Military Retirement & Financial Independence

How to support disaster relief (and rebalance your investments)

May 23, 2013 by Doug Nordman · 4 Comments

It’s that time of year again: storm season. The Oklahoma tornado disasters have me reviewing our Hale Nords hurricane readiness plans and tackling the time-consuming tasks like roof repairs. I’m married to a meteorologist who’s a military-trained Emergency Preparedness Liaison Officer, so there’s no slacking on our checklist. I’ve been through a few natural disasters and if I ever have to experience another one, I want to know that this time I’ve really done everything I could to be ready. Of course you’re never really ready to hear those sirens start wailing.

Last week I was only dimly aware that hurricane season is approaching. Instead, my spouse and I have been casting a wary eye on our retirement investment portfolio. After nearly six years it’s returning to new highs, and we all know how that trend ended the last time. Our asset allocation and our rebalancing triggers are subjects for another blog post, but one part of that process is our Fidelity charitable gift fund.

So rebalancing and donations were already on my mind when the Oklahoma disaster struck, and this is a good time to look at a different way to give money to relief organizations while rebalancing your portfolio.

Ideally we’d all have a philanthropic donation plan just like our investment plans. We’d choose our charity goals just like our asset allocations, and we’d regularly support our chosen organizations in ways that maximize their benefits.

However we humans are just as emotional as we are logical, and when disaster strikes we feel a strong affinity for helping others. Bankrate.com author Judy Martel, a CFP and an expert on family wealth, has a few suggestions on how to donate to tornado victims. When we impulsively give $50 to the Red Cross or one of the other organizations on her list, it makes us feel better next time the video & photos start scrolling across our screen.

But where is that $50 coming from? If you’re striving for financial independence then you’re already running a budget. It probably lacks a category for “miscellaneous charity donations”. You might allocate part of your spending to charity, but the organizations that you normally support are still every bit as deserving of your donation as the Oklahoma tornado victims. You’re probably pulling that $50 out of some other cell in your budget spreadsheet. If you’re planning to donate more, like $500 or even $5000, then it’s a lot more than just a part of your monthly budget.

You could pull the cash out of your emergency fund. However most people want their emergency fund to support their own personal emergencies so that they don’t need a relief organization. Cannibalizing your own emergency fund to help someone else is not in everyone’s best interests. Besides, you never want to get in the habit of frequently withdrawing “just a little bit of money” out of your emergency fund.

There’s another source of funds: your investments.

If you’re reading personal-finance blogs then you’re probably already familiar with the concept of rebalancing your investment accounts. You bring your asset allocation back to your personal comfort level by selling some assets (presumably at a gain) and using the cash to buy other assets (ideally on sale). You do it annually or whenever your chosen allocations get too far out of whack.

It’s fairly easy to sell assets from a taxable account, transfer the cash to your checking account, and then write a check to your chosen charity. However when you sell appreciated assets in a taxable account, you pay taxes on the gains. Now you have to have a little more cash available to pay your tax bill, and your $50 donation to the Red Cross has been contaminated by another involuntary donation to the U.S. Treasury.

That’s the beauty of charitable gift funds and donor-advised funds.

[There may be some legal distinction between those two terms, but I'm going to use them interchangeably as "CGFs".]

The Internal Revenue Service already lets taxpayers donate many types of appreciated assets to charities without (in most cases) paying taxes on the gains. Your charitable donation means that your profits on the sale are no longer subject to tax. In fact, if you meet the additional IRS limits on your other income and deductions, you may even save a little on your tax bill. I’m just a personal-finance blogger, so please seek professional advice before trying to save a little on your own tax bill.

In the past this meant obtaining actual paper share certificates, physically signing them and turning them over to the charity, and then having the charity cash them in to obtain the funds for their programs. In the 1990s, however, investment firms began acting as intermediaries. Instead of sending you a paper certificate they’d transfer the shares electronically to their own charitable funds. You, as the donor, could “advise” the fund on how you want to distribute the asset that you just donated. Three of the largest CGFs are run by Fidelity, Vanguard, and Schwab.

The fine print of a CGF agreement says that they’re only going to distribute your contributions to approved charitable organizations. You can tell a CGF to send your donation to support tornado victims in Oklahoma when there’s an IRS-approved charity for that cause. Even then you might only want your contribution to go to that charity if you feel that they’re responsible stewards of your money. However by the time you read this post, all major CGFs will have suggestions on their websites for where your tornado relief contribution will do the most good.

Although the CGFs are sending money to charities, they’re not completely altruistic. Fidelity will deduct a fee from your account every quarter, and the other fund companies will cover their expenses either with similar direct fees or through processing costs. However you can send appreciated shares to these funds much more efficiently via electronic transfers than by paper share certificates in the postal mail, and I think their fees are well worth the convenience. Best of all they’ll track your donations and your charitable distributions while sending you the appropriate tax forms.

Now when you want to send $50 to the Red Cross, you can sign up for an account at one of the CGFs. If you already own funds at Vanguard then it’s probably easier to set up an account at Vanguard’s CGF, but you can transfer your shares electronically among almost all major financial companies and a CGF of your choice. If you’re transferring shares from your Schwab account to your Schwab CGF, then it also happens overnight instead of over 3-4 days.

Next you have to choose which of your investments will provide the $50. You’re probably going to pick the fund or stock that’s appreciated the most (for the largest capital gain) or the asset class that’s farthest above its desired allocation. Instead of selling shares and transferring the cash to your checking account, you’re going to transfer the shares directly to the CGF account. Your trade will go through at the next available transaction price and $50 worth of shares will disappear from your taxable account. The CGF will let you deposit those shares into another investment fund if desired, but since you’re sending the money straight to a charity then you’ll probably direct them into the CGF’s money-market fund.

Once the shares have cleared the CGF’s processing and are credited to your account, you’ll select the Red Cross for a grant of your $50 worth of shares. Since the Red Cross is already on the CGF’s list of IRS-approved charitable organizations, your grant recommendation is immediately approved. The money-market fund shares are cashed in and $50 is transferred electronically directly to the Red Cross’ accounts. A Red Cross volunteer in Oklahoma uses the money to buy supplies for a shelter or hands a debit card directly to a hurricane victim.

That’s all it takes. The Red Cross has your $50 in Oklahoma faster than you could have tossed the cash to a volunteer. You didn’t have to write a check or deplete your emergency fund. You didn’t have to pay taxes on the donation, and the CGF will send you the IRS form in time for your next tax return.

By the way, you’ve just done a little rebalancing in your investment accounts. Now you can relax a bit and enjoy the stock-market trend.

[This example was for assets in a taxable account, but if you're older than 70½ then you can also make a charitable donation from your IRA. If you're younger than 70 ½ then you're going to have to wait until you're old enough to qualify to use your IRA for charity.]

Other charitable gift fund conveniences.

When you have the fund send a grant to a charity, you can tell the charity how you want them to recognize your donation. CGFs do the task for you in your name. You can use the CGF’s website to designate the grant “In honor of…” or “In memory of…”. For example, revenues from “The Military Guide” are donated to their military charities “In honor of the contributors to the book ‘The Military Guide to Financial Independence and Retirement’.”

You can distribute the grant for a specific purpose. When you send it to a large organization like the Red Cross without any conditions, they can use your “unrestricted” grant wherever they want. It’ll probably go to hurricane relief but it could also go to a local Red Cross chapter in your area, or it could be used to buy laser printer toner cartridges at the Red Cross headquarters office. If you check the box labeled “Use the money where it’s needed most” then it’s spent on their top priority for their annual program plan. When you specify “For relief efforts to Oklahoma hurricane victims” then that’s how they’re required to spend it.

You can send the grant in your name– or not. If the charity receives a donation letter from your CGF with your name on it, then the charity can put you on their mailing list and contact you directly. Even worse, some charities will sell their mailing lists to other organizations who will send you their own appeals. When you’re trying to help hurricane victims, it’s annoying to see a hurricane of unsolicited mail descend on your own house. However you can tell the CGF to make your grant anonymously, and the charity won’t be able to send you monthly appeals or other invitations. Now the charity is spending contributions on relief efforts instead of sending you junk mail.

My spouse and I really appreciate distributing anonymous grants. We don’t want the charity wasting our money on direct-mail fundraising expenses. We have a philanthropy plan, and we might want to change it without the charity sending us reminders or guilting us into donating more. We know how much we’re doing, and nobody else needs to know that information. You’ll never see my name on a park bench, let alone a hospital wing.

Now that you’ve set up a CGF account, you can make donations to it at any time. You can do your tax planning separate from your charity support. Instead of waiting for a specific event at one of your philanthropic organizations you can transfer appreciated assets to a CGF now, stash the funds in a money-market account, and wait for a charitable event to recommend a grant. This means that you can carry out your philanthropic plans on your schedule (quarterly donations or whenever you rebalance) and distribute grants to your chosen charities on their schedule (emergency relief, matching donation challenges, fundraising drives, or other events). We rebalance our investments every 2-3 years, and we transfer enough of that to our CGF’s money-market fund to fund three years of annual grants.

