Author Topic: Military FIRE Without Pension  (Read 1854 times)

artemis

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Military FIRE Without Pension
« on: May 05, 2019, 03:09:18 PM »
Military FIRE Without Pension

Life Situation:
Evening everyone, I’ve lurked around this and similar forums/podcasts for a while but this is my first post. I got on the fire train about 3 years ago, and since I, through dumb luck, had managed to avoid stupid financial choices found myself in a strong position. While I am happy with my finances, I am always trying to do better (I’m very impressed with those spending sub 15k annually) and have some decisions to make in the next few years that I would greatly appreciate this community’s thoughts on. My goal is to achieve financial independence (goal 1 million) by 35-40 years old, although I don’t plan on retiring at that point but simply having more options. 

I am a 28 year-old single Army officer living in Washington (no state income tax). I am planning to stay in the army for roughly 3-4 additional years and have currently maxed the GI Bill and VA loan benefits. Following the Army, I intend to graduate school at some point. I am investing in the DODs blended TSP retirement account with a 5% match and own a 2014 Mazda CX-5 with 45000 miles. While I currently need a car, I look forward to minimizing car travel post Army.

Gross salary/wages:
4818 monthly taxable
2280 monthly non-taxable (housing allowance, food allowance, parachute pay)
In February 2020, I will receive a pay increase of 853 per month. After that I will receive small raises every 2 years that will have negligible impact on my FIRE plans before getting out.
Total: 7098/month

Individual amounts of pre-tax deductions:
Roth TSP – 1590/month (capped at 19000 annually)
Traditional (401K Equivalent) TSP – 240/month (this is the 5% matching),

Taxes:
Federal – 630
FICA – 360
Tax refund last year was 1800 for similar taxes
State: None
Post Tax Income: 6108/month

Current expenses:
I use MINT to track expenses and used 3 month averages for below numbers
Rent: 700
Utilities: 50
Internet: 28
Phone: 30
Groceries: 280 (includes eating out/alcohol)
Gas: 80
Car payment: 260 (6800 remaining at 2.99%)
Insurance: 89 (car), 9 (renters)
Miscellaneous: 150 (car maintenance, registration, household items, very occasional pleasure shopping, gifts)
Travel: I have been fortunate to fund travel over the last few years through points and usually take trips to see friends and family, thus minimizing total costs)
Total Expenses: 1676/month, 20112/annual
Saving Rate: 72%

Assets:
TSP Roth: 45000 (70%/30% invested in a S&P 500 tracking fund and a small cap tracking fund)
TSP 401K: 6000 (70%/30% invested in a S&P 500 tracking fund and a small cap tracking fund)
Vanguard: 60000 [VTSAX (60%), V[O (30%), high dividend fund (10%)]
Charles Schwab: 4000 (international ETF)
Cash: 18000 (quite high, given the benefits of a guaranteed monthly check, I could probably afford to keep as little as 2000-3000 in cash and should be face punched for being lazy on this)
Saving Deposit Program: 11000 (I’m going to throw this into VTSAX in the next month as it just stopped accumulating interest post deployment)
Total: 144,000

Liabilities:
Car Loan: 6800 (2014 Mazda CX-5 with 45000, bought used)
Total Liabilities: 6800

Specific Questions:
1. Should I attend graduate school immediately after leaving the military at 31/32 or wait 3-5 years. My goal is to reach 1,000,000 by 40 at the latest with 35 as an ambitious goal. Although this is more than I need to achieve FIRE given current annual expenses, those expenses will likely increase. I am considering if it makes sense to go to Grad school, for a 3-year degree, immediately when I leave the Military (age 31-32) or delay that a few years in order to work and continue building capital at the earliest age possible and to take advantage of additional years of compounding interest. I will likely be able to attend grad school for free and live without dipping into savings due to a mix of the GI bill and yellow ribbon funds, but will probably not be able to increase my savings substantially over that period. For the type of work I plan on doing I do not think that graduate school would substantially increase my earnings potentially but would be important resume/networking wise to certain longer term goals.
2. Should I increase my retirement contributions when I deploy? When I deploy I can increase my retirement account contributions to over 50000 with the Roth still capped at 19000 per year (for 2019) and excess in the TSP traditional 401K account. Given that my taxable income is relatively low and that deployment income is untaxed, I’m not sure the benefit of increased tax sheltered contributions outweighs the benefit of being able to access that money whenever I wish if I throw it into VTSAX.
3. Should I utilize a 529 to reduce taxable income? I plan on having kids in the future and I believe (correct me if I’m wrong) that I can open a 529 account with myself as the beneficiary and then change the beneficiary to my future child at a later date. Starting the account now would allow for maximum tax advantages and maximum compounding interest.
4. Can/should I open a HSA account? I admit I know very little about how these accounts work. Currently my medical expenses are completely covered by the military so opening an HSA would be motivated by the same rationale as #3.
5. Home buying thoughts. I am thinking of utilizing the VA home loan to buy a home at my next duty station. This loan is capped at 484,000 dollars (not that I would take all of that) and allows home purchases with no down payment (thereby reducing the opportunity cost of not being able to invest a down payment in the stock market). In principle, I believe that home purchases are dangerous in nature, but that they can be profitable given specific conditions. I would welcome any thoughts folks have on those factors I am considering (I understand that these are semi vague in nature).
•   Show patience in buying and only buy in a bear market.
•   Search for a foreclosure/short sell
•   Search for high appreciation opportunities due to increased desirability of surrounding area (light rail investment, school investment etc)
•   Buy a house that looks terrible but doesn’t have significant problems (water damage, electrical/plumbing issues)
Home buying and maintenance is not something I understand as much as I would like and I am working to increase my knowledge and skillset. Buying a broken looking place and fixing it up over several years, even if that means living in a worse place for 2-3 years, is somewhat appealing. I am also considering buying a duplex/triplex instead of a single family home.

