Spent money now or later?

[ohyouknow]

My spouse and I are both active duty military and will have pensions. For active duty pensions, he is retirement eligible in 3 years and me in 6 years. Our pensions together should be approximately $9,000-10,000/month. (I’ll retire as O-5 with 29 years and he’ll retire as O-6 with around 21 years, maybe a year or two longer.)

We are moving back to the NCR this summer. Our housing allowance is a little over $6000/month tax-free between the 2 of us in addition to our paychecks. We have 4 kids. Three will be in elementary/middle school and one baby. We have been looking at housing/daycare/nanny/au pair/before & after care options. It’s likely we will be in the NCR for 3 years.

For those of you that have retired and/or have kids that are older, do you wish you had spent money now if you know you’ll be financially secure later? Or saved a more?
We are trying to decide between spending our entire housing allowance on either reducing our commutes (not entirely possible since we will be stationed at least 30 minutes apart), nicer house, or using it in another manner to make life easier (like a nanny vs. driving to daycare.)

I’ve spent my whole life saving and living beneath my means and it’s hard to spend on luxuries. However, I also don’t want to save money now and then wish I had taken advantage of things that would make my life easier. I guess it boils down to it’s really hard to pay a nanny $20/hr or $5500 on rent. That just seems insane.

Any advice?

 

[braumeister]

We are trying to decide between spending our entire housing allowance on either reducing our commutes (not entirely possible since we will be stationed at least 30 minutes apart), nicer house, or using it in another manner to make life easier (like a nanny vs. driving to daycare.)

You don't say what your savings are, so I'll just comment on this point.

(BTW, for those who don't know, NCR means the Washington, DC area (National Capital Region).

I retired from the Pentagon as an O5 with 21 years (long ago) so I have a small familiarity with it. From my perspective, one of the most horrible things in the world is the commuting in that area, and I would definitely prioritize living close to a Metro line to simplify the commute.

I would guess you'll be fine money-wise, so just enjoy the assignments. DC is a delightful place to live in many ways.

 

[BrianB]

If you haven't already discovered it, check out "The Military Guide" website created by Doug Nordman. Doug ("Nords") is one of the Elder Statesmen of this forum, and his site and book have great information on many questions like you are asking.

https://the-military-guide.com/

 

[ohyouknow]

Thank you both! I have read Doug Nordman’s entire book - it was excellent. I guess it seems frivolous to spend 2 housing allowances when we could spend one. Unfortunately metros don’t go to Joint Base Andrews, where I will be. My husband will be at Ft McNair the 1st year then likely the Pentagon.

As for savings, we have around $630,000 in TSPs, approximately half Roth and half traditional. We have another $300,000 in IRAs (mostly Roth) and about $40,000 in 529 plans. Paying for their college isn’t super important to us. We also have some rental properties with maybe $1M equity. It cash flows every month.

 

[DrRoy]

It doesn't have to be all one or the other. You can split the difference. We leaned toward saving, so as to be able to RE earlier. Still, we were not spartan with our spending, just careful. We are now much enjoying the fruits of our earlier financial control.

 

[cooch96]

(BTW, for those who don't know, NCR means the Washington, DC area (National Capital Region).

Thank you, braumeister. I figured an initialization must be a HCOL area, but I was a bit stumped. I figured it might be the North Corlina Riviera, or perhaps North Cali Ridge (overlooking the plebeian Silicon Valley).

I think the only polite slang I’ve heard before for DC is the beltway.

 

[corn18]

Retired O5 (20 years). I can speak from the spend it all and then some side. I retired in 2008 with a net worth of negative $150k or so and no hope to get out of debt. We lived high on the hog and just hoped it would all work out. Don't do that.

I don't understand the part about being retirement eligible in 3 years and 6 years. Are part of your years of service reserves?

 

[Red Badger]

If you choose to live midway between JBA and the pentagon, you'll both be swimming "upstream" during rush hour. You'll still have traffic, but not as bad as the daily DC inflow-outflow. Then, If you spend some $$ on a nanny/housekeeper, more of your off duty time can be quality time.

But, more to the point. As dual career officers that will have pretty decent health care upon retirement, you've won (earned every bit of it) the game. Spend some now to improve you're quality of life. Remember, you never see a hearse pulling a trailer to the graveyard.

Just a grumpy First Sergeant (very retired) bitchin' from the cheap seats.

 

[braumeister]

I don't understand the part about being retirement eligible in 3 years and 6 years. Are part of your years of service reserves?

Read the rest of that paragraph.

 

[corn18]

Read the rest of that paragraph.

Understand the O6 @ 21 part. O5 at 29 should be able to retire now unless part of that service is reserves.

