Tag: Corona

GI Bill: What Happens When You Are Mobilized?

If you are receiving the GI Bill and have to drop out of school as a result of reserve or Guard mobilization orders what will happen to your GI Bill? Will you lose your housing allowance? Will you owe the Department Veterans Affairs money?

Different Rules For Mobilizations

Normally, if you drop classes the VA will take back any money, including the tuition and Monthly Housing Allowance (MHA) payments you received for those classes. However, different rules apply if you’re dropping them because you’ve been mobilized for military service.

If you drop out due to mobilization, the VA will pay your tuition and fees to the school for the entire term, no matter when you drop out. As a special bonus, VA will also give you back any GI Bill entitlement you used during the term from which you were forced to withdraw.

For instance, if your term began on Jan. 15 and you dropped out on March 15, you used two months of GI Bill entitlement (which is normally 36 months total). VA will pay you for attending school those two months and give you back those two months of entitlement to be used at a later date.

VA will also pay you the MHA through your date of withdrawal, rather than stopping it on the beginning date of the term, which is what normally happens if you drop classes. If you’ve been mobilized under Title 10 or under Title 32 for at least 30 days, your Basic Allowance for Housing (BAH) will begin on the effective date of your orders, so you will most likely get some type of housing allowance for the entire time.

Effect of Mobilization on Future GI Bill Payments

Being called to active duty may also increase your Post-9/11 GI Bill entitlement percentage. The entitlement percentage is based on the amount of time you have served on active duty after Sept. 10, 2001. The entitlement percentage affects how much of your tuition is reimbursed to the school and how much your MHA payment will be.

For example, if you have served 24 months active duty after Sept. 10, 2001 your GI Bill percentage is 80%. If you are attending a public school with a tuition of $10,000 a semester you would have 80% of your tuition and fees or $8,000 paid by the Post-9/11 GI Bill. Active duty orders and mobilizations can add more active service to your base GI Bill percentage. The percentages and corresponding active duty requirements are:

  • 100% – 36 or more total months
  • 100% – 30 or more consecutive days with disability related discharge.
  • 90% – 30 total months
  • 80% – 24 total months
  • 70% – 18 total months
  • 60% – 6 total months
  • 50% – 90 or more days

The entire length of your mobilization will be added to your existing service.

Also, if you haven’t been on active service since before Jan. 1, 2013, your mobilization may give you more time to use your GI Bill.

People who were discharged before that date have 15 years to use their Post-9/11 GI Bill or 10 years to use their Montgomery GI Bill. However, additional active duty of at least 90 days effectively removes that time limit, and your additional active duty will effectively remove any time limits for receiving your GI Bill. Thanks to that new service, you are now covered under Public Law 115-48, the Harry W. Colmery Veterans Educational Assistance Act of 2017, commonly known as the “Forever GI Bill.”

Covid-19: Financial Takeaways

The novel coronavirus outbreak is unlike anything we have experienced in our lifetimes. While the full extent of the outbreak is yet to be determined, we can say with certainty that this pandemic will bring changes to the way our government and other governments address future emergencies of this kind.

But there are also many lessons all of us can learn so we can be better prepared for future emergencies. Here are six lessons we can take away from the coronavirus outbreak.

1. Stocks Are for Long-Term Investments Only

The stock markets are extremely volatile right now, and this volatility will likely continue for the foreseeable future. If you haven’t sold your stocks, then you may wish to hang onto them. Selling at depressed prices may only serve to lock in losses.

If you have a long-term horizon, you may be able to wait this out. Look at the most recent bear market during the 2008-2009 economic crisis to see how stocks fared. While we don’t have a crystal ball and we can’t predict how or when stocks will rise, we can assume that stocks will rise again at some point, even if it doesn’t feel that way now. Take a moment to look at the gains that were made after stocks bottomed out during the Great Recession. You don’t want to miss out on similar gains.