MrThatsDifferent

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Re: Military FIRE Without Pension
« Reply #1 on: May 05, 2019, 05:46:33 PM »
@Nords do your thing!

MDM

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« Last Edit: May 05, 2019, 06:19:14 PM by MDM »

spartana

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Re: Military FIRE Without Pension
« Reply #3 on: May 05, 2019, 06:51:36 PM »
Is there any reason you want to get out early? If FIRE by 40 is your goal then the military, especially as an officer, is pretty much a golden ticket with a pension and very low cost medical for life.

I got out after 12 (enlisted) and got a gov job so could carry over (buy) some of my military service time towards a public pension I could get as early as 50. However staying in would have been the better choice even though I was able to FIRE at 42 and live off investments before old enough to get my pension.
« Last Edit: May 05, 2019, 06:55:22 PM by spartana »

former player

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Re: Military FIRE Without Pension
« Reply #4 on: May 06, 2019, 02:44:01 AM »
If you carry on your current path while investing your savings you will be at $1M in investments aged 40, without changing a thing.

Nords

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Re: Military FIRE Without Pension
« Reply #5 on: May 06, 2019, 03:29:57 AM »
@Nords do your thing!
Thanks for the tag, MrThatsDifferent!  By now some of you may enjoy watching this thing get done...

Welcome, Artemis!  That’s a very appropriate poster name.

I am a 28 year-old single Army officer living in Washington (no state income tax). I am planning to stay in the army for roughly 3-4 additional years and have currently maxed the GI Bill and VA loan benefits. Following the Army, I intend to graduate school at some point.
I agree with staying on active duty while it’s challenging & fulfilling, and taking it one active-duty obligation at a time.  If you reach FI before you’re eligible for military retirement then it might not make much sense to gut it out to 20, either.

If you haven’t already considered the Reserves or the National Guard, then I’d suggest learning more about those options.  If you can integrate the drill weekends into your work/life balance for a couple of years then it’s a good way to enjoy some of the military’s camaraderie and shared values without so much of the sucky parts.  You’d have to decide whether you’re willing to stay around long enough for a possible mobilization (let alone retirement eligibility), or else you’d transfer to the Individual Ready Reserves and eventually separate.

I mention this because active-duty servicemembers don’t always see the benefit to a Reserve/Guard career, yet many of my readers in their 50s and 60s regret not making the time to figure it out and possibly enjoy the pension & benefits. 

It’s a highly individual decision.  I personally regret gutting out to 20, and when my spouse left her active duty for the Reserves our lives immediately got awesome.  This  month our daughter is on terminal leave and starts drills with her new Reserve unit next month, while our son-in-law chose to stick around for another active-duty obligation.  Unlike me, those three all learned enough about the Reserves to make the right choices for their situations.

Saving Rate: 72%
If you aren’t already following Justin at Saving-Sherpa.com, you might enjoy swapping tips with another servicemember who’s saving >70% of their gross income.  He’s very creative, especially with credit card hacking.

By the way, as I finished answering your five questions I sensed a theme of squeezing the maximum benefit out of every accepted technique for achieving FI.  Yet your 72% savings rate already beats every other one of the ideas you’re analyzing below, and you don’t get much additional benefit from tweaks like 529s or HSAs.  You might not even care about using your GI Bill or your VA loan benefits.

