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Young Military Officer Needs Advice
Old 09-18-2010, 08:46 AM   #1
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Young Military Officer Needs Advice

Good Morning Ladies and Gentlemen,

I recently discovered this useful site. I am primarily asking advice from retired military personnel or those who find themselves getting close to retirement from the service, but others feel free, please. I am 23, commissioned through AFROTC (University of Alabama), and went active January 2010. Finance has recently been an obsession for me as I find myself reading financial books, listening to Dave Ramsey, and reading information on this site. I recently purchased an older vehicle (2000 accord, original owner) to sell my current vehicle (2005 accord) to put the money I earn off the sell into a cd, or a bond. Once I sell the 05 accord, I will have roughly 17K in savings. I just started contributing 20% of my pay to the TSP (C-30%, S-35%, I-35%). I also have 5,200 in a roth ira offered through usaa. It is the balanced strategy fund (USBSX). I am looking to put roughly 5-7k in a short term investment (about 6 months-1 yr) for a future purchase of an engagement ring for my girlfriend (if she plays her cards right, jk). I worked throughout college and have zero debt. I would like to ask you what you would do if you were in my shoes? Is the USBSX a good fund? I read some posts saying that USAA's funds are not the best. Would you invest in some other investments? If so, which ones? What financial institutions should I take a look at? I am relatively young so I'd like to be more aggressive in my investments while I can. I really appreciate you taking the time to help this "newbie" out.

V/R

Ronnie
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Old 09-18-2010, 09:05 AM   #2
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Welcome aboard Ronnnie. You may find this reading list to be helpful.
An updated FIRE recommended reading list (with a military twist)

Nords, who compiled this list, has his own book coming out within the next year -- The Military Guide to Retirement if I recall the title correctly, so you've definitely come to the right place.
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Old 09-18-2010, 09:14 AM   #3
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Ma'am/Sir,

Thanks for replying, and Nords sent me some sound advice and recommended me posting my request so that others could chime in. Thanks again!
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Old 09-18-2010, 09:40 AM   #4
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rdw, I want to welcome you to the forum and congratulate you on being on sound financial footing at this stage of your life. You are already far ahead of most folks your age and seem to have a good grasp of the basics of financial well-being.

I'm not retired military, but I am retired and am a vet. USAA is a great place to bank, a good insurer, but their funds are not the best when it comes to the fees and expenses they charge you to own them. Late in life I discovered Vanguard and think that is a better option for you in the long run.

If I were you I'd compare the 1.0% expense ratio of USBSX to Vanguard funds like Wellington (VWELX) with an expense ratio of 0.34% or Lifestrategy Growth (VASGX) with an expense ratio of 0.27%. Please note I am not necessarily recommending either of these funds for someone your age, although VASGX might be something you should consider. What I am recommending is that you look at the long-term impact of paying only 1/3 or less of what you currently pay USAA for the privilege of owning one of their funds.

Read those books on Nord's list, give some consideration to an investment plan and post your thoughts here so we can shoot holes in them give you our input.
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Old 09-18-2010, 11:08 AM   #5
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Welcome to the boards and thank you for your service, RD. You are smart to ask for advice and very lucky to get it from people like Nords and REWahoo but I must warn you to watch out for them!!!

Nords will have you lusting to learn surfing and one day in all innocence you will ask about the AF bases in Texas and REW will try to scare you away from his briar patch by telling you "Texas is infested with scorpions, rattlesnakes, fire ants, crazy raspberry ants, cockroaches on steroids, killer bees, mosquitoes, ticks, chiggers, tarantulas, brown recluse spiders, love bugs, swarming crickets, copperheads, cottonmouths, rabid skunks, wild hogs, alligators, oppressive heat & humidity, bleak desolate scenery, dirty beaches, polluted air, dust storms, drought, wildfires, water shortages, recurring floods, tornadoes, hurricanes, rednecks, huge piles of flaming mulch, spontaneously combusting playgrounds, roads hot as flowing lava, the stench of natural and unnatural gasses, amoebic meningitis lurking in area lakes, recurring Ebola virus outbreaks, flesh eating bacteria, staggering homeowner insurance rates, unbelievably high property taxes, mandatory death sentences for DUI convictions, polygamous religious sects, and, lest we forget, doesn't look kindly towards Yankees."
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Old 09-18-2010, 11:21 AM   #6
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The only comment I have (and it's not related to investments) is treat your subordinates in a proper manner; especially your enlisted folks.

Just somebody who's been there (refer to me as an "old sarge” that served in another conflict, long ago...)

A good leader leads; an outstanding leader understands that it is not only their actions, but their actions with/through others ensure sucess.

God bless...
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Old 09-18-2010, 12:25 PM   #7
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The only comment I have (and it's not related to investments) is treat your subordinates in a proper manner; especially your enlisted folks.
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Old 09-18-2010, 12:44 PM   #8
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Welcome to the boards. I'm an active duty Army officer with a little over 13 years in service so far. Like the others, I commend you for having the insight to think about retirement early on in your career. You've definitely stumbled onto a great resource with this board...there is a lot of collective wisdom regarding retirement planning from folks who have successfully left the working world as well as those of us who are hoping to do so as soon as possible.

Definitely take a look at the reading list that Nords compiled...there is a lot of really good stuff there. I would also recommend that you take a look at the following link on another investing forum (Bogleheads) that discusses military investing specifically(Bogleheads :: View topic - Military Investing). The original poster provides some great advice for military folks that will serve you well as you continue your career. Best of luck.
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Old 09-18-2010, 01:03 PM   #9
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Welcome aboard, amigo. Naval Flight Officer here, also with a little over 13 years of service. Sounds like you're off to a good start and making good financial decisions.

