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Old 10-06-2007, 01:29 PM   #1
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Longest post I've ever made on net

Hello all - great site with plenty of useful info!

I recently 'retired' from the military after 24 years service (Sep 1st 2007). I REALLY wish I'd been in on this ER concept much sooner and am trying to make up for lost time and bad habits. Quite a few folks in my profession have ER'd, primarily in Thailand, Panama, Costa Rica, and Colombia...but for the most part -99%- they were single.

My ER plan is weighted heavily to paying the mortgage off the home in FL...yes I've read the pro's/cons already, but with my milpay I'll take that hit of not investing the additional $$. I still plan to save aggressively in spite of paying down the home...would be much easier if I were already living there. I've got a lot to learn and numbers to crunch before I'm anywhere close to many of your situations...We've currently identified "unlearning" some bad behaviors to be the primary obstacle to tackle at this point. Ordered the ERguide and downloaded it...still sifting through everything.
One thing cool we did right was get a house in Guatemala, paid off nice home/location...We know that we could live off just my milpay there if all our best laid plans go to crap.
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"1-0"
De Oppresso Liber

Thanks to other posters - I'll plagiarize format here...
Age, Location:
• 41 / wife 35 – Currently in NoVA just outside DC (an expensive place for ER prep!).

Income:
• Salary: $135,000+ / wife $85,000 plus my Military ‘Pension’: ~$24,000yr (just got my first check OCT 1st.)

Consumer debt:
• $0 – None on credit cards. Use a visa rewards card to pay monthly bills for points, and then pay it off.
Other debt:
• First Mortgage: $228,000 at 5.5% with 30 year fixed. Monthly payment is $2100 including escrow (covering home Ins & taxes). This is the house I plan to “retire” to…waterfront in FL. My parents are living in it while they have construction on their place done.
• Second Mortgage (Condo in Alexandria): 232,000 (80/20) at $186k 6% with 30 year fixed and ~45k 8.5% . Monthly payment is ~$1700 with a $206 condo fee (This is where I live – transitioned here out of MIL). Will unload this place when it makes sense – but wish I had just rented at this point to take advantage of LBYM and immediate freedom to cut away when the time comes.
• Equity Loan: $89k at 6%. Monthly $667. Though it's my loan – I took this loan out for my parents to do their construction, they pay the bill automatically and I get the interest write-off.

Savings: Since we’re feeling our way through this due to my transition – the plan is to increase numbers below significantly…primarily by refining LBYM.
• My 401k: $0!! I begin contributing 10% (~1200) of paycheck this month. Will do the math to max this out.
• Wife’s401k: ~20k. currently contribs 6%
• TSP: I have from military. $31kSitting in the L2040 fund – cannot make additional contrib. now that I’m out
• Traditional (nondeductible at this point) IRA: ~$4000+recent gains Fidelity 2030. I just got it started this year. Also put 4k in same type tradIRA but different fund, 2035, for wife. My Tax acct said income limits to open a ROTH are out next year and we’ll open those as well as convert these two I just established…the conversion hit will be small.
• Taxable TRowe 2030fund: $2600...just started it to have something outside an IRA beside my MMSA
• MMSA: $26K – start of the emergency fund
Insurance:
• TRICARE Prime for us both and my wife has free BC/BS thru her employer. Our employers pay premiums.
• Currently have 20 yr term life that expires at age 61.
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Old 10-06-2007, 01:57 PM   #2
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Welcome to the board, 1-0. There are approximately 50 veterans here, some of whom retired early. Lots of military sea stories experiences to learn from.

You need to look at a few more numbers:
- Your annual expenses... perhaps a rock-bottom survival amount, a "comfortable living" amount, and a "cruise the world" amount. It's probably best to look at this in terms of the expenses in excess of your monthly income (pension & rental income).
- One-time expenses in retirement-- paying off the mortgage (as you've mentioned), a new roof, replacement vehicles/appliances, a fantasy vacation, or whatever big hits you might impose on your ER portfolio.
- The size of your ER portfolio, assuming you pay off all/some/none of the mortgages.

Then start running the numbers through FIRECalc.

A couple other suggestions:
- Your military pension could be considered the equivalent of a portfolio of I bonds or TIPS-- among the highest-quality bonds available, inflation-adjusted, and only taxed at the federal level. You may want to change the rest of your asset allocation to shift more toward stocks, natural resources, and real estate.
- If your income is too high to contribute to a Roth IRA, make a non-deductible contribution to a conventional IRA. Later on you can convert the conventional IRA to a Roth and continue to enjoy tax-deferred compounding without minimum distributions.
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Old 10-06-2007, 04:56 PM   #3
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Welcome aboard 1-0.

If it were me, I'd aggressively go to work paying down that 8.5% second mortgage before loading up the money market account. While you haven't mentioned your actual expenses, just a swag says that, with your retirement pay and your current after tax savings, you could probably go six months if either you or your wife lost a job. (I presume your folks are covering the ongoing expenses in FL). For added confidence, you could get a HELOC to be drawn on in the event of emergency. Rates on those now are certainly lower than 8.5%
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Old 10-06-2007, 05:50 PM   #4
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Welcome O-Z, may I ask how you managed to retire with 24 years of service in the military at the age of 41?
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Old 10-06-2007, 05:54 PM   #5
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Welcome O-Z, may I ask how you managed to retire with 24 years of service in the military at the age of 41?
Entered at age 17, retired at 41...last month.
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Old 10-06-2007, 06:02 PM   #6
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OK, I thought one had to be 18 to join. Shows what I know.