Specific Questions:
1. Should I attend graduate school immediately after leaving the military at 31/32 or wait 3-5 years. My goal is to reach 1,000,000 by 40 at the latest with 35 as an ambitious goal. Although this is more than I need to achieve FIRE given current annual expenses, those expenses will likely increase. I am considering if it makes sense to go to Grad school, for a 3-year degree, immediately when I leave the Military (age 31-32) or delay that a few years in order to work and continue building capital at the earliest age possible and to take advantage of additional years of compounding interest. I will likely be able to attend grad school for free and live without dipping into savings due to a mix of the GI bill and yellow ribbon funds, but will probably not be able to increase my savings substantially over that period. For the type of work I plan on doing I do not think that graduate school would substantially increase my earnings potentially but would be important resume/networking wise to certain longer term goals.
The first question:  what would you do with a graduate degree? 

You’d earn a good sum from the GI Bill’s housing allowance, but you could do many other programs with that 36 months of benefits.  (The GI Bill can be used a month at a time, not necessarily over a three-year period.)  At the very least you’d be able to get a trade certification or a license in a field that personally interests you— and that would come in very handy for rehabbing your real-estate investments. 

If you decide to pursue a civilian bridge career (with or without the Reserve/Guard option) then your employer might have specific degree or certification requirements.  A traditional corporation might offer promotions for obtaining your MBA, but they might only be interested in a specific niche like finance.  Go for the job/career first, and then see what degree you want.  If an employer won’t talk to a military vet without an MBA then you don’t want to work there anyway.

You could also pursue a learn-while-you-earn career like Accredited Financial Counselor, where the employer hires you as long as you earn the AFC within the first two years on the job... and by two years you’d have more than enough of the experience hours.  I mention AFCs because many military vets gravitate toward financial careers, and AFCs are employed by the contractors who teach financial literacy on base to military families.

2. Should I increase my retirement contributions when I deploy? When I deploy I can increase my retirement account contributions to over 50000 with the Roth still capped at 19000 per year (for 2019) and excess in the TSP traditional 401K account. Given that my taxable income is relatively low and that deployment income is untaxed, I’m not sure the benefit of increased tax sheltered contributions outweighs the benefit of being able to access that money whenever I wish if I throw it into VTSAX.
Sure.  The TSP no longer has the advantage of its very low expense ratio, but it still offers tax-free and tax-deferred compounding.  VTSAX is about as tax-efficient as you can get in a mutual fund, but you’ll still pay income taxes on the annual distributions.

Better yet, after you leave the military you can still access your TSP accounts whenever you wish before age 59.5— penalty-free and possibly tax-free.
https://the-military-guide.com/early-withdrawals-from-your-tsp-and-ira-after-the-military/

This is especially compelling if your earned income drops after the military (or after you reach FI) and gives you the opportunity to convert the traditional balance of your TSP to a Roth IRA with little or no income tax.

This post goes into the tricky details of how to maximize your TSP contributions when you’re in a combat zone.  It also offers other ways to take advantage of the tax-free income, for example signing a Continuation Pay contract (in the combat zone) or resetting the cost basis of taxable investments.
https://the-military-guide.com/maximizing-your-thrift-savings-plan-contributions-in-a-combat-zone/
That post includes a spreadsheet from the TSP’s staff, and Dan also has a very helpful spreadsheet for planning your contributions:
http://keepinvestingsimplestupid.com/2019/02/01/maximizing-tsp-contributions-for-the-entire-year-when-you-deploy-to-a-combat-zone/

3. Should I utilize a 529 to reduce taxable income? I plan on having kids in the future and I believe (correct me if I’m wrong) that I can open a 529 account with myself as the beneficiary and then change the beneficiary to my future child at a later date. Starting the account now would allow for maximum tax advantages and maximum compounding interest.
No.  You’ll have plenty of time for 529 compounding when you start changing diapers, and those little bundles of joy have plenty of other options to pay for college— if indeed they decide to go to college in the first place.

I think people feel a lot of pressure to save for college because the expenses seem to be growing at 10%/year forever.  The reality is that many universities are already seeing pressure on their fees (and on their bloated payrolls).

Although you might want to save enough for a couple years at a community college or state university, I don’t think you’ll need $250K— and you certainly won’t need to use a 529 right now.

Instead, continue saving for your FI (where your assets will still compound in a very tax-efficient manner).  Once you’re FI then you could take another look at 529 options.

4. Can/should I open a HSA account? I admit I know very little about how these accounts work. Currently my medical expenses are completely covered by the military so opening an HSA would be motivated by the same rationale as #3.
When you’re eligible for Tricare health insurance then you’re not eligible for a HSA.  This applies to Reserve/Guard service as well as active duty.

You might choose an HSA when you’re out of the military and not using employer health insurance.

