Author Topic: Humble me  (Read 2894 times)

chiefsuave

  • 5 O'Clock Shadow
  • *
  • Posts: 29
  • Age: 24
  • Location: US/NNY
Humble me
« on: July 14, 2018, 04:46:55 AM »
Hey guys!

First time posting but around a 6 month Mustachian. 24yo/Military

Here's the overview:

$49k net worth:

$32K in CASH.

$17k investments made up of:
$2,500- Lending Club
$7.5k Thrift Savings Plan
$1.5k Vanguard brokerage- ETF: MGK
$5.5k Vanguard IRA- ETF: VTI
----------------------------------
Less than $100 in credit debt.
Own my 2014 Honda civic/ but I do have the expensive insurance roughly $92.48
Currently deployed so tax free
No apartment or house so rent/mortgage free
No phone bill cause Sprint put the contract on hold since I'm overseas
----------------------------------
Currently engaged

Just looking for some guidance and advice.

lemanfan

  • Pencil Stache
  • ****
  • Posts: 773
Re: Humble me
« Reply #1 on: July 14, 2018, 04:54:06 AM »
Nice meeting you!

What are your goals? Advice are easier to give it we know what you want to achieve. :)

chiefsuave

  • 5 O'Clock Shadow
  • *
  • Posts: 29
  • Age: 24
  • Location: US/NNY
Re: Humble me
« Reply #2 on: July 14, 2018, 05:10:27 AM »
Hello! I never really thought about my goals if I'm honest. I thought if I saved my money eventually I'd find a good purpose for it.
Enough passive income to cover my expenses.

1 year goal: $70k net worth
2 year goal: $100k net worth


End state goal: Be able to go hiking and travel freely/ spend more time helping others

Zaga

  • Handlebar Stache
  • *****
  • Posts: 1653
  • Age: 38
  • Location: North of Pittsburgh, PA
    • A Wall of Hats
Re: Humble me
« Reply #3 on: July 14, 2018, 07:08:26 AM »
Some basic life questions.  You said you're engaged, I assume that means a wedding will need to be paid for.  Are you both on the same page about wedding costs, who is paying for what, etc?  That would be one of my first priorities with your cash.

Next, are you going to need to rent somewhere once you're married?  Will expenses go up in other ways?  Prepare for that as needed.

Emergency fund, some of the cash should be set aside and designated as emergency fund.  I like a minimum of $10K, but then I have a house, cars, high deductible insurances, etc.  Find a number that works for you and go with that, remember to adjust if your life circumstances change.

It's great that you have access to the TSP, everything I've heard about that is it's the lowest expense retirement plan out there!  Set your percentage to max that out if you haven't already.  That's $18,500 a year of your contributions, if they match anything that's above the 18,500.

You're in amazingly great shape for a 24 year old, good work so far!

chiefsuave

  • 5 O'Clock Shadow
  • *
  • Posts: 29
  • Age: 24
  • Location: US/NNY
Re: Humble me
« Reply #4 on: July 14, 2018, 07:54:54 AM »
Some basic life questions.  You said you're engaged, I assume that means a wedding will need to be paid for.  Are you both on the same page about wedding costs, who is paying for what, etc?  That would be one of my first priorities with your cash.

Next, are you going to need to rent somewhere once you're married?  Will expenses go up in other ways?  Prepare for that as needed.

Emergency fund, some of the cash should be set aside and designated as emergency fund.  I like a minimum of $10K, but then I have a house, cars, high deductible insurances, etc.  Find a number that works for you and go with that, remember to adjust if your life circumstances change.

It's great that you have access to the TSP, everything I've heard about that is it's the lowest expense retirement plan out there!  Set your percentage to max that out if you haven't already.  That's $18,500 a year of your contributions, if they match anything that's above the 18,500.

You're in amazingly great shape for a 24 year old, good work so far!

First off, thanks for the feedback! a dollar at a time.

I have been googling and doing a lot of research/reading about weddings. Seems extremely expensive. Her and I have agreed to keep it fairly cheap and "low-key" but that's what they all say amirite? lol

I am returning to the states soon; but expecting $800 for rent which is cheap considering the military will be giving me $1200

I agree with the $10k safety net.

Next goal. MAX out that TSP. < Just have to adjust some spending but I think I can do $770.83 every paycheck.


Raenia

  • Pencil Stache
  • ****
  • Posts: 604
Re: Humble me
« Reply #5 on: July 14, 2018, 07:58:20 AM »
You're in a great place to start saving early, and you're quite right that you can decide what kind of lifestyle you want to retire to once you have a chance to try some things out, but it's much better to start saving now even if you don't have anything in mind to save toward.  I agree with the above poster who suggested maximizing your TSP, that's a great place to save.  Unless you're saving up that cash for a specific purpose (like a wedding?) I'd cut down on what you're holding in cash and put a chunk of that into your Vanguard Brokerage.  The funds you've picked look like good choices.

Since you say you're not paying taxes currently, I'd use a Roth IRA rather than a traditional (assuming you qualify), to minimize your future tax burden.

You haven't mentioned your income or expenses - without housing or utility costs, expenses should be low, but what besides car insurance are you currently spending?

What goals does your fiancee have for the future?  Do they have a job/career?  Do you want children eventually?  Have you thought about where you will want to live once you're out of the military?

