 We have its chief master sergeant Allen usry and he's a retired command senior enlisted leader for North American aerospace defense command in United States northern command from Peterson Air Force base. He also served as a principal advisor to the commander on all enlisted matters. He also currently serves as the board of directors for the Air Force enlisted village as a military relations consultant for pioneer services a division of mid-country bank. He's also been a guest columnist with Fox News the Hill and the Virginia pilot. Ladies and gentlemen please welcome retired chief master sergeant W. Allen usry. Thank you sir. All right. Good morning everybody. All right hey boy now that is loud. Once again good morning everybody. All right so as he said I and it's on the slide I'm Allen usry retired command chief out at NORAD Northcom retired about eight years ago for what for what that's worth but you know I share in your excitement at this moment because I know when you looked at the agenda and you saw financial resiliency you stopped everything you were doing you contacted your family and you said this this is why I became a chief you know and as you know this is the first time we've done this combined for the last six years I've gone out and done this brief with individual magic comms but I couldn't hit them all I would hit three or four now I'm not saying the Air Force consolidated this just so you could all get my briefing but the evidence is pretty self-evident and you know and they put me first I wasn't first and then they thought about it and I'm sure they said you know what nobody's going to be able to pay attention to anything until they get the briefing they really want so so now that I have set the appropriate level of expectations let's get on with this take a look at that up on the screen I saw I saw this on Facebook I don't know it's probably two or three years ago and everybody thought it was pretty funny but with anything it's funny why because there's an element of truth to it and it stood out to me because it had two things on there it had relationships and money and both of those things are kind of intertwined we'll touch on that in a minute let me go ahead and tell you what it is we're going to talk about we're going to talk a little bit about very briefly what is financial resiliency why it's important and then we're going to get into I'm going to provide you a little bit of background over finances in the military from a kind of a strategic level over the last 15 years or so but I'm hitting a hit on the military lending act I don't include the I'm not including the like the servicemen civil relief act in there because I think most of you are familiar with that most of you may not be familiar with the military lending act and that's the protections that we have out there for service members so I'm going to talk about that a little bit I'm going to spend most of my time probably on the next two slides on considerations for leaders and more to know and then I'm going to do a fun little exercise on compounding interest it's something that really stood out to me way back in the day when I first saw it so I'll share that with you but I promise you this I will give you some information you probably haven't had out of one of these briefings before I will try to be as upbeat and entertaining as I can be if you snore I will wake you up got it all right so let's start I mean we all know what resiliency is it's really the ability to withstand what life throws at you and keep moving forward with a certain level of stress that's appropriate not letting it it overwhelm you but why is it really important do we really see financial readiness as a mission essential thing and the one thing I always point out especially for leaders is you have to remember that this is the number one reason that members lose their security clearance and more importantly it's the second leading contributing factor in service member suicide what do you think the number one factor is relationships absolutely and those two factors are so intertwined at times that you really can't separate them and that goes back to that slide that I was showing you they the relationships and the money impact each other let's move on let me give you a little bit of background and and frame the problem here in 2001 Navy and Marine Corps relief gave a total of five thousand dollars to nine service members who had been the victims of predatory lenders five thousand dollars nine members just five years later in 2006 that amount had gone up to 1.37 million so around that 2006 time there was a lot of discussion on Capitol Hill about why this had become such a problem there was a lot of discussion in dod i was a numbered air force command chief at the time and i remember this is where it really started having a lot of conversations about those outside the gate businesses and how they financed and and those kind of things and Holly Petraeus the wife of general Petraeus she was also the head of the military division of the consumer finance protection bureau and she testified before congress and said that researchers had gone out and looked at the counties and zip codes that had the highest concentration of payday lenders and what they found they all had one thing in common they were close to large military populations and the researchers went on to describe this environment where service members were literally surrounded by companies that were willing to finance things and charge an annual rate average average of 450 percent you know some were a lot higher than that that was just the average and so what that led to was the military lending act of 2007 it was signed into law in 06 went into effect in 07 and basically what it did was two things it provided some protections for service members the biggest one being the prohibition against mandatory allotments but it also capped interest rates on 36 at 36 percent