A CGF lets you organize your philanthropy and put it on autopilot. If you decide to add hurricane relief to the causes that you support, then you could use your CGF’s website to schedule an annual grant from your taxable investment account. It could be sent anonymously every March to the Red Cross in memory of someone (or in their honor) to be used for hurricane relief efforts. Now when you see a hurricane on the news, your heart still goes out to the victims. However you also know that you’re already supporting the relief efforts with your donations and grants, and you can even impulsively log into your account to send more.

A charitable gift fund is a great way for us to use our emotional investor psychological behavior to help others.

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Filed Under: Finances · Tagged With: disaster relief, financial independence, military, Oklahoma tornadoes

TRICARE Prime premiums and United Healthcare

May 20, 2013 by Doug Nordman · 4 Comments

[WARNING: HEALTH INSURANCE RANT]

I’ve been a healthcare “past due” delinquent since April.

Even worse, I risked losing our family’s health insurance due to a bureaucratic glitch. It wasn’t my bureaucratic glitch, but we would’ve been without health insurance.

One of the most common concerns among retirees is “But… but what will I do all day?!?” I’m about to give you a glimpse into the downside of that question. I’ve certainly been doing something all day, and I wish that I never had to do it in the first place.

Are you in Tricare’s Western Region?

As some of you readers are aware, the Tricare Western Region has changed contractors from TriWest to UnitedHealthcare. (That’s not a typo. They actually spell their name on their letterhead with no spaces but two capital letters.) The “new” contract was first awarded to TriWest nearly four years ago but has been beset by challenges and appeals. It finally played out and UnitedHealthcare took over on 1 April.

In this case, however, “took over” is not the same as “seamless transition”. You may have seen the announcement from Tricare that referrals for their Western Region Prime members were waived ~~through 18 May~~ * due to UHC’s apparent inability to keep up with the requests. (With almost four years’ delay before they took over the contract, you’d think that UHC would’ve had time to figure out the process and determine how many people to hire. Or maybe they could’ve just hired TriWest’s referral staff. But I digress.) I have to admit that I was tempted to leap into that loophole and see a specialist about something– anything!– but regrettably I’m in decent health.

* [Update at 2 PM PDT: Tricare's UnitedHealthcare referral waiver has just been extended for another month through 18 June 2013.]

Back in March (before they took over the contract) UHC sent me a form to set up automated payments. As has recently been explained to me, the form had two parts. The first part asked for the usual information like a routing transaction number, a bank account number, and my personal information. This would be used to set up an electronic funds transfer to withdraw the monthly $44.88 Tricare Prime family premium. No problem there.

The second part of the form asked for three months’ premiums up front. I don’t remember whether I could do that with an EFT or if they wanted a credit card number. (Foolishly, I neglected to make a copy of the paperwork before I mailed it in. It’ll be a long time before I trust UHC at that level again.) I remember that in 2002 I had to pay in advance (when I retired), but this time UHC was taking over the contract from TriWest. They were going to simply take over the EFT payments that I’d been making for over a decade, so why would they need more money in advance? Even worse, I could imagine a scenario where the new crew would deduct $134.64 the first month and then start the EFT on the second month. I’d lose two months of premiums in the first month and have to spend many more months straightening out the error.

In retrospect, a different form for existing retirees (or a cover letter) could have mentioned that the credit-card charge in the second part would cover three months of premiums and the EFT would resume on the fourth month. But it didn’t say that because UHC tried to make the existing form cover all situations.

So I made a fateful mistake: I wrote “N/A” for the second part, signed the form, and sent it back in the mail.

In early April, a few days after TriWest left the building, I noticed that $44.88 had not been deducted from my checking account. I decided that UHC needed time to get caught up, and I forced myself to wait. Besides, I was pretty sure that the call center would be overwhelmed with new employees and thousands of other beneficiaries wondering when their premiums would be deducted.

That question was cleared up on 10 April when I received a “Past Due” notice. My first thought was to use their website to straighten out the problem. (And, um, the UHC call center computer suggested that about eight times too.) Of course I had to register for the website, and then I had to confirm, and then I had to log in, and then I was finally ready to e-mail them about the billing statement.

However I couldn’t e-mail UHC because they don’t list an e-mail address on their website. They didn’t even have a “Contact us” form. At this point they’d been “in charge” of the Tricare Western Region for just about two weeks, so maybe they’ve caught up to that oversight by now. But after spending 30 minutes on their website, it turned out that I still needed to phone them up.

I’m not sure how much time I spent on hold, but it must’ve been less than 15 minutes. Not bad for a new contractor. When the rep came on the line, he had my account on his monitor and he could actually see my EFT form. He wasn’t sure why it hadn’t been processed yet and he speculated that it was due to the backlog of changing over the contractors. He said that the $44.88 would be deducted. I asked about the second part of the form and he said that was just for people who wanted to make quarterly payments instead of monthly deductions. He actually said “Don’t worry about it.” That made sense. Good to go. Thanks!

Well, not so fast. On 10 May I got another “Past Due” notice, so by now I was two months delinquent. I was still in good health but I could feel my blood pressure rising. My stress hormones were probably boosting my cholesterol levels, too. I was reluctant to phone the call center again because I thought I’d get the same explanation, even if I asked for a supervisor.

I decided to see if UHC’s website had an e-mail address on it yet, but I don’t know the answer to that question because I can’t log in. It either doesn’t recognize my password or it’s overwhelmed with server traffic, but I’m not going to try to solve that problem this month. Maybe this fall, when business has hopefully settled down, I’ll reset my password and see if I can get back in.

I finally gave up and called UHC’s phone number again, but they were closed for the weekend.

I decided to pull out the heavy artillery and contact Tricare.mil, the supervisor of the contractor. However they only have an information website and apparently they don’t offer their own customer service– that’s handled by the contractors. No matter where I went on Tricare.mil or UHC’s website, I kept getting nudged back to the same phone number.

Then I noticed that Tricare.mil has a grievance process. Aha! That would get someone else involved who could help straighten out the call center’s confusion.

When I clicked on that link, it popped up a PDF and said that I’d have to fax it in.

I don’t know about you guys, but I haven’t had to send a fax for myself in at least three years. I think it’s dying tech that’s being replaced by e-mail attachments and secure websites. (We even refinanced our last mortgage by scanning & e-mailing dozens of pages without a single fax.) “Luckily”, I still have a fax machine because my Dad’s long-term care insurance company insists on receiving a monthly fax from me after I pay his invoice at his care facility. So I filled out the “online” grievance form PDF, printed it out, signed it, and faxed it to UHC.

The grievance got immediate attention. It wasn’t just heavy artillery– it was lobbing a tactical nuclear warhead. On Monday I was phoned by a supervisor who was at least two levels up from the call center. She was so high up that she had to bring someone else on the line to actually complete the paperwork. To her credit, she professionally explained why the form hadn’t been processed by UHC. I didn’t get any “You have to understand…” or “What I need you to do…” attitude. She just said that the April and May payments could no longer be deducted via EFT, and that they were nearly at the deadline for the June EFT. She proposed that I pay those three months over the phone with a credit card, and then they’d process the EFT paperwork to make the first premium deduction from my checking account in July. She brought on the rep to do that, we swapped numbers and confirmations, and now Ohana Nords is insured again.

By the way, when I answered the phone she asked for me by rank. I don’t know about the rest of you veterans, but these days when someone addresses me by my active-duty rank it makes my sphincters clench with the fear that I’m being mobilized. I guess Tricare asks their contractors to do that in order to honor our service.

I probably never lost any health insurance coverage, but it would’ve been darn hard to figure out how to contact someone at UHC or Tricare to confirm that. If we’d been injured or sick it would have been even more stressful. I hope UHC gets their payments and their referral system straightened out soon, but (as usual) it seems that the best healthcare is: prevention.

[END RANT]

One or two of you Western Region beneficiaries may be having similar problems with your Tricare premiums. If that’s the case, then first you should try to resolve the issue through their call center. If that doesn’t take care of it, however, then you could download the “Grievance Form” PDF, fill it in, print it out, and fax it to 877-584-6628. That seems to focus the correct level of management attention on the problem.

Or at least I hope it did. I’ll confirm that during the first week of July.

I should mention that while (so far) UHC’s customer care leaves a lot to be desired, I’m still happy with military Tricare Prime and its premiums. Health insurance and healthcare expenses are two more major worries of civilian retirees, and we military beneficiaries can easily lose sight of how good we have it compared to the rest of America’s citizens.

Have you had any problems with the new Tricare Western Region contractor? How have you solved them?

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Filed Under: "What do you DO all day?!?", Military · Tagged With: customer service, military, military retirement, Tricare, Western Region

Amazon affiliate sales

May 16, 2013 by Doug Nordman · 2 Comments

I’ve spent the last couple weeks writing about the changes that we’ve made to the blog in 2013 (see the links below). Today I’m going to reveal a new feature that I’ve been running for a few weeks: the upgraded “Recommended reading” page.

