1. Major Justin Knutzen

2. Personal History 2007: I was leading a “Successful” life…

3. Personal History 2008: I started thinking about getting married We openly discussed our finances and found Student Loans still unpaid 8 years after college Three vehicle payments Line of Credit on the house Major credit card debt A Signature loan with a high interest rate Over $100,000 in Non-Mortgage Debt!

4. Personal History We had no liquid savings We had very little retirement savings Our debt would not permit us to have the wedding that we wanted

5. Time for a Change I started to research personal finance I read books by the following authors: Dave Ramsey Suze Orman Robert Kiyosaki James Cramer Thomas Stanley We started a budget with a plan to pay off our debts Changed our lifestyle

6. Key Lessons Learned Learned difference between “Need” and “Want” Learned an important word… NO! A Budget is critical Plan for where your money will go Before you get paid A debt reduction plan is important “Emergencies” happen, a credit card is not a plan Open communication about our finances is critical

7. Developing a Budget

8. Budget Income Total Pay (Gross Income) Minus Gov’t Deductions (Taxes, Soc Sec, Medicare) Minus Other Deductions (uncontrolled, ex: Alimony) Equals your Personal Disposable Income Added to spouses income = Total Disposable Income (TDI) Charity (10% of TDI) Place of Worship AFAF Combined Federal Campaign Other

9. Budget Housing (30% of TDI) Rent/Mortgage Utilities (gas, electric, water, trash, phone, cable, internet) Insurance (homeowner/renter) Maintenance (for homeowners) Transportation (17.5% of TDI) Car Payment / Replacement savings Gas Maintenance (oil, tires, repairs, etc) Taxes and Licensing Insurance

10. Budget Food (10% of TDI) Groceries Dining Out Savings (10% of TDI) Emergency Fund Retirement College Fund

11. Budget Personal (10% of TDI) Clothing Personal Care Entertainment Vacation Pocket Money Debt (7.5% of TDI) Credit Cards Student Loans Line of Credit

12. Budget Insurance (5% of TDI) Medical Dental Disability ID Theft Term Life Insurance Long-Term Care (Over the age of 60)

13. Debt Elimination Methods High Interest Organize debts by interest rate Pay off highest interest first Roll payments into next highest, etc, until debt free Debt Snowball Organize debts by amount owed Pay off smallest debt first Roll payments into next largest debt, etc, until debt free Northwestern University, Kellogg School of Management Study: Closing debt accounts led to higher success rate of paying off debt than paying high interest first

14. Retirement Savings Traditional Thrift Savings Plan (TSP) Every $100 contributed reduces take home pay by $75 Money withdrawn in retirement is taxable Better option for those planning to be in a lower income tax bracket in retirement Roth TSP Every $100 contributed reduces take home pay by $100 Money withdrawn in retirement is tax free Better option for those expecting to be in a higher tax bracket in retirement Calculations assume 25% tax bracket

15. TSP Funds Varying range of risks Follow measureable index (Except G and L funds) Low administrative expenses (0.027% in 2012)

16. TSP Funds Common Stock Index Fund “C Fund” Follows Standard and Poor’s 500 Index (S&P 500) 500 large to medium-sized companies Price affected by gains/losses in the prices of the stocks and dividend income Fixed Income Index Fund “F Fund” Follows Barclays Capital U.S. Aggregate Bond Index Broad index representing the U.S. bond market Price affected by interest income on securities and gains/losses in the value of securities

17. TSP Funds Government Securities Fund “G Fund” Special U.S. Treasury securities specifically issued to TSP Interest rate based on weighted average yield of all outstanding Treasury notes and bonds with 4 or more years to maturity Earnings are based entirely on interest from the securities and affected by increases/decreases in U.S. Treasury security rates International Stock Index Fund “I Fund” Follows Morgan Stanley Capital International EAFE (Europe, Australia, Far East) Index Stocks of companies in developing countries Price affected by stock gains/losses, dividend income, and foreign currency changes in relation to the U.S. dollar

18. TSP Funds Small Capitalization Stock Index Fund “S Fund” Follows Dow Jones U.S. Completion Total Stock Market Index Small and medium size companies not in the S&P 500 Price affected by gains/losses in the prices of the stocks and dividend income Lifecycle Funds “L Funds” Diversify investments into G, F, C, S, and I Funds Automatically modify investment mixes according to targeted retirement dates

19. Conclusion Today, my wife and I are debt free We will have a full six month emergency fund when we PCS in July My wife has asked to stay home with our children after we PCS… With no debt and a full emergency fund, she can