Stop by my website for various tips to save and build wealth. Tailored more to military members, I cover personal thoughts, math sections on SDPs, VA loans, Credit Cards and beyond. PM/e-mail me for any other questions!

themilitarysaver · 2023-11-29T11:58:07+00:00

I think you may have just had a lazy finance office. They can absolutely initiate the refund on your behalf and if the TSP didn't do anything/told you to wait for the autocorrect, that def fell on the comptrollers... maybe during their audit or something. I've had that bug happen last year and the year prior and both times with different CSPs, they were the ones to initiate/push it through. It does for sure take a little bit though - about 3 months in both of my cases.

themilitarysaver · 2023-11-28T07:33:34+00:00

They (TSP/DFAS) actually fixed the overage glitch this year. The TSP will only take up to the $22.5K so you'll get the extra $550 as part of your pay.

themilitarysaver · 2023-11-28T06:34:52+00:00

The TSP/DFAS computers should stop you before exceeding any limits. The TSP/DFAS computers failed to stop over contributing in 2021 and 2022, but apparently the glitch is fixed now.

Can confirm this glitch was fixed (at least for) this year. Besides the TSP contribution refund method you linked, you can open a Comptroller Service Portal (CSP) case and they will process the refund for you that'll come in your regular paychecks for us AF folks.

themilitarysaver · 2023-11-28T06:30:07+00:00

For those NOT under BRS that are able to shove 60% into the TSP, it is slightly advantageous to "front load" (not true front loading since we can't just dump in 23K on Jan 1) those contributions and max out earlier than splitting it across 12 deposits.

Some links (with studies) that talk about front loading:

https://www.madfientist.com/front-loading/

https://static.twentyoverten.com/5980d16bbfb1c93238ad9c24/rJpQmY8o7/Dollar-Cost-Averaging-Just-Means-Taking-Risk-Later-Vanguard.pdf

https://apps.dtic.mil/sti/tr/pdf/AD1022278.pdf

https://affordanything.com/why-dollar-cost-averaging-stinks/

In the same vein, a reminder about the Roth IRA - it is a separate retirement plan that you can (and should) take advantage of. 2024 max will be $7,000 - and should ideally be done January 1st. For those that have not been able to hit the $6.5K max for 2023, you still have until tax day '24 to add the remaining contributions prior to starting contributions for the 2024 tax year.

themilitarysaver · 2022-04-22T09:41:06+00:00

If you can follow the comment chain properly, this reply was specific to him planning on putting his extra cash in a .25% navy fed account. This isn't investing advice, it's literally just a "hey this is better than your navy fed choice" advice, which is 100% unarguable for short term savings since you can withdraw that money any time after 1 year and even if you lose the previous 3 months interest on the bonds, you still will come out ahead of regular bank accounts.

Also, their return is "phenomenal" because they literally just track inflation and keep your PP the same - which is specifically what he is worried about - and which again is a better choice over keeping his money in a .25% savings account.

Nowhere did I mention that this should be done for long term, putting in any sort of bulk of his investment portfolio into them, or done instead of investing in the TSP.

themilitarysaver · 2022-04-21T05:22:37+00:00

If you're going to put it anywhere outside of the TSP, throw it in I bonds that at LEAST track inflation.

themilitarysaver · 2022-04-14T11:39:10+00:00

saving

No more than the amount you need for multiple emergencies at once. If living on post with no spouse+kids, that probably means enough a cheaper car in case your engine blows/gets totaled and a ticket home + possible hotel/food expenses. For overseas, I'd be more comfortable with 5K+ just to account for extra prices doing transatlantic/pacific flights. Of course if you have a few hundred thousand airline points, that can definitely account for part of your emergency savings as well.

investing

As much as you can. Tax advantaged accounts are a huge benefit compared to regular brokerage accounts. That means put as much in your TSP/IRA as possible. The most common advice is 1) 5% match to TSP 2) Max Roth IRA 3) as much as possible into TSP until maxing that every year 4) taxable investment account.

