Department of Defense Update CDR Dave Julian Deputy Director, OSD Office of Family Policy

Americas Financial CultureThe average American spends $1.22 for every $1.00 they make!

The average household has seven credit cards and pays $8,500 a year in finance charges!

The average 25-34 year old spends 25% of their income on paying down debt!

The average American adult receives a failing grade for their knowledge of basic economic concepts!You cant afford to be average!!That means if you make $30,000 a year, youre spending $36,600!?And meanwhile, the credit card balances continue to growThats one-fourth of your income you cant use for yourself or your family!Bottom Line?They dont understand how to properly budget, save, or investSource: Financial Literacy and Education Commission Jan 07; National Council on Economic Education

* Regional Joint Services Family Assistance Workshop OSD/MC&FP

IntegrityThe Militarys Core Valueswill be upheld:Our Service members must pay their just debts** Payday loans are just debts. Declaring bankruptcy betrays the unique trust that has been bestowed upon our Military and should be viewed only as a last resort, if at all.


The Pillars of Personal Financial ReadinessGood CreditFinancialStabilityRoutineSavingsTSPSGLILow %LoansSecurityClearanceMWR


Military One SourceTelephonic counselingMilitary Family Life ConsultantsCertified financial counselors, in concert with installation Personal Financial ManagersAll services, all componentsOn-call, by requestBriefings, one-on-one counseling, education & trainingTurbo TAP

Counseling


FINRA initiative in partnership with AFCPE & NMFAProgram:Personal Finance and Financial Counseling & Debt ManagementStudy group webinarsExaminationsPracticum hours (scaled)200 selectees from 2000 applicants172 active participants (11% drop rate)All Services, componentsStatus: 31 AFC-certified, 7 finalizing cert processPracticum hoursEmployment opportunities following certificationMilitary Spouse Fellowship Program


Youth Outreach50% of our military youth will join (or seriously consider joining) the militaryThe Challenge:Fewer than half of high school and college students have a regular savings planOnly about one-fourth of those students stick to a budgetOver 30% of students don't keep track of their spending at all

Youth and Money Study American Savings Education Council 2007According to the National Endowment for Financial Education, as few as ten hours of classroom instruction can be enough to persuade students to improve their spending and saving habits


Military Youth Saves 2008 Pilot11 Pilot sites: West Point, Fort Buchanan, Norfolk (area), San Diego (area), Camp LeJeune, Camp Pendleton, Beaufort, SC, Eielson AFB, Lackland AFB, Mountain Home AFB, Minot AFB, DLA sites: Susquehanna, PA and San Joquian, CAYouth Center, CDC, Family Support Center programsDoD Education Activity (DoDEA)Meeting scheduled - December 07Financial-related curricula, standards, after school activities, etcDoD Financial Partners:Jumpstart CoalitionABA/AMBA Education FoundationBBB/B&GCA Money MattersHow can we reach our youth?

Youth Financial Readiness


Circulate prominent trainers globally to reach military members and their familiesMajor events: address pillars with personal flair/causeMoneywise in the Military with Kelvin BostonJapan, Seattle (Oct)Personalities being sought:Ben Stein Suze Orman (Ft Dix)Jim Cramer (Mad Money)Rick AdelmanKelly PerdewDr. Robert Manning (Credit Card Nation)PSAs, DVDs, CDs, Podcasts, Conferences, etc

Media/Speaker Circuit


First meeting on 31 Oct with NC State Project Officer & USDA Program Manager to discuss:Target audience(s)Financial areas of emphasisCompetency requirementsReviewing, reporting, and referral requirementsFour phases:Phase 1: Preparation (to be completed 4th quarter 2007) Phase 2: Development (completed mid-2008)Phase 3: Delivery (NLT 30 Aug 2008)Phase 4: Evaluation Financial Council meeting to discuss with PFMsWeek of 10 December

On-Line Competency


Career Advancement Accounts (CAA)Demonstration ProjectFund Education, Training, Certification/Licensing necessary for Mil Spouses to have a career Provide valuable, trained workers to businessesIncrease financial stability of military familiesSupport retention/readiness of US Armed ForcesPartnerships: DoD, DoL, State Gov, Workforce Investment Boards, othersFocus: specific portable and high-growth career fields

For more information: www.milspouse.org, and Ms. Pamela Smith [email protected] 703-602-4949 ext 119


