Author Topic: Hi.. I've been a lurker. Please give me advice  (Read 2780 times)


  • 5 O'Clock Shadow
  • *
  • Posts: 1
Hi.. I've been a lurker. Please give me advice
« on: January 06, 2015, 10:03:05 PM »
Hello Mustachians!  I've been a lurker for some time and have seriously been utilizing MMM as part of my "life team" since 2013 and it has truly changed the way I look at life.  Now I am at a critical junction and need some advice. This will be long but bear with me... and if you have any advice please please please let me know.

First off I am in the military. I am an officer and make a decent amount of money for a 26 year old (88K Gross income).  I try to stick to a frugal lifestyle as much as possible and i has paid off significantly but I've got the thirst for more.  I'm thinking about getting out of the military (personal opinions) and really really want to get into real estate investing. I've been doing a lot of research over the past year, consuming everything I can and trying to get my feet wet. I want to get my hands on a few section 8 homes to start passive income and eventually dive deeper into real estate... This is truly a passion of mine and the military is not conducive to jumping into this. Anyhow, here's where I'm at.

I am about to move to a new duty location where I will be getting a $300 dollar increase in my allowance for housing ($1500/month). I have a brandy spankin new wife a little munchkin on the way. I am also making between 8-10K for moving my stuff myself (a pain but worth the couple of days of hard work). I also have the ability to take up to 3 months of advanced pay at 0% paid back over a year ($1200/month reduction in pay for one year but ~15K of cash up front).

Right now my expenses are as follows:
-$930/mth for first home- soon to be rented for $1200/month (i currently live in this home)
-$50/month for dog food (3 dogs- sorry can't get rid of them, i'd be going through a divorce if i did)
-$60/month for internet, I'm an IT guy and I run a bunch of services from my home, I need at least 20 down and 5 up
-$290/month for a car payment. Gasp! I know.. but i needed to help my credit out a bit, it's at 4% and I was making more on investments... I can pay this off now... we'll get to that.
-$80/month car insurance. Full coverage for my 4Runner (6cyl).
-$600 month (budgeted) for groceries and household chemicals/goods
-$7/month Netflix
-$12/month IT "services" that i utilize nearly every day
-$180/month GAS
-$220/month utilities (electricity, gas, water, trash)

Now the "Savings" portions
-$19,990 in vanguard index funds
-$16K in ROTH TSP (Military Retirement) fund. I put ~$100/month into this.
-$16K in ROTH IRA- I max this out every year. ~$458/month
-$1300 in stock options (my play around to learn stocks money)

Now the Debts
-~$6k remaining on 4runner loan
-~$5k on credit card, soon to be paid off entirely
-$2k student loan for masters. I pay nothing on this yet... still in school
- ~139K out of 145K remaining on my first home 30yr mortgage @ 4.25%

So here's where I'm stuck. We are about to use our remaining VA funds to buy another property.  Thats no money down, I'm qualified for 210K. My wife and I are currently looking at homes and we really really like this house that is listing for 180K.  The goal here will be to rent the property once i leave for my next duty station after this one's done (if i leave for another one).  However, if I take the advanced pay from the military, it my monthly costs completely burn up pay check.  Oh btw, we're looking at getting a 2004-2007 prius for around 6-7K (paying cash) to cut back on commute costs.  My wife will be selling her mustang and taking the 4Runner because she doesn't travel nearly as much.  I need to keep the 4 runner because the homes I'm looking at purchasing need serious work and I have to pull my trailer that I have.  Biking in the area I'm about to move to is a no-go.  I cannot budge on that.

So what can I do to save more. I know i'm basically putting 10K in the bank after this move, which equates to 833/month while also eliminating all of our debt minus the 4runner loan. But at the current costs i have in my life i'm not putting any more in for an entire year.  I also want to be able to purchase another investment property (~50K After all repairs).  But that puts me at some risk for funds as it will deplete me for a bit (unless i do a cash-out refi...).

So i don't like to whine without giving some solutions.  Here are the "sacrifices" I came up with in order to save more ranking from easiest to complete to hardest.
-Pay less for internet. I can reduce this by $40 per month.
-Reduce eating costs by eliminating eating out and shopping at COSTCO (previously unavailable to me due to my "remote" duty station).  I can probably get this down to 300/month or less for 2 people and a baby.
-Reduce gas cost by 30/week by purchasing more fuel efficient vehicle... but this will cost me $6-8K...
-Buy a cheaper house.  This one is the hardest because anything under 180K puts me in less than desirable locations... I'm already skimping a bit.  Plus at current rates, for every 10K I reduce on the homes only brings my payment down by $50/month

If I can accomplish the first 2, that puts an additional 460 in the bank.  What else can I do.  What am I missing? What can I do to generate more income?

I appreciate you guys and I really have enjoyed lurking for the past year and a half.  This site has changed my life for the better.  Thank you!



  • Senior Mustachian
  • ********
  • Posts: 10666
Re: Hi.. I've been a lurker. Please give me advice
« Reply #1 on: January 06, 2015, 11:39:39 PM »
dewthejrew, welcome to the forums.

Putting the numbers from the OP into the How To Write a Case Study spreadsheet it appears you are in great shape.  But then "However, if I take the advanced pay from the military, it my monthly costs completely burn up pay check" doesn't jibe, so I'm missing something.

