My profession is finances but my passion is helping military families. But I’m not the only writer whose professions and passions collide. At a #USAA blogger conference held every Fall, I met Jeff Rose, author of Soldier of Finance, where he compares the battles of finance to that of the reality of living in the military. He has great stories about his time in the military, and correlates them directly into the war of Finance.
In a chapter entitled “FRAGO—The Savings Accounts Survival Guide,” Jeff talks about the importance of putting away an emergency fund to be able to pay bills and enable you to live for a period of time if your income were to suddenly stop. Just like life in the military, there are always going to come things that you cannot predict and you must have the means of adjusting your plans on the basis of new contingencies.
The Army calls these midcourse corrections FRAGO, which stands for “Fragmentary Order,” but Jeff calls it “Financial Reserve and Goal Fund.” He suggests that 3 months is ideal, which gives you time to make whatever adjustments are necessary. He warns to also be on the lookout for imposters that make you think you have cash on hand when you do not, which are taken directly from Jeff’s book:
- Credit Cards: Just because you borrow cash does not mean it comes cheap. When you pay 20% interest on the money you borrow, you are just digging yourself into a deeper hole.
- HELOCs (Home Equity Line of Credit): Equity in your home is not as good as cash. When you take out a line of credit on your home you could potentially be putting yourself at financial risk because: 1) HELOCs are debt because you are still borrowing money, 2) They may disappear because the rules and availability if HELOCs have changed since 2008, and 3) Because you use your home as collateral, you could lose your home if you aren’t able to make the payment; it’s not worth putting your home at risk.
- Payday Loans: If you take out a payday loan, you could still have the same problems as a credit card, but worse interest rates. About 200% to 500% worse, to be precise. Don’t get sucked into these vicious cycles.
- Your Stuff: If you think you can sell your stuff at a pawnshop or consignment store, Jeff recommends to not bank on it. There are other people thinking the exact same thought, and you will be very surprised at what you will actually receive for your “valuable” items.
Jeff gives solid financial advice whether you are soldier or not. It’s great to have friends that love military families as much as I do!
America’s Family Financial Expert (R)