CAA Participating States and InstallationsCalifornia Camp Pendleton (Marine Corps)San Diego (Navy)ColoradoFort Carson (Army)Peterson AFB (Air Force)FloridaEglin AFB & Hurlburt Field (Air Force)Jacksonville NAS (Navy)GeorgiaFort Benning (Army)HawaiiNS Pearl Harbor (Navy)Hickam AFB (Air Force)Kaneohe Bay (Marine Corps)Schofield Barracks (Army)North CarolinaFort Bragg (Army)Pope AFB (Air Force)

MaineBrunswick NAS (Navy) WashingtonFort Lewis (Army)McChord AFB (Air Force)Naval Base Kitsap-Bremerton (Navy)


Joint Services Family Assistance WorkshopsRegional workshops conducted by MC&FP staff to brief family support and children & youth personnel of all Services and components on support programs, pilots, and initiatives and to allow networking Topics covered:Children & Youth programsFinancial ReadinessMilitary Home Front.dod.milTurbo TAPSpecial Needs ProgramsSchedule:15-18 Jan 08 (tent): Jacksonville, FL (GA, SC, FL, AL)11-15 Feb 08 (tent): San Diego area11-14 Mar 08 (tent): Washington, DC and Norfolk, VA8-11 Apr 08 (tent): Phila, PA (PA, NY, NJ, DE, CN, NH, MA, ME, VE, RI)12-16 May 08 (tent): Midwest (KY, IL, IN, OH, TN, WV, MI, MO, NE, KS, SD, ND, IA, MN)9-13 June 08 (tent): Southwest (AZ, CO, UT, NM)

Spouse Employment ProgramsHeroes to HometownsMilitary One SourceJFSAPPilots, initiatives


Joint Family Support and Assistance ProgramBackground: NDAA 07 - The Secretary of Defense shall carry out a joint family support assistance program for the purpose of providing assistance to families of members of the Armed Forces. JFSAP Mission: Provide mobile, high quality family services to augment current family programs ability to meet the needs of Active Duty, Guard and Reserve family members.Primary focus of support will be families who are geographically dispersed from a military installation

Functional areas:Financial and material assistanceMobile support servicesSponsorship of volunteers and family support professionals for delivery of support servicesCoordination of family assistance programsFacilitation of discussion on military family assistance programs between and among military and civilian stakeholders


Joint Family Support and Assistance ProgramStaffing: Each location will have three key staff members:Child & Youth Consultant Military and Family Life Consultant (MFLC)Military OneSource (MOS) Consultant

Staff Function: Partner with military, state and local resources to:Assess needsIdentify resources & address gapsEnhance/build community capacityFacilitate an integrated service delivery system and a community of support for military familiesPilot States:Alabama, Arkansas, California, Colorado, Florida, Hawaii, Indiana, Minnesota, Nebraska, New Hampshire, Ohio, Oregon, Tennessee, Texas, West VirginiaExpanded from 6 to 15 in August 07


Financial Readiness = Mission Readiness- Dr David ChuUnder Secretary of Defense for Personnel & ReadinessGood creditFinancial stability Regular savingsContribute to TSPDont Opt-Out for SGLILow % loansSecurity ClearanceBad creditBankruptcy No emergency savingsNo retirement savingsNo SGLI/insurance Predatory loansNo ClearanceMission Success vs Mission Failure


Great News!Military Money magazine Fall 2007Americans Well-Informed on Automobile Retailing Economics (AWARE) reports:Americas military personnel are particularly prepared for this major financial event in their lives, more so than Americans in general.they are more likely than the average consumer to understand the process of buying and financing a vehicle, and to spend time researching their options1-Credit Card, 2-Vehicle Financing, 3-Furniture/Appliance Financing, 4-Home Improvement LoanMilitary MembersResearch FinancingOptionsRespondents whoCompleted > 3 hrs ofResearch


Questions?Feed the Pigwww.feedthepig.org


* DoD is changing its strategy regarding personal readiness. Weve always understood that we need to instill a culture of financial responsibility within the military, but we need to ensure that were reaching the right audience. The challenge over the years has been to transform the military's financial culture where servicemembers feel they can address their financial difficulties without career repercussions, and where they value having emergency savings and good credit To this end, many military leaders have been exercising a positive and proactive approach to personal finances rather than a negative and reactive one. Encouraging servicemembers and families to come forward when they are experiencing financial challenges and connecting them to the resources they need before these challenges balloon into insurmountable problems are some of the key roles they have played. Through the Department of Defense Financial Readiness Campaign, the Department of Defense, the Military Services, and the Department's nearly 30 financial non-profit partners will continue to educate troops and families on the payday lending issue to ensure they are equipped with the tools necessary for financial self-sufficiency. DoD is looking at the entire family as a unit and addressing each member through tailored programs: the Military member, the spouse, and the children/youth. We need to arm all of them with the appropriate tools as necessary to put them on that path of financial literacy and responsible behavior. - With the current deployment dynamic, in most cases, the spouse is the one controlling the family finances. Youll see DoD and the Services are trying to provide additional tools and programs (such as employment) to help spouses improve.- We get most of our military members right out of high school. As we will see, they will have received very little training and education regarding personal finance. As a result, in many cases, our new accessions come into the military with very little financial training. - We ask much of our military families. It is our duty to ensure they are financially prepared.