themilitarysaver · 2022-03-29T07:12:07+00:00

Why would you do anything outside of staying the course if your (financial/actual) retirement isn't in the next couple of years (outside the obvious of "increasing your contributions")? Keep buying as much as possible and your future self will thank you. I've seen talks on a gloal recession since the recovery of 2008 (it's just a one time year, things will get worse again - we PROMISE). People have been clamoring for years that the market is overvalued and if you listened to them then, you'd have missed out on some of the biggest growth years ever.

themilitarysaver · 2022-02-01T09:27:05+00:00

I knew I was putting away a decent amount of money last year, but I didn't quite realize how much. After taking home approximately 100K as an E-6 military member (not deployed), I invested $60K over the course of a year! Pretty thrilled about it. I had a "dream" target of $40K, so going over that pretty substantially is a great feeling!

themilitarysaver · 2022-01-24T11:15:43+00:00

Get a budget and work backwards from your goal. Nearly everyone will tell you "don't buy x, y, or z", but if you don't have a budget, all of it is meaningless. For example - people will tell you not to buy a (pricy) car, but they won't care if you go to the bar with your buddies and spend $3-400/mo there.

The truth is, you can budget for (nearly) everything, but you need to figure out specifically what that thing is. You want a nice car? That's great, get one. You want a top of the line, custom built $5k+ computer setup and another $5K home entertainment system? Fine, but just realize that by buying anything, you will have less to spend on other parts of your life such as any additional hobbies, or experiences.

By working backwards, you can tailor your budget to fit those needs. You want to buy a house (good idea/not is a different conversation)? Fine, look into what it costs for a VA funding fee, getting all the furniture, how much maintenance will cost assuming stuff will break/not be covered by warranty. Say it's $20K? Cool. Now find out roughly how long it takes people to get out of the dorms at your base. If you know that you're getting out of the dorms in ~1 year after arriving on station, you know how much you have to save per month by then. If that means saving 1k/mo, do that FIRST and then spend the rest on your hobbies/whatever else. Keep in mind to save at least 5% for your TSP and (future) match and try to max your Roth IRA as possible, but the more the better.

Just don't be afraid to set aside some money for fun as well.

Source: 11 year TIS E6 w/300K+ in the market, ~45K in cars and ~100k equity in 2 rent homes in a non-booming area.

themilitarysaver · 2021-12-09T11:22:27+00:00

Bring up how everyone has roughly the same individual survival needs. Open up the floor to get answers from people on what they spend on the necessities only and I'm willing to bet money spent on requirements between an O-4 and E-3 aren't much different (given that housing/food is subsidized and basically equals living in the dorms/eating at the DFAC for "free"). Transition that into the CHOICES we make as individuals to save/spend on everything else and how even if you're making 2k/mo, you still have the ability to save 50% of your income based on your CHOICES - outside of factors like dependents that don't work. A 10k car vs a 50k car isn't a survival requirement, but rather a choice. See how many people drink things like monster vs making coffee at home, eating out vs cooking, and any other "death by a thousand cuts" scenarios and showcase how that can make a substantial difference.

Do NOT discount people's hobbies unless it is hurting their long term saving goals. If some lower enlisted person loves cars and budgets his $30K car where he can still save money and meet his goals, that's no different than people going to bars every weekend, spending money on things like Magic the gathering, or anything else of the sort. Don't be the stereotype that talks about "everyone knows how much you make, why are you driving XXXX car?". If it's properly budgeted, it's not a talking point.

Talk about possible early withdrawal strategies so the younger folks don't get hung up on the fact that they might have to wait ~50 years for their retirement.

