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O-1 Budget in Flight School
- Thread starter Draples
- Start date
Spekkio
He bowls overhand.
Yes, probably not a good source for investment advice.
Also, I found this nifty calculator:
http://www.nytimes.com/interactive/business/buy-rent-calculator.html?_r=0
And Suze Orman can answer your questions on why a condo may not be a good idea:
http://www.oprah.com/money/Should-You-Buy-a-Condo-Condo-vs-House-Suze-Orman
The part not really covered is the fact that you're going to move when orders tell you to move, which means if the market is not great for selling/renting you are stuck paying for two different places. Or if the market has a big dip, such as in '08/09, you are stuck with a huge loss.
Also, I found this nifty calculator:
http://www.nytimes.com/interactive/business/buy-rent-calculator.html?_r=0
And Suze Orman can answer your questions on why a condo may not be a good idea:
http://www.oprah.com/money/Should-You-Buy-a-Condo-Condo-vs-House-Suze-Orman
The part not really covered is the fact that you're going to move when orders tell you to move, which means if the market is not great for selling/renting you are stuck paying for two different places. Or if the market has a big dip, such as in '08/09, you are stuck with a huge loss.
There is nothing wrong with having investment properties in your portfolio. Yes, I said investment properties not the house you bought that you now want to rent because you can't sell it. Most investment gurus will tell you not to delve into investment properties until you have maxed your TSP/401K and both you and your spouse's IRAs....and then only if you have the capital for maintenance and the ability to be empty a few months a year.
If you want rental properties, then buy rental properties. You could even live in the property while at a duty station getting it ready to rent when you leave. I have friends that did this and they are basically slum lords now. One of my old bosses sold three homes when he retired to pay for his new retirement home.
If you want a house, I recommend you don't get into a house that the average O-3 won't look at when it's time to sell. As soon as you get into the O-4 "level" house you are limiting your market. When I say level I don't mean a rank but the rank does suggest an income level, neighborhood (and therefore schools) and style. You must keep all these things in mind. For the most part, you can project selling your house when you buy it.
I can talk about this strategy in more detail elsewhere if desired. It worked for me on four homes in crappy markets (CCTX and South OKC) and I made money on each one.
If you want rental properties, then buy rental properties. You could even live in the property while at a duty station getting it ready to rent when you leave. I have friends that did this and they are basically slum lords now. One of my old bosses sold three homes when he retired to pay for his new retirement home.
If you want a house, I recommend you don't get into a house that the average O-3 won't look at when it's time to sell. As soon as you get into the O-4 "level" house you are limiting your market. When I say level I don't mean a rank but the rank does suggest an income level, neighborhood (and therefore schools) and style. You must keep all these things in mind. For the most part, you can project selling your house when you buy it.
I can talk about this strategy in more detail elsewhere if desired. It worked for me on four homes in crappy markets (CCTX and South OKC) and I made money on each one.
The dip was 07/08 in Bremerton, Washington.... trust me I know =( Haven't lived there for four years now and would (at best) be stationed there one more time in my career (in about 8 or so years) and that place is still upside down for about half of what I paid for it. *sigh* Luckily I bought it as investment property, but it has become more of a hassle than I would like to place on my wifes' shoulders, and can't dump it. (Bought it prior to being married, or having kids.... I believe someone was referencing something about that
)
Well, I respectfully disagree. Myself, my brother, and plenty of other guys/gals I know that are kicking a$$ and moving up the ladder are good dudes, went to public school, never went to preschool, got sick, never had college paid for us, etc, etc. I think people ASSUME too much. It worked for us, we turned out alright. Plus, I agree...dont have kids, and when you do get married, pick the chick that will let you divorce her and keep everything you want, all your money and retirement investments!
Sometimes a condo is the only affordable option. If your based somewhere like San Diego buying a house is usually out of the equation. What is the max you can contribute to a Roth Tsp? Baseops has about the same financial advice except they say go toward a Roth Ira first and then go to the Tsp.
Limits are the same for TSP and 401(k). This year, $17,500.
If you want a lot more options and don't mind higher expenses, sure top off the IRA first, but if you just want a S&P index fund, put it in the TSP and buy some C.
Argghhh, beat me to it...and the astronomer spelled it Brahe 
Roth TSP is the same limit, currently $17,500/yr. You can STILL max out a traditional Roth IRA currently at $5500. The only time it gets weird is if you qualify for the combat zone kicker, in which case you can contribute up to $51,000/yr (not sure how or if they prorate), but you can still only put the normal (17500) yearly max into the roth option, the rest will have to be in the traditional tax in the future style TSP.
Spekkio
He bowls overhand.
You can disagree all you want, but the fact is that there are many professions where a private education from a reputable school (doesn't have to be ivy league) gets graduates hired at a higher rate and higher starting income than public schools, and will net them overall higher career earnings. Obviously, the military isn't one of those professions.
I am a state school guy myself who believed what you did -- a college education is a college education -- but the data that's been collected and put out on the 'net since I went to school was surprising to me. Whether you want to make your future spoons pay for their education is a personal choice. Personally, I don't see the value of forcing my kids to pay a 6% compound kicker on their education, and I also save a substantial amount of money by utilizing an investment option.
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Sorry, my misunderstanding. I thought you were advocating private schooling...from preschool all the way up. In my opinion that is a want vs need. Disclaimer, I have no children...on purpose
.....Disclaimer, I have no children...on purpose
If you don't have kids quit talking about how inexpensive they are, it is like a flight student talking about 'in his experience' how easy the fleet is.
Argghhh, beat me to it...and the astronomer spelled it Brahe
Roth TSP is the same limit, currently $17,500/yr. You can STILL max out a traditional Roth IRA currently at $5500. The only time it gets weird is if you qualify for the combat zone kicker, in which case you can contribute up to $51,000/yr (not sure how or if they prorate), but you can still only put the normal (17500) yearly max into the roth option, the rest will have to be in the traditional tax in the future style TSP.
Just to avoid some confusion, but there are two types of IRAs: a Traditional and a Roth. There are advantages and disadvantages to both and there is much better information online than I can provide here. That being said, I recommend talking to a financial advisor. I do all my investing with Schwab and have been very happy with their service. I originally started with a traditional IRA but then decided to swap to a Roth IRA after deciding it was better for me.
The basic gist most people are getting at here is be smart with your money starting out and don't blow it all on hookers and blow (or most of it at least) because all those financial briefs you slept through in school and training are actually right. I was fortunate enough to be able to invest all of my career starter loan and maxed out my IRA contributions plus additional savings and now as a 7 year O-3, if I were to liquidate all of my investments I could buy an 08 Lamborghini Gallardo with low mileage (I'm a car guy, I equate everything to cars). Not saying this to brag, but to show you what you can do.
This is exactly what I'm doing right now. Also, there's an O-4 who gave us the financial brief in P'cola, and then offered a sort of social hour at the Fish House where we could chat with him and his financial advisor (open bar, too), so if that's still running, it's a no-brainer. His advisor is with First Command Financial Services, and he was telling us that they have a bunch of benefits for active duty military.
True, but Judd Apatow spelled it BroheArgghhh, beat me to it...and the astronomer spelled it Brahe
Man, I wish I was smart enough to figure all this crap out. I just called USAA, asked them to transfer the 401(k) from my old job into Roth IRA (with some set aside in annuity) and that's that. No TSP or anything, just manual contributions here and there. And I don't know what half the words I just typed mean.