Looking for a Little Financial Advice

[jt71582]

I sat down today and looked at everything for my student loans, I had been putting it off because I knew it was going to be a huge number and this stuff is freaking scary!

I'm going to be paying about 400/month to my student loans, depending on what interest rate I lock into when I consolidate. The question is, will this be too much for me to handle as a new O-1? The base pay is around 2500 for new butter-bars, but I know I'm going to have a car payment and cell phone stuff to pay too...not to mention whatever rent isnt covered by BAH. Plus I'd love to be saving some money for the hookers and blow. :smgreen_1

I'm not looking for anyone to share specifics, but if you could look at my financial situation and compare it to your own when you were in my shoes, I'd greatly appreciate it. Disclaimer - I know I still have a long way to go until I'm an Ensign, just looking for your advice.

 

[kmac]

Why would you have a car payment? Why would you live somewhere that isn't fully covered by BAH*? Answer those questions to yourself and you'll be off to a good start.

*Including having roommates.

 

[jt71582]

I don't have a car payment as it stands, but my vehicle is on its last leg, and I'll need to get something eventually. Something...egregiously ensign-ey.

As far as BAH is concerned, I'll probably be fine, just wanted to make sure I had a little wiggle room in case I end up paying a bit more for a place then I expect. Roommates - that'll depend on who I meet in OCS and P'cola.

 

[picklesuit]

I don't have a car payment as it stands, but my vehicle is on its last leg, and I'll need to get something eventually. Something...egregiously ensign-ey.
.

Man, I drive a 1996 F-150 with 183,000 miles that I bought for $2200 cash as an E-3. That thing has made it everywhere with me and no BMW driving ensign has ever given me shit about it.
Take out the commissioning loan from USAA, buy a cheap, reliable vehicle that you can work on yourself (read AMERICAN) and use the rest to pay down yer loans.
I am paying MY college loans, my WIFE's college loans, a car payment (for my wife's kid-mobile), and the Commisioning loan from USAA all on 0-1 pay. You should be fine as a single sailor with only 400 a month.

There are a lot of Command Financial Counselors that would be happy to sit down with you and make a budget. Use them.

 

[Dirty]

Vegas baby... Vegas.

I sported a 95 Camry until O-3 pay, then it was time for a treat.

1. Pay YOURSELF first (I.E. make it disappear from your account before it ever gets there and send it to TSP, money market or savings of your choice)

2. Do NOT have a 5 hundy a month car payment.

3. Take the USAA loan, consolidate and have your student loan on auto withdrawal so you're never 'used' to having your full amount.

I still try to live on O-1 pay.. But I'm single, and I have a couple more toys these days.

 

[Raptor2216]

buy a cheap, reliable vehicle that you can work on yourself (read AMERICAN)[

Uhhh...ok. I guess you have part of that statement right...you will be working on it plenty and it will probably be cheap.

 

[Pugs]

1. Pay YOURSELF first (I.E. make it disappear from your account before it ever gets there and send it to TSP, money market or savings of your choice)

Reverend! That is very sound advice. May seem hard at first but you'll get used to it and never miss it but be glad you have it later.

As far as car, sure, get an Ensign-mobile. I fondly recall being 22, living on Perido, and having mine (a Merkur XR4Ti) and living on about $12K a year (0-1 with $50 a month flight pay in 1986). But, find yourself something a couple or three years old.

 

[Spekkio]

As a single, newly commissioned ensign, you should have no problem finding an apartment with roommates to bring your rent well under your BAH.

Car payment? Yea, sometimes it's unavoidable if your car craps out while you don't have a heap of cash in the bank (or if you crash it like me), but just be frugal about it. My car payment is only $255/month because I got it with my base salary in mind. Your loans are more than mine are, but you should be okay.

Base salary comes to ~$1,500 a month after taxes (under-estimating for the purpose of budgeting). Your student loan payment is $400, which gives you $1,100 to play with, plus anything you might save from BAH. Don't tell me you can't find a car payment for well under $1,100 a month.

1. Pay YOURSELF first (I.E. make it disappear from your account before it ever gets there and send it to TSP, money market or savings of your choice)

I've been looking into this, and really, TSP/401k accounts are making little sense to me financially speaking. If I start now and save till I'm 45 and eligible to retire, I'll have something like $200k saved up. Now say I'll survive for another 35-40 years...that's merely $4k/year. Now adjust for inflation 35-40 years down the line and it's really just crap. There's gotta be a better option than doing that shit. Then there's this whole other thing that excess BAH is tax free, but if I elect to put the money into TSP or the market it's taxable on the back end.

 

[porw0004]

Without being able to see your calculations I can't say anything definitively... but have you ever heard of 'compounding interest'? Again... I am only guessing that you neglected it... 200k sounds pretty low.

 

[Pugs]

I've been looking into this, and really, TSP/401k accounts are making little sense to me financially speaking. If I start now and save till I'm 45 and eligible to retire, I'll have something like $200k saved up. Now say I'll survive for another 35-40 years...that's merely $4k/year. Now adjust for inflation 35-40 years down the line and it's really just crap. There's gotta be a better option than doing that shit.

You need to run that through a financial calculator and it will show you the folly of your ways. You can pick the TSP (and should to the maximum match) and/or an IRA of either flavor. But if you don't do something you will regret it I assure you. Also assuming that you'll be a career officer is a very dangerous assumption right now. People get out for all sorts of reasons and if you think you're going to retire at 45 on your military pay you'll be shocked unless you're going kaczynski.

http://www.bloomberg.com/invest/calculators/401k.html

http://www.dinkytown.net/java/RothIRA.html

 

[bert]

If I start now and save till I'm 45 and eligible to retire, I'll have something like $200k saved up. Now say I'll survive for another 35-40 years...that's merely $4k/year.

Something is off in your calculations: I started when it first became open to military (01 if I remember right, but somebody can correct me if it was really 02) and am already well north of 100k and not eligible to retire for another 4 years. I suspect a lot of folks here would consider my investment choices conservative as well. Also, what money you do finish with will continue to grow tax-free until you can withdraw it at 59.5 - you won't start withdrawing upon your retirement date unless you want to pay extremely harsh tax penalties.

I've said it in other threads and will stand by it: TSP is a great deal and you should take advantage of it.

 

[jt71582]

In regards to a car payment, I'm definitely looking for something fairly cheap. The ensign-mobile thing was more of a joke than anything else. It looks like I'll be okay financially. I'll look into the TSP and other plans - my Dad is a CPA/financial advisor so he should be able to help with everything as well. I just didn't want to go to him immediately because he thinks everything I ever do with money is stupid .

 

[MasterBates]

I had $1000/mo+ in student loans when I graduated. I was able to live on ENS pay which was lower then. I just drove a cheap car, and lived in a small apartment.

It can be done.

 

[porw0004]

In regards to a car payment, I'm definitely looking for something fairly cheap. The ensign-mobile thing was more of a joke than anything else. It looks like I'll be okay financially. I'll look into the TSP and other plans - my Dad is a CPA/financial advisor so he should be able to help with everything as well. I just didn't want to go to him immediately because he thinks everything I ever do with money is stupid .

I know how that goes.

 

[Spekkio]

http://i96.photobucket.com/albums/l179/reynoldo_2006/calculator.jpg

$320,000 to live on over the course of 20 years isn't much better.