To change our culture, we have to look at Americas financial culture (since were a microcosm of the larger society). The numbers are sobering. Stats not included: The average 2 adult family has $13,000 on credit cards!!? The average young Americans credit card debt is $4088 (www.feedthepig.org) The 25-34 year old age group is also the 2nd most likely age group to declare bankruptcy - why is this significant? Look at the militarys demographics: 46% of the military is 25 years or younger 38% of the 25 and under crowd is married (3 times the average for their civilian counterparts) 21% of this crowd has childrenWere obviously a young force, and our young Service members have big family responsibilities (spouse and children); more so than their civilian counterparts. What they have in common with their civilian counterparts is they left high school (and college) with very little (if any) financial training or education. Also, to give you an idea of what were up against just in the military, some military recruits begin boot camp with anywhere from $6000-12,000 in unsecured debt. This is before they event begin their military training! This reflects the poor financial footing some of our young people find themselves even before they start their careers!Military people are people who mean what they say and are good for their word....that means we honor our commitments to pay back Creditors.it doesnt matter how the Service member/family got there - most likely through uninformed, undisciplined, bad decisions - some stupid - they still owe that money. Our job is to keep them from getting into that situation from the start altogether.

The National Association of Federal Credit Unions (NAFCU) states that in the financial world, there are the three Cs: capacity, capital, and character.

Military members are responsible citizens and WILL pay back their just debts.

If we were going to discuss our financial campaign platform, we would discuss these seven objectives or pillars as an attempt to group the main punch points wed like to get across. Good credit - how to manage it, track it, get on the good side of credit, and protect it, so this includes protecting identity and preventing ID theft Financial stability - Good spending habits - living within ones means. Tough in todays instant gratification world, but the message has got to be pay me now, or pay me dearly later. Also, were going to try to lose the word budget from our vernacular - it has negative connotations, like the word diet. The operative phrase were going to try to use is spending plan - positive connotations and implies you can still spend - after paying yourself, bills, TSP, etc. Routine savings - emergency savings, etc. Statistics show that as little as $500 in savings for emergencies would eliminate nearly 90% of the payday loans which were historically lended to Military members. TSP - in Hawaii, stumbled upon a class at the FFSC in Pearl called Million $ Sailor about financial literacy, but especially TSP. Outstanding class - working groups - and discussed both basics (what does IRA stand for?) and the details (the different type of TSP funds). The group was wowed by the idea that if they maxed out TSP even if they stayed an E-5 for 20 years, they would still end up with over a $1M). Discuss money lost due to X years of delay in investing calculator also made an impression on these young Service members. SGLI - best deal around. Significant impact: TSGLI ineligible if dis-enrolled ($25K 100K) Low % loans - offered by our financial partners, on-base CUs and banks. We are encouraging them to offer low-cost alternatives NAFCU, DCUC, and AMBA are the venues to do this. Predatory loans put the member in a spiraling cycle of debt - money is made by rolling over the loans - the average predatory/payday loan is rolled over three to six times. By the time youre done, your interest rate could be in the several thousands. Even with the predatory lending cap of 36% which will be implemented via Federal regulation in Oct, we still need to identify alternatives as predatory lenders will be getting smarter and finding alternate ways to get at our members/families. The new regulation covers refund anticipation loans, car title loans, and payday loans. MWR much in the same way were asking our on-installation banks and credit unions to offer alternatives to troops, we are asking MWR organizations on our installations to ensure they are visible, affordable, and available. Security Clearance - it is a myth that receiving counseling of any kind will endanger your security clearance, but it is NOT a myth that significant financial troubles will. Dont have specific numbers, but Services have reported dramatic rise in # of clearances revoked. Unofficial number from one Service is that they reported a 3 fold increase between 2006 and 2007. Additionally, the Navy reported (NAVADMIN 198/07) that 78% of the DON denials/revocations of clearances were due to poor financial management.

