PSA - things I should have done....

[DanMa1156]

FC almost got me. A man approached me during a cookout in HT-land that I walked over to see one day out of curiosity. He offered to show me what FC was about and took down my number and I agreed to visit one afternoon. The entire time I felt the hairs on the back of my neck stand up because it seemed like I was being sold a bill of goods that I barely understood wrapped in over two hours of military small talk to make it seem friendly. It seemed like I was a big juicy steak on a golden O-1 platter. I declined.

Only afterwards did superiors talk about "the company that shall not be named" and its shady business practices which seemed odd that the command couldn't openly out a company that preys on young JOs.

It's funny. I was my squadron's CFS and wrote a scathing command wide email about First Command, but never named them. I had my (outgoing) CO's permission to do it as he hated them too. I just went on about how a) it's totally unprofessional for instructors to take briefing time or aircraft time to "sell" their students anything; b) how, when you invest, you need to look at investment costs and where your money is being put: being charged a 5% front end load + a 1% expense ratio on the money that actually ends up in the account when half your money is going to a checking account is terrible; and c) a whole life insurance policy is not a great investment for a whole host of listed reasons, but not the least of which, unlike many people are promised, their distributions are not "tax free."

The next morning I woke up and saw in my email an alert from LinkedIn, something like "FirstCommand must be interested in you; 7 people from that company looked at your profile today!" I knew someone had leaked my email to their FC "financial specialist." The next day my PXO told me "from now on, I want to review your CFS emails." I found out during my check out a year+ later that my CO, XO, PXO all stuck up for me against the Commodore at the time who was a big fan of FirstCommand and got a few nasty phone calls that night from reps screaming at him about some rogue CFS giving bad gouge about their company. Apparently a JAG even reviewed what I wrote and apparently she stated something to the effect of "he never named a company, it just seems like everyone is getting defensive because everyone seems to know that's how this company operates, no?" CO was a huge fan of my email. XO and PXO were just like "this isn't how I wanted to start," but to this day I respect the hell out of them for going to bat for me when it would have been easier to just "fire" me as soon as they became the new CO/XO in order to gain favor with the CDRE.

What bothers me isn't that someone sent the email outside - it could have been as innocent as "hey Brad, this sounds a lot like what you're doing to me, care to explain?" - but that those who had FirstCommand, including the CDRE were just so infatuated that they couldn't have been duped like that and stuck to their guns that it was a fantastic investment company.

Sorrynotsorry for the threadjack.

OP's post is awesome - seriously.

 

[RandomGoat1248]

It's funny. I was my squadron's CFS and wrote a scathing command wide email about First Command, but never named them. I had my (outgoing) CO's permission to do it as he hated them too. I just went on about how a) it's totally unprofessional for instructors to take briefing time or aircraft time to "sell" their students anything; b) how, when you invest, you need to look at investment costs and where your money is being put: being charged a 5% front end load + a 1% expense ratio on the money that actually ends up in the account when half your money is going to a checking account is terrible; and c) a whole life insurance policy is not a great investment for a whole host of listed reasons, but not the least of which, unlike many people are promised, their distributions are not "tax free."

The next morning I woke up and saw in my email an alert from LinkedIn, something like "FirstCommand must be interested in you; 7 people from that company looked at your profile today!" I knew someone had leaked my email to their FC "financial specialist." The next day my PXO told me "from now on, I want to review your CFS emails." I found out during my check out a year+ later that my CO, XO, PXO all stuck up for me against the Commodore at the time who was a big fan of FirstCommand and got a few nasty phone calls that night from reps screaming at him about some rogue CFS giving bad gouge about their company. Apparently a JAG even reviewed what I wrote and apparently she stated something to the effect of "he never named a company, it just seems like everyone is getting defensive because everyone seems to know that's how this company operates, no?" CO was a huge fan of my email. XO and PXO were just like "this isn't how I wanted to start," but to this day I respect the hell out of them for going to bat for me when it would have been easier to just "fire" me as soon as they became the new CO/XO in order to gain favor with the CDRE.