5. Home buying thoughts. I am thinking of utilizing the VA home loan to buy a home at my next duty station. This loan is capped at 484,000 dollars (not that I would take all of that) and allows home purchases with no down payment (thereby reducing the opportunity cost of not being able to invest a down payment in the stock market). In principle, I believe that home purchases are dangerous in nature, but that they can be profitable given specific conditions. I would welcome any thoughts folks have on those factors I am considering (I understand that these are semi vague in nature).
•   Search for a foreclosure/short sell
•   Buy a house that looks terrible but doesn’t have significant problems (water damage, electrical/plumbing issues)
Home buying and maintenance is not something I understand as much as I would like and I am working to increase my knowledge and skillset. Buying a broken looking place and fixing it up over several years, even if that means living in a worse place for 2-3 years, is somewhat appealing. I am also considering buying a duplex/triplex instead of a single family home.
Real estate is a great idea if you enjoy the work, and you’d certainly do well at it. 

I’d suggest that you begin now by reading the BiggerPockets website.  If you learn while you’re on active duty then you’ll be ready for the opportunities.  Subscribe to their weekly e-mail (for regular small doses of basic info) and join in their webinars & podcasts.  (Brandon and David are entertaining.)  You can go a long way with their resources for free, and when you’re ready to start investing then a Pro membership is worth the price.

However you might not want a VA loan. 

Here are some issues to consider:
1.  The VA loan is not always the best financial deal, especially if you’re a real estate investor and not only a homeowner buying a personal residence for a live-in rehab.  Instead of focusing on a VA loan, use a mortgage broker to analyze your options (including the VA loan).  They understand VA loans better than we ever will.

2.  The funding fee on the VA loan can be waived if you’re eligible for disability compensation.  For this reason, many servicemembers wait until their VA disability rating has been awarded before applying for a VA loan.  There are waivers and refunds in this process, but they’re painful.  The best way to skip the VA loan funding fee is to have a VA disability rating.

3.  Experienced sellers (and their realtors) will hate you for trying to buy the property with a VA loan.  The VA appraisal guide includes “safety and habitability” requirements which are intended to protect disabled vets from getting ripped of during a home purchase.  However with a VA loan the appraisers have to call out minor deficiencies which would normally be negotiated during closing, and they can keep you from getting the lender’s approval for the loan.  Let’s not get into how I learned this, but it was a very expensive lesson.

If a seller has a choice of buyers, they’ll accept just about any other offer instead of your offer which is tied to a VA loan.  And by the way if you decide to use a VA loan then it’s essential to have that “upon approved financing” contingency in your offer.

4.  Same issue as #3 if you’re trying to buy a broken-looking place at a huge discount.  The VA loan is not worth the effort, even if you could convince the appraiser that it’s “safe and habitable”.

5.  The VA loan has an owner-occupancy requirement.  The VA doesn’t require you to live in the home for a minimum time (just “intended for use as a primary residence”) but the lender might have additional requirements in their underwriting. 

Your residency in a unit of a multi-family property satisfies the VA’s residency requirement, and that’s one reason you might want to borrow $484K.  Depending on the location, the rents from a $600K multi-family property might pay all of your mortgage expenses... especially if you can house-hack with a roommate.

I’m happy to answer more questions here, or send me a PM, or e-mail NordsNords at Gmail.
« Last Edit: May 06, 2019, 03:32:01 AM by Nords »

happy

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Re: Military FIRE Without Pension
« Reply #6 on: May 06, 2019, 04:33:14 AM »
Good to see the batcall @Nords still works and that the next gen have got there before me. Hi Nords! /waves

Nords

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Re: Military FIRE Without Pension
« Reply #7 on: May 06, 2019, 04:40:47 AM »
Good to see the batcall @Nords still works and that the next gen have got there before me. Hi Nords! /waves
Hi Happy, it works fine!

When I respond in threads with military questions, I turn on the “Notify” feature so that new posts in the thread get my attention.

I also drop by weekly (or so) and search the forums for keywords “Nords” and “military”.  Otherwise there’s way too many daily posts to scan.

happy

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Re: Military FIRE Without Pension
« Reply #8 on: May 06, 2019, 05:09:18 AM »
Indeed, not like the old days at the beginning, when one could read everything. I read only a small proportion now.

artemis

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Re: Military FIRE Without Pension
« Reply #9 on: May 06, 2019, 07:20:51 PM »
Is there any reason you want to get out early? If FIRE by 40 is your goal then the military, especially as an officer, is pretty much a golden ticket with a pension and very low cost medical for life.

Financially the military pension is a extremely safe and reliable FIRE plan. However, work/life balance and other life goals mean I wont be staying anywhere close to 20 years.
« Last Edit: May 06, 2019, 08:32:24 PM by artemis »

artemis

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Re: Military FIRE Without Pension
« Reply #10 on: May 06, 2019, 08:15:57 PM »
To all commenters and especially Nords, Thanks you so much for the advice. I will definitely look at the guard/reserve. The sticking point for me will be continued deployments, fortunately/or unfortunately my particular experience will probably make deployments from the guard/reserves likely so I will have to commit one way or the other based on that understanding.

