Archive for the 'General' Category

Risky Business

Nov 27 2012

Investors expect the Government to protect them against risks but what if that same government actually exposes them to danger?  Fed Chairman Ben Bernanke wants savers to take more risk – and a lot of them are taking him up on that.  Interest rates on “high-yield” bonds fell to record lows in mid-November.  These higher-risk securities (better known as “junk bonds” because of the low creditworthiness of the borrowers) have become popular along with just about any other investment product that promises above-average yields.  But do the buyers always appreciate the extra risk?  I doubt it.

By driving short-term interest rates close to zero, Bernanke is pressuring traditional savers to take on greater investment risk – knowingly or unknowingly. Now the Chairman’s ultimate goal is not to punish savers but rather to stimulate the economy – although after 4 years of this, you have to question the effectiveness of his strategy.  Nevertheless, the result is the same – the typical saver who relied on income from savings accounts and CDs has been forced to choose between punishingly low returns or higher risk investments.

The real crime here is that, by definition, traditional savers are very unsophisticated when it comes to judging the risks of investment products and can easily be led astray by unscrupulous or uncaring salesmen.   This is particularly true when the need for income overcomes their natural skepticism.  People begin to believe that maybe this time they can get higher return without greater risk even though, in their heart of hearts, they know better.

Savers can protect themselves by following a few simple rules:

  1. Remember that “there is no free lunch.”  Higher returns always involve higher risks and just because you don’t see any risk doesn’t mean it isn’t there.
  2. Don’t take risks when you can’t afford to lose.  If a bad outcome will seriously erode your standard of living you can’t take the risk regardless of the potential payoff.  “Don’t gamble with the rent money even if you think it’s a sure thing.”
  3. If you can afford a loss, be sure that you are adequately compensated for taking on higher risk.  If a high quality bond will pay you 4% how much more should you ask from a less-creditworthy borrower who might stop paying?

Misguided government policy causes collateral damage.  Don’t let it happen to you.

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New Policy Changes and Mortgage Programs to Help Military Members

Jul 25 2012

With so many military families facing mortgage challenges due to Permanent Change of Station (PCS) moves, deployments, underwater mortgages, and perhaps other reasons, mortgage lenders are being creative with developing new programs to help military members and families.

If you have a mortgage owned or guaranteed by Fannie Mae or Freddie Mac, additional assistance may be available soon. The Federal Housing Finance Agency (FHFA) recently announced changes to short sale policies that will make it easier for military homeowners with Fannie Mae and Freddie Mac mortgages to honor their financial commitments when they are issued a PCS order.

To learn more about the details and eligibility requirements refer to the FHFA Short Sale Asst for Mil Homeowner – Fact Sheet  on FHFA website.

CitiMortgage announced the launch of new programs geared toward members of the military – one of those programs being the military Permanent Change of Station (PCS) Transfer Assistance Program.

The program is available for military service borrowers with CitiMortgage-owned first mortgages who have to relocate due to PCS orders. Other programs CitiMortgage has developed to assist active duty and veterans include Citi’s Disabled Veterans Mortgage Relief Program and Veteran’s on Wall Street.

Whether your mortgage is owned by a federal agency or commercial lender, if you are a military member and experiencing financial challenges due to homeownership there may be programs available to assist you. Call your mortgage company or lender to find out more, or visit

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Ready to call it quits with your spouse?

Jan 26 2012

This content is provided courtesy of USAA.

Make sure you understand the financial realities of divorce. You may feel 110% ready to divorce, but have you considered the financial implications of splitting up?

“When people are thinking about divorce, many are just ready to get out at any cost. That is exactly the wrong attitude to have. You have to plan carefully,” says June Walbert, a CERTIFIED FINANCIAL PLANNER™ practitioner with USAA. “In virtually every divorce, there is a major lifestyle change. You have to keep in mind the financial ramifications for today as well as for decades to come.”

The Right Paperwork

If you’re splitting funds from your spouse’s 401(k) or other retirement account or pension, you’ll need a Qualified Domestic Relations Order, which:
– Officially directs the ex’s employer how to pay your portion of the account, as determined by the divorce decree.
– Must be submitted to the plan administrator.
If an annuity is divided in a divorce decree, a similar document may be required to finalize the payment plans. Check with an attorney for additional legal information regarding your particular situation.