One of the many ways to generate revenue from a blog (and reach financial independence) is through affiliate sales. Unlike running ads or selling text links or sponsored posts, affiliate sales are actual products. A company agrees to pay you a small commission for persuading your readers to buy what they’re selling, and the revenue scales right up with your audience. Impressions and clicks don’t matter– just how much the buyers pay for the company’s product.

If only it was that simple.

Well, I guess the concept is pretty straightforward, but the implementation sure takes some blogger labor.

If Google AdSense is the 800-pound gorilla of blog advertising, then Amazon Associates is the elephant of affiliate sales. They started out with books over 15 years ago and have expanded to… “just about everything on their website”. Amazon claims that the product price stays the same no matter how much they pay to their affiliate, so in theory the whole program is free to the buyers who use it. Affiliates earn commissions of 4%-10% on Amazon’s sales in most categories and can earn a slightly higher rate based on volume. The good news for bloggers is that Amazon’s “sales price” is easier to calculate instead of Google AdSense “valid clicks” or “impressions”. Amazon’s program is harder to manipulate and their operating agreement is much simpler. Unlike AdSense, I especially appreciate that Amazon not only lets you know when the agreement has been updated but shows a separate summary of what specific parts have changed.

The paperback copy of “The Military Guide” includes a “recommended reading” list of books, research papers, and website articles. I used these source materials to educate myself on the topics and to present the data analyzed in the book. Readers recommended their own favorite books, I read them, and I added those to the list. The “Recommended reading” blog page was built straight from the book, but now it has all of the links to the references… and many of them are available on Amazon’s website.

When bloggers register for the program, your account is assigned a short affiliate code that’s appended to the URL of every product you want to list on your blog. Readers (about to become buyers) click on the link to get to Amazon’s website, where Amazon’s system tracks your affiliate code along with the reader’s purchases. Once the reader has paid for their purchase(s), Amazon credits your commission to your account along with a summary of the transaction. You can do the usual spreadsheet tracking of what’s selling over time and you can even add additional code to your links to figure out exactly how each link is performing.

The beauty of the affiliate code is that it sticks with the buyer through more than just the purchase of your recommended product. If your reader buys just about anything else on Amazon during the next 24 hours after clicking on your affiliate link, your account is also credited with a commission on their purchase. This adds up quickly if the buyer is in the market for power tools, electronics, sporting goods, or most of Amazon’s other big-ticket items. (My grateful mahalo to whoever bought the red chrome license-plate frame kits– 93 cents of your purchase will go to military charities!) If you’re a frequent Amazon shopper then you can start your surfing at your favorite blogs (no matter what you’re buying), click through to Amazon so that your visit includes the blogger’s affiliate code, and send a few nickels their way.

Amazon’s implementation has come a long way over the years. In addition to the product links, you can link your favorite Amazon.com pages (with your affiliate code). You can build advertising banners, preformatted store templates, and widgets. If you’re planning to sell a significant volume of product then you can even build your own custom store on your site and integrate it with Amazon’s advertising API.

I’m just getting started on affiliate sales, and this takes a considerable amount of thoughtful up-front labor to properly set up and format the links. My first effort was simply a long period of drudgery (20 minutes a day!) using my Amazon affiliates account to build the text links for each of the 75+ books on the “Recommended reading” page. Yeah, I’m a nuclear engineer, but even high-volume HTML link-building is about as exciting as it sounds. That’s been running since March and it seems to be working fine.

Text links load quickly and get the job done, but humans are visual shoppers and graphics close the deal even faster. I started adding graphic links for each book, but I quickly bogged down in the minutiae of setting each link on the blog page alongside the existing text and descriptions. That project soon got kicked to the curb for a couple months, but when I came back to it I discovered the Amazon aStore. These templates help you quickly add product images & links and organize the inventory. (You could spend most of your waking hours tweaking the display features, but I went with the defaults.) What would have taken several days to format 75+ individual image links on the blog took only a couple hours on the aStore page. Best of all: the aStore code runs on Amazon’s website, not yours. You enter your aStore changes in your account on Amazon’s website without having to directly edit your blog page. (If you have an Associates account, use the “aStore” tab at the top to learn more.) Whatever editing I do to my aStore is promptly displayed on the blog’s “Recommended reading” page in an HTML frame a little below the fold (scroll down).

Flush with blogger success and feeling empowered by capitalism, I looked around for more ideas. I think the blog has quite enough AdSense advertising, so I skipped over the Amazon banners (for now). Most of the blog’s readers come to the Recommended reading list from search engines so there’s no reason to beat dedicated subscribers over the head with an Amazon banner every time I put up a new post.

However widgets are another matter! Amazon offers over a dozen of them but I picked the “Recent reads” version from a relative’s blog (thanks, Camilla!). Most adblock software considers this widget to be display advertising, so you’ll have to turn off your adblocker to see it in the sidebar between the “recent comments” and “categories” widgets. I’ve thrown in a half-dozen randomly-selected nonfiction books that I’ve recently read and that I’ll eventually add to the aStore. Most of them are Kindle eBooks by other bloggers whose work I enjoy, and a couple of them are new lifestyle books that caught my eye. I’ll update that widget every few weeks by moving its older books to the aStore and adding newer ones.

Before I talk about the earnings, please keep in mind that 95% of these books are available from your local public library. (If they’re not then they should be: fill out a book request and ask your reference librarian to add it to their personal-finance educational inventory.) Before you get all enthused with consumer lust (and the hedonistic thrill of shopping in your underwear) please check your library and flip a few pages from their shelves to make sure you find the books that you really enjoy. Progressive libraries might even have an eBook copy that you can check out for a few days. Once you’ve finished surveying the literature then you can decide what you want to add to your personal reference library.

Well, how’s this working out? It’s been running for just under two months, and this is the official launch. Eager shoppers have stumbled across the page on their own and rushed to buy six books (plus the aforementioned license-plate frame kits) to ring up $76.87 in product.

The blog’s share of that comes to precisely 4%, or a whopping $3.07.

Amazon has a $10 direct-deposit threshold and a considerable time lag for returns, so I won’t see any money until 60 days after the commissions reach that hurdle.

A few cynical readers might wonder whether I’m double-dipping on the book, the pocket guide, or the Kindle edition by earning both a royalty and an Amazon.com affiliate commission. The first answer is “Neither one changes your purchase price, and both are donated to military charities, so you don’t have to care.” The second answer is “No” because this issue definitely affects the publisher. They would much rather sell a book to you directly from their website than from Amazon, and I’m supporting the publisher first. Every link on this blog to “The Military Guide” paperback goes through Impact Publications. You may be able to buy a single copy of the book cheaper from Amazon.com, but you can negotiate a better deal from the publisher on bulk purchases. You can also negotiate shipping, and when you phone Impact during business hours you can speak to a real, live human being (Hi, Keith!) who does a great job with your order.

Impact is also the only place where you can buy the pocket guide version of the paperback book. In return for avoiding the revenue shares of distribution networks, Impact sells the pocket guide at rock-bottom prices. It’s especially useful for military support organizations and family service centers who want to give the book away to their servicemembers & military families.

Another reason you want to shop from the publisher’s website is because you can search much more quickly for other military books & pocket guides. Take a look at Impact’s military special collection and see what could help you or your family with your career or your next transition.

If you prefer an electronic reader, though, you’ll have to obtain your eBooks through your local library or Amazon’s Kindle system. The Kindle edition of “The Military Guide” is cheaper than the paperback and offers all the modern conveniences of electronic bookmarks. Not only can you highlight your favorite portions of the text, but you can see what other (anonymous) readers have highlighted for themselves. I don’t own a Kindle but my iPad is a big improvement on my presbyopian eyes, and I’m slowly starting to migrate to eBooks whenever they’re available.

My affiliate sales are not just through Amazon. You’ve probably noticed an icon from PowerWallet tucked into the sidebar among the blogroll links. I also recommend the personal-finance tools Planwise and the TotalPay iPhone/iPad app, which are marketing partnerships (link juice) instead of affiliate programs.

What’s next? My list includes installing the USAA affiliate widget, and maybe somewhere down the road I’ll include credit-card advertising. I could also explore more affiliate programs from Commission Junction and other advertising programs from First Media. Affiliate marketing has been a growth industry for over a decade, so I could go completely nuts with the programs and referrals and links. Google “Shawn Collins affiliate marketing” if you want a taste of that for your own blog.

Before I head down those roads, however, my next education & revenue project is an eBook on military insurance topics.

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Filed Under: Books & publishing · Tagged With: Amazon.com affiliate, early retirement, financial independence, military, military retirement

Discussing financial independence with the troops

May 13, 2013 by Doug Nordman · 14 Comments

This post is long overdue, and I’m embarrassed to admit that it kept getting pushed down the priority stack. I’ve answered reader questions for most of the last six months, but this is a reader report about financial independence.