but only for certain products and those products were three types of loans you had payday loans auto title loans and refund anticipation loans why did it really cover those three well according to the national foundation for credit counseling 60 percent of service member families have borrowed money from non-traditional ways of borrowing i don't know better way to say that and those were the three but it had some stipulations to it for the payday loans if it was more than two thousand dollars or longer than 90 days the mla didn't apply if it was an auto title loan if it was longer than six months it didn't apply some pretty big loopholes interesting back story to this is congress who normally writes laws actually went to do d and said we want you to write this well why did do d write something that only provided for three types of loans and then had loopholes in it i can't answer about the loopholes i can't answer about the three things the fdic has said that service members are underserved when it comes to banking and so there was a concern that you can have the unintended consequences of tightening up the rules so much that now young service members don't have any place they can go so they went after the three that they saw as the biggest problem areas but they left those loopholes in there and what happened was that it resulted in things like this the spouse of a wounded warrior in the illinois national guard takes out a loan for $2,500 her annual percentage rate is 300 a little bit better than the 450 but i wouldn't call it good right so she ends up paying over five thousand in interest lands up paying over eight thousand dollars for a $2,500 loan and the military lending act did not apply why because it went longer than six months you've got a travis air force base airmen and you know we like to say airmen are a little bit smarter right he did a lot better than 300 percent he got a hundred percent interest rate 102 percent interest rate he took out a loan for six thousand he paid over seven thousand in interest and again the military lending act did not apply why because it went longer than six months so we went back we we re-looked at this and they updated it in 2015 it went into effect in october 2016 about two and a half years ago so this is still relatively new the first thing they did was they closed those loopholes the second thing they did was they said this should apply to more things than just those payday loans auto title loans and refund anticipation loans so now it also applies to credit cards credit union loans installment loans bank overdraft loans so really most of the financial products that are out there are now covered by the military lending act the other thing it did it established what's called the military annual percentage rate the mapper a term that had as far as i know hadn't really been used before the reason they did this is so let's say i'm a lender who's out in town and chief here comes to borrow money and she gets a loan and let it's just it's below the 36 cap well while we're signing papers i say wouldn't you like to have some credit insurance you know just in case there's an emergency and something happens and you can't pay it'll go ahead and pay it she says you know that sounds really good so i add on that debt protection well that i don't have to i don't have to comply with 36 percent for that so i loan her the money at 36 but i add on the ancillary product of debt protection and i charge her 900 for that okay so they came back and said look if you're going to loan money to the military whatever ancillary products you want to add into it it's still got to come under that 36 percent rate so it also added some more prohibitions it it prohibited rolling over a loan that had a balance to a bigger loan because it just continues that cycle of debt and it gets bigger and bigger because they're rolling over an old balance into a new balance it also prohibited mandatory arbitration and i like this one it's interesting why because most of you know an example of this uh the samsung galaxy phones they had the problem where they a few years ago they were exploding right well they're and it's to the best of my knowledge last year it was still going on in court why because they brought a class action lawsuit and samsung is arguing that in its terms of use you know the terms of use that you click on after you read every single word in it in that terms of use it said look if there's a dispute you agree to arbitration what's the problem with that the arbitrator uh is almost always paid for by who the lending organization so where do you think they usually land when they make a decision so they prohibited mandatory arbitration the the next one i think is kind of funny but it's it had to be done they would were some blending institutions would require you to provide a signed blank check when you got the loan so if you didn't make a payment they could just fill it out and and and go ahead and cash it themselves and and a lot of places did that not your reputable places and then they got rid of prepayment penalties and that's important because for a lot of these companies they were charging 450 average now they can only charge 36 they did not want you to pay off early so they would add a hefty prepayment penalty so if you walked in and said i got to get out of debt here's the money they go oh well you owe me x amount because you paid off early that way they could get as much money as possible so those are all covered in the military lending act let me ask you something show hands i want to see it from everybody how many of you have had heard of the military lending act before today that's really not too bad better than i expected good job all right so now we're going to spend some time talking here i'm going to hand this to you because i'm and but you can't forget that i gave it to you okay all right no no i don't want you to click i just want