Newly subscribed to Saving Sherpa and BiggerPockets! Thanks for the tip.

I want to attend grad school for a dual public policy/MBA or JD masters, both because I enjoy learning and these particular degrees might help me with longer term political ambitions. Originally I was planning to save the GI bill for future kids but the recent changes regarding GI bill transfers (which now mandate a minimum of 10 years of service in order to transfer it) make that extremely unlikely. Given the benefit/enjoyment I would get, it seems a shame to waste well over 100,000 of value. If I decide to work before grad school in order to continue building savings I doubt that grad school would be necessary to finding a reasonably well paying job in a field I enjoy or can, at worst, stomach for a couple years; as you say, an employer only interested in vets with an MBA wouldn't be something I'm interested in.

Interesting, I hadn't thought about using the GI bill to learn house repair skills, I will definitely look into available options for that although I would probably only spend a couple of months of the GI bill on such skills if I chose that option; I may be stupidly overconfident but I feel that a substantial chunk of house rehab skills can be learned via youtube, patience, practice, and a willingness to learn from mistakes.

Mulling it over, I think I am going to start maxing a civilian Roth through Vanguard and will also increase deployment retirement savings - since contributions can be withdrawn early it doesn't seem like there would be any reason to miss out on the possible tax advantages since if the money went to VTSAX it would be taxed anyway and I can always pick and choose low income years to convert that traditional TSP into the Roth via the conversion ladder.Thanks for the tips re maximizing combat savings and the spreadsheet, I will put them to good use!

Re VA Loan Advice
It sounds like VA loans are a bit trickier than I anticipated. However, its hard for me to believe that avoiding the opportunity cost of a down payment can be outweighed by other issues, no matter how frustrating the VA loan process can turn out. How do the deficiencies keep me from getting lender approval even if I tell the lender that I am fine with the deficiencies and accept them?




Villanelle

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Re: Military FIRE Without Pension
« Reply #11 on: May 06, 2019, 08:32:57 PM »
To all commenters and especially Nords, Thanks you so much for the advice. I will definitely look at the guard/reserve. The sticking point for me will be continued deployments, fortunately/or unfortunately my particular experience will probably make deployments from the guard/reserves likely so I will have to commit one way or the other based on that understanding.

Newly subscribed to Saving Sherpa and BiggerPockets! Thanks for the tip.

I want to attend grad school for a dual public policy/MBA or JD masters, both because I enjoy learning and these particular degrees might help me with longer term political ambitions. Originally I was planning to save the GI bill for future kids but the recent changes regarding GI bill transfers (which now mandate a minimum of 10 years of service in order to transfer it) make that extremely unlikely. Given the benefit/enjoyment I would get, it seems a shame to waste well over 100,000 of value. If I decide to work before grad school in order to continue building savings I doubt that grad school would be necessary to finding a reasonably well paying job in a field I enjoy or can, at worst, stomach for a couple years; as you say, an employer only interested in vets with an MBA wouldn't be something I'm interested in.

Interesting, I hadn't thought about using the GI bill to learn house repair skills, I will definitely look into available options for that although I would probably only spend a couple of months of the GI bill on such skills if I chose that option; I may be stupidly overconfident but I feel that a substantial chunk of house rehab skills can be learned via youtube, patience, practice, and a willingness to learn from mistakes.

Mulling it over, I think I am going to start maxing a civilian Roth through Vanguard and will also increase deployment retirement savings - since contributions can be withdrawn early it doesn't seem like there would be any reason to miss out on the possible tax advantages since if the money went to VTSAX it would be taxed anyway and I can always pick and choose low income years to convert that traditional TSP into the Roth via the conversion ladder.Thanks for the tips re maximizing combat savings and the spreadsheet, I will put them to good use!

Re VA Loan Advice
It sounds like VA loans are a bit trickier than I anticipated. However, its hard for me to believe that avoiding the opportunity cost of a down payment can be outweighed by other issues, no matter how frustrating the VA loan process can turn out. How do the deficiencies keep me from getting lender approval even if I tell the lender that I am fine with the deficiencies and accept them?

The VA won't fund a loan if they deem the house deficient, whether you are okay with those deficiencies, or not.  It's meant to protect you from being taken advantage of, so you aren't allowed to waive it.  So if the railing isn't up to current code, for example, they may decline to fund unless a new railing is put in (or the old retrofitted) before closing.

As a seller, I would absolutely accept an offer for slightly less money over a VA loan.  It's just not a headache I'd want to deal with if I had another option.  Greater chance of the loan falling through entirely, and almost guaranteed need for lots of little annoying fixes that cost time and money.  That doesn't mean it's not the right choice, but in a competitive market, it could put you at a disadvantage. 

