mitrokhin
Active Member
Sounds good. Yeah I guess it wouldn't be wise to put too much into it right away since I might have random expenses along the way.
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O-1 Budget in Flight School
- Thread starter Draples
- Start date
Sounds good. Yeah I guess it wouldn't be wise to put too much into it right away since I might have random expenses along the way.
Yup, big difference between tax bracket and effective tax rate.
Also worth knowing, if you get stationed in any state with no income taxes at any point in your military career, you can make that your state of legal residence, and you won't have to pay state income tax for the rest of your military career, even after you've moved out of the state. For example, all aviators go to Pensacola, FL after OCS, so most change their residence to Florida (which just involves going to the DMV and giving them your driver's license and they'll give you a Florida one, and then you fill out a bit of paperwork), and you will no longer have to pay state income taxes, even if you get orders to an income tax state afterwards.
Good experience...low fees...I like their fund history...solid website where you can adjust as necessary very easily...very good customer service but, like elsewhere, can vary depending on how much coin you are putting in play.
Important to remember those word "effective tax rate" because a significant portion of our income is an allowance (BAH/BAS) and not taxed. So we are in a significantly lower tax liability situation. Some easy math can tell you how much less income (when taxed at the full rate) would give you the same tax burden. i.e. you are taxed like you make less.
I think this is important to consider when deciding ROTH vs Traditional, something we all need to decide for ourselves.
Spekkio
He bowls overhand.
The IRS has a W-4 calculator which will project your federal income tax liability for the current calendar year. Only enter 'pays', not 'allowances.' In doing so, it will take out whatever deductions you think you qualify for. Divide that number by your annual pay and allowances and that's your effective marginal income tax rate.
Also, there are a lot of people who don't claim enough deductions on their federal income tax. Putting an extra $200 a month into an IRA over the course of the year is much, much better than getting a $2,400 check from Uncle Sam for your loan back at 0% interest.
Also, there are a lot of people who don't claim enough deductions on their federal income tax. Putting an extra $200 a month into an IRA over the course of the year is much, much better than getting a $2,400 check from Uncle Sam for your loan back at 0% interest.
This is one of the first things I have my junior E's do when they say they have money issues. I have had quite a few who were actually doing pretty well with their money, just a little short each month and didn't want to use a credit card for it. Low and behold they get something like 4000 back on taxes, easy day!
Is the Career starter loan something available to civilians who commission through OCS? I have a cousin at USAFA and he is about to take advantage of the opportunity but everything I seem to find only applies to Academy graduates. If it is available to OCS grads, at what point are we eligible to apply?
Thanks for any insight.
LET73
Well-Known Member
Yes. You'll get info on it towards the end of OCS, and I think you can apply at that point.
Ok awesome, thanks for the confirm. This is an interesting topic and something I'm surprised hasn't been talked about more on these forums, or maybe I just haven't looked in the right place.
As someone who works for a major financial institution I'm thrilled that we will get the opportunity to borrow money at such a low rate. I hope new Ensigns take full advantage of this in a responsible manner, I know I plan on it.
By responsible you mean not picking the wrong color car?
Yeah like LET73 said, it's available to OCS grads, although I don't recall hearing anything at all about it at OCS itself, at least there wasn't like a brief on it or anything like that. Most of the info I got on it was from this site, still might be around here somewhere, but broad strokes, 2.99% APR for five years, up to 25 grand (note: you don't have to take the full amount). Payments on the full 25k are about 450/mo. And you need to have your paychecks on direct deposit with USAA, and they need to see a copy of your CAC card and your Oath of Office (I had to substitute the other document instead, the one with the Presidential seal that sounds all nautical and whatnot).
And since you work in finance, you probably know this, but for everyone else, don't take this money and buy a car with it. In most cases, auto loans on new cars will be significantly less than 3% (auto loans are "secured" debt, e.g. backed by the value of the car, if you miss payments they can just take the car back; while the career starter loan is "unsecured debt," AKA signature loans, meaning all they have is your word that they'll pay it back, so it's riskier for them and the interest rate is therefore higher). Insert another plug for USAA's car buying service here for that very reason.
And since you work in finance, you probably know this, but for everyone else, don't take this money and buy a car with it. In most cases, auto loans on new cars will be significantly less than 3% (auto loans are "secured" debt, e.g. backed by the value of the car, if you miss payments they can just take the car back; while the career starter loan is "unsecured debt," AKA signature loans, meaning all they have is your word that they'll pay it back, so it's riskier for them and the interest rate is therefore higher). Insert another plug for USAA's car buying service here for that very reason.
The less loans one has the better in my mind. No matter the rate. Lines of credit included
Usaa or NFCU for banking? Are they pretty much the same or usaa more versatile?
LET73
Well-Known Member
1) You'd better get the right color car. Just think about how humiliating it would be if you showed up at flight school with the wrong Ensignmobile.*
2) The loan is good if you already have other loans (student, car, etc.) with a higher interest rate. Other than that, yeah, don't borrow money.
*I kid. I held off until I could afford a Lieutenantmobile. It's sweet.