Spreadsheet entries included some guesses and excluded some things (e.g. credit card balance, housing allowance, etc.) from the OP.  See below.  You could download from the post linked above and make your own (presumably more accurate) entries.

Again, it seems you are doing quite well.  Congratulations on the new baby and good luck!

CategoryMonthly amt.CommentsAnnual
Federal Adj. Gross Inc.$7,333$88,000
Federal tax$6322015 rates, stand. ded., 3 exemptions$7,587
State/City tax$367Guess, using 5.00% * Fed. AGI$4,400
Soc. Sec.$455Assumes 1 earner paying$5,456
Total income taxes$1,560$18,720
Income before other expenses  $5,773$69,280
Monthly Expenses:
Property Tax$150Guesses to match $1,800
Home/Rent Insurance$67$930/mo PITI(?) in OP$804
Car Insurance$80$960
Electricity$220All utilities$2,640
Fuel/Public Transport$180$2,160
Non-mortgage total$1,426$17,112
Total Expense$2,429$29,153
Total to invest$3,344$40,127
"Gross" income$7,333$88,000
Income taxes$1,560$18,720
After-tax income$5,773$69,280
Living expenses$2,139$25,672
Non-mortgage loans$290$3,481
After-tax investable$3,344$40,127
Time to FIRE?:
Time to FIRE7.5years
Safe Withdrawal Rate4.00%percent
Real return on tax-deferred investments6.67%percent
Real, after tax, return on taxable investments5.00%percent
Expected retirement total tax rate10.00%
Current Savings
Projected Savings at Retirement
Total projected stash$435,366
Projected Expenses in Retirement
Non-loan, non-work expenses$17,112
Income taxes$1,901
Stash needed for retirement @4.0% SWR$475,333
Need $39,968 more.


  • Stubble
  • **
  • Posts: 135
Re: Hi.. I've been a lurker. Please give me advice
« Reply #2 on: January 07, 2015, 09:58:54 AM »
ok, so one step at a time. 

Your new mortgage will add 1200 dollars a month to your expenses and eat the entirety of your BAH assuming similar utilities. And no money down- eh, to each their own 

I think the real estate gurus will tell you your current home doesn't meet the 1% rule but we will leave it as paying for itself- maybe it's own account- gathering the 250 extra to pay for the next "furnace, tenant destruction, etc ".

Roth TSP - yay! IF you retire as an officer, your pension will put you near tax zone without fail

Roth- YEA! did you open a spousal? - you have till April for 2014 if she doesn't have one already

3 years left on your commission? but you don't say you have any cash on hand or plans for such to make that transition- your real estate holdings aren't going to pay you enough to live on yet.

Advance pay- NO, unless you are going to pay off all debt( that you were going to pay in the year anyway) and never have any again- even using it to buy that Prius is a bad plan. You can't make that 15 up in the year with gas and interest savings- just aim at saving that in the next year. If you fall short at least you're not scraping the edges.

You're paying for your masters? No post grad option?  No GI bill? Hubs enlisted after Undergrad, OCS (at 26), Navy paid post grad GI transferred to the kidlets. 

If you can make the reductions you have planned- woot- but don't spend it before you prove it.

MDM has got you retired at current income and expenses in 7.5 years before the pension- Stay Navy isn't here so that's all I got for recruitment ;)

With the baby and move I assume shiny new wife isn't working (i didn't) You need to take some time to adjust to the changes, I'm not saying don't take any risks, just take it slower. It takes time and you are looking at a lot of changes.  Good Luck.

Try living as close as possible on the BAH/BAS and lots of extra will be available. (1746? for the necessities) We never did (with house payments) but trying made saving easier.



« Last Edit: January 07, 2015, 10:03:54 AM by Lkxe »


  • Stubble
  • **
  • Posts: 241
  • Age: 42
Re: Hi.. I've been a lurker. Please give me advice
« Reply #3 on: January 07, 2015, 11:24:27 AM »
been in this exact scenario a few times.

I would switch to the traditional TSP; it will lower your taxable income to nearly nothing.  The tax savings will allow you to contribute more to the TSP overall.  Once you retire (if you stay in 20+ years), consider a Roth conversion ladder; or sometime during your career, take the sabbatical and convert then when you have almost no taxable income. 

if you take the advance, drop it in a CD or high interest savings account.

seriously consider renting...VA is great and I've done three houses with VA loans, but the costs are high (3.3% for subsequent use) and if you do go the 0 down option, you're already in the hole by $6K before you've even moved in; just to pay off the VA.  If you are set on buying, consider that it would take a lot of PMI to get to that $6K point; if you're an O-3 with 4+ years,  a 3 month advance would give you $15k for a down would probably get to 20% equity and be able to drop PMI before your PMI total equaled what the VA charges with its funding fee.  on the other hand, VA loans are assumable so when you sell, another service member can buy your house with the exact loan you have at the current appraisal or additional closing costs required.  If rates go up, this could be a huge selling point.

Once your car is paid for, raise the deductible.

Lower your groceries--  can you shop at the commissary?...if you're spending $600 at the commissary, that would be about the same as spending $800-$900 at a reg. grocery store.  The advantage is probably about the same as COSTCO.  I price match everything at the PX/BX...alcohol, consumer goods...even milk if I know it's cheaper somewhere else.  If the difference is under $10, you don't need an ad.  Just a few points that may help you get started.