ETA: Saw your comment about wedding costs - I just got married a few weeks ago and we spent about 8k all told, for what we felt was a lavish and thoroughly enjoyable affair.  There's several threads floating around on how to do a wedding on a budget, and I'm happy to talk about it more, but it really boils down to what parts of the day matter the most to you.  Do you (or she) care about dancing, a religious ceremony at a church, how many guests do you want, etc.
« Last Edit: July 14, 2018, 08:00:54 AM by Raenia »

Finances_With_Purpose

  • Bristles
  • ***
  • Posts: 491
    • Finances With Purpose: deploying resources wisely to live vigorously
Re: Humble me
« Reply #6 on: July 14, 2018, 09:38:00 AM »
Some basic life questions.  You said you're engaged, I assume that means a wedding will need to be paid for.  Are you both on the same page about wedding costs, who is paying for what, etc?  That would be one of my first priorities with your cash.

Next, are you going to need to rent somewhere once you're married?  Will expenses go up in other ways?  Prepare for that as needed.

Emergency fund, some of the cash should be set aside and designated as emergency fund.  I like a minimum of $10K, but then I have a house, cars, high deductible insurances, etc.  Find a number that works for you and go with that, remember to adjust if your life circumstances change.

It's great that you have access to the TSP, everything I've heard about that is it's the lowest expense retirement plan out there!  Set your percentage to max that out if you haven't already.  That's $18,500 a year of your contributions, if they match anything that's above the 18,500.

You're in amazingly great shape for a 24 year old, good work so far!

First off, thanks for the feedback! a dollar at a time.

I have been googling and doing a lot of research/reading about weddings. Seems extremely expensive. Her and I have agreed to keep it fairly cheap and "low-key" but that's what they all say amirite? lol

I am returning to the states soon; but expecting $800 for rent which is cheap considering the military will be giving me $1200

I agree with the $10k safety net.

Next goal. MAX out that TSP. < Just have to adjust some spending but I think I can do $770.83 every paycheck.

You're doing outstanding already!  The military does make saving easy in that way.

Listen to the other advice here in general; max out your tax-deferred accounts now, while you can, especially before kids. 

I'm chiming in with some words about weddings: have those conversations now.  Decide (1) who's paying (her parents? the two of you?), (2) what the *expectations* are (i.e., how many of mom & dad's friends are coming, what do mom and dad want/require, etc.), and how much the budget is. 

From experience, I would have conversations with those involved and get firm answers on all of that up front.  Also firm up who's making decisions (your wife, your mother-in-law, etc.), and make extra sure that's OK with your wife. 

Also from experience, I would only take money from parents/others for a wedding if it was a gift/no expectations.  Everyone has tons of expectations surrounding weddings, in my experience.  (My wife works in a wedding-related field, so we see it frequently.)  We rarely see that go well; more often there are different expectations/hurt feelings/large additional costs because mom wanted X and wife wanted Y. 

You have an opportunity to lead now and lead well.  By doing the hard things up front, you can avoid problems on the back end.  It's a lot easier to have awkard conversations now than to re-plan or reset expectations midway through the process, once you already have vendors, dresses, etc., because Mom and Dad had one set of expectations and daughter had another, or you didn't realize the costs involved, etc. 

You do *not* want to let someone else fund the wedding without being very clear as to what the expectations are, as the person with the funds generally has the power over what happens - or expects to. 

Wedding costs can very easily get out of hand, since it's a major event and there may be many people in the process who want their own expectations fulfilled (often without regard to cost). 

You want to set a budget and stick to the budget.  And things will try to break that budget.  So, best practice would be to set a budget that's 20% less than your expected spend, knowing that last-minute things or other things will increase costs by a bit regardless. 

This can obviously be relaxed some (my advice) if your families *and* wife are all extremely laid-back and low-cost/no-frills.  But even so, I would have a budget for everything, because it's really easy to let it all get out of hand cost-wise. 

We did our wedding on a budget (pre-set) and it went well, but we have seen many friends fall into pitfalls by not planning ahead and having those hard conversations up front.  And we could have done better ourselves.  It's just like Mustachianism/stoicism: do the hard things now, have an easy time later.  Or do the opposite, and buy lots of Kleenex...

This reminds me: I really need to do a blog post on this whole topic. 

chiefsuave

  • 5 O'Clock Shadow
  • *
  • Posts: 29
  • Age: 24
  • Location: US/NNY
Re: Humble me
« Reply #7 on: July 14, 2018, 10:45:57 AM »
You're in a great place to start saving early, and you're quite right that you can decide what kind of lifestyle you want to retire to once you have a chance to try some things out, but it's much better to start saving now even if you don't have anything in mind to save toward.  I agree with the above poster who suggested maximizing your TSP, that's a great place to save.  Unless you're saving up that cash for a specific purpose (like a wedding?) I'd cut down on what you're holding in cash and put a chunk of that into your Vanguard Brokerage.  The funds you've picked look like good choices.

Since you say you're not paying taxes currently, I'd use a Roth IRA rather than a traditional (assuming you qualify), to minimize your future tax burden.

You haven't mentioned your income or expenses - without housing or utility costs, expenses should be low, but what besides car insurance are you currently spending?

What goals does your fiancee have for the future?  Do they have a job/career?  Do you want children eventually?  Have you thought about where you will want to live once you're out of the military?

ETA: Saw your comment about wedding costs - I just got married a few weeks ago and we spent about 8k all told, for what we felt was a lavish and thoroughly enjoyable affair.  There's several threads floating around on how to do a wedding on a budget, and I'm happy to talk about it more, but it really boils down to what parts of the day matter the most to you.  Do you (or she) care about dancing, a religious ceremony at a church, how many guests do you want, etc.


You guys honestly rock. Income is roughly $2100 a paycheck with $650 going straight towards TSP. As far as expenses go, I don’t really have any but the occasional credit charge for some sunflower seeds, my monthly internet ($35), and as mentioned my car insurance. I do send my fiancée some money in case she needs it but she’s quite the savings finder.