you to hold it because i want my hands for you got to talk all right so considerations for leaders the first thing is we don't recruit bad credit bad credit is a disqualifying factor now if you have some minor things maybe there's a waiver but bad credit is disqualifying we do take in folks who have debt like student debt and i think i had read somewhere and you guys have seen this where the average enlistee now or the enlistee is coming with an average of over twenty thousand dollars in debt man i couldn't get anybody to give me credit when i was 18 years old much less have 20 thousand dollars in debt but that comes in we also have folks who have shallow credit which is what i was when i first joined which is you just don't have very much you know you may have one or two little things but there's not enough to really give a good view of your credit for so if we don't recruit bad credit where is it that they really go wrong and i would argue that it's in the first three to six months after they get out of basic because i mean let's let's think back these folks are what typically 18 19 years old it is typically their first real job and it's a good job and it pays well and it's got good benefits and it's secure they know they're going to be doing this job for the next three to four to six years hopefully unless something bad happens right businesses know that too and there's nothing predatory about that businesses want to do business with a young military person why because it's a good job it's secure military people pay their debts so this young 18 or 19 year old airman they get to their first duty station maybe even before that what are some of the things they start to buy they got to buy a car got to have a nice car maybe it doesn't have to be a corvette but you want a nice car that your friends will think will cool and maybe help you get a date right and you need to have a stereo in that car that can be heard in the next state um what about the dorm room what do you need in there you got to have a tv not just any tv you got to have an 80 inch tv because you got to be able to see it from across your across the room right what about a gaming system maybe two gaming systems because you've got you know sega and you got playstation i those may well those may be the same thing i have no idea why that was funny but okay um but you've got to have a laptop you've got to have a smartphone you got to have all these things now i'm not not knocking those purchases the next time you go to a chief's group meeting i want you to look in the parking lot see how many fifty sixty thousand dollar bmw is mercedes f250s with roll bars and fog lights that will never see off-road because they're too nice but again i'm not knocking the purchases the point that i'm trying to make is everybody wants their bling but hopefully by the time you're well i started to say before you're our age but that would be a disservice to you by the time you're a chief you've learned how to buy things smartly you either learn through hard knocks or somebody taught you a little bit of how to buy things wisely right so for arguments sake if we don't recruit bad credit and we know that it's in that first three to six months that they get into debt above their head there is a window of opportunity there for us to engage now it is a tough window because sometimes they come to us at their first duty station out of tech school already badly in debt right but there is a window of opportunity now what we do we tend to do is we set no expectations for them you know i had a friend of mine he was command chief out at packf some of you may remember him chief tony bishop used to say if you set the bar so low that a dead man can get across it why are you surprised with mediocre and and uh... substandard results but we don't set expectations for finances we do for fitness we do for education we don't for finance the reason i mentioned those three things if you go out and do the research people who have an education people who are healthy and people of their finances in order live longer and so we don't pay there are a lot of tools that are available out there now much more than when i was a young service member but it's kind of like having a parade that nobody comes to it's like having uh... the greatest web page in the world that nobody uses there's got to be a delivery method in that and we set no expectations is an expectation is it not okay so go with me here for just a minute i want to give a couple of examples of differing expectations one is on the officer side one is on the enlisted side i don't mean to make it sound us versus them it's not it's just a very good illustration so for our young men and women that go to the service academies when they are in their junior year there are two large financial institutions that do a lot of business with the military that offer what is called a career starter loan the name career starter loan even implies that there's expectations this is to help you get started in your career so when you're a junior at one of the service academies you can take out a thirty six thousand dollar unsecured personal loan and pay point seven five percent interest not seven point five point seven five now why would a business do that well obviously the same reasons they want to do business with the military it's a great job they know you're going to be in it for a while you're you're looking to make this a career but more importantly they have a discussion with you that says look with a personal loan of thirty six thousand point seven five percent interest if you take that money and invest it with us you'll earn more in interest than you're having to pay if you add to that x amount over 20 years this is what you'll walk out with at 20 years at 22 years so there is automatically this expectation that not only will you be financially sound but that you will build wealth throughout a career now on