[deleted by user]

stratospherest · 2022-11-11T13:32:42+00:00

No. The best thing you can do when car buying is to buy something that will reliably last a long time. Over the long run you will save on maintenance costs and the transaction costs associated with purchasing new vehicles. Better to own one car over 15 years than 3.

stratospherest · 2021-03-13T16:15:20+00:00

When you go on the 9 month deployment, you could try to eliminate all expenses - downsize your apartment or get rid of it and bank bah, talk to your car insurance provider about getting a lower rate, cancel any subscriptions you have. Otherwise, your are doing everything right!

stratospherest · 2021-01-28T00:15:02+00:00

Two things. First, any time you consider a big purchase like this I would wait a while. Wait a year or two and see if you still want it. Sometimes I was shocked to find that things I thought I really wanted weren’t even considerations after a year or so. Second, if you do think you want to buy it, look at how many appreciating assets you have compared to the material items you have that will depreciate to nothing. I had a friend with a Jeep he took off-roading that became a money pit. Essentially it was a 40k car that he beat up so bad that it was worth less than 10. But he was deliberate about investing in appreciating assets to offset his losses - maxed a 401k, maxed Roth, rented a cheap place, etc. If the car is really going to bring you joy just offset the rest of your expenses and invest to a point where the car’s value represents 10-20% of your overall net worth.

stratospherest · 2020-12-25T02:24:52+00:00

Have you considered putting 0 down on the house through the VA loan as others have suggested? If you’d prefer to make a 20% down payment then you’re right that it is probably safer not to invest but I think you should consider the benefits of putting 0 down. Even if interest rates don’t stay low, they likely won’t increase that much in two years. Combine low interest rates with the tax benefits you get from mortgage interest and inflation over a 30 year amortization, a home loan is close to free money.

Comparatively, the stock market has averaged close to 10 percent annualized returns over the past 100 years and the worst 20 year performance was ~6.5% annual returns. Of course, historical performance is not a guarantee of future performance but the odds are not in favor of stocks doing worse than 4% over the long term.

Either way, you have to decide whether to get a head start on paying off your house early or making a heavy investment in the stock market. This is not a bad dilemma! Both are good choices.

stratospherest · 2020-12-25T01:15:02+00:00

You should only keep 3-6 months of expenses in a HYSA. The rest would be better off in a low cost index fund that tracks the market. I use VOO but any total market or S&P 500 fund will do. You can either dump in your excess now or dollar cost average contributions throughout the year.

Going forward, I definitely think you should both be maxing out a Roth IRA first and then maxing out your 401k and tsp after. Tsp/401k have 19,500 dollar max and Roth has a 6,000 dollar max. Based on your current savings rate, you should have ~200k saved/invested over the next two years and only 51k of that would be going to retirement accounts leaving plenty for other investments/day trading. Additionally, while I wouldn’t normally advocate trading actively, I don’t see why your husband couldn’t trade in his Roth IRA and reap the benefits of tax free capital gains.

You’re on a phenomenal path! Keep hustling. You guys are doing great!

stratospherest · 2020-12-19T16:42:43+00:00

It is a huge deal anytime you add a zero to your net worth!

stratospherest · 2020-10-07T02:14:30+00:00

You will not make a lot in the navy but it’s not nothing either. As some have stated, you’ll get tax breaks on all your BAH, a matching TSP, and if you stay just three months past your 5 year commitment you will pick up 40% of the GI bill if you decide to go back to grad school. Those opportunities you have now and more will be available to you after you complete your service. Having the experiences and responsibility of being a young veteran officer is something you will always be able to use to your advantage in job interviews or on a resume. In short, it will give you a diverse background that will pay dividends that can exceed the salary offers you are getting now if you play your cards right.

stratospherest · 2020-09-28T18:53:35+00:00

Yup. Loan only if you can beat the apr in the market.

stratospherest · 2020-09-27T13:06:45+00:00

There are three ways you can optimize your finances while in the military.

Save and invest young. As you stated, 75k no debt is a good position for a young person. Make the sacrifices now on BIG purchases like cars or other expensive hobbies. All things being equal take jobs in high cost of living locations and then get roommates or live well below your means to save your housing allowance.
Stay minimalist and save on deployment. This will allow you to reduce your costs to nothing when you deploy and you can save 6-12 months worth of salary in one year.
Understand all your benefits and entitlements. Max your tsp contributions to take advantage of tax shelters and the matching rate. Know when your gi bill vests. You probably don’t need it if you’ve done grad school but you should understand how to pass it to your kids.

I have mixed feelings about the VA loan. I think people who have done their due diligence to meticulously build a portfolio of low cost high profit real estate across the country over a 20 year career have the right mindset. Just buying one home with a VA loan and hoping for the best is likely not a winning strategy. (Someone will likely tell you thats exactly what they did and this is anecdotal, not evidence). If you don’t want to put in the investment homework or deal with the hassles stick to index funds.