Fiancée- just finished college with her loans paid off (OMG right!)/ we are currently working through her finding a job.

We are working through the pain of wedding planning/budgeting.

chiefsuave

  • 5 O'Clock Shadow
  • *
  • Posts: 29
  • Age: 24
  • Location: US/NNY
Re: Humble me
« Reply #8 on: July 14, 2018, 10:50:03 AM »
Some basic life questions.  You said you're engaged, I assume that means a wedding will need to be paid for.  Are you both on the same page about wedding costs, who is paying for what, etc?  That would be one of my first priorities with your cash.

Next, are you going to need to rent somewhere once you're married?  Will expenses go up in other ways?  Prepare for that as needed.

Emergency fund, some of the cash should be set aside and designated as emergency fund.  I like a minimum of $10K, but then I have a house, cars, high deductible insurances, etc.  Find a number that works for you and go with that, remember to adjust if your life circumstances change.

It's great that you have access to the TSP, everything I've heard about that is it's the lowest expense retirement plan out there!  Set your percentage to max that out if you haven't already.  That's $18,500 a year of your contributions, if they match anything that's above the 18,500.

You're in amazingly great shape for a 24 year old, good work so far!

First off, thanks for the feedback! a dollar at a time.

I have been googling and doing a lot of research/reading about weddings. Seems extremely expensive. Her and I have agreed to keep it fairly cheap and "low-key" but that's what they all say amirite? lol

I am returning to the states soon; but expecting $800 for rent which is cheap considering the military will be giving me $1200

I agree with the $10k safety net.

Next goal. MAX out that TSP. < Just have to adjust some spending but I think I can do $770.83 every paycheck.

You're doing outstanding already!  The military does make saving easy in that way.

Listen to the other advice here in general; max out your tax-deferred accounts now, while you can, especially before kids. 

I'm chiming in with some words about weddings: have those conversations now.  Decide (1) who's paying (her parents? the two of you?), (2) what the *expectations* are (i.e., how many of mom & dad's friends are coming, what do mom and dad want/require, etc.), and how much the budget is. 

From experience, I would have conversations with those involved and get firm answers on all of that up front.  Also firm up who's making decisions (your wife, your mother-in-law, etc.), and make extra sure that's OK with your wife. 

Also from experience, I would only take money from parents/others for a wedding if it was a gift/no expectations.  Everyone has tons of expectations surrounding weddings, in my experience.  (My wife works in a wedding-related field, so we see it frequently.)  We rarely see that go well; more often there are different expectations/hurt feelings/large additional costs because mom wanted X and wife wanted Y. 

You have an opportunity to lead now and lead well.  By doing the hard things up front, you can avoid problems on the back end.  It's a lot easier to have awkard conversations now than to re-plan or reset expectations midway through the process, once you already have vendors, dresses, etc., because Mom and Dad had one set of expectations and daughter had another, or you didn't realize the costs involved, etc. 

You do *not* want to let someone else fund the wedding without being very clear as to what the expectations are, as the person with the funds generally has the power over what happens - or expects to. 

Wedding costs can very easily get out of hand, since it's a major event and there may be many people in the process who want their own expectations fulfilled (often without regard to cost). 

You want to set a budget and stick to the budget.  And things will try to break that budget.  So, best practice would be to set a budget that's 20% less than your expected spend, knowing that last-minute things or other things will increase costs by a bit regardless. 

This can obviously be relaxed some (my advice) if your families *and* wife are all extremely laid-back and low-cost/no-frills.  But even so, I would have a budget for everything, because it's really easy to let it all get out of hand cost-wise. 

We did our wedding on a budget (pre-set) and it went well, but we have seen many friends fall into pitfalls by not planning ahead and having those hard conversations up front.  And we could have done better ourselves.  It's just like Mustachianism/stoicism: do the hard things now, have an easy time later.  Or do the opposite, and buy lots of Kleenex...

This reminds me: I really need to do a blog post on this whole topic.

So many good, valid points. Thanks for taking time out of your day! The lead now and lead well part stuck with me. If you do a blog post I’ll be sure to check it out!!

jlcnuke

  • Pencil Stache
  • ****
  • Posts: 757
Re: Humble me
« Reply #9 on: July 14, 2018, 11:14:01 AM »
You're in a great place to start saving early, and you're quite right that you can decide what kind of lifestyle you want to retire to once you have a chance to try some things out, but it's much better to start saving now even if you don't have anything in mind to save toward.  I agree with the above poster who suggested maximizing your TSP, that's a great place to save.  Unless you're saving up that cash for a specific purpose (like a wedding?) I'd cut down on what you're holding in cash and put a chunk of that into your Vanguard Brokerage.  The funds you've picked look like good choices.

Since you say you're not paying taxes currently, I'd use a Roth IRA rather than a traditional (assuming you qualify), to minimize your future tax burden.

You haven't mentioned your income or expenses - without housing or utility costs, expenses should be low, but what besides car insurance are you currently spending?

What goals does your fiancee have for the future?  Do they have a job/career?  Do you want children eventually?  Have you thought about where you will want to live once you're out of the military?

ETA: Saw your comment about wedding costs - I just got married a few weeks ago and we spent about 8k all told, for what we felt was a lavish and thoroughly enjoyable affair.  There's several threads floating around on how to do a wedding on a budget, and I'm happy to talk about it more, but it really boils down to what parts of the day matter the most to you.  Do you (or she) care about dancing, a religious ceremony at a church, how many guests do you want, etc.


You guys honestly rock. Income is roughly $2100 a paycheck with $650 going straight towards TSP. As far as expenses go, I don’t really have any but the occasional credit charge for some sunflower seeds, my monthly internet ($35), and as mentioned my car insurance. I do send my fiancée some money in case she needs it but she’s quite the savings finder.