Deserat is not your typical reader: she’s a major contributor to “The Military Guide“. She wrote most of the chapter on the Reserves, contributed to the book’s section on “multiple streams of income”, and reviewed way too many drafts of the other chapters. In her military career she’s a Reserve officer at the top of her game who’s mentoring the next generation of officers & enlisted. In her civilian career she enjoys decades of engineering success in the med tech industry, even running her own consulting firm. She’s the first to point out the synergy behind her two careers: techniques she learned in the military worked in the civilian corporate environment, and the executive skills she’s learned during her tech career paid off very nicely in the military.

Today she’s financially independent, retired from her civilian career, and wrapping up her military career. She spent the last few years roaming Europe in between drill weekends and contracts. I suspect she’s also fending off multiple consulting offers while she and her spouse enjoy their new home and their travels.

A few months ago during one of her Reserve weekends, she wanted to give a presentation on achieving financial independence. The military is focused on teaching financial responsibility (stay out of debt, use credit responsibly, don’t be a security risk) but it’s not the military’s mission to teach financial skills like building your net worth. When it’s time for the transition seminars (both separating from the service and retiring from it) the emphasis is on starting a bridge career, not on when you’d stop working. Deserat wanted to show her troops how to budget, save, invest, and then decide what you’d like to do with your life.

The cover of the pocket guide, available from Impact Publications

At Impact Publications

The tool for her presentation was the pocket guide version of “The Military Guide”. It’s 4″x5″, 64 pages, and available only from Impact Publications (not on Amazon or in bookstores). It has most of the content of the full-sized paperback minus the chapter checklists, the personal stories, and the detailed appendices. Its main advantage is its price: one copy is $2.95 but 25 copies are only a little over $2/copy and 50 copies are $1.77/copy. 100 copies… well, call the publisher to get an even bigger discount.

Impact Publications specializes in pocket guides, with over a dozen of their book titles also available in pocket guide versions. They’re popular with military family service centers, veteran’s programs, and job fairs. The publisher tells me that most of the orders come from individual military commands and state VA offices that are spending their resource budgets– the display racks of pamphlets & guides that you see in their lobbies. One state veteran’s administration even bought 125,000 copies of a transition pocket guide.

We’ve been surprised and gratified at how many servicemembers are also buying the pocket guide out of command funds (or even out of their own pockets) for their training programs. Deserat led one of the more recent and larger seminars but I’ve had reports from a half-dozen others who are happy to share the knowledge with their battle buddies and wingmen. I’ve even had a query from a high-school teacher who’d like to hand them out to their military-curious students.

Deserat wrote to me a few months ago:

“I will be giving a presentation on financial independence and early retirement to a group of young officers and others when I do my next two weeks of duty. I was wondering how I could get some of the pocket guides to give away.”

We took care of her order and they came in the mail a few days later.

“I ordered 25 of the pocket guides and will be doing my presentation to unsuspecting lieutenants (and other ranks) sometime next week– now to just prepare for it. Any advice you have on the presentation (1.5 hours) would be appreciated. I’m going to hone in on the benefits about the military, living below your means, developing streams of income, investing (but not necessarily telling them how or where to), and understanding the thing about time being really your best asset.”

I’ve given a few of these seminars at military bases and public libraries, so I sent her a handout of bullet points with extra space for taking notes. A couple of weeks later:

“Well, I did the class on financial independence (I was on active duty so it was in uniform). There were even a couple of civilians there. I gave them the attached handout and the pocket guide as I talked. I started out saying I was financially independent, I had paid cash for my car and house: their eyeballs bulged at that. Turns out most of them were already interested or had started many of the necessary habits. One young captain asked me about his real estate (two rental properties) and if his savings rate should be based on gross or net income… hey, if you can get 25-50% of either, you’re doing fine!”

“They even asked me where they should invest their money. The main stickler for these troops is they live in a high-cost area and real estate is expensive. It would be very difficult for them to drive their housing costs below 35% of their expenses without a subsequent increase in transportation costs and time lost. I kept driving it home: time is all you have and you need to spend your time doing what you value… the whole purpose of financial independence is to be able to spend your time doing what you value.”

“The other thing that resonated was the statistics on how many would actually retire. I said look around: only 2-3 of you would actually last 20 years, so the ideas talked about for financial independence are even more important due to the benefits of the military pension. I also talked to them about different situations in civilian positions… my experiences with different 403(b) plans and pension plans. Lastly, I talked about the different references in the handout attached and the people who were behind those references. All in all, they seemed interested, eager and liked my approach for presenting the information.”

“Side story: someone walked in late and sat down just as I was giving some general advice on what types of investments to purchase… my point was to minimize expenses and that the Thrift Savings Plan had one of the lowest expense ratios with Vanguard right behind them. At that point I asked the audience if any of them were financial managers. They guy who came in late raised his hand and then proceeded to tell me he had come to the session to see if I would talk “crap” about investing. I just looked at him coolly and said, well, my intention wasn’t really to give out investment advice but that I could share my experiences. I’m glad I asked the question about financial managers because I was then going to say that they needed to stay away from actively managed funds as much as possible– I didn’t know if anyone there sold actively managed funds as a financial manager. He then walked out of the class with me and made the comment that everything I had said was spot on and that he met lots of people who didn’t take advantage of TSP. I just smiled. I then thought that earlier in my career he might have intimidated me, but today I knew where I was and that it was unique… and although he was a financial manager I don’t think he was financially independent.”

“Another story: I had a captive audience in a different impromptu session… three second lieutenants – we talked about savings and where to save and how they should start now. One of them wanted to know if he should put his money in the Roth TSP or the regular TSP– I explained the different types of taxes and then told him to make it a 50/50 split to hedge the bets. They were all saving something; two in TSP and the other had a family corporation… I think he was going to be fine based on what he said. Two of them were USAFA grads and the other ROTC… sharp officers. I sent them the handout.”

“Last story: I then had a meeting (to discuss other issues) with the senior leadership of my Reserve duty area and gave each of them a copy of the pocket guide. They both said they weren’t financially independent and never would be… one was a full-bird colonel on active duty (I’m shocked at how much O-6s make), the other was a retired active duty O-6 who is now a senior civil servant… in the SES case, I think he works because he likes what he does and is frankly very good at it. In the case of the active-duty officer, I sense a general lackadaisical approach to personal finance.”

“I’m still counting the days until I retire from the Reserves!”

Deserat’s probably going to be doing this training at least annually until she retires– a great way to practice what we’re preaching!

The other readers have very similar stories about their sessions. (I’m also afraid that it’s all too common to see senior officers who have chosen to remain blissfully ignorant about personal finance.) If you’re in a command financial billet then it’s probably easier to get the funds to buy the pocket guides, but a couple of servicemembers have even spent their own money on the project. From a cynical perspective, if the expense helps even one of your people stay out of financial trouble then it makes your job that much easier.

If you decide to do this type of seminar at your command, feel free to use Deserat’s talk as a guide for developing your own curriculum. Contact me or send me an e-mail if you’d like a copy of my bullet handout. If one of your local commands can’t order the pocket guide for you, then ask me or Impact Publications for a bulk discount!

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Filed Under: Finances, Military · Tagged With: early retirement, financial independence, military, military retirement, training

Google AdSense blog tweaks

May 9, 2013 by Doug Nordman · 3 Comments

My thanks to you readers for tolerating the advertising! Your purchases of “The Military Guide” book and the pocket guide are also supporting the Wounded Warrior Project and Fisher House. And if the ads help you solve a problem or learn something then so much the better.

Google AdSense has improved their advertising & affiliate programs over the last few months. If you’ve wondered whether they’re worth the time & effort (or if you’re wondering whether to give them another try) the answer is “Yes!”

One of the reasons that I write about blogging & advertising is because of all the e-mail questions I’m getting from you readers who are also blogging. I’m financially independent so I’m happy to try something that a starving blogger may be reluctant to explore. This post goes into the nitty-gritty details of ad placements and sizes.

Another reason for this post is having you give me a second check. I might be missing a trick or a technique, so hopefully one of you experts will let me know what I could do better.

Finally, I keep finding plenty of excuses to go surfing do anything else but tweak my blog code. I’d rather just write about more interesting subjects. But if I put an AdSense post on my editorial calendar, that means I have to do it before I can write about it.

AdSense tweaks

I’ve kvetched before about AdSense’s incredibly confusing terms of service, but now they’ve fallen even lower by coming out with new AdSense terms of service. In addition, every month or so brings a slightly different version of products and “rules”. In general, the program choices are improving. Google works very hard to educate us “publishers” with e-mails, blog posts, and a huge AdSense help website. However the program seems to be growing ever more complicated, and frankly the changes & additions can lead to blogger paranoia. You don’t even know that you’ve broken an AdSense law until they carry out the execution via e-mail.