Nords

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Re: Military FIRE Without Pension
« Reply #12 on: May 06, 2019, 10:02:59 PM »
To all commenters and especially Nords, Thanks you so much for the advice.
You’re welcome!  Glad to help.  You can find “The Military Guide” books at your local base library, base financial center, or public library.

I will definitely look at the guard/reserve. The sticking point for me will be continued deployments, fortunately/or unfortunately my particular experience will probably make deployments from the guard/reserves likely so I will have to commit one way or the other based on that understanding.
When you decide to resign, you might not have the time to learn about the Reserves/Guard.

As an active-duty officer, if you learn now about how the Reserve/Guard funding works, you might even be able to bring in people for AT or short active-duty orders at your command.  It’s essentially free labor in your office.  Take a Reserve or Guard officer out for coffee and ask questions about how that would work.

The Reserve/Guard deployment issue is highly dependent on the service and your community, and the rules might be completely different by the time you submit your resignation letter.  During the 1990s, the Navy Reserve didn’t even have money to pay ATs or some drill weekends, let alone deploy servicemembers.  Not even during the Bosnia Crisis.

In today’s Navy Reserve, my daughter has a three-year obligation.  (It’s the final three years of active duty, Reserve drills, or IRR after her five years of active duty.)  She’s been guaranteed a two-year moratorium on deployment but a mobilization could happen in the third year.  This means that she has the option to drill for two years and then go to the IRR during the third year, eventually separating and going total civilian. 

The Navy Reserve offered a $10K bonus to stay in a drill billet for three continuous years, with the clear possibility of deploying during year three.  She turned that down.

Other Navy Reserve officers in their third year have been told “Never mind, we don’t have a deployment for you and we’re not mobilizing you this year, but it could happen next year” or “It’ll be delayed by 3-4 months” or even “I know you were told that you’d be mobilized for a year, but we’re cutting it short by two months.”  The Reserve officers’ main complaints about this are planning with their civilian employers and for family child care.  The dual-military couples are particularly annoyed because the active-duty servicemember of the couple could be in the middle of a transfer (or even their own deployment) while the Reservist is trying to figure out when to bring in Grandma or other live-in childcare.

If you leave active duty after eight years and affiliate with the Reserves or Guard then you’d sign a six-year contract.  You could go to the IRR at any time after the first couple years (maybe even sooner) and you’d probably be left alone until you separated (or decided to return to a drill billet).  However 30,000 servicemembers did get mobilized from the IRR over the last 18 years, although most of them were infantry enlisted.

Interesting, I hadn't thought about using the GI bill to learn house repair skills, I will definitely look into available options for that although I would probably only spend a couple of months of the GI bill on such skills if I chose that option; I may be stupidly overconfident but I feel that a substantial chunk of house rehab skills can be learned via youtube, patience, practice, and a willingness to learn from mistakes.
Between YouTube and BiggerPockets you can certainly learn how to build your own home— all it takes is persistence.

But that’s not necessarily the point of the GI Bill.  Many vets use the GI Bill (even just a few months) not only for tuition & fees but also to pocket the E-5 housing allowance.  You can’t get BAH for watching YouTube videos on your own.

Mulling it over, I think I am going to start maxing a civilian Roth through Vanguard and will also increase deployment retirement savings - since contributions can be withdrawn early it doesn't seem like there would be any reason to miss out on the possible tax advantages since if the money went to VTSAX it would be taxed anyway and I can always pick and choose low income years to convert that traditional TSP into the Roth via the conversion ladder.  Thanks for the tips re maximizing combat savings and the spreadsheet, I will put them to good use!
A 70% savings rate as an O-4 means that you’ll maximize your contributions to your TSP, your IRA, and put even more in your taxable accounts.  During a deployment you’ll also be able to maximize your TSP contributions (the annual additions limit of $56K in 2019) and perhaps still end up putting some money in your taxable account.

Re VA Loan Advice
It sounds like VA loans are a bit trickier than I anticipated. However, its hard for me to believe that avoiding the opportunity cost of a down payment can be outweighed by other issues, no matter how frustrating the VA loan process can turn out. How do the deficiencies keep me from getting lender approval even if I tell the lender that I am fine with the deficiencies and accept them?
The VA doesn’t actually lend the money.  Regular mortgage lenders are motivated to give you a “VA loan” which has the VA’s guarantee of paying 25% of the balance of the loan if you default.  The VA funds these guarantees (insurance contracts) with the VA funding fees paid by servicemembers (and some vets).

As Villanelle says, borrowers can’t accept appraisal deficiencies.  The agreement is between the appraiser and the lender, backed by the VA’s criteria. 

