Tax Rebates Offer Opportunity to Clean Out Bad Habits

FORT WORTH, Texas, Feb. 19 /PRNewswire/ -- With the upcoming federal tax rebates heading toward Americans' pockets, many may be thinking about a splurge. A new HD TV? A spa day? A new GPS system?

But instead of just spending the tax rebates, Americans have the opportunity to sit down and really think about what is financially important to them.

"According to the U.S. Department of Commerce, Americans currently are spending $1.22 for every $1.00 they earn," said Scott Spiker, chief executive officer of First Command Financial Services. "The 2008 tax rebates offer Americans a chance to break those poor spending habits, change their financial behavior and use the money in a way that helps get them back on track with their financial values."

The first step in realigning your financial values and goals starts with constructing a financial plan. To begin, it is important to understand your personal financial goals, where you currently are and where you want to be. Taking the time to identify your current life state can help in this first step. If you are just starting out, you may have student loans and are adjusting to living on your own. If you are thinking about your children's future, you may be investing in a savings plan for college. The values you outline will lead you to your priorities in life. And your priorities can be shaped into specific goals.

"Outlining the financial goals that are important to you only increases your chances of achieving them," Spiker said. "Most Americans will just spend the tax rebates instead of contemplating where the additional money fits into the bigger financial picture. Just like you clean out your closet, this tax rebate gives Americans an opportunity to put those bad spending habits behind them and start fresh."

Take the tax refund as an example. If your goal is to fund your child's college education, $600 invested for 10 years assuming eight percent interest compounded annually will grow to more than $1,295 without any additional contributions.* Taking full advantage of the power of compounding, which is interest accrued over time, provides another avenue for savings.

An important principle to remember in personal investing is to keep it simple. Several basic -- but very effective -- tips to remember include:

    -- If you don't save, you can't invest. Start with small amounts and watch       the money grow.    -- Time and compounding can be powerful allies of any investor, even when       saving small amounts.    -- Investing an equal amount of money at regular intervals is an effective       way to remove emotion from investing.

First Command suggests that you take this opportunity to start fresh with your financial management and save your tax refund toward a larger financial goal. When embarking on a new path to sound financial behavior, avoid the following common mistakes Americans make in approaching their personal finances. Don't let them affect your financial goals.

    1. Assuming your financial future is set, thanks to corporate and federal       benefits -- With convenient payroll deductions to retirement funds,       it's easy to become complacent about retirement and your financial       preparedness. But how will you pay for a child's college education?       What if you're held financially liable beyond your home or auto       insurance limits?    2. Not knowing how much you need for retirement -- Too often, workers fail       to address this question until they're nearing retirement -- then       discover that they must adjust their expectations for the reality of       their financial situation. Today, people live longer and have more       active retirement lifestyles, which means you may need to save more       than you thought.    3. Failing to take full advantage of matching retirement contributions --       The federal government and many companies offer matching programs for       employee contributions to retirement funds. But if you contribute less       than the maximum, you're leaving their money on the table.    4. Not having an insurance strategy -- Many Americans have insurance       options through their employer but there are good reasons to consider       supplementing this insurance. As part of a financial plan, an insurance       strategy that includes life, home, auto, liability, disability       insurance and more can help protect you and your loved ones against       financial misfortune due to a loss of life, property or income.    5. Failing to consider financial goals and events other than retirement --       Investing only for retirement can leave you unprepared for other       financial needs, such as funding college education, paying for a       child's wedding, starting a business or building a weekend retreat.       Most Americans are likely to experience the occasional unexpected event       that can put a dent in your finances if you haven't prepared for it.    6. Underestimating your spouse's or other survivors' income needs --       Determining the amount necessary to address your survivor's needs       requires careful thought, and consideration of other investments or       insurance that can support those needs.    7. Worrying about things you can't control -- Most people focus far more       attention on their investments' rate of return than on ways to increase       their saving and investing. But you've got little control over the       former and significant control over the latter. Take the long view,       contributing regularly to your 401K, IRA or TSP. Focusing on the things       you can control -- the length of time and the amount you invest -- can       remove the emotion from investing and help you pursue your goals more       consistently.

About First Command

First Command Financial Services and its subsidiaries, including First Command Bank and First Command Financial Planning, assist American families in their efforts to build wealth, reduce debt and pursue their lifetime financial goals and dreams -- focusing on consumer behavior as the first and most powerful determinant of results. Through personalized financial plans that emphasize accumulating wealth while reducing risk, First Command Financial Advisors have established lasting relationships with hundreds of thousands of client families since 1958.

    * This example is a hypothetical investment illustration of mathematical      principals only. It does not factor into account the impact of sales      charges and other expenses or the time value of money. It is not meant      to represent the past or future performance of any particular investment      or investment strategy. Investment return and principal values will      fluctuate over time so that an investor's share, when redeemed, may be      worth more or less than their original cost.

First Command Financial Services, Inc. is the parent company of First Command Financial Planning, Inc. (Member SIPC) and First Command Bank (Member FDIC). Insurance products and services are offered by First Command Financial Services, Inc. Financial planning services and securities products are offered by First Command Financial Planning, Inc. Banking products and services are offered by First Command Bank. Securities products are not FDIC insured, have no bank guarantee and may lose value. In certain states, First Command Financial Services, Inc. is a separately registered domestic corporation and does business in California as "First Command Insurance Services."

     Contact: Steve Crews              The Harbinger Group              773-338-3501              stevec@theharbingergroup.com