For the last six months, I’ve been collecting revenue data and experimenting with different ad sizes & placements. Blog traffic has been fairly consistent at 400-500 hits per day (with occasional spikes & dips). 75% of the traffic comes from readers who are following links from search engines to old posts, not to the main landing page. It’s hard to tell whether changing ad sizes & locations are the only factors affecting earnings, because sometimes advertisers bid amazingly high amounts for certain military keywords and other times for financial keywords. Then I’ll confuse everything by putting up a sea story about submarines or a guest post on saving money.

I started AdSense advertising with a “skyscraper”, 160 pixels wide x 600 pixels high, in the sidebar (the blogroll). I also added a 300×250 “medium rectangle” just below the title of each new blog post (before the post’s text begins). This is known as “above the fold” because it’s viewed on a monitor without having to scroll down the screen. The end of each post was followed with a smaller rectangle.

AdSense limits each blog page to three ads, but bloggers can change their locations and sizes. I use the venerable plugin “WhyDoWork AdSense” to change the top & bottom ads with different sizes for posts more than a week old. At first I used 728×90 “leaderboards” at the top and bottom of the old posts.

Advertisers bid on these boxes based on Google’s assessment of my site and on the context of the content around the boxes. The auction process is automated, although bloggers can choose what types of advertising they’re willing to accept. This blog’s AdSense income immediately started at $100/month and bounced around from $96-$133. I didn’t change anything because I wanted to see whether this would be consistent or if it would vary with different times of the year. Six months later I decided that I could do better this was a steady income. AdSense performance reports give all sorts of performance data (you could spend hours digging into the details) so I started changing the setup.

When I broke down ad performance by location, it was easy to decide where to cull the herd. The 728×90 leaderboard at the bottom of old posts only got a handful of clicks during the entire six months, so I replaced it with a medium rectangle. (That takes just a few clicks in WhyDoWork AdSense.) The leaderboard at the top of the old posts seemed to be doing a great job until I realized that 75% of my traffic sees that screen right after the search engine. (Only 25% of my traffic sees my new posts.) When I replaced that top leaderboard with a 300×250 box, revenue jumped up 3x.

In November AdSense came out with a new 300×600 skyscraper ad format, and if my e-mail was any indication they were marketing it heavily to advertisers. I was willing to use that size in a few different places, but current AdSense policy limits that box to one per blog page. My 160×600 sidebar skyscraper was sucking on earnings and looked puny by comparison, so I replaced it with the 300×600. (It doesn’t even display correctly in the Genesis Nomad sidebar, but readers are clicking on it anyway.) Sidebar revenue went from $48 over six months to $24 in just two weeks– a jump of 6x. I don’t think that’s the readers– I suspect that advertisers pay more for bigger space, especially for graphic/animated ads instead of “just” text links.

Last month AdSense actually sent me an automated e-mail suggesting that raise the size of my “above the fold” box from 300×250 to 336×280, and revenue in that spot also immediately doubled. I promptly boosted the size of the box on the old posts, too, and I’m waiting to see how that turns out. In April the 336×280 ad earned 60% of the revenue. The other three sizes (300×250, 300×600, 728×90) were earning 10%-15% each.

Daily earnings in April varied from $1.23 to $35.19. It depends on the ad agencies and the posts, and it’s hard to make predictions when the data varies by nearly 30x. Although AdSense will tell you all about your ad sizes and formats and your exposure and your clickthrough rates, they won’t actually share with you precisely which ad inspired so many readers to click on it. (I really wish I had a clue what ads were running on 25 April, the $35.19 day.) Perhaps they’re afraid we’ll go directly to the advertiser and cut out the AdSense middleman, but I just want to know what caused all of those clicks so that I can do more of it.

The results

I earned $136 in March (the month when I started making the changes) and earnings shot up to $242 in April.

May will be my first full month using only the 336×280 box above the fold, a 300×250 box at the bottom, and the 300×600 skyscraper on the sidebar. May is on track to earn at least $240. In June I’ll probably change the bottom ad to 336×280 as well.

Contact me if you want the excruciating clicks and dollar details behind this analysis, but here’s my conclusions:

- A 160×600 skyscraper in the blogroll is a loser because advertisers have better options. I now use a 300×600 skyscraper. Since AdSense only allows one 300×600 ad anywhere on a page, the sidebar seems to be the best fit.

- The 336×280 box seems much more popular with advertisers and they spend more money to get it, so bloggers earn more money by displaying it– even if a smaller number of readers click on it.

- Boxes of 336×280 and 300×250 earned a lot more money than leaderboards of 728×90. It took me a long time to notice this because a leaderboard on my old posts was capturing the 75% of my readers who find the blog from search engines, but it was earning much less per reader than the rectangle ad formats. Advertisers must be paying less money for leaderboards and fewer readers click on them. I’ve stopped using leaderboards.

- New AdSense sizes and features seem to come out every month or two. At first that’s a yawner until you realize that advertisers are paying more for the hot “new” features (not you or the readers) so replacing one ad with a newer one may boost revenue by over 50% in that position. It literally pays off to pay attention to the AdSense announcements, e-mail suggestions, and tutorials.

I started this blog in 2010 to promote the book. In 2011, my first six months of paperback book royalties on “The Military Guide” were $1136. (The publisher only pays out every six months.) My latest six months of royalties were just $265, admittedly due to military family support commands worrying about sequestration. Sales & royalties may come back up to about $500 every six months, but AdSense earnings will be at least triple that. A hardcopy book has a place in every writer’s marketing plan, but so far it’s not keeping up with AdSense.

More AdSense formats

AdSense allows two Google Search boxes on a page (in addition to the blog’s default search box). I have the default Genesis framework search box at the top of the page, a Google Search box about halfway down, and a second Google Search box another foot or so of scrolling below that. If I could figure out how to replace my default search box with a Google Search box then I’d do that instead.

WordPress automatically re-sizes and optimizes a blog page for readers who are using a mobile device. Nearly a quarter of my traffic is coming from tablets & smartphones, but they may not see the same ads. WordPress.org has a new Jetpack plugin for mobile ads and AdSense allows one mobile ad per page. I’ve turned this on but I can’t tell yet whether it’s displaying correctly. (I don’t even carry a cell phone, let alone a smartphone.) I’ll know more in a month or two of analyzing the revenue reports. In the meantime, please let me know if something looks offensive (or just goofy).

AdSense also puts ads in pages with something called a “link unit ad”. I don’t use them yet, but bloggers are allowed three per page in addition to the other ad boxes and the custom search boxes. AdSense just made a major change to add previews to link unit ads so I’ll probably start them next month. If nothing else they’ll make readers laugh as the ad algorithm tries to guess the context of military acronyms.

You can control what ads you see

You probably already know that you can surf this site with ad-blocking software. I used to do that, but now I enjoy seeing the interesting topics– or at least the advertiser’s creative attempts to be relevant with the blog. (Shipmates, if you ever need a military-friendly bail agency after a bad liberty night on Ke’eamoku Street, I can show you where to find the best in town…) I’m also impressed by what a good graphic artist and website designer can cram into one of those little boxes. It may be less than a year before bandwidth loads quickly enough to run video ads. I’d even be happy to host videos on the blog and serve ads that way.

I can also filter the ads by your preferences. Most of the ads are financial (70%) but some are for jobs & education (13%), business (5%), news, travel, or health. I’ve already removed the “Payday & Emergency Loans” category, but contact me if you’d rather see those ads. (Judging by the volume, I’m sure they’re extremely profitable.) I’ve also blocked the categories of astrology, “black magic“, “get rich quick“, politics, and gambling. Again, let me know if there’s something you’d rather see– even if it’s just for the humor potential.

Please contact me if you see a campaign that inspires you to click. If I get a bunch of e-mails from readers about the same ad, then I can do a better job of tailoring the content to your preferences.

I’m also learning to diversify the blog’s income past AdSense, but I’ll describe that in another post. And if you’ve used the ads, thanks again for your support!

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Filed Under: Books & publishing · Tagged With: Adsense, financial independence, military, military retirement

Military retirement and divorce

May 6, 2013 by Doug Nordman · 2 Comments

A reader writes:

“If my ex husband was active duty for 10 years and 20 years Reserve and he has 5300 retirement points at the rank of O-6, how much will he receive? I will receive 50%.”

After exchanging more e-mail, we learned that her ex-spouse is under the Final Pay retirement system (for those starting their military service before 8 September 1980). He filed for Reserve retirement in 2006 and will turn age 60 in late 2013. When their divorce agreement was mediated it was agreed that she would get 50% of his retirement and “spousal insurance” benefits.

Disclaimer: I’m a fast learner, but I know very little about military benefits for divorced spouses. Military divorce is a complex issue with many of the answers depending on state law and the wording of the divorce decree. Even though I can come up with a slew of numbers to answer the pension question, ex-spouses still have to check their divorce agreement. The decree also has to be filed with the Defense Finance and Accounting Service in order to claim the divorce’s pension payments. If any of this seems confusing or conflicting, it may be due to the extensive differences among state laws. It’s essential to consult a divorce lawyer with experience in military benefits.