Fiancée- just finished college with her loans paid off (OMG right!)/ we are currently working through her finding a job.

We are working through the pain of wedding planning/budgeting.

Max out your TSP, you don't need that money anyway.
Keep your housing (mortgage/rent AND utilities) and food costs below your BAH/BAS payments.
Pay your bills automatically, just in case something happens and you can't do it manually for some reason (i.e. ensure your credit card(s) are at least set to automatically pay the minimum).
Look into alternative policies for auto insurance when you're deployed. Many insurance companies have cheaper plans for cars that are just sitting you can switch to while deployed.
ENSURE your TSP isn't just sitting there in the G-fund... you didn't mention where it was invested so I figured I should point that out.

Non-financial (at least for now) - document everything from your time in the service. Your duties, education, experience, schools, certifications, injuries, illnesses, etc.. and do the same on the social side - you're professional network is already being developed, keep in touch with the guys you respect and who respect you. You never know when one of you will be able to help the other in the future (jobs, information, etc etc). Develop your resume now and keep adding to it over the years so it stays current at least once a year. It's easy to forget stuff down the road.

Kierun

  • Stubble
  • **
  • Posts: 149
  • Location: Honolulu, Hawaii
Re: Humble me
« Reply #10 on: July 14, 2018, 11:58:53 AM »
Look into the Savings Deposit Program (SDP), if they still have it.  Also you may want to look into temporarily changing your TSP deduction to Roth if you haven't already.  Since you're in a tax-free zone, the roth money is tax-free going in and coming out.

chiefsuave

  • 5 O'Clock Shadow
  • *
  • Posts: 29
  • Age: 24
  • Location: US/NNY
Re: Humble me
« Reply #11 on: July 14, 2018, 12:22:33 PM »

Max out your TSP, you don't need that money anyway.
Keep your housing (mortgage/rent AND utilities) and food costs below your BAH/BAS payments.
Pay your bills automatically, just in case something happens and you can't do it manually for some reason (i.e. ensure your credit card(s) are at least set to automatically pay the minimum).
Look into alternative policies for auto insurance when you're deployed. Many insurance companies have cheaper plans for cars that are just sitting you can switch to while deployed.
ENSURE your TSP isn't just sitting there in the G-fund... you didn't mention where it was invested so I figured I should point that out.

Non-financial (at least for now) - document everything from your time in the service. Your duties, education, experience, schools, certifications, injuries, illnesses, etc.. and do the same on the social side - you're professional network is already being developed, keep in touch with the guys you respect and who respect you. You never know when one of you will be able to help the other in the future (jobs, information, etc etc). Develop your resume now and keep adding to it over the years so it stays current at least once a year. It's easy to forget stuff down the road.

That darn TSP. I’m in the C-Fund %100 have been for a while. / The auto insurance policy is the same one since I had a loan on it. The reason being, I drive approx 15k miles yearly. I try to see my family as much as possible. But I for sure could’ve found a way to have them put in temporary status. Attention to detail.
I am a little skeptical about having that much cash in my bank account kinda just sitting. But at the same time I prefer the security blanket.

Zaga

  • Handlebar Stache
  • *****
  • Posts: 1653
  • Age: 38
  • Location: North of Pittsburgh, PA
    • A Wall of Hats
Re: Humble me
« Reply #12 on: July 14, 2018, 02:09:30 PM »
I agree with what's been said about weddings.  DH and I paid for ours entirely, on a tight budget.  Any time a friend offered any kind of assistance to us we said yes, that can be your wedding present to us!  So we had one friend cook (we supplied ingredients), one brought wine, 2 took pictures, one baked a cake, etc.  We did all the decorating ourselves, DH made my dress cause he's awesome like that.  We rented a boy scout camp for the event, for the whole weekend.  The venue was lovely, if rustic.  We ended up spending a grand total of $2,500.

Obviously I'm not suggesting you do what we did, just that you look around for opportunities to be frugal and have a really fun day!

chiefsuave

  • 5 O'Clock Shadow
  • *
  • Posts: 29
  • Age: 24
  • Location: US/NNY
Re: Humble me
« Reply #13 on: July 15, 2018, 01:03:46 AM »
Look into the Savings Deposit Program (SDP), if they still have it.  Also you may want to look into temporarily changing your TSP deduction to Roth if you haven't already.  Since you're in a tax-free zone, the roth money is tax-free going in and coming out.


I looked into the SDP, but didn't think much about it. Now looking back at a guaranteed 10% I could've afforded doing it. And yes I do ROTH! 

rebel_quietude

  • 5 O'Clock Shadow
  • *
  • Posts: 36
  • Age: 33
  • Location: Colorado
Re: Humble me
« Reply #14 on: July 15, 2018, 07:05:41 PM »
I'd say, if you havn't already, put talking with you future wife on the financial to-do list as well. "A millionaire next door," makes the point that one of the most powerful factors in wealth accumulation can be who you marry.

What are your mutual savings goals? Do you both have a certain nest egg you want to reach before having kids? Are you going to pay for childcare or is one of you (with a college degree she might end up the higher earner, and that's worth talking about as well) going to stay at home until the kids are school-age? How are you two going to deal with the requirement for health care / benefits if you wind up going to school after having kids? Which accounts will be joint, and which funds will automatically move to E-Fund / brokerage / Roth from your pay check? From hers? What are your standard of living expectations? Hers? Where are you both prepared to compromise and what are your "rocks?" If you stay in, how will you both navigate the maddening reality of her trying to find a new job every few years as you PCS? If you don't stay in, is she willing to support you while you transition careers? Who will take primary responsibility for investments?