Dollars and Divorce

The good news is that many people seem to grasp the connection between their bank accounts and their marital status. Among the 44 states that collect divorce stats, divorce rates dropped by 5% between 2006 and 2009 — just when the economy was at its worst, according to the Centers for Disease Control and Prevention. In fact, 38% of those who responded to a survey by the National Marriage Project at the University of Virginia who were considering separation or divorce said the recession caused them to put aside their plans. However, law firms nationwide are reporting a recent surge of business, as couples feel more confident that the improving economy can more easily sustain two households.

“The economy affects whether people can afford to divorce. It affects what you do with the house, a family business, child support and alimony,” says Linda Lea M. Viken, president of the American Academy of Matrimonial Lawyers and a Rapid City, S.D., family law attorney with more than 30 years of experience. “If people don’t have money, they can’t even afford appraisers or lawyers. When considering divorce, you have to take off your emotional hat and put on your business hat because you’re making business decisions.”

Even if the recovering economy has boosted your confidence in your ability to afford divorce, make sure you have a clear picture of your financial reality.

Make a Budget

Before you divorce, sit down with a paper, pen and calculator to figure out how you will pay for everything, Walbert says. A divorced couple will suddenly have two households to maintain financially and two retirement accounts to fund.

“When going through a divorce you need to know how the numbers shake out, so know what you can afford and what you can’t,” she says. “The numbers don’t lie.”

Even if one party earns the bulk of the income, it is unlikely that person will walk away with the bulk of the monthly income or assets. Keep in mind, however, that in many states a great deal of discretion is left to the judge or courts. If children are involved, child support and even spousal maintenance often are awarded, making the keeping of the proverbial lights on in two homes a question mark for both parties.

Tax Impact

Even if you calculate your current income and expenses down to the nickel, you probably still don’t have an accurate picture of what your checkbook will look like after a divorce. Divorced couples lose out on the tax benefits of filing jointly, and only one person will have the tax advantage of filing as head of household if awarded primary custody of the kids. Child tax credits, child care deductions, and the family home’s interest and property taxes likely will be declared by just one of the parties — assuming the couple’s house was not sold. “It’s a big difference whether you have those deductions or not,” Viken says.

Further, make sure to tidy up past years’ filings before calculating your new bottom line. There is nothing worse than finding out too late that a dishonest spouse lied about paying or filing previous taxes — or worse, cheated on the filings. Remember, you will be liable for any tax obligations incurred during the marriage.

Bottom line: There’s a good chance that at least one party will be paying more taxes, which slashes take-home pay for everyone. And that further squeezes what is likely a tight financial situation.

Retirement — Your Future Now

“Even if you’re in your 30s or 40s, you must consider the impact that a divorce today will have on your retirement in decades to come,” says Walbert. In many cases, retirement funds amassed during a marriage are split 50-50 — no matter who earned the money. A spouse’s military retirement paycheck or corporate pension may also be considered part of the settlement. Likewise, when couples have been married at least 10 years, the poorer spouse is eligible for up to 50% of the ex-spouse’s Social Security benefits at age 62, if greater than his or her own.

That said, use an online calculator to figure out how far these divvied-up retirement assets will help each of you in retirement, and what earning potential you and your spouse have between now and then. Chances are both parties will have to save more and work longer than originally planned.

Certified Financial Planner Board of Standards, Inc. owns the certification marks CFP® and CERTIFIED FINANCIAL PLANNER™ in the United States, which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
USAA or its affiliates do not provide tax advice. Taxpayers should seek advice based upon their own particular circumstances from an independent tax advisor. This material is for informational purposes. Consider your own financial circumstances carefully before making a decision and consult with your tax, legal or estate planning professional.

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New Law Change Increases VGLI Coverage Limits Available for Veterans

Jan 10 2012

New Law Change Increases Insurance Coverage for Veterans

The VA just announced that theyhave increased the limits for coverage under the Veterans Group Life Insurance (VGLI)  program. The VA press release is below. This could be a good opportunity for those veterans who need and use the VA as their life insurance provider. Keep in mind though that VGLI is term insurance, and premiums increase dramatically as we age. Many veterans determine that they can’t keep their life insurance in force later in life because the premiums are too expensive. How will you provide for your loved ones if you can no longer afford your life insurance premiums?