the enlisted side and i understand this there's a lot of tools available now and i'm going back 37 38 years to when i came in i had formal and informal financial education and i i think you guys will find this interesting maybe humorous my formal education was a correspondence course that was focused on how to balance a checkbook now when i came in there wasn't you didn't even have to have direct deposit there weren't atm's there weren't debit cards that kind of thing so everything was done by check right so how to balance your checkbook man that that's it now my informal financial education when i got to my first duty station somebody actually did one of my staff nco's i started in the marine corps grabbed me and said look let me give you a little financial education said do not ever write a bad check and land up in the first sergeant's office because you know some of you may remember back in the day if you got into trouble with that stuff it went to your chain of command right do not write a bad check now my corporals they were even better they gave me some informal education they pulled me to side and said hey man we got the secret to this don't get a checking account said why not so if you have a check can't can't write a bad check can't write a bad check can't get in trouble made perfect sense to me so i would take my check over to the px i would cash it get my cash in and i would live life for the next two weeks i'm 18 years old i got friends who want to do stuff i don't have a car we would go out and i would spend my money and i would run out of money before payday so thank god for those corporals because they really had my back they would loan me $20 whenever i needed it but i had to pay them back 40 on payday so what is that but a hundred percent payday loan is it not i didn't have to worry about the predatory lenders outside the gate they lived in the barracks with me and i never understood why corporal brown said hey now if anybody asks don't say anything about this because i thought he was doing me a favor and i'm not dogging him now because i was the consumer i wanted it i thought it was a great deal give me 20 bucks and and i can go to the club for the next two nights but i got into a cycle of debt where with my own corpals where half my paycheck was going to my corpals it all comes back to expectations that you said whether it's to build wealth in a career or whether it's don't you dare get in trouble there's a huge difference every time i do one of these classes someone will come up afterwards and go man when i was young somebody pulled me inside got me saving and i did that for the rest of my career now i'm set that's what we have to do as a chief maybe you don't sit down with every person but you can make that an area of emphasis because go back to the fact that it is mission related it is the second leading contributing cause for service members suicide it is the number one reason that service members lose their security clearance the other thing that we do we set no expectations and then we tend to blame the member what i mean by that is not that we you tell them it's all their fault but we tend to discount or look down on the things that they buy you don't need that that why do they spend money on that that's stupid well remember we all want our bling greatest example i can remember this as a young first sergeant i remember at a first sergeant council meeting all right we had a big discussion about spinner rims remember spinner rims yeah i'm old enough now to swear some of you had them and uh but you know spending two thousand dollars on rims for a two hundred dollar car you know we we were dogging them for what they bought but yet we're driving a bmw my point here it's not on what they buy it's how they buy it does that make sense i looked at a contract several years ago for a young young army e3 who had bought an iphone 5 that'll tell you about how long ago it was and at the time it was probably a 450 or 500 dollar phone right by the time he finishes financing it it was going to cost him $2,300 you know i do believe our young service members do pay attention to their money on a monthly basis they don't necessarily look at what it's going to cost them in the long run what i tend to try to do when i sit down with a young person is go look i know you want your bling you can either have your bling and be broke or we can sit down and talk about how to have your bling and have some money left over then you can decide if you want to invest that or if you just have money left over for the weekend instead of buying that iphone 5 and financing it and paying four times let's go out on the apple website and let's look what an refurbished last generation iphone cost because you may not have to finance that and then that's a monthly payment you don't have to worry about again it's teaching people how to buy things smartly and that kind of leads right into the next bullet of our financial education often misses the mark and not to say that it's not good but we have you know really good briefings most of you probably had it i know i had it at least three times in my career how to make a million dollars in a career in the military right but the hard-fast truth the one solid rule that will never fail in investing never fail you cannot invest what you do not have and so i can talk to you all day long about investing but if you're broke and not knowing how you're going to get to next payday and you're having to think about borrowing money from your corpals like i did well that's going to sell right over your head even if you are thinking about retirement long term there's nothing you can do about it you know my daughter is in her thirties now and she's a financial advisor and she's really got it together with her money uh and when she was young i talked to her a lot about money and the fact that money can't buy you happiness but it'll darn sure lower your stress