Not trying to be a downer - hopefully you two are of similar mind about these things. My point is, it's worth ensuring you're on the same page before the tumult of moving away from established networks of friends and family and starting a life together. If you have pre-marriage counseling available (some chaplains have programs, if that's your cup of tea), there are resources to help lead you through these conversations. Good luck, and have fun!

pecunia

  • Bristles
  • ***
  • Posts: 483
Re: Humble me
« Reply #15 on: July 15, 2018, 07:24:26 PM »
Thank you for serving the country - Take advantage of all the education benefits while you can.

Finances_With_Purpose

  • Bristles
  • ***
  • Posts: 491
    • Finances With Purpose: deploying resources wisely to live vigorously
Re: Humble me
« Reply #16 on: July 15, 2018, 09:18:32 PM »
Some basic life questions.  You said you're engaged, I assume that means a wedding will need to be paid for.  Are you both on the same page about wedding costs, who is paying for what, etc?  That would be one of my first priorities with your cash.

Next, are you going to need to rent somewhere once you're married?  Will expenses go up in other ways?  Prepare for that as needed.

Emergency fund, some of the cash should be set aside and designated as emergency fund.  I like a minimum of $10K, but then I have a house, cars, high deductible insurances, etc.  Find a number that works for you and go with that, remember to adjust if your life circumstances change.

It's great that you have access to the TSP, everything I've heard about that is it's the lowest expense retirement plan out there!  Set your percentage to max that out if you haven't already.  That's $18,500 a year of your contributions, if they match anything that's above the 18,500.

You're in amazingly great shape for a 24 year old, good work so far!

First off, thanks for the feedback! a dollar at a time.

I have been googling and doing a lot of research/reading about weddings. Seems extremely expensive. Her and I have agreed to keep it fairly cheap and "low-key" but that's what they all say amirite? lol

I am returning to the states soon; but expecting $800 for rent which is cheap considering the military will be giving me $1200

I agree with the $10k safety net.

Next goal. MAX out that TSP. < Just have to adjust some spending but I think I can do $770.83 every paycheck.

You're doing outstanding already!  The military does make saving easy in that way.

Listen to the other advice here in general; max out your tax-deferred accounts now, while you can, especially before kids. 

I'm chiming in with some words about weddings: have those conversations now.  Decide (1) who's paying (her parents? the two of you?), (2) what the *expectations* are (i.e., how many of mom & dad's friends are coming, what do mom and dad want/require, etc.), and how much the budget is. 

From experience, I would have conversations with those involved and get firm answers on all of that up front.  Also firm up who's making decisions (your wife, your mother-in-law, etc.), and make extra sure that's OK with your wife. 

Also from experience, I would only take money from parents/others for a wedding if it was a gift/no expectations.  Everyone has tons of expectations surrounding weddings, in my experience.  (My wife works in a wedding-related field, so we see it frequently.)  We rarely see that go well; more often there are different expectations/hurt feelings/large additional costs because mom wanted X and wife wanted Y. 

You have an opportunity to lead now and lead well.  By doing the hard things up front, you can avoid problems on the back end.  It's a lot easier to have awkard conversations now than to re-plan or reset expectations midway through the process, once you already have vendors, dresses, etc., because Mom and Dad had one set of expectations and daughter had another, or you didn't realize the costs involved, etc. 

You do *not* want to let someone else fund the wedding without being very clear as to what the expectations are, as the person with the funds generally has the power over what happens - or expects to. 

Wedding costs can very easily get out of hand, since it's a major event and there may be many people in the process who want their own expectations fulfilled (often without regard to cost). 

You want to set a budget and stick to the budget.  And things will try to break that budget.  So, best practice would be to set a budget that's 20% less than your expected spend, knowing that last-minute things or other things will increase costs by a bit regardless. 

This can obviously be relaxed some (my advice) if your families *and* wife are all extremely laid-back and low-cost/no-frills.  But even so, I would have a budget for everything, because it's really easy to let it all get out of hand cost-wise. 

We did our wedding on a budget (pre-set) and it went well, but we have seen many friends fall into pitfalls by not planning ahead and having those hard conversations up front.  And we could have done better ourselves.  It's just like Mustachianism/stoicism: do the hard things now, have an easy time later.  Or do the opposite, and buy lots of Kleenex...

This reminds me: I really need to do a blog post on this whole topic.

So many good, valid points. Thanks for taking time out of your day! The lead now and lead well part stuck with me. If you do a blog post I’ll be sure to check it out!!

Any time.  And thank you for your service! 

chiefsuave

  • 5 O'Clock Shadow
  • *
  • Posts: 29
  • Age: 24
  • Location: US/NNY
Re: Humble me
« Reply #17 on: July 15, 2018, 11:01:39 PM »
I'd say, if you havn't already, put talking with you future wife on the financial to-do list as well. "A millionaire next door," makes the point that one of the most powerful factors in wealth accumulation can be who you marry.

What are your mutual savings goals? Do you both have a certain nest egg you want to reach before having kids? Are you going to pay for childcare or is one of you (with a college degree she might end up the higher earner, and that's worth talking about as well) going to stay at home until the kids are school-age? How are you two going to deal with the requirement for health care / benefits if you wind up going to school after having kids? Which accounts will be joint, and which funds will automatically move to E-Fund / brokerage / Roth from your pay check? From hers? What are your standard of living expectations? Hers? Where are you both prepared to compromise and what are your "rocks?" If you stay in, how will you both navigate the maddening reality of her trying to find a new job every few years as you PCS? If you don't stay in, is she willing to support you while you transition careers? Who will take primary responsibility for investments?