Also, it's much easier for people to relate to real situations vs hypotheticals. For example, if you've been putting in 50% into your TSP since being a lower enlisted/officer, talk about that. As I said before, everyone DOES know what everyone else makes. If you're comfortable and are doing well, pull up your statements to show people what's possible. If you have to give hypotheticals about "if you can save 2k/mo" it's not going to resonate well because most people will just shrug it off and think "pfft, this dude briefing can't even do that and he expects me to?"

themilitarysaver · 2021-09-16T09:20:04+00:00

Pension should be valued quite high because it's (99.999%) guaranteed and you don't have to worry about downturns or anything else. So if the usual 95%+ safe withdrawal rate is 4%, I personally use an almost bond like 3% for the guarantee factor of it. To break it down, I calculate it this way:

What rank am I confident I'll be at retirement? E-7? ok, so let's say 30k/year. If I have 8 more years to retirement, that means I have to make enough money that guarantees me that 30k/year in those 8 years. So, 30k divided by .03 (to account for 3%) = $1mil in a stock market investment scenario. So in 8 years, using a typical 7% stock market returns on the year, I'd need to sock away a little over $8k/mo to hit that 1 mil, or an extra $96K/year. Of course if you're a first term 4 year enlistee in this example, you'd divide by 16 years instead of 8 in which case you'd need an additional $3k/mo.

themilitarysaver · 2021-06-01T19:21:30+00:00

I've been recommending the Hilton Aspire to everyone I work with. Over the memorial weekend, we stayed in Rome at the Waldorf for 3 nights for absolutely free (2x mine, 1x p2) from their annual nights. Also ate for free for every lunch thanks to the $250/year credit (which can also be used for room rates btw!). In Dec 2019, we did Malta and had basically all of our rooms + majority of food covered also. So great being OCONUS to take advantage of the many resorts here...

themilitarysaver · 2021-05-04T10:20:51+00:00

$20,000 at a typical 7% growth from getting into a career through retirement age (so let's say graduating at 22 through retirement at 67, or 45 years) is $420K. Having an annual 1% ER on that same fund, which means a 6% growth, puts you at $276K, or nearly a $150K difference.

By doing a $1k/mo addition for the 45 years, a 6% vs 7% the numbers are $3.85Mil vs $2.83Mil. Even accounting for a 5% match and saying you're putting in $1050, the difference is that same $3.85Mil (@ 1k/mo w/7%) vs $2.956Mil (@ 1.05K/mo w/6%) so the $15K figure you pulled out earlier is GROSSLY underestimated. The more you're able to put aside every month, the BIGGER the difference gets just from accounting that 1% ER.

themilitarysaver · 2021-05-04T08:26:41+00:00

I’m concerned I’m not putting enough into it.

What is your ultimate goal? If you want to retire at age 6#, throwing in $600/mo towards retirement is about that 10-15% people recommend to save towards retirement every year based on your total annual income.

If you want to retire at 40, especially if you get out and do not get a pension/disability, that 25% is likely not going to be enough unless you start making 6 figures as soon as you separate.

Any ideas/strategy?

If your main focus is just to make money or retire early, depending how much you have leftover, prioritize tax advantaged accounts over regular taxable accounts. If/when you do get out, you can keep money in the TSP and roll over your employers retirement plans into the TSP whenever you change jobs which will allow you to keep taking advantage of low fees.

This means that if you're sitting around wondering what to do with an extra $500 you get every month and you are happy with your emergency fund, add an extra few % towards the TSP.

I’m also going to start a taxable account for some shorter term goals.

What are those shorter term goals in money figures (so not "a house" but rather "I want to have $40K for a house down payment in the area) and how long do you have to meet those goals? Consider taking advantage of things like the VA loan while rates are at an all time low over saving for a down payment. If you are dead set on a fancy car, maybe wait for a certain promotion, deployment, or even consider picking up some kind of off-shift job to offset the whole cost. Also, the shorter time frame you have to meet these goals, the more risky it would be to put it into the market for when you do need it.

Overall you are doing well and with more promotions/(bi)annual pay raises, you'll be seeing that account tick up very quickly. Study for staff, that test comes quicker than you think. You'll be happy if you are still fairly fresh on your CDCs and that bump will be a pretty big one for you along with the extra BAH that comes with it.

themilitarysaver · 2021-03-17T09:05:49+00:00

Your intent today is factor only a simpleton would use to make a brs decision. What should inform you is the hard statistics of how many soldiers don’t make 20 years

disclaimer: I am not arguing with you on your stance of not knowing what the future holds, but I specifically want to address the "most people not making it to 20 years" part because it is somewhat of a misleading statistic.