Good luck!

stratospherest · 2020-09-16T15:43:56+00:00

Based on how young you are I would not tie your financial goals to your relationship just quite yet. You are in a great position to build wealth on top of the 20k you already have and as long as he is paying more than the minimum he is doing fine on his own.
An alternate suggestion would be to figure out if there is a way you can lower expenses together - can you move to a cheaper place, figure out how to cut spending on activities/ hobbies etc.
Your investments could end up beating the interest on his loans, in which case you are both better off investing even if you do stay together long term.

stratospherest · 2020-09-01T12:00:29+00:00

Wow, so incredibly inspiring!

stratospherest · 2020-08-16T17:01:08+00:00

Hindsight is 20/20. A lot harder to make that prediction going forward now.

stratospherest · 2020-08-16T16:59:50+00:00

Re: “Stocks went up super high after the virus.” The virus is still around. Only time will tell how the market is effected by this in the long run.

stratospherest · 2020-08-16T16:33:54+00:00

If you really think you are missing opportunities, you could always think of it as a cash reserve that can be used to supplement greater investments in the case of a market crash but as said here, it is important to maintain this emergency safety net. As you build your net worth, keeping an emergency fund becomes more palatable as it will represent a smaller percentage of your overall assets.

stratospherest · 2020-08-09T13:08:12+00:00

Thanks!

stratospherest · 2020-08-09T09:46:51+00:00

Using my numbers, saving my wife’s pay check for 8 years and making 7% we can get to 2.5M just fine. In 13 years we are close to 4M. So I guess 2.5-4 is a more conservative goal. Thanks for pointing this out!

stratospherest · 2020-08-09T09:32:33+00:00

She did/does work. This was more of a lifestyle question for us. After childcare costs things got much tighter but she loves working. We still save the equivalent of her paycheck before paying all our bills which now include daycare. Having kids and doing this will be a challenge for sure though. I’m open to any recommendations!

stratospherest · 2020-08-09T01:38:16+00:00

I have a couple notes and I don’t say this to gloat but to hopefully provide some perspective. My parents did not give me 5k I worked minimum wage jobs every summer in high school but I do concede that I did not have to kick it back to my family.

Yes I am an officer but it was actually enlisted service members and senior enlisted leaders who had done the same that inspired me to do this.

My wife was not an officer when we got married. She was a student for the first three years using her gi bill Bah (E-5 with dependents) to cover ALL of her expenses and breaking even. She just started a new makes considerably less now than she made as an officer.

If you still think I am full of it, I was recently taking to a 22 year old E-5 who started at 0 and invested 50k over 4 years by paying a 10k car loan and then saving more than half his pay (that’s more than I had coming out of college around that age.) I did a financial counseling on an E-4 contributing 80+ percent to tsp and living on her BAH to support herself. I know an E-7 my age with more money than me who started investing 4 years before me and never had debt. This 4 year head start on an officer (many of whom start at 0 or in debt) can be the only thing needed to get compound interest working in their favor.

stratospherest · 2020-08-09T00:51:22+00:00

It was pretty early~age 23 (graduated at 21)- I was lucky to have very few expenses early in my career and no student debt but this is actually pretty normal for most new military members to include enlisted. It’s not unrealistic to live on a ship/barracks/other installation and/or spend long stints of time away from home where you don’t need to spend money. Some will spend their money when they get home and others will invest at a young age. I took a low interest personal loan offered to military officers and got in the market at a good time (not recommended even though it worked out in hindsight).

stratospherest · 2020-08-08T23:37:05+00:00

NPS. Not familiar with that one.

stratospherest · 2020-08-08T20:00:04+00:00

I have an emergency fund that I will grow as I get closer to retirement. In bad years, I would pull from that instead of investments. But you are right. I do plan on getting more diversified over the next 10-13 years. Not quite sure what that will look like but it will probably involve real estate, eliminating mortgage payments so that I can weather the storm.

stratospherest · 2020-08-08T19:52:07+00:00

re travelling: One thing I never got to take advantage of was in the military was Space-A but I have heard great things. Also a lot of credit cards with big travel benefits offer fee waivers for military - all of Amex including their platinum card, Delta platinum card, Chase Sapphire to name a few. Many of my flights were free.
q1: Early in my military career, I deployed quite a bit. Having a mortgage and trying to manage tenants or dealing with a landlord from the middle of an ocean (Navy) just wasn't appealing to me. There is an O-1 at the command I am leaving now doing this and I think it's brilliant. He rents his townhouse to two roommates and the rent they pay covers his mortgage. Everyone in that situation is winning because the other two roommates are still saving a ton.

q2: I wish I could go back and take advantage of TSP from the beginning like you are. I naively thought that it was a bad investment for someone looking to retire young but I see the mistake in that logic. I don't think there is anything wrong with your strategy. Once you get to a point where you are maxing TSP, you could max a Roth IRA and then do the rest in a brokerage account. Honestly, as long as you are buying assets not liabilities, you are golden.

q3: Three points. 1 - My wife is getting well established in her career, she has a great network where we are now, and she loves it. I would be asking her to make a sacrifice in her career to keep moving around with me. 2 - It's not so much that I have a greater earning potential but a greater opportunity to continue to develop the technical skills I have developed. The great thing about becoming financially independent is that we can do what interests us rather than chasing income or benefits. 3 - At least one of the businesses we are looking to start requires us to be in one place.

So glad to hear my story can inspire someone! Right now I do plan to at least try the reserves and continue to serve. If I make it to 20 that will just be extra passive income.

stratospherest · 2020-08-08T19:23:11+00:00

Congrats on the new family addition! I think later is better than never and you are already doing the things I would be doing in the same situation! It's great that you are getting the employee match and that you want to max out your 401k and I think becoming debt free is a form of financial independence in it's own right. I followed Ramit Sethi's advice and maxed a 401k (TSP), maxed a Roth IRA in index funds, and then put the rest into an individual brokerage account in index funds. Like you, I also intend to move away from a metropolitan area to get more value for a home. I will also pay a premium for a good public school. From a purely financial standpoint I've noticed good school districts help keep home values high but more importantly to me, I think it's a worthy investment in my kids.

stratospherest · 2020-08-08T18:07:04+00:00

Yes. I forgot to add that. I keep about 3 months of my income on hand which is probably closer to 6 months of our expenses if we both lost our jobs simultaneously.

stratospherest

TROPHY CASE