, goop (cornstarch and water mixture), fingerpaints, or modeling clay can all provide sensations that help reduce stress. Repetitive movements like rocking in a rocking chair, swinging, or being patted on the back provide a different, but also calming, sensory experience.

Large physical movement: Any kind of physical activity that gets kids energetically moving their whole bodies for a good amount of time helps reduce stress. Increased breathing and blood flow, as well as the release of feel-good endorphins in the brain, combine to help children’s (and adults’!) feelings of well-being. Regular exercise has the added benefit of helping children sleep and eat better, too, which all works together to make them more resilient in the face of stress.

 Music:  Music can be used in a couple of key ways to reduce children’s stress. Slower, soothing music, especially instrumental music, has been shown to slow breathing, lower blood pressure, and reduce amounts of the stress hormone cortisol in the brain and body. Soothing music can be played softly in the background during quieter periods of the day. You can also use it in a more direct way by helping children breathe in time to the beat, close their eyes and imagine floating or flying, or slowly move their bodies to the music. More energetic, upbeat music can be used to get children moving, dancing, and laughing – all of which create “feel-good” chemicals in the brain that counteract the stress chemicals.

Humor:  Humor is an anti-stress tool you may not have thought of before. Researchers are finding more and more evidence that laughing results in actual physical changes in our bodies – lower blood pressure and heart rate, better breathing and digestion, and the release of endorphins in the brain. Luckily, it’s pretty easy to get most young kids to laugh! Goofy silliness reigns supreme in the preschool world of humor. Find what tickles the funny bone of the child you are concerned about and be sure to provide regular opportunities for laughing. As it turns out, laughter really is good medicine!

Not every strategy will work equally well for every child, so apply what you and the parents know about a child’s personality and preferences as you put strategies in place to help reduce his feelings of stress and anxiety. The good news is that every one of the stress-reducers described above is also good for all kids, any time! Music, movement, laughter and sensory experiences should all be a regular part of an early childhood program. But for children who are in a particularly stressful situation such as the absence of a deployed parent, be especially sensitive to their need for these experiences and their response to them. And then be sure and share what works with the homefront parent or caregiver so they can try these strategies at home. By using them at home, too, the whole family can benefit from their stress-reducing effects!

Steps to Financial Freedom

Friday, November 4th, 2011

Contribution by Molly Herndon and Carolyn Bird

Digging out of a mountain of debt can seem like an impossible task, and many resist asking for help. Service members may feel anxious about their options or be unaware of the wide range of services provided to them on base and, increasingly, online. As a PFM you may ask yourself– how do I help a service member find the motivation to stick with a financial management plan? Over the next few weeks, we will be going back to the basics by outlining steps and strategies you can use to help your clients who are looking for financial guidance to get on track.

Step 1: Assess the Situation
The first step is to assist the service member in getting the finances under control by assessing the current financial situation. The service member, and you, must know what you’re up against before you can create a plan to get out of the cycle of debt. Using a net worth calculator

Depending on the specific circumstance, you may recommend your client consider consumer credit counseling, debt consolidation, refinancing or transferring balances to get a handle on existing debt. Each of these strategies comes with advantages and disadvantages. It is important that the client be aware of and ask the lender for an explanation of any increase in the number of payments and interest rates or fees. A clear explanation of costs or extended periods of indebtedness will help the client to evaluate whether the plan is in their best financial interest. Credit repair agencies often promise to remove negative credit information for a fee. Be sure your clients know that the only legal method of improving a credit score is through a history of on-time payments or the removal of false negative information. Steering clients away from credit repair agencies is good practice, saving your clients valuable time and hard earned money.

These initial meetings may be a good time to suggest creating a monthly budget tracker. Tracking every penny that comes in and goes out is the only effective measure toward changing spending habits. Providing clients with an easy-to-use worksheet, like this one, may help clients get started with this new habit.

Step 2: Find the Motivation
What’s really important is what happens after the service member leaves your office. One way to motivate might be to show just how much the debt truly costs. Using the credit card calculator on myfico.com, I experimented with a balance of $3,000 at an interest rate of 18 percent and payments of $75 a month. Guess what? This debt costs $509 a year! Before you run the calculator, ask the service member about favorite hobbies or something he or she would like to buy. Run numbers on the calculator and show the service member just how much the debt at minimum payments is costing them each year. Ask if they wouldn’t rather use that $509 toward that hobby or purchase.

Step 3: Recruit Your Team!
While PFMs are part of the service member’s team for financial fitness, the most important team member is the service member’s spouse. Discuss with the service member how he will discuss this with his spouse to get her motivated too. Ask about the spouse’s favorite things and help the service member devise an approach that rewards both of them for working together toward a financial goal.

These are just the initial steps in working toward financial freedom. Later we will discuss saving, investing, and raising financially fit kids. There are many approaches to debt solution. What strategies have you found works well in helping service members turn their financial situations around?

Banking Fees Add Up

Tuesday, November 1st, 2011

Lately there’s a lot in the news about checking accounts and debit card fees. So, I thought this would be a good time to take a look at checking account features.

A recent survey by The New York Times found that the average bounced check fee is now $30.83, which is a record. In addition, many banks are abandoning their free checking account option, but may offer accounts that allow customers to avoid fees by maintaining a certain balance or by electing for direct deposit. When shopping for a checking account, watch for account features that should raise “red flags,” such as the inability to link the account with a savings account or overdraft fees on debit card transactions. To help service members avoid excessive fees, encourage clients to ask about the specific features of an account before moving their business to a new bank. The Center for Responsible Lending offers a bank-guide to answer just these questions. Click on the Checking Account Practices tab to see how bank features compare.

However, this guide doesn’t address the recent trend in debit card usage fees. What are you hearing about debit card fees? Bank of America has taken a lot of flack for their $5 debit card fees, but many other banks have already instituted fees or are considering implementing fees in the future.

Military-affiliated credit unions often charge fewer fees than standard banks.

Fortunately, service members and other consumers have other options. Opening an account with a credit union and smaller community bank is often the first step toward avoiding or reducing banking fees. Regardless of the advantage of avoiding fees, research has shown consumers are often hesitant to change banks because they have become accustomed to how a bank operates, even if they don’t care for the fees associated with services. As more users move to online banking, the thought of switching over all their online accounts may seem like more trouble than it’s worth. However, a closer look at how quickly these fees add up might make it worth the annoyance; like the 3,200 people who decided to become new customers at Navy Federal Credit Union. Earlier this month, the Navy Federal Credit Union reported 3,200 new accounts opened in just one weekend. Many new customers had left behind banks that now charging debit card fees.

Are your clients paying these fees or changing financial institutions to avoid fees?

Beyond debit card fees, what are the features we need to look for when shopping for a transaction account?

What are the features likely to get an account holder into trouble?