Not trying to be a downer - hopefully you two are of similar mind about these things. My point is, it's worth ensuring you're on the same page before the tumult of moving away from established networks of friends and family and starting a life together. If you have pre-marriage counseling available (some chaplains have programs, if that's your cup of tea), there are resources to help lead you through these conversations. Good luck, and have fun!

^ This is awesome. There are a lot of things we have not yet talked through. This is definitely an eye opener. Planning for myself is easy. Thanks for your advice! I asked to be humbled.

chiefsuave

  • 5 O'Clock Shadow
  • *
  • Posts: 29
  • Age: 24
  • Location: US/NNY
Re: Humble me
« Reply #18 on: July 15, 2018, 11:04:31 PM »
Thank you for serving the country - Take advantage of all the education benefits while you can.

Thanks for the support! I'm currently taking classes trying to get my degree so I can eventually commission as an officer.

chiefsuave

  • 5 O'Clock Shadow
  • *
  • Posts: 29
  • Age: 24
  • Location: US/NNY
Re: Humble me
« Reply #19 on: July 15, 2018, 11:05:28 PM »
Some basic life questions.  You said you're engaged, I assume that means a wedding will need to be paid for.  Are you both on the same page about wedding costs, who is paying for what, etc?  That would be one of my first priorities with your cash.

Next, are you going to need to rent somewhere once you're married?  Will expenses go up in other ways?  Prepare for that as needed.

Emergency fund, some of the cash should be set aside and designated as emergency fund.  I like a minimum of $10K, but then I have a house, cars, high deductible insurances, etc.  Find a number that works for you and go with that, remember to adjust if your life circumstances change.

It's great that you have access to the TSP, everything I've heard about that is it's the lowest expense retirement plan out there!  Set your percentage to max that out if you haven't already.  That's $18,500 a year of your contributions, if they match anything that's above the 18,500.

You're in amazingly great shape for a 24 year old, good work so far!

First off, thanks for the feedback! a dollar at a time.

I have been googling and doing a lot of research/reading about weddings. Seems extremely expensive. Her and I have agreed to keep it fairly cheap and "low-key" but that's what they all say amirite? lol

I am returning to the states soon; but expecting $800 for rent which is cheap considering the military will be giving me $1200

I agree with the $10k safety net.

Next goal. MAX out that TSP. < Just have to adjust some spending but I think I can do $770.83 every paycheck.

You're doing outstanding already!  The military does make saving easy in that way.

Listen to the other advice here in general; max out your tax-deferred accounts now, while you can, especially before kids. 

I'm chiming in with some words about weddings: have those conversations now.  Decide (1) who's paying (her parents? the two of you?), (2) what the *expectations* are (i.e., how many of mom & dad's friends are coming, what do mom and dad want/require, etc.), and how much the budget is. 

From experience, I would have conversations with those involved and get firm answers on all of that up front.  Also firm up who's making decisions (your wife, your mother-in-law, etc.), and make extra sure that's OK with your wife. 

Also from experience, I would only take money from parents/others for a wedding if it was a gift/no expectations.  Everyone has tons of expectations surrounding weddings, in my experience.  (My wife works in a wedding-related field, so we see it frequently.)  We rarely see that go well; more often there are different expectations/hurt feelings/large additional costs because mom wanted X and wife wanted Y. 

You have an opportunity to lead now and lead well.  By doing the hard things up front, you can avoid problems on the back end.  It's a lot easier to have awkard conversations now than to re-plan or reset expectations midway through the process, once you already have vendors, dresses, etc., because Mom and Dad had one set of expectations and daughter had another, or you didn't realize the costs involved, etc. 

You do *not* want to let someone else fund the wedding without being very clear as to what the expectations are, as the person with the funds generally has the power over what happens - or expects to. 

Wedding costs can very easily get out of hand, since it's a major event and there may be many people in the process who want their own expectations fulfilled (often without regard to cost). 

You want to set a budget and stick to the budget.  And things will try to break that budget.  So, best practice would be to set a budget that's 20% less than your expected spend, knowing that last-minute things or other things will increase costs by a bit regardless. 

This can obviously be relaxed some (my advice) if your families *and* wife are all extremely laid-back and low-cost/no-frills.  But even so, I would have a budget for everything, because it's really easy to let it all get out of hand cost-wise. 

We did our wedding on a budget (pre-set) and it went well, but we have seen many friends fall into pitfalls by not planning ahead and having those hard conversations up front.  And we could have done better ourselves.  It's just like Mustachianism/stoicism: do the hard things now, have an easy time later.  Or do the opposite, and buy lots of Kleenex...

This reminds me: I really need to do a blog post on this whole topic.

So many good, valid points. Thanks for taking time out of your day! The lead now and lead well part stuck with me. If you do a blog post I’ll be sure to check it out!!

Any time.  And thank you for your service!

Thanks for the support! I wish I had you guys when I was 18 lol

lemanfan

  • Pencil Stache
  • ****
  • Posts: 773
Re: Humble me
« Reply #20 on: July 15, 2018, 11:36:19 PM »
Thanks for the support! I wish I had you guys when I was 18 lol

You're still only 24 and in good financial shape.  Soo many people come here much later in life, with hair on fire-debts and bad relationships to boot.   You'll do great.

And to get the life partner on track, so you see things the same way is perhaps the most important part of it all.  Talking about money is never easy, since often feelings are involved and not just pure logic.

chiefsuave

  • 5 O'Clock Shadow
  • *
  • Posts: 29
  • Age: 24
  • Location: US/NNY
Re: Humble me
« Reply #21 on: July 15, 2018, 11:55:11 PM »
Thanks for the support! I wish I had you guys when I was 18 lol

You're still only 24 and in good financial shape.  Soo many people come here much later in life, with hair on fire-debts and bad relationships to boot.   You'll do great.

