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Military Retiree and FI
Old 02-11-2022, 07:09 PM   #1
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Military Retiree and FI

Hi all - I just wanted to send a update. I haven’t been on here in a while but glad this forum is still around. I originally posted back in 2007, and said that I wanted to be financially free. I think I finally made it to FI. I toughed it out in the Army for the past two decades and came out the other side(barely). I retired on 1 Dec however, like most coming out of the military. I don’t want to stop earning income just yet. I could if I wanted too and that is all that matters.

A little more about me now. I am 43 with a wife and 2 boys (15YO and 6YO). I just moved back into the house that I bought 6 years ago and rented out. It is in a nice community near ATL. We are planning to stay here until at least my youngest gets out of high school (12 years). We moved so much in the Army (17 times in 20 years - which includes 3 deployments). Now we just want to settle down for a little while and establish some roots in the community.

A little about my financials -

Current Cash Flow:

Inflow: ~$25,000/mo
• Passive income: $10,000/mo—> $4850/mo for military pension (taxable) + $3746/mo for VA disability(not taxable) + $1,600 Rental income (taxable) + $300-1000/mo from a small side internet business
• Earned income: $15,000k/mo

Outflow: $14,000/mo
• Living Expenses: ~$8,000/month ($1,300 PITI payment + all other wants and needs for family.
• Taxes: ~$6,000/mo

So that leaves us with ~ $11,000/mo to save for future expenses (investments, travel, big purchases, gifts, etc)

Net Worth: I think about this in 3 buckets; Real Estate, short/mid term savings, long term savings. I know my investment balances are not huge, but I plan to put a lot more in starting now.

1. Real Estate = $700,000 in equity
a. Personal residence = worth $500k, owe $200k @2.25%
b. Investment properties = worth $400k, no mortgages

2.Short-mid term Savings = ~$300K
a. Cash (short term savings <2year and emergency fund) = $267k
b. Brokerage ( mid term savings) = $0 (but going to start putting much more in now)
c. Kids college fund = $35K (also they will get my GI bill benefits for a couple of years each)

3. Long term Savings (+15 years) = $400K.
a. Roth IRAs (tax free) = $200K
b. Traditional (tax deferred) = $200K

So..Now I am just trying to settle into my new life. I am still trying to figure out how to balance my health and wealth and find that sweet spot. I did get another job that I really enjoy and it gives me the freedom to walk my youngest boy to school and work from home most of the time. I believe now my objective is to find my right balance to be completely healthy, wealthy, and wise. Healthy = (mind+ body + soul); wealthy = (money+time+relationships+experiences). And wise enough to know what that balance is and strive to help others.

So what do you think? I am new to this FI feeling, am I missing anything?
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Old 02-11-2022, 07:57 PM   #2
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Good job OP. Lots of retired military on here. You have set yourself up well. Good job on the VA Dis. Hope nothing there is too debilitating. I am at only 60% and DW got a 0% rating. Working to get both of those higher. Plenty wrong but just not documented properly. You have won the game. Now you just need to keep the mind engaged. DW and I are both retired USMC. FI but both working because we enjoy what we do.
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Old 02-12-2022, 05:29 AM   #3
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Thanks - BigDawg. Nothing too bad but a career of getting shot at, jumping out of high speed aircraft, and rucking definitely takes a toll on the mind and body. I never really went to the doc my whole career. But those last 2 years before I got out, I finally went and made sure everything was properly documented and diagnosed.

Thanks again - it does seem a little unreal to win the game and be out of the rat race.
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Old 02-12-2022, 06:49 AM   #4
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So what do you think? I am new to this FI feeling, am I missing anything?
Welcome back, RLTW, and enjoy having more life in your work/life balance!

You seem to have figured out the cashflow part. Let us know if you have more questions.
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Old 02-12-2022, 07:02 AM   #5
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I am a "Time > Money" guy. If I have guaranteed cashflows like you then I would not want to work to earn money. You should rather focus more on the side business you already have and grow it. YMMV.
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Old 02-13-2022, 05:40 AM   #6
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Thanks Nords - I’m sure I will have lots of questions. Right now, I am struggling with the age old question of, should I pay off my mortgage or invest the money. I know the right answer is invest the money, but I always like to lower my required monthly expense. I keep going back and forth. Since inflation is so high and interest rates seem to be raising, I landed on keeping the mortgage and taking the money and investing. What do you think?
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Old 02-13-2022, 05:59 AM   #7
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Thanks pjiger - Yes, I enjoy my time too...but what do you do, if you "have nothing to do, and all day to do it" I am still trying to learn what I enjoy filling it with. I want to stay productive.

I am definitely going to start working again on the side business.
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Old 02-13-2022, 06:15 AM   #8
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Welcome to the club! I retired from Uncle Sugar's Navy in 2018 with 28 years. Hit 70% on the VA disability lotto.

We retired to Roanoke VA, my wife's hometown and are enjoying being almost completely retired. I'm taking a very part time online gig teaching JPME Phase 1 at the Naval War College, so that will keep me engaged with DoD to some extent.

My hobby of photography could end up making me some money, but I want it to remain mostly a hobby and not feel like work.

Your investment properties sound like a full time job to me! Best of luck as you settle in to FI if not RE.
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Old 02-13-2022, 07:20 AM   #9
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Thanks pjiger - Yes, I enjoy my time too...but what do you do, if you "have nothing to do, and all day to do it" I am still trying to learn what I enjoy filling it with. I want to stay productive.

I am definitely going to start working again on the side business.

I didn't mean to say you should not do anything but rather "not to work to earn money"! But yes, everyone needs to do something. I choose to spend my time on the endless hobbies.