Reserve retirement is also nearly as confusing as divorce agreements. (Reserve retirement has been the #1 search topic on this blog for nearly a year– look over to the sidebar on the right, under the “Top Post and Pages” header.) Most of my reader questions come from servicemembers, not the spouses. If the servicemembers are confused, then imagine that you’re a military spouse who’s not quite sure how the system works, and you’re not aware of what information sources could help you learn more. If your spouse is hiding the facts during a bitter divorce then the research becomes nearly impossible.

For example, I’m sure millions of veterans have heard of the legendary military retiree who refused his pension so that his ex-spouse would not get her share of it under the Uniformed Servicemembers Former Spouse Protection Act. (One state court eventually handed down a judgment awarding her that amount regardless of whether he was receiving his pension.) A Reserve servicemember could try a similar tactic that’s completely legitimate, although ethically dubious and financially disastrous. Instead of applying for “retired awaiting pay” status, they could elect to be discharged. “Retired awaiting pay” means that at age 60 the pension will start at the max longevity for their rank and at the pay scale in effect when they turn age 60. That’s what 99.9% of Reserve officers choose, but “retired awaiting pay” means that they’re still technically eligible for mobilization.

A discharge has no risk of mobilization, but discharge also means that longevity and pay scale are frozen on the date of discharge. At age 60 the pension would start at their rank and longevity that they held on the date of discharge (their actual years of service) using the pay scale in effect on the date of the discharge (not the pay scale in effect at age 60). If a Reservist wanted zero risk of mobilization (or if they wanted a smaller pension to spite an ex-spouse) then they could choose a discharge. However choosing “discharge” instead of “retired awaiting pay” means that years of missed pay raises can reduce a pension by 10%-50%. An unsympathetic court could still award the ex-spouse the pension share that the retiree should have elected.

Even when a servicemember elects to “retire awaiting pay”, they won’t know the precise amount of their pension until they turn age 60 and can use that year’s military pay tables. However the pension amount can be estimated using today’s 2013 pay tables and then making hopeful educated guesses about how military pay will keep up with inflation until age 60.

In this reader’s case the divorce decree splits the pension (50% to each) and the Reserve retirement starts later in 2013 (the current pay table).

The military retirement pension formula is:

Pension = (service multiple) x (pay base).

“Service multiple” comes from the number of years of service or Reserve drill points (two different formulas). “Pay base” is different from “base pay”. It’s the pay amount calculated for the “Final Pay” or “High Three” retirement systems. We’ll come back to that in a few paragraphs.

Let’s start with the easier part of the retirement pay calculation: the service multiple. For a Reserve retirement it’s:

Service multiple = (# points) / 360 * 2.5% .

(The divisor is 360, not 365, because military pay is based on 30-day months. There are 360 days in a year of 12 30-day months.)

For this reader’s situation the service multiple is:

5300 points / 360 * 2.5% = 36.806%.

The pay base for “Final Pay” is simple: the highest base pay scale earned on active duty or in the Reserves. That Final Pay number is in the O-6>40 column (maximum longevity) of the 2013 military pay table: $10,736.70/month.

The pension would be:

36.806% x $10,736.70 = $3951/month. The ex-spouse’s half of that would be $1975/month.

If the retiree’s date of initial entry into military service (DIEMS) was 8 September 1980 or later, they would be under the “High Three” retirement system. That requires calculating the average of the highest 36 months of base pay. If the retiree was turning age 60 in October 2013 then their High-Three average base pay (from O-6>40 pay tables of 2010, 2011, 2012, and 2013) would be $10,520.95.

36.806% x $10,520.95 = $3872/month.

Unfortunately that pension amount may not be the final answer. The USFSPA legislation only affects the retiree’s “disposable retired pay”, which is the pension amount minus authorized deductions. Among the authorized deductions is “amount of retired pay waived in order to receive compensation under Title 38 (Department of Veterans Affairs) of the U.S. Code”. (See Q#10 of the USFSPA FAQ at that link.) In other words, some disabled military retirees have a smaller DoD pension because they waive a portion of it in order to receive that amount from the VA.

Mahalo nui loa to Rob Aeschbach and Jason Hull for correcting my misunderstanding of the VA disability process and helping me check my references. The specific statute is in section 1408(a)(4)(B) and (C) of Title 10 of the U.S. Code and a more specific divorce discussion is at this link.

Here’s a brief example. If a military retiree has a $1000 pension and his divorce decree awards 50% to his ex-spouse, each would receive $500. If the retiree is determined to be eligible for $200 of VA compensation, they waive $200 of their (taxable) DoD pension in order to receive $200 of (untaxed) compensation from the VA. Now their “disposable retired pay” is $800 and the ex-spouse would receive $400: $100 less than they expected. The divorce decree can anticipate this issue by changing the pension payments to the ex-spouse (still limited to a max of 50% by USFSPA legislation) or awarding more funds (alimony) from other marital assets.

If a retired veteran has a disability rating of at least 50%, or combat-related disabilities, or a Chapter 61 disability retirement, then the situation is even more complicated– and far beyond the scope of this post. Seek professional legal advice.

The rules got even more complicated in 2008. Although most Reserve pensions start at age 60, a few Reservists are eligible for a pension that starts earlier. They had to deploy to a combat zone for at least 90 days anytime after 28 January 2008. For every 90 days that they deployed during a fiscal year after that date, the starting age of their pension is 90 days earlier down to as young as age 58. “Luckily” that wasn’t the case in this situation, because the ex-spouse would have to ensure that she filed her application with DFAS before the retiree’s pension began.

Ex-spouses have to “claim” their portion of the retiree’s pension at by filing with DFAS before the pension starts. If the claim isn’t filed soon enough then DFAS will not pay retroactive to the start of the pension. This is controversial and a lawyer may be able to suggest a resolution of missed pension entitlements, but the problem can be avoided by filing the claim before the retiree starts drawing their pension.

Three more issues for this ex-spouse: first you should check whether you’re eligible for Tricare healthcare at age 60, followed by Tricare For Life healthcare at age 65 (second payer to Medicare). Many financial aspects of divorce can be negotiated while other military benefits are set by law. The expert in what’s known as the 20-20-20 rule is “Ask June” at Military.com.

Next you’ll want to check your “spousal insurance” paperwork that you negotiated during the divorce. It sounds as if you’re describing the Reserve Component Survivor Benefit Plan, which certainly covered you for the last seven years. If your ex-spouse has been voluntarily paying SBP premiums on your behalf then he can change his mind and cancel the insurance after paying two years of premiums (starting at age 60). If he remarries then he can change the beneficiary to his new spouse, but the wording of the divorce decree may affect that. If you trust that he’s treating your honestly then you’re probably getting the straight story. If you’re not sure then you need to seek a lawyer who understands military divorce, the RCSBP, and Former Spouse Coverage.

Finally, you probably already know that you may be entitled to a portion of your ex-spouse’s Social Security benefits based on his and your earnings records.

I’ll end this post by encouraging military spouses to educate themselves on their benefits. As Kate Kashman writes over at Military.com, the more educated and involved you are then the better you’ll be able to take care of yourself and your family. When your spouse is working on their military career, they can use your help to make sure that you both understand your pay, allowances, and benefits and use every program you can. When they’re deployed and you’re managing the family finances, you’ll need to know what you’re entitled to and where to find it. If you ever have to deal with divorce like this reader, the day you visit a lawyer is the worst possible time to start a personal cram course on military benefits acronyms.

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Filed Under: Finances, Military · Tagged With: divorce, financial independence, military, military retirement, RCSBP, SBP, USFSPA

Details of the blog move

May 2, 2013 by Doug Nordman · 6 Comments

It’s been seven months since we made the switch. So far… not bad.

This is a post for bloggers and the blog-curious. I’m going to explain the technical details of the move and its revenue. I may omit some Google AdSense proprietary information limited by terms of service, but if you contact me then I’m happy to share that separately.

WordPress.ORG

The biggest change was moving the blog from WordPress.COM (which offers free support for nearly everything) to WordPress.ORG open-source blogging software. WordPress.com is a benevolent dictatorship, and it’s fantastic for beginner bloggers. It was a big help when I started blogging. WordPress.com’s software is hosted by WordPress and locked down so that you can only install approved themes and plugins. You can use their version of advertising (“WordAds”) but nothing else. In exchange, they take care of security and backups and spam filtering and everything else a noob could hope to need. All you have to do is show up with content, and they’ll even help you with “how-to” posts and other inspirational suggestions.

WordPress.org is like moving off the military base to live in the civilian community. You’re responsible for everything that WordPress.com used to take care of, and now you either have to figure out how to do it yourself or find someone to do it for you. You pay for your own hosting (and other services) but you’re free to do just about whatever you want for blogging software, themes, plugins, advertising, marketing, and sales.