And to get the life partner on track, so you see things the same way is perhaps the most important part of it all.  Talking about money is never easy, since often feelings are involved and not just pure logic.

Money has always been a very sensitive topic for me. Considering I never really had any. But I am becoming more open to the idea of open discussion. I know there is a thread on how to put the FI spell on your SO.

Nords

  • Magnum Stache
  • ******
  • Posts: 3102
  • Age: 57
  • Location: Oahu
    • Military Retirement & Financial Independence blog
Re: Humble me
« Reply #22 on: July 21, 2018, 10:38:17 AM »
Hey guys!

First time posting but around a 6 month Mustachian. 24yo/Military
Currently engaged

Just looking for some guidance and advice.
Welcome to the forum, Chief.

Here are some ideas which you may already have taken care of:
- Have you opted in to the Blended Retirement System yet?  You're the type of servicemember it was made for.

- Up through the rank of about E-6 (depending on specialty pays) it generally makes more sense to contribute to the Roth TSP because your income taxes are very low.  (If you're taking the Earned Income Tax Credit then your taxes are practically zero.)  After you make E-7 (or O-3) then it's probably better to contribute to a traditional TSP.  However the math also depends on whether you're likely to have a few years after the military where your income is very low and you have room (and time) for Roth IRA conversions.

- There seems to be a trend of servicemembers getting married at the courthouse (or in a family livingroom) with a minimal reception.  Then 5-10 years later they have a bigger ceremony with a renewal of vows.

- For your new spouse, your local military base will have a seminar titled "Military Spouse 101" or "Welcome To The Navy".  There are also a ton of military spouse Facebook groups.

- You can scan the titles of my military personal finance posts here:
http://the-military-guide.com/post-titles-by-month/
and you can find the book at your military base or local public library.

Let me know if you have any questions.  My spouse and I are both military retirees and our daughter and son-in-law are on active duty, so we have these conversations around the dinner table.

chiefsuave

  • 5 O'Clock Shadow
  • *
  • Posts: 29
  • Age: 24
  • Location: US/NNY
Re: Humble me
« Reply #23 on: July 22, 2018, 02:19:28 AM »
Hey guys!

First time posting but around a 6 month Mustachian. 24yo/Military
Currently engaged

Just looking for some guidance and advice.
Welcome to the forum, Chief.

Here are some ideas which you may already have taken care of:
- Have you opted in to the Blended Retirement System yet?  You're the type of servicemember it was made for.

- There seems to be a trend of servicemembers getting married at the courthouse (or in a family livingroom) with a minimal reception.  Then 5-10 years later they have a bigger ceremony with a renewal of vows.

- For your new spouse, your local military base will have a seminar titled "Military Spouse 101" or "Welcome To The Navy".  There are also a ton of military spouse Facebook groups.

- You can scan the titles of my military personal finance posts here:
http://the-military-guide.com/post-titles-by-month/
and you can find the book at your military base or local public library.

Let me know if you have any questions.  My spouse and I are both military retirees and our daughter and son-in-law are on active duty, so we have these conversations around the dinner table.

NORDS! Thank you and your wife for your service also your dedication to educating military members and civilians alike! I'm pretty sure I have read just about everything on your website. Thanks for all the information.

I have opted in the BRS considering my low amount of yrs in service/not knowing if I wanted to stay in. So I thought 16yrs of free money if I decided to stay in sounds like a good deal.  Right now I am an E-5 and since deployed contribute roughly 45% of base pay and 65% of Special Duty. Game plan for right now is finish the degree and commission within the next four years. < I just re enlisted; they offered me $90k for 6yrs but I took the $78.6k for 4 yrs (TAX FREE) woohoo!

Will take all the spouse advice and run with it!

I do have a few questions concerning taxes. The first 3 years in the service I used HR Block then I realized most of their people weren't trained and more for the "masses". I now have an accountant that does them considering I know 0% of the tax code. How worried should I be with taxes?

Thanks in advance
-V/R Suave
 

lhamo

  • Walrus Stache
  • *******
  • Posts: 7921
  • Location: Seattle
Re: Humble me
« Reply #24 on: July 22, 2018, 01:51:26 PM »
Glad you already found Nords -- he is an excellent mentor, and an all around great guy.

Re: taxes -- learn to do them yourself.  It isn't that hard, especially if you don't have a lot of business or active investment income (those might warrant a CPA to ensure you maximize all possible deductions and depreciation).  I have done ours for years, including somewhat complicated returns with the Foreign Earned Income Exclusion for many years, and one with big capital gains last year.  I did use a tax program for the latter one (borrowed my sister's software).

Also recommend keeping the wedding budget in check.  We had a small courthouse wedding here in the US (just my mom, sister and two grad school friends -- we took everyone out for lunch after), and then a bigger blowout celebration a few months later in China (where my husband's family is from). We got enough cash gifts (the custom there) to cover most of the cost of the latter.  Oh, and one reason we had the courthouse wedding on New Year's Eve is because I figured out we would save $4k on our taxes by filing jointly!  Made for a memorable anniversary date and that extra $4k sure helped as we were in grad school.

Nords

  • Magnum Stache
  • ******
  • Posts: 3102
  • Age: 57
  • Location: Oahu
    • Military Retirement & Financial Independence blog
Re: Humble me
« Reply #25 on: July 22, 2018, 06:02:58 PM »
Glad you already found Nords -- he is an excellent mentor, and an all around great guy.
Thanks, lhamo!