Good luck!
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Old 10-06-2007, 06:06 PM   #7
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OK, I thought one had to be 18 to join. Shows what I know.
Eh, when I joined at age 17 my mommy had to sign my paperwork. She seemed pretty eager to get it done, though...
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Old 10-06-2007, 06:14 PM   #8
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Lots went in at 17, I did and "retired" at 37 with 21 plus years of service. Some I know of even went in at 15 and 16 but had to get that "adjudicated" later and faced the very real possibility of being administratively discharged for "fraudulent entry" as the minimum age since at least 1958 was 17 with parent(s) or guardian permission. That was back in the 50's and very early 60's and I do not think it can happen now (much better records and those Entry National Agency Checks sort of preclude it).

OP: I also "retired" in the Northern VA area from the MILPERCEN there in the Hoffman in Alexandria. It was EXPENSIVE then (1974-1979 while on AD and then from 1979 to 1986 when we left). I was back to visit two years ago and was really amazed at the changes and the even more EXPENSIVE costs there. Old home we sold in 1886 for $125K was in the $700-750 range now. Guess it has changed a bit since that time but still costly. Good luck in the post AD era.
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Old 10-06-2007, 06:22 PM   #9
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Eh, when I joined at age 17 my mommy had to sign my paperwork. She seemed pretty eager to get it done, though...
Hope to spend more of my time discussing issues directly relevant to ER...after viewing some posts in the "other topics" area it became painfully obvious many here have severely skewed world views - very little which is based on facts or experience...especially involving our military situation abroad.

73ss454: I'm not the youngest to have joined by a longshot. As Nord's stated - Mom/Dad had to sign the papers. But they weren't happy about it at all, and I told them I'd just do it myself at 18...feel bad for putting them in that situation - but they now dig living in my house in Fla and are proud of my service!!
I graduated HS a year early and had a scholarship for a pretty decent school. I assured them I would go to college and pointed out the options the military offered. I was good on my word, but a bit late, it took 2 decades of night school/weekends and challenging exams to finish up w/my MBA in 2004...My job was not at all conducive to pursuing civilian education. Much like this ER thing, I believe persistence is key.

RW - you're right, NAC has changed the landscape...no 15yr old hard chargers slipping by these days. Though it may be a better alternative than the lives some of them are trying to get away from - at least the military will encourage and provide a means for them to finish HS and beyond, while learning a trade and getting a check...quite a few would be scumbags have turned themselves around by joining.
cheers,
1-0
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Old 10-06-2007, 09:30 PM   #10
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Pretty amazing, one can join the service and carry a gun, shoot people, get shot or worse get killed all at 17. Yet you wouldn't be able to vote or drink alcohol, I gotta be missing something.
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Old 10-06-2007, 09:34 PM   #11
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Pretty amazing, one can join the service and carry a gun, shoot people, get shot or worse get killed all at 17. Yet you wouldn't be able to vote or drink alcohol, I gotta be missing something.
The military's endless appetite for cannon fodder and the nation's puritanical bent?
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Old 10-06-2007, 10:03 PM   #12
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The military's endless appetite for cannon fodder and the nation's puritanical bent?
Ref the above - this is why I made my initial comments ref hoping to stay on topic with ER. I was not cannon-fodder by any stretch of the definition...the generalizations posed on this subject and other hot-button issues are based on the same attitudes that feed racism, sexism, and many other predjudices - based on ignorance.

Please, I just signed on and intro'd myself for the ER forum
I like the concept and wish to learn more about it without sifting through mindless drivel. There are enough forums out there taking that on...

I'll caveat my comments as I know sometimes intent can be misconstrued on the net so I'll try not to be quick w/negative responses. So far only 2 posts have addressed the ER situation since I put my initial intro here - I appreciate their comments and intend to use the 'search' feature a bit more before asking any questions...
regards,
1-0
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Old 10-06-2007, 10:52 PM   #13
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Yet you wouldn't be able to vote or drink alcohol, I gotta be missing something.
I did plenty of at least one of those before I turned 18.

A friend of ours, recently turned 18, is joining the Marines. He's homeschooled and they're happily taking him without his GED, which they'll arrange for him to acquire after he finishes recruit training.

He's 5'2" and 120 pounds, a gymnast & martial artist with a bodyfat of about 0.3% and lightning reflexes. He's going infantry and he wants to be a machine gunner. I asked him if he's checked the pack weight of that job and he says that the Marines want the smaller guys who fit in the Humvee turrets more easily.

If he'd been ready to hop on the bus in early September they would've stuffed an additional $10K in his seabag.