I’m glad that I started with WordPress.com and had a couple of years to figure out what the heck I wanted to do. But now the training wheels can come off so that I can ride happy, wild, & free…

Bluehost

The database move to Bluehost went flawlessly. One of my mentors referred the expert help of Scott at BlogCrafted.com. I signed up for a Bluehost account, turned over my Bluehost and WordPress passwords to Scott, and he did the rest. In retrospect it was totally routine, even boring. Perfect. If I’d tried to do it by myself then it could’ve turned nasty in a nanosecond, especially if I’d misinterpreted a cryptic error message or checked the wrong box on a menu.

As soon as the blog went live on Bluehost, I started getting epic spam comments: over 500 per day. I thought it was just the price of moving out from under the protection of WordPress.com’s servers, and I resigned myself to frequently clearing out the spam queue. A few days after the move, Bluehost sent a customer survey so I commented that I sure had a lot of spam. (You can see the cumulative damage from the spam counter at the bottom of the sidebar.) Overnight Bluehost modified a setting on the shared resources server (the “htaccess” file) that stopped the spam cold. (And that’s as much as I know about the htaccess file!) Maybe once or twice a month I’ll get a spurt of 10-20 spam comments, and the rest of the month I’ll only have one or two a day.

Bluehost also offers backup services, website security, and search-engine optimization support. Some of them are “free with signup” while others are additional fees. I hope I never need to know how well Bluehost’s backups work, but I’ve heard plenty of other host horror stories so I also run my own backups. Security seems to be alert– the staff immediately let me know when Google blacklisted a site that I’d linked to, and they even nagged me every 24 hours until I took care of the bad link. I guess that means they’re doing a good job of watching out for my best interests. I haven’t used Bluehost’s SEO services but I guess they’re ready if I want them.

For the rest of this post, I’m going to praise some (presumed) blogging features and kvetch about others. I’m hoping that you’ve shared the same frustrations and maybe even found solutions for these issues. Please jump in with your comments and helpful suggestions, and I’ll see what I can do to improve the blog’s look & feel.

Genesis Framework for WordPress

The Genesis Framework appears to be a good idea. I say this because it’s applauded by bloggers and coders who are a lot smarter and more experienced than me. Presumably most of what makes it so good is invisible to the average blogger, who never notices how stable and robust it seems to be. I haven’t noticed that either, but if it’s doing a good job for everyone else then I’d rather jump on the standards bandwagon. If I need to move the blog to a new host, or if I want to switch themes again, or if I start up another blog, then Genesis makes it a lot easier to handle these tasks.

Genesis is a StudioPress product of CopyBlogger Media, and I’m using their free Nomadic theme. I’d hoped that the transition would go better. For example Nomadic had no idea that I’d assigned categories to the links in the blogroll. I ended up re-creating the categories and then going through over 150 links to re-assign them to the appropriate category. I also had to copy over the metatext descriptions that pop up when you hover your cursor over the link. (That metatext might have been buried in the SQL database, but Nomadic apparently wasn’t reading those fields.) Nomadic also has a hard time displaying very small font sizes, although I might be able to fix that by specifying my preferred Times New Roman font.

One of the nicer Genesis features is the ability to switch blog layouts with each individual post. Some features (like Planwise or 3D Hawaii) work best in a wider display without sidebars, and I can do that right from the control panel. So far it’s the only Genesis feature that I routinely use.

It turns out that I have no idea how to change the text font of a post in WordPress. I can probably figure that out with some HTML research (and I can do it in my word-processing software), but WordPress doesn’t seem to make it easy.

FeedBurner

I have to admit that I don’t understand the advantages of FeedBurner well enough to install it, so I didn’t. One significant issue (for me, anyway) is that FeedBurner is now tied to a Google Account. I wasn’t going to link it to all of my other personal Google Account features because someday I might sell the blog. That meant creating a separate Google Account just to set up FeedBurner (and another Gmail address), which meant that I was logging in & out of separate accounts and hopping around chasing down error messages. It gets old fast.

After a couple hours of progressive frustration, I went with the familiar ol’ WordPress e-mail subscription and RSS feed buttons. I could see that I’d eventually beat FeedBurner into submission, but I just didn’t see the advantages over the WordPress features. Now that Google Reader is going away, the blogger community is wondering how much longer FeedBurner will be around. I’m going to sit on the sidelines for a few more months until the whole controversy shakes out.

Plugins

Wow. Talk about being a kid in a candy store. In the case of WordPress.org plugins, over 24,000 of them.

Plugins are great, but they’re worth what you pay for them. Their real cost comes in the additional overhead of page loading time (for your readers) and the possibility of breaking other parts of your blog. I’ve tried really hard to hold myself to the plugins that really make a difference for you… and for me.

My first decision was to push the “Easy” button: the WordPress.org Jetpack plugin. It supplies most of the same blogging features that I’m used to from WordPress.com (with a few minor deficiencies). They add new features every few months, so by now I have everything I need and I don’t miss what I used to want. One advantage of Jetpack is that it runs off WordPress’ servers, not my host server, so it can help offload some host server traffic. Of course if WordPress or Jetpack go down then you’re royally screwed, but so far so good.

Speaking of “royally screwed”, my second plugin was BackWPUp and a Dropbox account. I want to make sure that I don’t have any trouble moving to a new host if Bluehost goes down or loses a backup. The most I’ll lose is a week of work.

I use another dozen plugins. They include Akismet to further control spam, Todd Tressider’s “Ultimate Financial Calculators” to insert into posts, and WhyDoWork AdSense to help display the ads. I’m also beta-testing CoSchedule, an editor’s plugin to integrate social media publicity with an editorial calendar. (So far it’s great.) If you want my full list of plugins then add a comment or contact me for the geeky details, but I think they’re pretty standard.

Google AdSense

I signed up on 1 October, and after seven months I’m still feeling paranoid. Let me rant about the service. First, it rules the online advertising industry. Every major advertiser is afraid of being left out of Google AdSense, so nobody has mounted a strong competitive alternative. (There are rumbles, and Google may be their own worst enemy in this struggle.) For now, everyone toes the line for fear of being cut off from this de facto monopoly.

Cutoffs are happening more frequently, although it’s possible to violate an AdSense policy for months because enforcement is so unpredictable. (I wonder if Google has grizzled sergeants-major who stomp around every quarter reminding their platoon sergeants to crack down on blogger AdSense violations.) I’ve always heard persistent rumors of blogger AdSense accounts being suspended, but now I’m reading about them first-hand in my blogger groups. AdSense sends a boilerplate e-mail citing “violation of terms of service” or “invalid clicks” and… you’re done. Bloggers usually have no idea how the specific violation happened, and it’s difficult to tell whether an AdSense human is even involved in the decision. (AdSense may not share the details because that data could be used to reverse-engineer or manipulate their advertising software.) Sure, there’s an appeals process, with about the same benefits as your right to appeal the results of an IRS audit. However I’ve only ever heard of one blogger getting their account reinstated. We have no reliable statistics on the number of existing AdSense bloggers publisher accounts or the number suspended or terminated, let alone a breakdown of the reasons. All we know is what we read about on blogger groups or hear when we huddle together around the fire at blogger meetups to whisper about the issues.

You’re also hostage to the AdSense terms of service. I’m a military nuclear engineer with a graduate degree in computer science– yet I think that even reactor plant manuals and nuclear missile publications have a better layout with simpler language. It can take an hour just to parse the AdSense TOS and translate its copious verbiage into a specific layout for your blog. Even then you may have an ad link too close to a title (readers might click an ad thinking that it’s your post), or your ad colors might be too similar to the post colors, or you used a phrase like “Cl**k h*re!” to generate an invalid click on an ad. (Yeah, that’s how scary it can be.) Even worse, AdSense may trumpet a new feature in an e-mail (which you’ll keep in your IN box and get back to someday) yet restrict some of that feature’s policies in one of their AdSense blog posts (which you’ll forget about until you stumble across it again weeks or even months later).

Yet I completely understand why AdSense is a monopoly: it’s so freakin’ profitable. The blog immediately started earning over $100/month, even though it took me about 10 hours of reading & tweaking to set up the ads. Revenue has grown faster than blog traffic, with some days in double-digit dollars. AdSense even keeps adding larger formats (which advertisers outbid each other to use) and frequently sends helpful hints to us bloggers on what ad formats to put where. I thought that in 2013 I’d earn $2000 in AdSense revenue, but I may go over $3000. If I asked my daily readership to cough up that revenue in membership fees then you’d mutiny with pitchforks and torches, but the advertisers are happy to pay.

Next week I’ll describe some AdSense tweaks and other affiliate income.

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Filed Under: Books & publishing · Tagged With: Adsense, Bluehost, early retirement, financial independence, Genesis StudioPress, military, military retirement

Military retirement from the Individual Ready Reserve

April 29, 2013 by Doug Nordman · Leave a Comment

(Note: For over nine months, the topics of the Reserve and National Guard forces have been at the top of this blog’s searches. After 30 months of blogging, some of these posts rank higher in Google’s search results than the official DoD pages.