Today’s real-estate appraisal system uses “appraisal management companies” which essentially assign from a pool of individual appraisers (as subcontractors) to mortgage applications.  (It’s an initiative to reduce the mortgage fraud which contributed to the 2008 loan crisis). For VA loans, the appraisers are assigned by an AMC using a rotating list of appraisers approved by the VA Regional Loan Center.  The borrower’s mortgage application gets the next RLC-approved appraiser at the top of the AMC’s list.  The idea is that the appraisers are objective instead of doing a “friendly” appraisal for the realtor or the mortgage broker.

The VA “handbook” (more like a multi-volume encyclopedia) lays out the rules under which the VA will guarantee the loan.  It’s incredibly detailed and even arcane, and much of the requirements are based on the condition of the home.  (The VA lending criteria for the borrower’s finances are actually looser than conventional mortgages, which is why so many military families get suckered into “0% down!!”)  If the appraiser finds a problem with the property’s VA lending criteria then they’re not allowed to issue a clean appraisal.  The lender can’t get the VA guarantee and won’t give you the loan.

I’ve read of case studies where doors had to be replaced, gravel streets had to be paved (“safe disability access”), and roofs had to be repaired (habitability).  All of this had to be done before the mortgage was approved, instead of letting the buyer & seller negotiate the terms to do these repairs after closing.

In my case, in 2017 we were refinancing our home and went for a VA refi of our conventional mortgage.  The appraiser was totally overzealous (a two-hour inspection) and said that one of our 28-year-old outdoor staircases and a perimeter fence didn’t comply with their permits.  (He even tested the safety circuit on our garage door motor, and I had to fix that as well for his re-inspection.)  I went to our Dept of Plans and Permits to get a new permit for the fence ($110 and six weeks) and was verbally told that the staircase didn’t need a permit.  The appraiser argued that the DPP supervisor was wrong and refused to issue the updated appraisal.  The lender wanted a letter from DPP saying that we didn’t need a permit.  (In other words, a “permit that we didn’t need a permit”.)  Our only other option was to invite a DPP rep and the appraiser to our home and let them argue it out. 

I wasn’t going to give an appraiser and a DPP rep a free invitation to inspect our property for permit deficiencies. 

At that point our mortgage broker suggested that we apply for a conventional loan.  The conventional appraisal (not a VA appraisal) took 15 minutes (the usual routine) from a different appraiser, and the refi funded a couple weeks later.  Of course there was a huge $$ difference between the VA loan’s 3.25% and the conventional’s 3.50%, and we have the first appraiser to thank for that.

I learned later (from our mortgage broker) that this VA appraiser had been killing home sales and refis for years.  I filed complaint letters with the state and the appraiser’s association and the local VA RLC.  The VA RLC asked for more info, which I cheerfully provided.  I also put out a ton of negative reviews on social media.  (I’m a blogger.  I know how to do SEO.)  Hopefully that appraiser is off the VA RLC’s appraiser list.

And now you know far more than you want to know about VA loan appraisals.

artemis

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Re: Military FIRE Without Pension
« Reply #13 on: May 08, 2019, 11:15:39 PM »
Perhaps more than I ever expected to need to know. It seems like the common sense idea is to be knowledgeable and prepared to execute a conventional loan instead of the VA loan if good opportunity to buy presents itself. Agreed re GI Bill, no sense in not maxing the BAH. I will definitely take the time to investigate the guard/reserves over the next few years to be ready when the time comes. Lol, sounds like that particular appraiser will find himself in a tough spot, he certainly picked the wrong FIRE expert to mess with.

Villanelle

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Re: Military FIRE Without Pension
« Reply #14 on: May 09, 2019, 11:14:38 AM »
Perhaps more than I ever expected to need to know. It seems like the common sense idea is to be knowledgeable and prepared to execute a conventional loan instead of the VA loan if good opportunity to buy presents itself. Agreed re GI Bill, no sense in not maxing the BAH. I will definitely take the time to investigate the guard/reserves over the next few years to be ready when the time comes. Lol, sounds like that particular appraiser will find himself in a tough spot, he certainly picked the wrong FIRE expert to mess with.

I've got friends who use the GI Bill for things like cooking school, just because it seemed fun (and because they were paid the BAH to do it).  By husband and I have joked that we will go to massage school so we can give each other great back rubs.  There are tons of programs that qualify, so if there's no specific degree you need or want, you might look to cobble together a bunch of interesting experiences.  And then you walk away as a scuba-instructing pilot chef who can repair your car's engine and then make great drinks at your home bar (or whatever).  There are some requirements on what programs qualify, but they are pretty broad. 

NorCal

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Re: Military FIRE Without Pension
« Reply #15 on: May 09, 2019, 12:23:33 PM »
Best of luck to you!  I got out of the service as an Army Officer in 2006, and also drove a Mazda at the time (they're great cars).