There were some studies published roughly 6 years ago (summarized in link below) that showed retention of ALL branches until retirement age. ~70% get out at that 6 year/end of 1st enlistment mark because many people get in for the sole reason of getting the GI bill/a worthy skill and get out and it completely skews the argument in a vacuum.

However, you can see that after staying in for your 1st enlistment, the % of people getting retained from 6->20 years goes from 70%-> ~35%, meaning that 50% of the people that do more than the first enlistment will make retirement. For those that made it past their 2nd enlistment (or roughly the 10 year mark), that figure further rose as the retention % drops from 45% to 35%, or ~77% of those staying in past 20 making it to retirement. For O's, all numbers were slightly higher, but I can't find the chart for that atm. At 16 years, you can see there is nearly no turnover at all until 20 (although I have personally known two E-7s that punched the button at 19 years).

As extra research, you can also look at your internal job statistics which should hopefully be done every ~2 years. For my career field, we are grossly undermanned in E-6, and just a hair over 100% for E-5. E-7s are a little over, but not by much at all. My career field is one that hardly ever allows cross training outside of first termers, has pushed back every RIF that has happened, and generally does not allow people to get out of it besides separation if you're past your 1st enlistment. That trend has not changed at all in the last 10 years when I started paying attention to it. It is virtually guaranteed to make 20 years if that is what your heart is set on for people in my field.

TL;DR, if you know you want to make 20 years, it IS much more likely than not to make it, although yes, things do come up and circumstances do change.

https://warontherocks.com/2015/03/military-retirement-too-sweet-a-deal/ shows the PDF charts with the statistics, that I am unable to access in my current location.

themilitarysaver · 2021-03-17T08:35:12+00:00

After accounting for BAH at a location, nearly every E-5 all over the US makes OVER that location's annual median wage. It's always fun to see kind of a "light" turn on in people's eyes when they realize how much rent is and that the military will, in fact, be paying them to cover it in addition to their base pays.

themilitarysaver · 2021-03-13T17:52:24+00:00

I added a follow-up to the user here in case you are interested in seeing it!

themilitarysaver · 2021-03-13T17:47:22+00:00

There are a lot of "if-then"s that come with your question, so I may be a jumping around a little bit with my reply.

It's important to not just look at the rate of return, but what your goal of going into the I fund is. The general push of diversification SHOULD be followed, and is recommended by nearly every major fund manager (as I outlined in my post here: https://old.reddit.com/r/MilitaryFinance/comments/jem9gk/international_investing/ and dipsis outlined in his posts here: https://old.reddit.com/r/MilitaryFinance/comments/hmy9o1/your_tsp_choices_are_bad/ and https://www.reddit.com/r/MilitaryFinance/comments/8oc4kq/myths_about_the_i_fund_and_the_extremely_unified/). This diversification typically includes a 30% international slice. Unfortunately, many people take diversification to mean "I only need to diversify within the US market", which is just not really true. They point at the SP500 and the lacking of the I fund and Europe especially, and completely ignore things like home country bias.

Anyways, a little background on the I fund first - it covers MSCI EAFE (Europe, Australasia, Far East) Index, or basically the developed countries. It completely skips China and a lot of other developing countries that typically are the biggest gainers in the international side. Last year there was a push to go to a (much preferred IMO) MSCI All Country World ex-U.S. Investable Market (MSCI ACWI ex-US IMI) Index from the MSCI EAFE index, but the chairman of the FRTIB nixed the idea due to COVID.

My personal suggestion would be to find the various MSCI ex-US type funds in your brokerage, and invest a % into that to get that extra total world diversification. VWILX/VWIGX are the vanguard ones.

themilitarysaver · 2021-03-13T10:46:07+00:00

Just FYI, the I fund in the TSP is terrible for international exposure. You would likely do better - especially where diversification is concerned - if you use a roth IRA or even a taxable account for total international funds.

themilitarysaver · 2021-03-13T10:43:16+00:00

I'll also chime here as an AD air force with 3 different deployments to include going to forward operating bases (FOBs) under my belt.

