Quiz 1 Financial Literacy

Understanding the Midshipman Pay System

-

Midshipman Pay is 35% of the base pay of an O-1 with under 2 years of service
In 2014 that Pay is $1,017
1/C get between $430-$805
My Pay
o Mypay.dfas.mil/mypay.aspx
o Maintained by the Defense Finance and Accounting Service
o Provides paycheck and tax info for military members, retirees and civilian works
o Must change password every 60 days
Leave and Earning Statement (LES)
o A comprehensive list of a leave and earning statements
o It is the Midshipmans responsibility to monitor pay, identify issues and inform the
disbursing office.
Advance for Clothing and Equipment (ACE) Loan
o Interest free loan for equipment usually around $17,500
o Midshipman can apply for outside funding that can subsidize their loans and repay them
Pay Day
o Midshipman get paid on the first day of a month for the previous months work
Held Pay
o Extra pay that is accumulated each month to pay for expenses
o Paid out in December and July
o 1/C do not receive this because they receive their full pay
Taxes
o Midshipman are subject to:
Federal income Tax Withholding
Federal Insurance Contribution Act Withholding
State Income Tax Withholding
o Marital Status: Single, Number of exemptions: 01, State of Legal residence ________
Servicemember Group Life Insurance (SGLI)
o Rates are 6.5 cents per $1000 in coverage
o Increments of 50k up to 400k
Naval Academy Business Services Division (NABSD)
o In charge of Mid Store, Uniform Store, Textbook Store
o The more you charge on the Midstore card, The less Held pay you get
Charitable Allotments
o Able to donate to Combined Federal Campaign and Navy Marine Corp Relief Society
o CFC January March, NMCRS April June
Travel Reimbursement
o All official travel will be reimbursed

Commuted Rations (COMRATS)

o You earn $11.85 per day on leave

Personal Finance
Financial Tools The following is a list of financial tools, Learn how to use them and not abuse them
-

Checking account Very liquid form of storage easy to withdraw or deposit

Savings Account A deposit held at a bank earns modest interest not as liquid
Money Market Account An interest bearing account that has higher interest rates but
withdraws can be limited
Certificates of Deposit (CD) An account that is set of a specific time, your money is unavailable
until that time, Interest bearing
Bonds When you give money to an entity (corporate, government) for a set time and you get it
back with interest
Mutual Funds When a group pools money and then invests it in securities
Exchange Traded Funds Similar to a stock, but compiles a section of the market instead
Stocks A type of security for a cooperation, Common allows you a shareholder vote, Preferred
does not
Individual Retirement Accounts (IRA) An investing tool to earn earmark savings for retirement
when your 59.5 withdrawal from Traditional are taxed, Roth are not

Money Habits
-

Good Habits
o Budgeting
o Saving
o Spending within your means
o Not carry a credit card balance
o Save for retirement
Bad Habits
o Lack of budgeting
o Not saving Money
o Living above your means
o Maxed out credit cards

Assets vs. Liabilities

-

Assets Things that put money in your pocket

Liabilities Things that take money out of your pocket

Interest
-

Compound counts the money that you have already made off of interest
Simple Only counts the initial money that you put into the account

Service Members civil relief act caps all interest on pre-military loans/credit cards at 6%

Credit Reports
-

Get from myfico.com or annualcreditreport.com

The three agencies are Experian, Equifax and Transunion
You are your only auditor
o <630 Bad
o 630 689 Fair
o 690 719 Good
o 720 850 Excellent
US NAVY can look at credit score to determine security clearance
Report any credit fraud at said websites

USNA Contacts
-

Mid Dispusing Officer

LT Deschamps
3-3307
4002

Mid Financial Advisor

LTJG Lopez
3-7023
3008