 

[HawkeyeNFO]

Retired military here, living in McLean, VA with 3 school-age kids. I've done a couple of DC tours, and I fully recommend spending NOW on the housing if you want to buy. That's what I did, because I don't like long commutes. Some folks around here spend 3 hours a day commuting, and then pretend that it's not that bad. My drive to the Pentagon takes just 15 minutes, but my house wasn't cheap. No regrets at all.

All that being said, if you only plan to be in the area for 3-4 years, I would recommend getting a rental. About $4k is what starts putting your family in a nice large modern home in Falls Church, N. Arlington, or McLean. Those areas have the best schools, are walkable to Metro, and are a short drive to the Pentagon. Areas near Andrews are not so nice, and the areas in between Andrews and the Pentagon are slummy ghettos.

PM me if you need more advice, I've lived in both MD and VA, and have commuted via both metro and car.

 

[HawkeyeNFO]

I think the only polite slang I’ve heard before for DC is the beltway.

"DMV" is what the locals call it these days (DC, MD, VA).

 

[Mdlerth]

It's the traffic, stupid

(BTW, for those who don't know, NCR means the Washington, DC area (National Capital Region).

From my perspective, one of the most horrible things in the world is the commuting in that area, and I would definitely prioritize living close to a Metro line to simplify the commute.

+1

DC was my home town, and I never return for a visit without remarking how glad I am to not live there anymore.

There are only two jobs that would entice me to move back: President of the United States, or owner of the Washington Redskins. Both of those guys have helicopters so the miserable traffic doesn't affect them.

 

[Elbata]

Interesting parallels with my dad. His main duty was at Andrews and then he'd get sent over to the Pentagon for a brief time. We lived in Dist. Hgts. At 47, the Air Force wanted to send him to the Pentagon again so he retired as an E9 NCO. My mom passed away last year and we finally sold the home for $204K. Nice house, super neighbors, but since most of the town is black, white people stay away.

 

[Nords]

If you haven't already discovered it, check out "The Military Guide" website created by Doug Nordman. Doug ("Nords") is one of the Elder Statesmen of this forum, and his site and book have great information on many questions like you are asking.

https://the-military-guide.com/

Thank you both! I have read Doug Nordman’s entire book - it was excellent. I guess it seems frivolous to spend 2 housing allowances when we could spend one. Unfortunately metros don’t go to Joint Base Andrews, where I will be. My husband will be at Ft McNair the 1st year then likely the Pentagon.

As for savings, we have around $630,000 in TSPs, approximately half Roth and half traditional. We have another $300,000 in IRAs (mostly Roth) and about $40,000 in 529 plans. Paying for their college isn’t super important to us. We also have some rental properties with maybe $1M equity. It cash flows every month.

Thanks, Brian & ohyouknow!

("Elder Statesmen": REWahoo, I can hear you smirking from all the way over here!)

Frugality should be challenging & fulfilling, and it sounds like trying to stay within one housing allowance might be crossing over into deprivation. It's worth spending for a quality of life that's not going to lead to other problems with kids, schools, neighborhoods, commutes, or other hassles. Spending up a little now might be a much better idea now rather than retiring in a few years to realize that you've way way overshot the FI mark.

As for your pensions & savings... what's your projected retirement spending? What are you saving it for? It's a highly individual decision. We have some forum members who spend $2000/month in FI and a larger number who spend ~$4000/month. I know a few military retirees (not members of this forum) who can barely endure FI on anything less than $10K/month. I know that their struggle is real because even at that spending level they are still vocally unhappy about it.

As for that rental: "cash flows every month" is meaningless without calculating your capitalization ratio or putting the numbers into context like the 1% thumbrule or the 50% thumbrule. Even when you think you're making money on a rental property, you may be still paying a high price for the opportunity cost of investing in a better-performing asset. Unless you have sentimental value in that property (or you're thinking of moving back into it) then when you have the time you might want to take a hard look at the numbers (and perhaps an exit strategy).

(BTW, for those who don't know, NCR means the Washington, DC area (National Capital Region).

Ah. That sounds so much more polite than what I usually hear people call it... and easier to market on assignment dream sheets.

 

[ohyouknow]

If you choose to live midway between JBA and the pentagon, you'll both be swimming "upstream" during rush hour. You'll still have traffic, but not as bad as the daily DC inflow-outflow. Then, If you spend some $$ on a nanny/housekeeper, more of your off duty time can be quality time.



But, more to the point. As dual career officers that will have pretty decent health care upon retirement, you've won (earned every bit of it) the game. Spend some now to improve you're quality of life. Remember, you never see a hearse pulling a trailer to the graveyard.



Just a grumpy First Sergeant (very retired) bitchin' from the cheap seats.

First sergeants are my favorite people in the world! It’s a tough job....thank you for your service.