be smart with it and uh she got engaged and her her fiance went off to basic before he went to basic i said boy you got to enroll in tsp just do it he came back from basic said did you enroll in tsp no but i'll get it i'll hit it when i go to tech school so he goes to tech school comes back said did you enroll in tsp she says no but i'll get it my first duty station the dent in my forehead is getting stronger because i'm beating on this kid you need to enroll in tsp finally my daughter calls me she goes dad lay off we enrolled in tsp i said all right good deal february rolls around and she calls me and and says hey we got our tsp statement we got this much in there next year february rolls around she calls me and now she's excited she goes dad you won't believe how much we have in tsp this is great but i'm paying attention because you know we're friends on facebook and i'm seeing things as many of you parents do you may see some things that concern you the thing that i saw was a two door red Mercedes Benz coupe and i called her and i said how could you afford this and she goes dad don't worry about it you raised me right it's three years old we got a good deal on it it still has warranty it's low miles and we can afford this i actually got our phone going that's my baby girl you know and uh but then over the next few months they bought a Chevy avalanche and a couple other things and i'm starting to go and then i see a four-wheeler you know recreational four-wheeler and so i immediately got on the got on the computer and and pulled up the pay chart just to make sure that e3's hadn't gotten some huge pay raise that i didn't know about and i called her and said hey you know there's no way i you know because i know what you guys make and uh and after a while she tells me well we got in a little bit you know over our head a little bit but you taught me to always you know have you know to borrow from yourself and and so what we did was we took a loan out against our tsp and you know what that's not necessarily a bad thing but i told her i said honey you realize that you're losing interest twice now you're losing the interest you would have earned on the money that would have been in there and you're also having to pay interest on on the money that you borrow which was your money to begin with and again that just makes the point that you need to have an emergency fund you need to have money put away that you can touch on your own and so uh again with our financial education well and i the the moral of that story is it really hit me that you can't teach somebody to be smart with their money until you teach them how not to be stupid with it and that may sound harsh but go back to you can't invest what you don't have right so how much good does it have to talk with somebody about retirement when you really need to be talking to him about how to just purchase something without overpaying uh and then the last one nothing is more vital than nco engagement i would use myself and then my daughter is an example but i go back to to my early days when i owed all my money to my corporal and i finally decided hey i'm going to cycle a debt here i've got to get out of this and so i was paying them back i wasn't borrowing any money and corporal brown my primary lender my preferred lender uh came to me and said man i hadn't seen you what's going on i said man i'm trying to save to get a car i need to get a car it takes 40 minutes to get off camp pennilton and my gunnery sergeant that i worked for heard the end of that conversation and later on in that day he goes hey us three come here i said yeah gunny what do you need because i heard you talking to corporal brown and said you were going to buy a car so yeah that's that's what i was talking about gunny so when are you going to buy a car i don't know for sure i got to save up a little bit of money because well before you go out and buy a car come see me we'll jump in my truck and ride out there i know a couple of places that are reputable won't rip you off i'll make sure you get a good deal i cannot overemphasize the impact of that three-minute conversation because here is what was really going to happen i was going to save out about up about 200 dollars i was going to go get on the bus with my 200 dollars in my hand and i was going to spend 30 minutes or 40 minutes riding off base when i got off base in ocean side california i was going to get off that bus i don't have a car so what am i going to do i'm going to look around for what the first car lot i find and i'm 18 19 years old i'm going to go there and i'm going to pretend i know what i'm doing i'm going to kick the tires i'm going to look at the engine like i actually know how it operates and then i was going to make a deal for a car that i liked and and i undoubtedly would have overpaid both in the short term and the long term but because of a three-minute conversation i went back to the barracks saying yeah the gunny's got my back he's going to take me out make sure i don't get ripped off i mean that's all it takes is a three-minute conversation that says hey before you do anything come talk to me man i'll help you out and they see that their nco's are on their side so again the power of nco engagement i think is probably one of the biggest messages in this presentation and you've got my clicker all right i'm done with that so now some other things to know and i try i do try to pick things that maybe aren't you know the run of the mill that that you you've heard about before i know you all have heard about debt to income ratio how much debt do you have compared to your income the reason i put the 40 percent in there because that's generally the line somewhat drawn in the sand uh by lending institutions where they will not lend to you anymore uh 43 percent for mortgages about 40 percent for regular personal loans that kind of thing banks start to back away from you so it doesn't