Here's my general advice based on my experience:

1. I went to grad school immediately after the Army, and that was a great decision for me.  It taught me how to be a civilian again, which is actually important.  I think there's a strong case for going immediately after separation.  Be thoughtful about what school and what you want to study though.  Going to grad school for the sake of grad school won't get you anywhere.  You'll want to pick a school in a place you want to live long term (it's where your best job prospects are) and study for something with employable skills. 

2. The guard/reserve is as big of a choice as to stay in or leave.  Consider it carefully.  Your desired career path should influence this.  There are some career paths that work well with Guard/Reserve, and others that don't work so well.  If you want to take a path into BigLaw and work 80+ hour weeks for a big paycheck, the guard/reserve commitments won't work so well.  If you're going to be a student for 3 years, then maybe a 3 year reserve commitment would be a good thing.

3. If you have high career ambitions, go to the highest ranking school you can get into.  It makes a BIG difference for grad school.  I you just want a degree because it's a checkbox for a career path, get the cheapest degree you can.

4. I wouldn't open a 529 until you have kids.  The tax benefits are okay, but not worth locking money up for without a plan IMO.  Otherwise, all of your financial plans seem solid.

Horatius

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Re: Military FIRE Without Pension
« Reply #16 on: May 10, 2019, 04:57:15 PM »
Artemis,

I agree with NorCal ( despite being from SoCal) on point number two. The Guard or Reserve could be a great option while attending graduate school. I anticipate anywhere you go will be fully funded by GI/ Yellow Ribbon.

Pros: Continued service, disposable income or cash to throw at your TSP, non-deployable for two years, exposure to decide if the weekend warrior lifestyle is compatible with future aspirations

Cons: None, you're still wearing the uniform!

In any event, best of luck. 

NorCal

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Re: Military FIRE Without Pension
« Reply #17 on: May 11, 2019, 07:07:46 AM »

Cons: None, you're still wearing the uniform!


While I did overall enjoy my time in the Reserves, there are a few other cons I should point out:

-"One weekend a month" sometimes means a weekend that starts on Wednesday night.  This was fine for me as a college student, but I couldn't do this today.

-The Guard/Reserves do get deployed on a not-infrequent basis.  I don't know what the Op-tempo is today, but I imagine it's still pretty heavy.  Back in 1999, I saw units do 3-4 month deployments to Korea, deployments to Kosovo, and deployments to Kuwait.  This can be a pro or con depending on your lifestyle.

Nords

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Re: Military FIRE Without Pension
« Reply #18 on: May 11, 2019, 08:34:58 AM »
-"One weekend a month" sometimes means a weekend that starts on Wednesday night.  This was fine for me as a college student, but I couldn't do this today.

-The Guard/Reserves do get deployed on a not-infrequent basis.  I don't know what the Op-tempo is today, but I imagine it's still pretty heavy.  Back in 1999, I saw units do 3-4 month deployments to Korea, deployments to Kosovo, and deployments to Kuwait.  This can be a pro or con depending on your lifestyle.
There’s a Navy Reserve saying:
“You’ve achieved work/life balance in the Reserves when your family, your civilian employer, and your Reserve unit are all equally annoyed with you.”

Having said that, I think the Reserves and Guard still offer a lower operating tempo than active duty... although that lower OPTEMPO still might not meet expectations.

NorCal

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Re: Military FIRE Without Pension
« Reply #19 on: May 11, 2019, 05:54:28 PM »
-"One weekend a month" sometimes means a weekend that starts on Wednesday night.  This was fine for me as a college student, but I couldn't do this today.

-The Guard/Reserves do get deployed on a not-infrequent basis.  I don't know what the Op-tempo is today, but I imagine it's still pretty heavy.  Back in 1999, I saw units do 3-4 month deployments to Korea, deployments to Kosovo, and deployments to Kuwait.  This can be a pro or con depending on your lifestyle.
There’s a Navy Reserve saying:
“You’ve achieved work/life balance in the Reserves when your family, your civilian employer, and your Reserve unit are all equally annoyed with you.”

Having said that, I think the Reserves and Guard still offer a lower operating tempo than active duty... although that lower OPTEMPO still might not meet expectations.

Agreed.  If you go in with the expectation of "two days a month and two weeks a year", you will be SORELY disappointed.   But that doesn't mean it's a bad thing.  You have to know what to expect, and understand how that fits in your lifestyle.

I still rank my four years between the guard and reserves as the best part of my military experience.  I did it while I was in college, and it was perfect for me.

There's a 0% chance it would work for me today as a consultant at a small firm.  My commitments to my clients don't have the flexibility where I could take time out for a long drill weekend, or even two extra weeks during the summer.