PS: To each of their own and I don't know your/anyone's life story. But IMHO "enjoying my work" mentality has been programmed by the culture/society in our country (which is a good thing for the economy but not so good for the individual). Just see how European and Scandinavian countries live. They seem to never run out of things to do in their leisure time.
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Old 02-13-2022, 07:36 AM   #10
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Thanks Nords - I’m sure I will have lots of questions. Right now, I am struggling with the age old question of, should I pay off my mortgage or invest the money. I know the right answer is invest the money, but I always like to lower my required monthly expense. I keep going back and forth. Since inflation is so high and interest rates seem to be raising, I landed on keeping the mortgage and taking the money and investing. What do you think?
You could just make extra principal payments along the way to "retire" your mortgage years earlier.
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Old 02-13-2022, 11:47 AM   #11
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Thanks - rwdflynavy. I am definitely happy to be in the "US Club"!

I agree with you on the real estate! The promise of passive real estate investing is not quite accurate. I am planning to use this market to make an exit from real estate. I am currently under contract for one of the properties. Which will only leave me with one more.
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Old 02-13-2022, 11:52 AM   #12
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I didn't mean to say you should not do anything but rather "not to work to earn money"! But yes, everyone needs to do something. I choose to spend my time on the endless hobbies.
Pjigar - I understood what you meant. I was just saying that I didn't know what I wanted to do with my free time yet. I am definitely trying to figure that out now though!
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Old 02-13-2022, 11:54 AM   #13
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You could just make extra principal payments along the way to "retire" your mortgage years earlier.
Yes, I will definitely do that! Thanks
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Old 02-13-2022, 12:04 PM   #14
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Yes, I will definitely do that! Thanks
And make sure your servicer understands they are extra payments to be applied directly to principal, not just prepaying your regular monthly mortgage bill.
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Old 02-13-2022, 04:40 PM   #15
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Originally Posted by RLTW View Post
Right now, I am struggling with the age old question of, should I pay off my mortgage or invest the money. I know the right answer is invest the money, but I always like to lower my required monthly expense. I keep going back and forth. Since inflation is so high and interest rates seem to be raising, I landed on keeping the mortgage and taking the money and investing. What do you think?
Well, even in this forum it's a perpetual Internet debate. The answer depends on what criteria people are using.

Regardless of what inflation & interest rates are doing this decade, over a 30-year period the math & logic favors investing a lump sum now and paying off the mortgage from monthly cash flow. Whatever low future returns and high inflation may be, the longest these situations have lasted is 2-15 years before reverting back to a long-term mean.

However the emotions of behavioral finance mean that carrying a huge chunk of debt might make it hard to sleep at night, even without Dave Ramsey frowning down on people.

In your case, with an inflation-adjusted pension + inflation-adjusted VA disability compensation, you have the world's most reliable cash flow for handling mortgage payment. In addition, you have so much bond-like income from the pension & VA compensation that you're way under-allocated in equities. In your shoes, knowing what I know now, I'd keep the mortgage.

We've carried a mortgage since 2004 and refinanced every time it made sense.
https://www.early-retirement.org/for...ets-15237.html
After taxes, through the end of 2021 we've enjoyed an compounded average annual return of 9.4%. After paying the principal & interest that still leaves us with an average annual after-tax income of over $20K just from the mortgage arbitrage. We'll pay off our current mortgage in 2047 for my 87th birthday.
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Old 02-14-2022, 06:03 AM   #16
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You could just make extra principal payments along the way to "retire" your mortgage years earlier.
+1 We did this once I realized we weren't getting any benefit on our federal tax and the interest wasn't enough to itemize anymore. Saved us a chunk of money in the process and once paid off gave us peace of mind getting rid of the last money we will ever have to borrow. The extra available money each month went into maxing out tIRA, Roth, and savings.



Cheers!
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Old 02-14-2022, 02:20 PM   #17
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In your case, with an inflation-adjusted pension + inflation-adjusted VA disability compensation, you have the world's most reliable cash flow for handling mortgage payment. In addition, you have so much bond-like income from the pension & VA compensation that you're way under-allocated in equities. In your shoes, knowing what I know now, I'd keep the mortgage.
Thanks Nords - Yes, it is definitely a good debate and thanks for your perspective. I never really thought of my pension as "bond like income". I like it and agree that I am way under-allocated in equities. I definitely need to change that. I am not really concerned with my cashflow or allocation anymore. Now, I want to ensure my family is okay if something happens to me. I took out a fairly large 20 year term life insurance policy before I retired. So have about 20 years to make sure I have enough in our pile of money.

Would you recommend that I sell my investment property and invest that money too? I am planning to but wondering what you thought.
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Old 02-14-2022, 03:54 PM   #18
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2.25% interest on the mortgage, eh? Fixed rate? No way would I pay that off. Make the minimum payment, and maintain your flexibility with your money, instead of locking it into the house. Never know when you might need the funds.
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Old 02-14-2022, 04:49 PM   #19
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2.25% interest on the mortgage, eh? Fixed rate? No way would I pay that off. Make the minimum payment, and maintain your flexibility with your money, instead of locking it into the house. Never know when you might need the funds.
Yes- 2.25%, 30 year fixed. I got it about a year ago.
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Old 02-14-2022, 07:57 PM   #20
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I'm a fairly young military retiree at 44, transitioning to semi-ER/kept man/side gig economy this week after two years of working for "the man" post-retirement. DW and I will keep our mortgage as long as we need to at 2.75%. That's what the math says and we're both pretty practical in that regard.


Kudos to you RLTW!
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