What bothers me isn't that someone sent the email outside - it could have been as innocent as "hey Brad, this sounds a lot like what you're doing to me, care to explain?" - but that those who had FirstCommand, including the CDRE were just so infatuated that they couldn't have been duped like that and stuck to their guns that it was a fantastic investment company.

Sorrynotsorry for the threadjack.

OP's post is awesome - seriously.

When I checked into Corpus, one of the mandatory in-briefing items is a FirstCommand sales pitch. I've wondered how the hell that is legal.

But if it makes you feel any better, my check check-in at TW-5 a few years ago included a financial brief with a warning about reserve instructors selling BS financial services to students.

 

[Hair Warrior]

A retired O-5 USAF contracting officer I know, who was prior E, bought a house every time she PCS'd, kept the previous one, and rented it out to other military families. By the time she retired, she owned five houses. Now, some of them weren't great earners for her, and for that I will say: location location location. But if you are reading this at the start of your career and you can make it work financially, it can be its own retirement plan. I think she's north of $100k/yr just with her retirement pay and rental income.

 

[ABMD]

Thanks for the post, Sir. It sounds like the part about lifestyle and avoiding creep deals with things like not buying brand new cars just because you can afford to. How else would you avoid other common "lifestyle creep"?

Houses, cars, stupid crap and credit card debt. Do you really need that new iPhone 13 for $1,500? Do you need 6 subscription services? (Yes, some are pretty good, but there are now tons of these services and I know people who think of them as status symbols). Even with cards that give points, unless you are laser focused on getting it paid off every month and never carry a balance, avoid them. Invest early, and stick to a regular schedule of funding your accounts. Don't get fooled by the facade of success and wealth by the people in the flashy cars and big houses. I'm willing to bet many of the them are up to their eyeballs in debt without any savings and are about 2-3 months from living on the street.

 

[ABMD]

A retired O-5 USAF contracting officer I know, who was prior E, bought a house every time she PCS'd, kept the previous one, and rented it out to other military families. By the time she retired, she owned five houses. Now, some of them weren't great earners for her, and for that I will say: location location location. But if you are reading this at the start of your career and you can make it work financially, it can be its own retirement plan. I think she's north of $100k/yr just with her retirement pay and rental income.

I too know someone in the Army that did this. Guys isn't half way through his 30's and own multiple rental properties across the country.

 

[taxi1]

Also, refrain from the temptation of becoming a currency speculator after toppling a Middle Eastern government. Put your money in a Vanguard index fund (or take a flyer on Apple, or something like that). Not Iraqi Dinar.

Heh, I have about $300 worth of crisp Iraqi Dinar sitting in an envelope in my sock drawer.

 

[Pags]

A retired O-5 USAF contracting officer I know, who was prior E, bought a house every time she PCS'd, kept the previous one, and rented it out to other military families. By the time she retired, she owned five houses. Now, some of them weren't great earners for her, and for that I will say: location location location. But if you are reading this at the start of your career and you can make it work financially, it can be its own retirement plan. I think she's north of $100k/yr just with her retirement pay and rental income.

Caveat emptor. This works for some people and bites a lot of people. As a guy who still owns my JO condo I'll say it's not my favorite millstone to drag around.

 

[ABMD]

Caveat emptor. This works for some people and bites a lot of people. As a guy who still owns my JO condo I'll say it's not my favorite millstone to drag around.

Are you cashflowing? Sometimes those condo fees are a bit steep.

 

[Hair Warrior]

Condo fees are rough - they build zero equity, and they never decrease. In addition, theoretically the building will at some point come down. That's not the case with a house on a patch of land that's your own.

I'll double down on my earlier comment: location location location. If you buy closer to the beach in FL, closer to the metro in DC, closer to the historic areas in Annapolis, or closer to the ocean in SD, you will be glad you did - no matter how small your house is.

 

[ea6bflyr]

Condo fees are rough - they build zero equity, and they never decrease. In addition, theoretically the building will at some point come down. That's not the case with a house on a patch of land that's your own.

I'll double down on my earlier comment: location location location. If you buy closer to the beach in FL, closer to the metro in DC, closer to the historic areas in Annapolis, or closer to the ocean in SD, you will be glad you did - no matter how small your house is.