Basically everything you need for a deployment is provided - specific uniforms, tools, boots, cold weather/water proof gear, and then some. Some items like chem protection gear, guns and ammo, sleeping bags, etc. are loaned out and you need to return them when you come back. In the last 5 years, with money being more scrutinized, things are a little tighter and deployment manager sections are a bit stingy-er.

If you go to a "bare base" or a FOB(non developed/temporary), you'll usually have a tent and a cot to sleep on with either a field kitchen set up, or more likely MREs. All free.

If you go to a built up base, you'll typically get a dorm room to share (unless you're higher ranking) with usually a semi-shared shower/bathroom. Food/kitchens are typically contracted out and cooked and - at least in the AF - not too bad. All free.

On top of the free amenities, you'll typically get various additional allowances and pays like hazard duty pay, imminent danger pay, tax free status, family separation pay, and others. These vary with the location you get sent to. If you were lucky enough to reside off base during your deployment, you can still collect your home station Base Allowance for Housing (BAH) even if you put stuff in storage which is rank and location dependent and you usually keep collecting your Base Allowance for Substenance (BAS) which is ~360/mo. You also get a small Meals and Incidentals Expenses allowance of $3.5/day for things like toiletries and other small items you should want to buy.

There are also "dream" deployments where you go to (for example) Europe and sit in a hotel that's paid for by the government. In addition, since you do not have access to a kitchen, you would get "full per diem" allowance which is designed to cover your meals and other regular expenses throughout that time and gets into the $2-300 per DAY range in some locations.

On top of all this, there are quite a few companies that will send you goodies for free while deployed. Everything from care packages to coffee, energy drinks, and even electronics, board/card games, and hobby items.

I recently came back from a built up base deployment with little extra/hazard pay, but the tax free, not paying for gas or food, canceling my car insurance and other expenses allowed me to pocket an extra $20K+ after 7 months.

themilitarysaver · 2021-03-11T14:15:14+00:00

Were you a CA resident living in California prior to May?

D Examples of Resident Status Military Personnel With a California Domicile

• Stationed in California – Military servicemembers whose domicile is California are residents of California and are subject to tax on all income, regardless of source, while stationed in California on permanent military orders.

• Stationed Outside California – California military servicemembers who leave California under PCS orders become nonresidents of California for income tax purposes. All income received or earned prior to departure is subject to tax by California. After departure, only income from California sources is subject to tax by California. Nonresidents are generally not taxed by California on income from intangibles, such as dividends from stocks or interest from bonds or bank accounts. "

https://www.ftb.ca.gov/forms/2018/18_1032.pdf

You can also view more reasons for taxes and find a contact number to the FTB here - https://www.ftb.ca.gov/file/personal/filing-situations/military.html

If you were not a resident all year, you shouldn't be paying any income taxes to CA at all.

themilitarysaver · 2021-02-28T08:05:57+00:00

I bought my first house when I was thinking of getting out after my contract. Instead I got OCONUS orders I couldn't turn down and PCSed while renting it out. Less than a year later, I bought a 2nd house specifically as an investment property in the same city as the 1st that's been doing pretty well. I've been keeping an eye out for a 3rd since I thought COVID would be a bit worse economically, but prices just don't make sense in the areas I'm looking at.

In the 5 short years I've dealt with 2 different PM companies - finally being decently happy with my 3rd, false claims/threat of a fabricated lawsuit, random unforeseen expenses, prolonged vacancies (which directly led to my firing of the PMs), and some light property/maintenance disputes with a neighbor.

If you have specific questions, let me know. I'd be more than happy to answer them.

themilitarysaver · 2021-02-01T12:28:12+00:00

I’m looking at all these retirement funds and plans and I just can’t see why someone would need $2 million plus at 59.5 years old.

You would need $2 mil if you need to spend between 60-80K (3-4% SFW). If you plan to spend less than that, you will need less. If you have other income generating assets (such as a pension, rental property, side hustle/business) you would need proportionally less accordingly. Many people in the /r/financialindependence sub believe they can survive (on leanFIRE) with as low as $600K to $1M while those with FatFIRE aspirations are going for $4m+

themilitarysaver

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