His light burns pretty brightly. He wants to do four years and get out with his GI Bill, just like his older brother, but he's gonna need to have an answer ready when they ask him to go to college on their dime...
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Old 10-06-2007, 10:58 PM   #14
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So, you lied about your voting age?
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Old 10-06-2007, 11:28 PM   #15
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So, you lied about your voting age?
Yeah, several hundred times... considering the way events turned out it's a very good thing that I was incarcerated at a military institution.

At least now I can sleep at night knowing that I'll never be tempted to run for an elected office.
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Old 10-07-2007, 12:05 AM   #16
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1-0,
Nothing especially significant to add.
-- You don't sound particularly in love with NoVA/DC area--do you need to live there for job reasons, or could you scoot to somewhere more affordable?
-- Even with the big mortgages, your incomes should enable you to sock away some serious change if you get solidly into the LBYM habit. That will be easiest if you guys are comfortable/near comfortable with keeping the luxuries at approx the level you had when you were on AD.
-- Taxes: Are obviously a major consideration for you now. It will be worth it to get an accountant with a very sharp pencil. Things that maybe didn't make much sense for you before (e.g. muni funds/muni bonds, etc) might be worth exploring. At the very least, it wouldn't be a bad idea to get a copy of TurboTax or TaxCut and simulate going through the whole interview process as though it were 15 April 2008. That may give you some ideas on where you can put some money away out of the clutches of the IRS, and could also help you fine-tune your witholding from the present paycheck(s).


Good luck!
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Old 10-07-2007, 08:18 AM   #17
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[quote=One-Zero;563632]Hope to spend more of my time discussing issues directly relevant to ER...after viewing some posts in the "other topics" area it became painfully obvious many here have severely skewed world views - very little which is based on facts or experience...especially involving our military situation abroad.

------------------------------- ########################## ------------------------

Yes, it is quite obivious that not of us stay on the ER topics and that from time to time most of us just might go into other areas that have nothing to do with the particular thread. But guess what that is life and that's what makes this forum so interesting.

As for your statement that "it became painfully obvious many here have severely skewed world views - very little which is based on facts or experience....especially involving our military situation aboard" Tnanks for your insight but the reality is that we all have opinions and views and as such we all have a right to express them. If you do not wish to hear them or read them then DO NOT READ THEM.

As for our opinions or skewed world views - very little which is based on facts or experience.....especially involving our military situation aboard. Some of us have served in the military, some of us have experienced war, some of us have lived overseas and some of us have lost loved ones in the wars so what we have to say whether it comes from the news, internet, newspapers, peronsal experience etc.., etc... is important. Being an ex-military person does not make one a SUBJECT MATTER EXPERT on War.

If it was not for the investigative reporting of news organizations the world would not have known about the terrible living conditions of OUR TROOPS at Walter Reed, the secret prisons in foreign countries, the torture that our government has sanctioned, the billions of $$$$ that are being wasted in Iraq, the cooked and false intel that got us into the Iraq War, the illegal wire tapping by our government, this adminstration's blatant disregard for the Constitution, OUR TROOPS not being properly trained and not having the proper equipment (MRAPS, body armor, chemical suits/masks, etc.., etc..)when going to WAR, OUR VETERANS having to SUE the governement/VA to get the proper medical care, ratings and compensation, etc..., etc....., etc....

GOD BLESS

WAGS
A LIFETIME MEMBER OF THE DAV
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Old 10-07-2007, 08:19 AM   #18
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So far only 2 posts have addressed the ER situation since I put my initial intro here - I appreciate their comments and intend to use the 'search' feature a bit more before asking any questions...
regards,
1-0
Heh, I think you'll find hat we regularly wander off topic at the slightest provocation. Don't take it personally.

As for your situation, I hate to tell you this, but it looks a lot like your net worth is mostly tied up in non income-producing real estate and you are carrying a healthy amount of debt. So if you want to end up in FL, I think you have a lot of saving to do. I would start with a guess at what your living expenses will be in retiemen, and then start to work back from that to see how large a portfolio you will need to supplement your military pension.
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Old 10-07-2007, 08:37 AM   #19
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Welcome 1-0... Another veteran here.
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Old 10-07-2007, 10:33 AM   #20
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..... a lot like your net worth is mostly tied up in non income-producing real estate and you are carrying a healthy amount of debt. ....start with a guess at what your living expenses will be in retirement, and then start to work back from that to see how large a portfolio you will need to supplement your military pension.
I concur - I'm currently sifting through much of the info here to see how others have tackled a similar situation. As for the living expenses in retirement - that one is throwing me for a loop as well. I've enjoyed reading Bill/Akaisha 's ER guide and others experiences relating to those expenses that relate to quality of life as we all know it won't be much of a plan if all we can cover is food and utilities.

One area of particular interest to me - being inclined to stash in mutual funds instead of individual stocks - are recommendations regarding fund families. I see alot of ref to vanguard on this site, I've already made a start with Fidelity & Trowe...in Target Funds. Am I being too conservative in this area?? Nords made mention of treating my mil pension as "bonds", which I've read in other articles, and to go heavy with stocks with remaining investments. It makes sense to me, but I know when starting out the right moves can sometimes be counterintuitive...

thanks for the input
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