matter that you have paid everything on time i want you to go back and i want you to think about our young airmen that went and bought the tv the laptop the two gaming systems the car all those things their debt to income ratio now is 70 to 85 percent now if they want to get a loan to consolidate it they can't get one from a traditional bank usually they have slipped from the prime market to the subprime market most of you probably in general understand what prime and subprime means the reason i put it on there is there is no line in the sand for credit score that drops you to subprime but generally speaking it's about 650 most banks will start backing away from you if your credit score is below 680 and so it and it doesn't matter again if you made all the payments in time if your debt to income ratio is completely out of whack and so i'm going to skip a bullet here and go to the credit reports you all know that you can pull a credit report from each of the three major credit reporting agencies annually there's two things i want to share with you on this first of all we normally only do this when when there's an issue right what i would recommend that you do is you set it up to where every four months you pull one report from one of these agencies so you're seeing your full uh disclosed credit report every four months the other thing i would tell you a lot of you in here pay a few dollars a month for credit monitoring through your bank okay so there was a law and i wish i could remember the name of it that was signed last year goes into effect and as of may this year the three major credit reporting agencies must provide active duty military to include active garden reserve a free credit monitoring so come may you can contact them you just have to show that you're active duty and then you will get free credit report monitoring the other thing that i recommend is something where you can kind of keep an eye on it every day it costs nothing is these two apps and i know there's other like it i use these i'm not recommending them but i am saying that i use them experience gives you a good view of your experience credit report and credit karma covers equifax and trans union and i've actually had an instance where an on post credit union drop did something to my credit report that dropped the score by a hundred points i knew it immediately because of the credit karma app i went to that institution and said this is wrong you need to fix this and they said no we're not going to fix it i went back to him said this is why you need to fix it they said no you need to fix it and i went back to him again and they said well if you'll pay this and this and this we'll put a note on your credit report and so i went to the consumer finance protection bureau down at the bottom and filed a complaint and within two weeks i had a letter from the vice president of the bank saying sorry we fixed your credit so i know i'm jumping around here a little bit but the consumer finance protection bureau hopefully most of you have heard about that one of the things they have on their website that i highly recommend is they have a complaint database so if you're getting ready to take out a loan with somebody you can go in there and you can type in the name of that company and you can see all the complaints that have been filed against them there were 19 000 complaints filed last year so you go in and type in whatever it is and you see what kind of complaint sale uh it gives you an idea of whether you're dealing with somebody that's reputable or not going back to credit score and debt to income ratio when you get to that point that you can't use a traditional bank to take out a loan then you get pushed down to using things like finance companies i don't have anything against finance companies but there's something you need to know about finance company versus banks banks are federally regulated by both both the OCC the office of comptroller and currency and the CFPB those two federal organizations proactively come out and go through your books on a regular basis why so that consumers fill a level of security with the banking institutions that they do business with finance companies are regulated primarily at the state level and many states only inspect finance companies in a reactive measure when there's been a problem when there's been complaints so obviously anytime you want to borrow money you want to try to do it uh through through a bank um let's see oh and the last thing which seems to be pretty popular that 1885 opt out you all have heard about the uh the national do not call registry this is the national do not send me credit junk and so you can either go to that website or you can go to that phone number and that will stop all the free credit offers that that you get in the mail all right a couple of examples i know the principles of this you understand but i think it always helps to put it on a screen person a on the left is in prime credit they have a 730 credit score person b is in subprime they have a 599 they both go to the same car lot the same salesman they both buy a 2016 Toyota Camry with the same term look at the difference in interest rates basically 2% versus 15% and in the long term that works out to a total of $10,000 more to pay for the exact same car the next one is is uh same type of thing but for revolving credit versus installment credit and the reason i put this on there is you know almost all of us when we were young had credit card debt uh when i sit down and talk with young people about saving and those kind of things one of the first things they always say is i'm going to start as soon as i pay off these credit cards we pay for something on a credit card and we have every intention of doing what paying it off quickly and then it hangs around for a year or two or three till we finally get fed up and say i can't deal with this anymore i got my tax return i'm going to