NORDS! Thank you and your wife for your service also your dedication to educating military members and civilians alike! I'm pretty sure I have read just about everything on your website. Thanks for all the information.

I have opted in the BRS considering my low amount of yrs in service/not knowing if I wanted to stay in. So I thought 16yrs of free money if I decided to stay in sounds like a good deal.  Right now I am an E-5 and since deployed contribute roughly 45% of base pay and 65% of Special Duty. Game plan for right now is finish the degree and commission within the next four years. < I just re enlisted; they offered me $90k for 6yrs but I took the $78.6k for 4 yrs (TAX FREE) woohoo!

Will take all the spouse advice and run with it!

I do have a few questions concerning taxes. The first 3 years in the service I used HR Block then I realized most of their people weren't trained and more for the "masses". I now have an accountant that does them considering I know 0% of the tax code. How worried should I be with taxes?

Thanks in advance
-V/R Suave
Excellent-- that's a lot of posts to wade through-- glad they're helping!

If it's not too late for your re-enlistment bonus, you could direct a huge chunk of that tax-free pay into the traditional TSP.  While you're deployed, your total TSP contribution limits rise from the usual $18,500 limit to $55,000.  However to continue to get the DoD BRS match, you have to contribute less than $18,500 in your Roth TSP until you hit the limit with your December contribution.

I just put up a long example (from the DoD BRS office) on Reddit:
https://old.reddit.com/r/MilitaryFinance/comments/90vbd9/maximizing_brs_tsp_contributions_in_a_combat_zone/
It includes a Google Sheet to save to your hard drive and then edit for your numbers:
https://docs.google.com/spreadsheets/d/1JW-8EpzRv4Fpt7hV35Su0Av0Q9AgAtGkIVjY-AX6aa0/edit#gid=0

If you've already put your re-enlistment bonus elsewhere then you could always live off your $32K cash stash and then boost your traditional TSP contribution to 92%.  You have so much tax-free income this year that I'm pretty sure you could even take a big pile of long-term capital gains which would still be taxed at 0%.

I doubt you have any worries about your 2018 tax return (which you'll file in 2019).  Your 2018 W-2 will show the correct amount of taxable income for you to enter into your return.  If you use someone to prepare your return then ensure they understand that you have plenty of earned income (for your TSP and IRA contributions) but most of that earned income is tax-free.

You could continue to use a tax-prep service or the free Volunteer Income Tax Assistance on your military base, but as lhamo says you could also buy a copy of TurboTax or TaxAct and learn to do your own.  You'll answer the software's interview questions, enter the numbers from your W-2 and your investments, and take the standard deduction.  If you also qualify for the Earned Income Tax Credit then you'll probably pay zero taxes.

I've done my own taxes for over 40 years.  (My father decided that would be my learning experience.)  Tax preparers have to know a little of everything ("a mile wide and an inch deep") but you only need to know your personal military pay & investments ("an inch wide and a mile deep").  In the 1980s and 1990s you had to buy a book to work through the various forms, but today's software will keep you on track.  In the highly unlikely event that you have a question, you'll post it on their help forums (or on this forum) and you'll be good to go. 

And if you & your fiancée are married this year then you can work through the Married Filing Jointly part together, yay!

If your car insurance is through USAA then it's worth e-mailing them about your deployment status and asking them to retroactively credit your account for the dates that you're not using your car.  I have no idea whether they'll do that for you, but I've learned to ask. 
« Last Edit: July 22, 2018, 06:04:29 PM by Nords »

chiefsuave

  • 5 O'Clock Shadow
  • *
  • Posts: 29
  • Age: 24
  • Location: US/NNY
Re: Humble me
« Reply #26 on: July 22, 2018, 11:40:02 PM »
Also recommend keeping the wedding budget in check.  We had a small courthouse wedding here in the US (just my mom, sister and two grad school friends -- we took everyone out for lunch after), and then a bigger blowout celebration a few months later in China (where my husband's family is from). We got enough cash gifts (the custom there) to cover most of the cost of the latter.  Oh, and one reason we had the courthouse wedding on New Year's Eve is because I figured out we would save $4k on our taxes by filing jointly!  Made for a memorable anniversary date and that extra $4k sure helped as we were in grad school.

Thanks Ihamo! I will look into it this year! We are currently working through a budget for the wedding now. I don't really have anyone to impress but I want her to have an awesome day. Turns out a lot of people are willing to help so my worry for overspending has gone down.


Glad you already found Nords -- he is an excellent mentor, and an all around great guy.
Thanks, lhamo!

Excellent-- that's a lot of posts to wade through-- glad they're helping!

I doubt you have any worries about your 2018 tax return (which you'll file in 2019).  Your 2018 W-2 will show the correct amount of taxable income for you to enter into your return.  If you use someone to prepare your return then ensure they understand that you have plenty of earned income (for your TSP and IRA contributions) but most of that earned income is tax-free.


I've done my own taxes for over 40 years.  (My father decided that would be my learning experience.)  Tax preparers have to know a little of everything ("a mile wide and an inch deep") but you only need to know your personal military pay & investments ("an inch wide and a mile deep").  In the 1980s and 1990s you had to buy a book to work through the various forms, but today's software will keep you on track.  In the highly unlikely event that you have a question, you'll post it on their help forums (or on this forum) and you'll be good to go. 

 
[/quote]

I am going to do my homework and give it a shot this tax season. The goal is to achieve the 92%! Every time I tell people how much I put towards TSP they are always so shocked. Next on the list is "passive income". I plan on PCSing (moving to a new base) soon. I have been looking into smaller duplexes and have done the RENT vs BUY calculations. Just a matter of time and deal that shows up but I love renting!