In addition to location, it's also how you and when you buy. I purchased my current home on a short sale. Seven years later, my house is worth almost twice as much as I paid for it....

I've had friends buy houses at the wrong time and took a losses when they sold it. (Luck and timing, am I right?)

Buying a home while on active duty is always a smart choice if you can afford it. You are taking TAX FREE money (BAH) and getting a tax break from the investment....Double dipping.

 

[Hair Warrior]

In addition to location, it's also how you and when you buy. I purchased my current home on a short sale. Seven years later, my house is worth almost twice as much as I paid for it....

I've had friends buy houses at the wrong time and took a losses when they sold it. (Luck and timing, am I right?)

Buying a home while on active duty is always a smart choice if you can afford it. You are taking TAX FREE money (BAH) and getting a tax break from the investment....Double dipping.

^ This.

Also: your mortgage type and APR matters. Getting a sub-3% rate on a 30 yr fixed is going to set you up for success.

 

[insanebikerboy]

Condo fees are rough - they build zero equity, and they never decrease. In addition, theoretically the building will at some point come down. That's not the case with a house on a patch of land that's your own.

I'll double down on my earlier comment: location location location. If you buy closer to the beach in FL, closer to the metro in DC, closer to the historic areas in Annapolis, or closer to the ocean in SD, you will be glad you did - no matter how small your house is.

I had a condo in San Diego for about three years. Even though it was a nice condo and in a good location, the association wasn’t under the greatest management and the fees increased each year. I sold it in 2015 and actually made a decent amount on it but I heard from several realtors that the condo fee hurt in drawing in potential buyers.

 

[Hair Warrior]

I had a condo in San Diego for about three years. Even though it was a nice condo and in a good location, the association wasn’t under the greatest management and the fees increased each year. I sold it in 2015 and actually made a decent amount on it but I heard from several realtors that the condo fee hurt in drawing in potential buyers.

I stayed a week in a really swanky Airbnb near Point Loma that was a duplex or maybe three units in one building. That might be the exception, because it's small enough that you can coordinate with the other owners to keep costs down, and not feel like you're powerless against a huge assn.

 

[Jim123]

Condo fees aren't a complete waste- they keep the outside of the unit and the neighbors' units tidy and in good repair and they pay for common areas like the pool/gym/bbq grill/fire pit. Whether you get your money's worth on that stuff or if it translates into a 1:1 bump in what you charge for rent, that's debatable (not to mention you pay income tax on rental income... dang details).

Being a slumlord is complicated. If you're going to do the rental property thing then sit down with someone who's BTDT for at least a few hours.

 

[drgndrvr]

Good stuff on here, thanks for engaging.

You can absolutely make money owning properties, but you can also endure some stress and not make money. Like others have said, it all depends on the 1) timing, 2) location, 3) individual house. You can't control #1, but you can with the others. Let me give you my example.

Like many others I was bit by the house purchase bug at the FRS. All the feedback I was getting from instructors was that I could stay in Norfolk for my entire commitment bouncing between the squadrons and FRS. We wanted to enjoy our time (reference my previous comment about lifestyle creep) and bought a $375,000 house in Larchmont. It was great, had lots of "character" (meaning age), and we loved the area.

Circumstances changed and I took orders in another state for our shore tour and we decided to rent. It was challenging - had some unforeseen repairs, military tenants moved in an out so vacancies (USAA canceled our insurance on us because the renewal period fell during a one month vacancy - topic for another rant but that company has basically done all it can to drive me away and I was a total USAA fanatic before) - so we decided to sell.

Both periods were "hot" markets but we sold for $40k less than we bought it for after a terrible experience with the new buyers. We didn't want a cookie cutter house in Chesapeake, but looking back, all of my buddies who bought there ended up just fine.

So, just one data point, but I feel like the people who lose money are often less likely to speak up than those for whom everything goes right.

Another thing to consider is the time horizon of a mortgage and the waterfront locations most of us live. Public opinion, science, etc can change in 30 or even 10 years. Norfolk floods all the time. The base is raising its piers. These aren't opinions, just simply facts. I for one would be wary taking on a mortgage with a risk that is not priced in and hoping that there will be someone to sell it to or a government program to bail me out.