Department of Defense

1

• Department of Defense
• Financial Readiness Update
• CDR Dave Julian
• Director
• OSD Office of Personal Finance
• Military Community and Family Policy

2
Topics

• Economic Environment (VUCA)
• Financial Readiness Campaign
• Roadshow Events
• FINRA Military Retirement Confidence Survey
• Questions

3
Economic Environment
Foreclosure Crisis
Credit Crisis
Federal Bailouts
Savings Crisis
Banking Crisis
Market Instability
4
Trend Analysis E1 E4 Self Assessment of
Financial Condition
Percentage answering question at right with
responses 4 or 5

• Question Which of the following best describes
  your financial condition?
• Very comfortable and secure
• Able to make ends meet without much difficulty
  
• Occasionally have some difficulty making ends
  meet
• Tough to make ends meet but keeping your head
  above water
• In over your head

Overall trend within error tolerances fewer
Service members appear to be finding it tough to
make ends meet or in over their heads Army
slight upturn
5
Trend Analysis E1 E4 Ability to Pay Bills on
Time
Percentage answering yes to one or more of the
answers to the question at right

• Question In the past 12 months, did any of
  the following happen to you (and your spouse)?
  Mark yes or no for each item.
• Bounced 2 or more checks
• Failed to make a monthly/ minimum payment on
  credit card, AAFES, NECOM account, or Military
  Star card
• Fell behind in rent or mortgage
• Was pressured to pay bills by stores, creditors,
  or bill collectors
• Had telephone, cable or internet shut off
• Had water, heat or electricity shut off
• Had a car, household appliance or furniture
  repossessed
• Failed to make car payment
• Obtained payday loan

Overall trend within tolerances Little to
slight increase in members appear to be reporting
difficulties with maintaining finances
6
Good news?

• Our Service members and their families are not
  immune from the storm, but they do have some
  shelter
• Guaranteed paycheck
• Spousal employment programs
• Low-cost child care programs
• Medical/dental benefits
• Commissary/Exchange privileges other
  installation support
• Special pays moving allowances
• Tax-free housing and subsistence allowances
• Only 25-30 own homes as primary residence

And
7
The DoD Financial Readiness Campaign

• Started in 2003 to reduce the stressors
  associated with financial issues on Service
  members and families
• Education, resources, protections
• Federal, state, local/non-profit outreach and
  programs
• Platform represented by 8 Financial Pillars

DoD has been emphasizing financial readiness as a
critical component of mission readiness long
before the current economic crisis
Financial Readiness Mission Readiness
8
The Pillars of Personal Financial Readiness
Good Credit
Financial Stability
Routine Savings
SGLI/ Insurance
Low Loans
Security Clearance
TSP/SDP
MWR
Deployment
9
Military Saves 2009

• 22 February 1 March 2009
• Events planned at installations world-wide
• Incentivized savings programs at banks credit
  unions
• Saver Pledge
• Quarterly themes
• 1st quarter Save and Invest
• 2nd quarter Youth Financial Readiness
• 3rd quarter Debt Reduction
• 4th quarter Retirement

Build Wealth, Not Debt!
10
Challenges
Changing Community Changing Services

• Delivering correct, user-friendly information
• Reaching Guard and Reserve families
• Reaching geo-isolated families
• Meeting emerging expectations of new generations
• High Tech-High Touch
• Building a worldwide, trusted communication
  system to connect with troops and families

The Digital Generation
The Right Information, at the Right Time, to the
Right People
11
Military OneSource

• Military One Source (www.militaryonesource.com)
• 24/7 world-wide assistance, on-line and by phone
• Money Section
• Telephonic financial counseling or face-to-face
  upon request
• Effective 17 Nov Partnership with NFCC
• Mortgage/foreclosure assistance
• Referrals, connections to key helping agencies

12
Financial Counseling

• Installation/Unit Financial Managers/Specialists
• Military One Source
• Telephonic counseling
• Military Family Life Consultants
• Personal Financial Counselors (PFC)
• AFC/CFP-certified
• On-demand assignments upon installation request
• Briefings, one-on-one counseling, education
  training
• Financial Readiness Partners

13
Military Spouse Fellowship Program

• FINRA initiative in partnership with AFCPE NMFA
• Program
• Personal Finance and Financial Counseling Debt
  Management
• Study group webinars
• Examinations
• Practicum hours (scaled)
• 200 selectees from 2000 applicants
• 172 active participants (11 drop rate)
• All Services, components
• Status 31 AFC-certified, 7 finalizing cert
  process
• Practicum hours
• Employment opportunities following certification

14
Financial Roadshows

• Purpose to assist installation commanders in
  providing financial education and resources to
  help their troops and families
• Available to installation commanders by request
  at no cost
• Tailored to the needs of the installation
• Roadshows feature
• Financial/Motivational Keynote speakers
• General session presentations breakout
  workshops
• Exhibit Hall/Display booths
• One-on-one financial counseling (PFC)
• Leave behind teams
• Practicum/employment support for Spouse Fellows
  pursuing AFC certification
• Installations encouraged to utilize all
  installation resources
• Family Centers, Commissary/Exchange, MWR, Legal
  Services, Chaplains, Child Development/Youth
  Centers, Schools, Banks and Credit Unions