At the end of this post I’ve linked every major article on this blog with information about the Reserves and Guard: serving, benefits, separating, and retiring. Some of the reader questions may apply to only a few servicemembers or retirees, but I’ve included all of them. Please let me know if you have questions, advice, or your own story to share!)

In today’s post, a reader writes:

Hello sir! I’m an O-5 (USNR) with 19 years and I stumbled upon your website/blog. All I can say is AWESOME! You put things in plain English when many other websites and instructions either “beat around the bush” or use vernacular that usually leads to more questions! BZ! I was hoping you could answer one question for me. Since I am at 19 years in the Navy (seven years active / 12 years Reserve) – I am trying to weigh my options when I go over 20.

After I hit 20, if I am on the O-6 promotion list and then immediately choose to transfer to the IRR, would I be able to retire as a CAPT? Would I have to serve as a CAPT for at least three years in the IRR and if I earn enough points for a good year, does that mean I could eventually “retire awaiting pay” and retire as an O-6? I guess that was a long-winded way of asking, can you be promoted to O-6 in the IRR and earn good years in the IRR?

Thanks! Eight years of instructor duty, most of it with submariners: complex concepts, simple words.

The big-picture answer to your question is that you can go to the Individual Ready Reserve after you’re selected for O-6. Once you’re in the IRR you’ll have to continue to earn your “good years” in order to satisfactorily complete your time in grade.

The details:

Officers are eligible for promotion while they’re in the IRR, but I have never heard of anyone getting promoted while they were in the IRR. It’s possible, but there are too many Reservists on mobilization and drilling status who have probably done more things to earn the selection board’s attention. You’ll hopefully be drilling (or mobilizing) at least until you reach 20 years and get your Notice of Eligibility letter. Ideally you’ll keep at it until you’re selected for O-6 and the selection results are approved by Congress.

Once you’re selected for O-6, though, you can go to the IRR whenever you want. (Even before you’re formally promoted to O-6.) No matter what timing you choose, the only way your time in grade will accrue is when you accumulate good years (50 points per year). You could hypothetically do that in a pay billet (if you get one), or by getting mobilized, or by drilling in the Volunteer Training Unit. If you’re in the IRR, though, you’ll probably do it by correspondence courses or special duty (funeral detail), or by other individual arrangements with your chain of command. (You may also want to see if you can earn points by serving as a U.S. Naval Academy Blue & Gold Officer.) IRR members still have to show up for annual musters and maintain whatever other readiness status is required by your chain of command (medical & dental screenings, staying within physical standards). Time in grade only counts when you earn a good year.

Your O-6 time in grade is normally three years, whether you’re drilling or mobilizing or in the IRR– as long as you accumulate your good years. However when you request retirement you can also request a waiver to reduce the TIG requirement to two years. That’s routinely approved for most retirements and would almost certainly be approved for a retirement from the IRR during a drawdown.

No matter when you choose to submit your retirement request, make sure you review your options under the Reserve Component Survivor Benefit Plan and Tricare Retired Reserve. The first is an exceptionally inexpensive life insurance annuity that offers more benefits than any civilian policy. The second will provide health insurance (up through age 60) that might even be cheaper than some civilian programs.

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Filed Under: Military · Tagged With: financial independence, Individual Ready Reserve, IRR, military, military retirement

New links for military retirement, military transition, and blogging

April 25, 2013 by Doug Nordman · 2 Comments

Here’s an easy slide into the weekend. I only have a few new links to share with you today, but a couple of these are time-sensitive as well as being current events.

Take the survey

First up, thanks to Rob Aeschbach‘s recommendation, is a survey request from Orders To Nowhere. Mike Grice retired from the Marine Corps in 2012 and has been blogging about his military transition. He’d like to hear how your own transition went and what issues you came across. It’s a straightforward SurveyMonkey format with mostly multiple-choice questions and a few short essays. (It’s not graded!) Best of all, you’re contributing data to a research project that could improve the transition process and maybe even result in another book. Nearly a decade ago, a similar survey started me down the same road. Please help a blogger out.

Plan your transition

Speaking of the military transition, the new Transition Assistance Program courses seem to be a hit. This is a combination of seminars, interest surveys, skills discovery assessments, and certification programs sponsored by DoD, the VA, and the Department of Labor. They’re designed to translate military skills to civilian resumes, streamline credentials and licenses, and generally speed up the job search. The popularity comes from the student critiques, but these veterans are just now beginning their job search. (I’ve heard privately from another retiring servicemember that the curriculum is still PowerPoint overload, now with lots more links to other websites.) Another quarter-million servicemembers are projected to leave the military during the next four years.

If I had to make a skeptical prediction, I’d suggest that you’ll get results out of the program only if you bring your own initiative and motivation. If you show up with your own plan and have a chance to review & tweak it then you’ll probably do fine. If you show up expecting TAP to hand you a plan, you’ll be disappointed.

Help a blogger, or get help from a blogger

You can help teach other bloggers or learn something new for yourself!

Bloggers Helping Bloggers

Next, whether you’re a blogger or just wondering whether it’s worth your time, Jana could use some help over at Bloggers Helping Bloggers. We’re always happy to have new bloggers show up over there, or intermediate bloggers who are trying to figure out how to raise their game. However Jana especially wants to hear from more experienced bloggers who can volunteer as mentors.

I’ll start the pitch for her by pointing out that the bar is not very high: I’m one of the mentors, yet the blogger I’m mentoring has more experience than me. We each have skills to teach each other, though, and it takes about an hour a week. You and your blogger partner set the pace and share the knowledge over the phone, Skype, e-mail, social media, or however you want. (We’re roughly 5000 miles apart, so e-mail & phone has worked out best.) A new round starts every eight weeks, and the June group needs more mentors. I’ve thoroughly enjoyed mentoring and I’m going to sign up for another round.

Go Curry Cracker

Third, I’d like to re-introduce you to Team Go Curry Cracker. (Don’t laugh! That phrase rules the first page of Google search results, and it’s going to be stuck in your brain for the rest of the day.) I first met Jeremy and Winnie several years ago through Early-Retirement.org while they were vacationing in Waikiki. They were pretty close to financial independence, putting the final touches on their portfolio, and coping with the fiscal pounding of the Great Recession. Late last year, while still in their 30s, they pulled the plug and started traveling. Believe it or not, it takes a lot less than a million dollars when you’re traveling light and living local. It’s like watching Billy & Akaisha Kaderli start their journey again.

Reader Challenge Roundup

Fourth, in a shameless plug, I’d like to thank Pat Flynn at Smart Passive Income for including my pillar post in his latest Reader Challenge Roundup. I’ll confess that I got pretty excited when I saw it near the top of his post, but that’s probably just because I turned it in early it has a catchy rhyming title. If you’re a blogger, or if you’ve been wonderin’ if you should get yerself some of that there passive income everyone seems so excited about, then subscribe to his blog and keep an eye out for the “Niche Site Duel #2″ challenge. I can affirm (like thousands of other bloggers) that his techniques are working on this blog.

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Filed Under: Books & publishing, Finances, Military · Tagged With: Bloggers Helping Bloggers, financial independence, military, military retirement, TAP

Ask the readers: Returning to duty after military retirement?

April 22, 2013 by Doug Nordman · 4 Comments

I occasionally get a question that I can’t answer on my own, and this one is of general interest to many of us. Can you help this military retiree with an instruction reference or a website?

Here’s their question:

I retired from the Army and Army Reserve after a total of 29 years. Six of those years were active duty. 11 of those years I was enlisted, and 18 of them I was an officer. I retired, I got divorced, and I really miss the military.

I am age 50 in excellent condition and even had a military physical completed to try to back in – but no one thinks they can help me. I don’t want to go active duty just Reserve or IMA (individual mobilization). Please advise me of who can help me. I miss the military. Thanks.

The Army Reserve allows some retirees to participate, with several restrictions. Here’s an excerpt from that link:

Transfer to the Retired Reserve. A member in this category may participate in inactive duty training provided:
a) Such training is at no expense to the Government.
b) Members are not entitled to pay or retirement points.
c) No official record of such participation is maintained.

Similar wording is in the “Army Reserve Non-Regular Retirement Information Guide“, chapter 3-1 c.2.b, page 8 (that link opens a Word document).

You could try talking with your local Army Reserve recruiter, but I don’t know what’s typically available at local sites. You could also contact the Army’s Human Resource Service Center for other program or instruction references, and then see what you could arrange in your area.

I can think of three other options to share in the military culture:

JROTC instructor at a local high school. These are pay billets filled by military retirees, but they’re very popular and in high demand. You might have to do this as an unpaid volunteer for months or even years.
Honors detail for military funerals.
Volunteering with a local veteran’s organization like American Legion, Veterans of Foreign Wars, Military Officer Association of America, one of the wounded warrior programs, or whatever other chapters are in your area.

Readers, any other ideas? Do you have a reference or a website?

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Filed Under: Military · Tagged With: financial independence, military, military retirement, Reserve, return to duty

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