pay it off but both of those are for the same amount three thousand dollars the installment loan actually has a higher percentage rate but the the total that you're going or the total time that you're going to pay is two years versus up to 10 years and you save about a thousand dollars in interest sometimes it's just smarter to go out and say hey i'm going to take out a personal loan for a year year and a half two years then running the risk of putting it on a credit card and carrying that forward quite honestly i have a business credit card and i probably put somewhere between 70 to 100 thousand dollars a year on that but it is paid off every single month uh with business expenses all right basic tips for budgeting i know you know some of this but i'm i'm i'm sharing this stuff for a reason and you can find stuff similar to this out on the internet pretty easy a lot of places recommend that you track your spending for a week or two weeks i recommend 30 days because doing it for a full month gives you a good view of what you've spent over the entire month what do you think the biggest surprise for married couples when they sit down and they track it for a month and go back and look at what they spent what do you think the biggest surprise is eating out absolutely chunk of change on eating out that's probably the easiest thing to cut back on but there's other things that you can that you can work with and lower those payments so after you've done it for 30 days you sit down and you really analyze where your money's going do it you know if you've got a significant other spouse you do it with them you go over it and you start to make those cuts okay we're going to eat out once a week but also you know i'm going to look at should i refinance my car with another location where the payment will be cheaper i'm going to look at my cable bill i'll give you a personal example of this i hate my cable bill absolutely hate it and uh and to get a package that has the channels you want you have to get more channels than you need and i'm trying to get that cost down i'm talking to the cable guy and i got the dent in the middle of my forehead and uh he says well you've got hbo what do you watch on hbo it's a game of thrones so we got showtime what do you watch on showtime what's ray donovan so well you know those are all a car right that's what are you getting at says you don't have to sign a contract for those you can turn those on and off anytime you want so why why do you have it if that's the only thing you're watching and you're paying for it all year around you know that's pretty smart so i cut off showtime i cut off hbo i'm not even gonna put showtime back on there but when game of thrones comes on next month i'm gonna have me some showtime or some some hbo uh but then start to have competitions with it my wife and i we used to we'd get our groceries and we'd fill up the car on on saturday or sunday and then that week we could we would see who could go without spending any cash you can have competitions for who can go the longest who can spend the least and all of a sudden you start having money and you get better at it month to month i'll tell you what i really recommend is that you do this for an entire year because you have uh certain things that only come up once a year right the other thing on there that i skipped over is the don't use cash now what i i don't mean use credit cards what i'm saying is when you go to the atm and you take out 60 bucks unless you're really good at saving receipts we don't know where those that 60 bucks went most of us have banking apps that if we use the debit card as long as there's not a fee associated with that we can pull up that banking app and we can see every little thing we spent and so every day i would pull that up and i would see what we spent a lot of them you can even go in and categorize it to where it'll start categorizing things for you automatically month to month the whole purpose for this slide isn't to tell you the you know three level budgeting it's to get to that last bullet develop an attitude of defending your money you earned it why would you give it away there was a marketing research firm and i can't remember the name of it but just recently they did some study did some research on this and came out and said your average american sees up to 5 000 ads a day is exposed to them now that seems high to me but i want you to think about this whether it's on the radio whether it's on social media whether it's on tv whether it's in a magazine i don't care where it's at every advertisement in the history of man has been designed to do one thing to separate you from your money you earned it why would you give it away without thinking about it one of the tips i always give young folks is if it costs more than a hundred dollars sleep on it for at least a day walk away from it sleep on it because tomorrow you may realize you don't really need it all that much so again develop an attitude of defending your money there's a difference between earning money and making money earning money is the amount that shows up on your les that's the amount i'm paying you for the work that you do making money is what you do with it after that point are you taking your money and putting it into things that will generate more income or are you simply taking the money that you earn and spending it because if you do as an e9 you're no different than an e2 you just have bigger bills right so take a look at this compounding interest is the eighth wonder of the world he who understands it earns it he who doesn't pays it absolutely brilliant quote einstein probably didn't say it snopes says it showed up about 20 years after he died but i still like it so i still use it so what i want to do is i want to do a quick exercise with you as we start to wrap this up some of you may have seen this before if you haven't i think it's pretty powerful so i'm going