15
Guest Speakers
John Sileo
Sammy the Rabbit
Identity Theft Expert
Think Like a Spy
Terry Savage
Dr. Robert Manning
Jason Goodman
"America's Money Answers Man"
Credit Card Nation
The Savage Truth on Money
16

• Take Five What I Wish I Had Known About
  Personal Finance
• Better Than a Budget Develop a Spending Plan
  That Will Keep You On Track
• The Perils of Plastic Avoid Drowning in Debt...
  Charge Wisely!
• Dream Big - Plan Now! Make Your Ideal Retirement
  a Reality
• Pay Yourself First Why You Should Sign Up for
  the Thrift Savings Plan Today
• Have You Fed Your Pig Today? Simple Tips for
  Saving Investing
• Ready for Everything? Insurance Essentials for
  the Service Member With or Without a Family
• The Wheels You Want Successful Car-Buying
  Strategies
• Home, Sweet Home Strategies for Home-Buying and
  Protecting Against Foreclosure
• Youve Earned It! Making the Most of Your
  Military Benefits
• Before You Take Off Financial Planning for
  Deployment
• Dont Lose It! How to Protect Yourself Against
  Identity Theft

CDR Dave Julian, david.julian_at_osd.mil
17
Roadshow Locations
Fort Lewis McChord AFB 4 Dec 08
Grand Forks AFB 29 Jan 09
Fort Drum 5 Nov 08-30 Jan 09
Tinker AFB 5 Nov 08
Pentagon 23 Feb 09 27 Apr 09
Fort Sill 9 Sep 09
Luke AFB 13 Nov 08
MCAS, Miramar 21Feb 09
Goodfellow AFB 24 Jul 09
Navy
Army
Air Force
Marine Corps
MCRD 24 Feb 09
18
FINRA Military Financial Confidence Survey

• Released 19 February 09
• Purpose capture militarys attitudes/perceptions
  about retirement/finances
• Most pressing financial issues

19
FINRA Military Financial Confidence Survey

• Conclusions
• Military more likely to take an active role in
  financial planning
• Military has more realistic view of financial
  requirements/preparations
• More outreach required to raise awareness of TSP
• Military financial educational programs and
  services are positively influencing financial
  behavior

20
Great News!

• Military Money magazine Fall 2007
• Americans 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
  options

Military Members Research Financing Options Respon
dents who Completed gt 3 hrs of Research
1-Credit Card, 2-Vehicle Financing,
3-Furniture/Appliance Financing, 4-Home
Improvement Loan
21
How Defense Credit Unions Can Help

• Continue to provide innovative, low cost products
  services
• Incentivized Savings programs (Military Saves?),
  loan products, ATM fees SHORT TERM LOANS (to
  replace payday lending alternatives)
• Be accessible
• Be proactive in providing educational services
• Step up financial educational opportunities
• Meet with installation/unit leadership
• Know your installation Personal Financial Manager
• Attend events, clinics, picnics (Ask about
  Financial Roadshows at your base)
• Make appropriate referrals
• Military One Source, other DoD financial partner
  resources
• Know, understand Service members and families
• Local demands, stresses of deployment
• Unique challenges

22

• Join us to help Service members and Families make
  sound financial decisions.
• Thank you for your 46 years of service to our
  Military!

23

• Questions?
• CDR Dave Julian
• Director, Office of Personal Finance
• David.julian_at_osd.mil
• 703-908-6236

24

• Financial Readiness Partners

• Consumer Federation of America (www.MilitarySaves.
  org)
• Military Saves Week (22 Feb 1 Mar 2009)
• Strategies to save, buy big-ticket items, reduce
  debt
• In Charge Institute
• www.Inchargefoundation.org and www.Militarymoney.o
  rg
• Debt reduction/management programs
• FINRA Investor Education Program
  (www.SaveandInvest.org)
• Bright Score Credit Score Management Program
• Military Spouse Fellowship Program
• Better Business Bureau Military Line
  (www.bbb.org/military)
• National Military Family Association
• Association of Military Banks of America
• Defense Credit Union Council

25
Talent AmendmentPredatory Lending Law

• Regulation went into effect October 2007
• Report due to Congress April 2008
• Implementation status
• Recommendations for statutory, legislative
  changes
• Regulation capped at 36
• Payday loans
• Vehicle Title Loans
• Refund Anticipation Loans
• SASC concerns installment loans state
  enforcement

26
Report Findings

• Regulation has had desired impact
• Limited access to storefront payday and vehicle
  title loans
• Very few cases of morphing products to work
  around law\
• Serrvice members did not appear to be left
  without options
• Sources of high cost installment loans are much
  more limited around military installations
• Internet is problematic
• Remaining source for covered loans
• Source for high cost installment loans
• Alternative loans are available and in use
• Available in excess of 135 installations through
  banks/CUs

27
Report Conclusions Recommendations

• Implementation has been successful
• No further legislation or regulation necessary at
  this time
• Recommendation change definition of covered
  borrower to align with DMDC definition of
  dependent

28
Report Recommendation

• Revise the definition of the covered borrower to
  coincide with the definition used to populate the
  DEERS database
• Current definition in the regulation reads the
  same except for an individual who receives 50 of
  income from a Service member for 180 days prior
  to receiving the loan
• Cannot include this individual in any database
• DEERS definition father, mother, father-in-law,
  mother-in-law who receive 50 of income from a
  Service member for 180 days
• Change will allow for lenders to verify covered
  borrowers through a database rather than through
  a safe harbor statement