Takeaway: Only invest with money that you don’t need in the immediate future. Stocks can be volatile, and you may lose money in the short term. But in the long run, stocks tend to provide greater returns than most other types of investments.

2. Lowering Your Fixed Expenses Can Have a Huge Impact on Your Budget

One way to get out of debt more quickly is by lowering your fixed expenses. The Fed has dramatically lowered interest rates since this outbreak started. This means it should cost less to refinance loans such as your home mortgage, credit card balances, auto loans and student loans.

You will still need to qualify to refinance, based on your credit history and credit score. But if you qualify, refinancing your loans can help you save hundreds of dollars per month in interest payments.

This can do one of two things: It means you have more cash flow each month or, if you make the same payment toward your loan, then more of your payment will go toward reducing your principal, reducing the amount of time it takes to pay off your loan.

Takeaway: Take time over the next few weeks to see whether you can reduce your payments by refinancing your loans or by transferring your credit card balance to a zero balance transfer credit card.

3. Emergency Preparedness Also Means Having Extra Supplies on Hand

This pandemic and the nation’s response caught many people off guard. It’s not hard to find pictures of empty shelving at grocery stores, big-box warehouses such as Costco and Sam’s Club, and other stores that sell food and other household items.

The world’s supply chains will tighten up over the next few weeks while nations close borders to try and stem the spread of this disease. That doesn’t mean you need to rush out and hoard food and supplies. But it does mean that you should be aware of your family’s needs. Make sure you have enough food, medicine and related supplies to get you through the next few weeks.

Having some extra room in your budget will allow you to stock up on extras that you might have normally waited a few weeks to purchase.

Takeaway: Going forward, it may be a good idea to ensure that you keep a decent supply of shelf-stable food staples on hand, along with sufficient medicines and medical supplies to get you through an emergency.

4. Insurance Can Be a Lifesaver

Insurance serves one major purpose — to shift financial risk from yourself to another party. Simply put, insurance helps you avoid a financial expense that you otherwise would not be able to afford.

Being properly insured is essential during times of financial uncertainty. This includes all forms of insurance — health insurance, life insurance, auto, home, renter’s etc.

Takeaway: Take time to review your insurance policies to ensure you have sufficient coverage. If not, get insurance quotes and get coverage. You can’t afford to go without insurance at a time like this.

5. An Emergency Fund Is Essential

Emergencies can happen at any time and, by definition, they will almost always be unexpected. That is why having a well-funded emergency fund is essential. How you define an emergency fund is up to you. But at the minimum, it’s good to keep at least $1,000 in cash set aside for a rainy day. However, this is one time when more is better. Some financial experts recommend keeping three to six months of living expenses in your emergency fund.

Find the sweet spot that works for you.

Takeaway: Start an emergency fund as soon as you can if you do not already have one. Transfer money into a savings account that you won’t touch except for emergencies, and leave the money there. If you don’t have one, set up an automatic transfer to fund your account each month. It will add up quickly, even if you can afford to put away only a small amount each month. You’ll be glad you did.

6. Debt Is the Killer of Financial Dreams

We are just now seeing the impact of this outbreak. Hundreds of major venues throughout the nation have closed for the foreseeable future — museums, concert halls, sports stadiums and more. Some states have even mandated the closure of bars, cafes and restaurants. All of these are necessary to help slow the spread of this disease. But it also means many people will be out of work.

This is where having too much debt comes into play. The greater your fixed monthly expenses, the less margin you have during an emergency. Excessive debt can cause severe financial problems in the event of a job loss or even decreased income from working fewer hours.

Takeaway: Work to eliminate debt as soon as possible. Weather this upcoming storm first, if need be. But after the all-clear siren sounds, work at chipping away your debt.

In Summary

None of this is doom and gloom. Our country and the rest of the world will weather this storm. But there will be hardships and inconveniences in the meantime.

Hopefully, these lessons learned can help all of us be better prepared for the present outbreak and for any future emergencies that may arise.