to come over here to first sergeant hansen i'm going to get first sergeant hansen one penny and then how do you say your last name okay so yeah uh chief yarborough i'm going to get chief yarborough a million dollars now if i asked you straight up who wants the penny who wants the million dollars of course she'd want the million dollars right but i tell you what i'm going to do i'm going to double his penny every day for 31 days i want to see a show of hands from everybody who wants the million dollars nobody oh a couple people what about the penny that's going to be doubled every day for 31 days show of hands okay i said everybody show your hands come on guys okay so well let me let me make the deal let let what was that show let's matter make a deal or something i'll make this two million how many of you want the two million how many of you want the penny okay and so many of you got your hands down and i'm going to assume it's because you're so enthralled with this you're forgetting to raise your hand okay final offer three million three million how many for the penny how many all right well let's see how this thing goes all right so there's 10 days of this challenge i'm going to double that penny every day and at the end of 10 days you don't quite have enough for a super sized extra value meal you're close you can get one of the five dollar boxes from Kentucky Fried Chicken but you don't have enough to pay the tax okay uh so the important thing of this is we're one-third of the way through this exercise one-third and Chief Yarborough has a million dollars first Sergeant Hanson has five dollars and 12 cents we're one-third of the way through let's keep going so now we're to day 20 we keep doing this every day we keep doubling that penny and on day 20 the first sergeant has 5200 dollars Chief Yarborough still has a million so with 5200 dollars i guess you can buy a fairly decent used car but Yarborough is sitting over there with a million dollars still so let's keep going with this through day 25 all right first sergeant you're starting to make some headway here 167 thousand dollars that's a nice little nest egg is it not but it's not a million dollars is it look how far through this challenge we are we're 25 days through this challenge and there's a difference of over 800,000 but now's where it starts to get interesting day 26 300,000 day 27 600,000 almost 700 and then on day 28 bam the first sergeant's finally in the money he's got 1.3 million dollars Chief Yarborough's got a million both of them are very lucky right but 1.3 is better than one but wait there's more day 29 2.6 million day 30 5 million bam almost 11 million dollars now the obvious lesson in this is what the snowballing effect of compounding interest you all know that you're going Chief why are you telling me this this is the real message i want to get across on day 16 when you had about 350 dollars if you went oh man the the refrigerator broke down i got to take my money out of my investment i got to fix the refrigerator i'm going to pay this bill and then i'll start saving well on day 31 when Chief Yarborough had a million the first sergeant had 11 million you've got 163 dollars and 84 cents because you rated your investments and that's an important message i think that's probably the more powerful message in this when you talk about the power of compounding interest and you say yeah chief but you know nobody doubles their money with this stuff well you may be familiar with this the rule of 72 take the number 72 divide it blah blah what it comes down to is if you earn 10 on your money you will double it every 7.2 years and i realized we don't probably make 10 but over the life of the dow Jones it has never averaged less than 10 over the long term so all right i am actually a little bit ahead of schedule which is always a good thing for you now come on when you saw financial resiliency on your agenda you kind of went oh boy you know but hey i set high expectations did i give you guys stuff you maybe hadn't heard before maybe a little bit different perspective all right remember this is mission related again we've got to teach our service members to to take care of their money because it does impact mission you know the the second bullet on there is really one i use for the first sergeant academy but it applies to all of us we're supposed to provide that commander with the mission ready and listed force you know one thing i forgot to mention and i will jump back here real quick when i joined the marine corps and first time i went overseas was 1984 if something happened back home often by the time i found out about it it had already been fixed because there wasn't social media there wasn't cell phones i had to go to a pay phone bank to call home so really things were fixed before i even found out about it is that the way things are today absolutely not our airmen deploy and they take all of that with them because they are in most places they go to connected and so when they're having that conversation with home and and the refrigerator is broken or the engine in the truck went out and you're an e2 or an e3 that creates a distraction that prevents them from focusing on the mission that you as chiefs need them to be focused on again i've mentioned it several times the number one reason service members lose their security clearance second contributing cause and service members suicide but nothing absolutely nothing makes as big as an impact as an nco who i'm not kidding takes three minutes and goes hey before you do that come talk to me i'll help you out so all right folks uh i usually do the dry drop mic and walk off stage but anybody have any questions comments you know i realize that you are going to be in awe for the rest of the week so i've agreed to stick around for the rest this week so i'll see you tonight at the social and i'll be hanging out here all week thank you very much i appreciate it