When you get deployed to a combat zone, be sure to take advantage of the Savings Deposit Program for the guaranteed 10% return. I am also a big fan of taking advantage of all the Tuition Assistance Programs and graduate education offered. Not many places will pay you to be a college student again.
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Old 09-18-2010, 01:20 PM   #10
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I sincerely appreciate all of your posts. Thank you all!
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Old 09-18-2010, 01:31 PM   #11
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Welcome aboard Ronnnie. You may find this reading list to be helpful.
An updated FIRE recommended reading list (with a military twist)
Nords, who compiled this list, has his own book coming out within the next year -- The Military Guide to Retirement if I recall the title correctly, so you've definitely come to the right place.
That reading list is a beta-test of The Military Guide's "Recommended Reading" appendix.

If anyone has any more recommendations then it's not too late to get them into the first edition...
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Old 09-18-2010, 02:27 PM   #12
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When you get deployed to a combat zone...
I had to add - combat pay is overrated ...
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Old 09-18-2010, 02:43 PM   #13
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I would like to ask you what you would do if you were in my shoes?I am looking to put roughly 5-7k in a short term investment (about 6 months-1 yr) for a future purchase of an engagement ring for my girlfriend
Just some food for thought, but if you want to end up richer than most people sometimes you have to think a little different, too.

I never had an engagement ring. I don't think the idea of having one ever even occurred to either one of us as we were both so frugal. My husband and I bought our wedding rings together a discount chain store. I don't remember what they cost but I know it wasn't much. We got married at a courthouse. We put the money we could have spent on a wedding and rings into appreciable assets instead, like IRAs, 401Ks and a house. We are older now and have never regretted those decisions.

You might want to read the Millionaire Next Door book. It has some good examples of how most real millionaires got to where they are through frugal living.
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Old 09-18-2010, 02:58 PM   #14
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Just some food for thought, but if you want to end up richer than most people sometimes you have to think a little different, too.
I'll agree.

On the engagement ring question (we were engaged in '68 - well before the "three months of income" mantra from DeBeers) we shopped for what my meager income as an E3 would allow - not what getting into debt would allow.

Over the years we've been together, the ring was "upgraded" to shall we say much more than that 3-month guidance, along with a full circumference channel set anniversary ring (on our 10th) followed by an eternity ring (on our 25th) with fairly generous sized diamonds.

It's not where you start (in all things in life); it's what you do along the way, and more importantly what you have at the end of the journey.

We didn't try to capture our feelings at a young age with a ring we "must" have, but rather the rings (and the increasing size) came along during our journey together while our relationship increased to match the size/value of the ring.

Just my thoughts...
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Old 09-18-2010, 03:15 PM   #15
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In 1982, when I was a young Ensign, I got a $3000 bonus for completing Navy Nuclear Power School. (which was slightly more than 3 months pay and just about as much as I paid for my car) I spent it all on an engagement ring. Financially, it was an extremely dumb move, but she liked the ring (and, more importantly, she said yes).

Only you know your girlfriend well enough to determine whether she wants the sparkly ring or greater financial security. As an aside, I once asked the young wife what it is about an engagement ring. I mean, wouldn't she have liked something useful, like a car or a chainsaw or something? She said it was a test -- if I was willing to spend so much money on something totally useless for her, she could be sure I was really serious about the whole marriage thing.
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Old 09-18-2010, 03:44 PM   #16
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Spouse elected for a combined engagement/wedding ring, which we obtained the same day that we did the license application and ironed out the last-minute wedding/reception details. I got a cheap plain brushed-gold band. We were in a real hurry.

No, no, not that kind of a hurry. We could only get follow-on orders to be stationed together if we were married, and in five more days I was leaving for my final 30-day refit and my last 90-day patrol.

That week of decisions represented the beginning of the end of my military career, which reality I didn't fully appreciate until 16 years later. But it also represented the start of something much better, which I really do fully appreciate all the more over 24 years later.
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Old 09-18-2010, 05:04 PM   #17
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Welcome aboard. Like Nords, I am USN (Ret). The only thing I have to add is to stay away from any free dinners offered by First Command, a "financial planning" company that targets the military. Most of their reps are retired military, so they come across like they're your good buds. But their products are very expensive and you can do a lot better following the advice you will see on this site as well as bogleheads.org if you're not familiar with that.

Best wishes.
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Old 09-18-2010, 05:26 PM   #18
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Welcome aboard. Like Nords, I am USN (Ret). The only thing I have to add is to stay away from any free dinners offered by First Command, a "financial planning" company that targets the military. Most of their reps are retired military, so they come across like they're your good buds. But their products are very expensive and you can do a lot better following the advice you will see on this site as well as bogleheads.org if you're not familiar with that.

Best wishes.
Let me second that one, shouting at the top of my lungs. Stick with Vanguard mutual funds and the like and do not listen to anyone who wants you to pay them for advice unless they are a "fee-only planner" with appropriate credentials (and you feel the need to get advice).
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Old 09-19-2010, 12:00 PM   #19
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I had to add - combat pay is overrated ...
The pay is nice...earning it is the part that really sucks.
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Old 09-19-2010, 12:58 PM   #20
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When you get deployed to a combat zone, be sure to take advantage of the Savings Deposit Program for the guaranteed 10% return.
Is there anyway you can pre-package this application for this Program before you're actually in a combat zone? My son, during his last tour in Afghanistan, didn't have any time to search out military finance people to get this straight. I'm suspecting this might occur again on any future deployments.
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