Very little training in high schools and colleges provided to our young people. DODEA engagement is another area that needs to be addressed - we need to train our young people in our schools - whats easier? We control curriculum. Financial baggage - remember that some recruits may bring into the service with them significant unsecured debt prior to even starting boot camp. Disturbing facts: 94% of young singles know that insurance is important, but: 20% of young singles let their auto insurance lapse to save money 18% decline employer health plans (not a concern of our crowd), but shows the bad decisions that can be made. 87% of students rent; only 24% have renters insurance.

ABA/AMBA Education FoundationFor Teens and Young Adults Developed for 14-22 year olds, the program teaches the basics of good credit management in an engaging and interactive way to capture the attention of the target audience. Interactive module reviews help the learner see if key points are remembered andpre-and-post quizzes measure results. Subjects covered include:Becoming Creditworthy Budgeting Comparing Credit Cards Understanding Credit Reports Safeguarding Your Personal Information

The Goals of this demonstration is to fund the educational requirements of our military spouses so that we can provide valuable, trained workers to American businesses. This will both create financial stability for our miiltary families as well as positively affect retentionMilitary Spouses routinely lose 6-9 months of income during a military move which occurs on average of every 18-36 months.Career Advancement Accounts are self-managed accounts that will enable military spouses to gain the skills needed to successfully enter, navigate and advance in Americas workforce.Eligibility will be determined by the Installation Education Centers but the actual accounts will be administered by the local One-Stop Career Centers. The maximum amount of the CAA is $3,000 for one year. The accounts may be renewed for one additional year, for a total of a two-year account amount of up to $6,000.CAAs can ONLY be used for education and/or training provided by post-secondary institutions. Those costs can include tuition, books, fees and certification/licensing testing.The demonstration project will be for spouses of enlisted active duty members who have one year remaining at their current duty station. The military spouses must have at a minimum a high school diploma or GED. Military spouses are considered by DOL as Dislocated Workers due to their mobile military lifestyle.The CAAs will be used for education and training in portable high demand occupations. The four targeted career fields include:Finance,Technology, Health Care, EducationProgram Manager conducting training nationwide (and HI) with installations and DoL One-Stop Centers. Spouses will be encouraged to start the process in November.

These are the states and installations that are selected for the initial demonstration project.Goals:Create a high-tech, high touch web-enabled community to connect military families with each other and with supportive resources 24/7Increase availability of resources for family membersIncrease awareness of active/Guard/Reserve members and families of existing servicesInform leadership and service providers about the range of available programs and services, and how they may be accessedProvide Child Development resources and referral Sponsor volunteers and family support professionals Assess the need for enhanced support Integrate services and programs into a comprehensive delivery system that responds to members and families at all stages of the deployment cycle

Overview:DoD responsible for oversightEach JFSAP will be co-located with the National Guard Joint Force Headquarters Command OSD & JFSAP staff at each location will coordinate activities with the Services, Guard & Reserves, helping organizations, community agencies and other military and civilian stakeholders

OSD MC&FP will provide 3 staff members for each JFSAP for one year (from the point they are hired for a state).

The primary role of the staff will be to partner with military, state and local resources to integrate service delivery and build a community of support for military families. They will partner with military, state, and local resources to:Assess needs of familiesIdentify resources & gapsFill the gapsBuild an integrated service delivery system and an enhanced community of support for military familiesProvide intensive outreach to families to inform them of available servicesPublicize the availability of resources through all channels

Message from Dr. Chu:We do not want our SMs on the battlefield distracted by worries or concerns about the safety or well-being of their family back home. If they can be assured that the financial situation is well in-hand, thats one less distractor/stressor. Bankruptcy is only an option if all other avenues have been exhausted and then should be approached very cautiously.Foreclosure is another avoidable circumstance - FLEC reported that 57% of folks foreclosed last year DID NOT talk to their mortgage company prior to the foreclosure??!!Lenders/Banks are much more willing to accept SOME payment, than NO payment. In many cases, a plan for payment is enough to avoid foreclosure, bankruptcy, etc.According to Duet Financial Group, 1 in 4 employees report being in financial distress as opposed to 1 in 10 ten years ago. Additionally, according to a 2005 study, 80% of financially distressed employees attempt to deal with their financial issues while at work not compatible with military service! 27% of employees report not having started saving for retirement.

Documents

Department of Defense Update CDR Dave Julian Deputy Director, OSD Office of Family Policy