Take a look at the chart of VGLI premiums from the VA before you decide whether to increse your VGLI coverage.

Here is the link to the premium tables for VGLI: 

Those are the monthly rates. Download the chart for a good view, broken down by monthly, quarterly, semi-annual and annual rates, of how much this insurance costs. Take a look at the costs at age 70 and beyond. Will you be able to pay those rates in later life? Obviously, you’ll need more than VGLI to complete your financial planning.  

With all life insurance, it pays to shop around and do your homework.

WASHINGTON – Some Veterans covered under the Veterans Group Life Insurance program (VGLI) now have the opportunity to increase their coverage to the current maximum coverage under the Servicemembers’ Group Life Insurance (SGLI) program.

“Currently, 70 percent of the Veterans covered under VGLI are under age 60, have less than $400,000 of coverage, and will greatly benefit from this law change,” said Allison A. Hickey, Department of Veterans Affairs under secretary for benefits.

Under the Veterans’ Benefits Act of 2010, enacted on Oct. 13, 2010, Veterans can increase their coverage by $25,000 at each five-year anniversary date of their policy to the current legislated maximum SGLI coverage, presently, $400,000.
To date, approximately 21 percent of eligible Veterans have taken advantage of this opportunity, resulting in nearly $113 million of new coverage being issued.

The VGLI program allows newly discharged Veterans to convert their SGLI coverage they had while in the service to a civilian program. Before enactment of this law, Veterans could not have more VGLI than the amount of SGLI they had at the time of separation from service.

For example, those who got out of the service prior to Sept. 1, 2005, when the maximum SGLI coverage was $250,000, were limited to $250,000 in VGLI coverage.

Now on their first five-year anniversary, these Veterans can elect to increase their coverage to $275,000. On their next five-year anniversary, they can increase the coverage to $300,000, and so forth.
The additional coverage can be issued regardless of the Veteran’s health. To be eligible to purchase this additional coverage, the Veteran must:

• Have active VGLI coverage,
• Have less than the current legislated maximum coverage of $400,000,
• Request the additional coverage during the 120-day period prior to each five-year anniversary date, and
• Be less than 60 years of age on the five-year anniversary date of his or her coverage.

Eligible Veterans are notified of this opportunity a week before the start of the 120-day period prior to their anniversary date, and twice more before the actual anniversary date.

For more information about VA’s Insurance Program or other VA benefits, go to or call 1-800-827-1000. Veterans are also encouraged to visit VA’s web portal eBenefits – Insurance.

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Tricare to Offer Credit Monitoring in Wake of Data Theft

Nov 08 2011

Tricare to Offer Credit Monitoring in Wake of Data Theft

While Tricare Management Activity maintains that there is no evidence that sensitive personal patient information stolen in September has been accessed by a third party, the insurer now says it will take “proactive measures” to ensure that patients are protected.

On Sept. 12, an employee of Tricare contactor Science Applications International Corp. reported the theft of computer tapes containing personal health information of 4.9 million Texas patients. While the tapes contain no financial data, they do include patients’ names, Social Security numbers, addresses, phone numbers and personal health data.
TMA, which has insisted that information on the tapes would be difficult to access, has been criticized for not providing free credit monitoring in the wake of the theft.

But on Nov. 4, TMA announced that it has directed SAIC to provide one year of credit monitoring and restoration services to “patients who express concern about their credit.”

“We take this incident very seriously,” said Brig. Gen, W. Bryan Gamble, TMA deputy director. “The risk to our patients is low, but the Department of Defense is taking steps to keep affected patients informed and protected.” Gamble said the measures “exceed the industry standard to protect against the risk of identity theft.”

TMA said concerned individuals can contact the SAIC Incident Response Call Center on weekdays from 9 a.m. to 6 p.m. ET at (855) 366-0140 (toll free) in the United States, and (952) 556-8312 (collect) internationally.

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