Author Topic: On Track for Military FIRE?  (Read 9035 times)

mgnhrvth

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Re: On Track for Military FIRE?
« Reply #50 on: March 27, 2020, 03:01:33 AM »
Thank you @Nords and @Retireatee1 - Always appreciate the feedback!

@Nords - you are right, saying that I “feel natural overall” about selling the property was poor wording. I want to sell on time (this summer) and within the price range discussed with my agent.  What I was trying to communicate is that, if the property doesn’t sell (and I have to revert back to a rental property), I will be able to manage financially. Feedback from my agent below:

“We haven't had any real issues with our real estate market here. There are less international buyers but they make up only a small portion of our sales on Oahu. So far we haven't experienced any major issues. As we get closer to the listing date I will re-assess the market value.”

I am very fortunate that my current and future employment (at least the next four years) is not in jeopardy. And my current renters are military so no impact to their ability to pay rent.

2020 Developments:
Given the recent market dip, I borrowed $20,000 from my parents (0% interest) and deposited it into my Vanguard Index Fund (VTSAX - Vanguard Total Stock Market Index Fund Admiral Shares - ER 0.04%). I will pay them back upon receipt of my Blended Retirement System (BRS) Career Retention Bonus ($20,000) in July 2020. 

I also have my Roth IRA with Vanguard (also VTSAX - Vanguard Total Stock Market Index Fund Admiral Shares - ER 0.04%).

Like most folks, I have experienced a dip in assets overall but do not plan to modify my savings plan/goals nor my asset/contribution allocations.

2020 Goals:
Max Roth TSP - on track for $19,500* by December 2020
Max Roth IRA - DONE January 2020
Execute OCONUS orders - Scheduled for October 2020
Contribute $20,000 to my Vanguard Index Fund - DONE March 2020

*(NOTE: I opted into BRS so receive full BRS matching into Traditional TSP of $4,340/year)

One activity I would like to explore is credit card churning for travel benefits. Plan on adding this to my 2021 Goals.

Fellow medical staff - hang in there, take care of your physical and mental health. We are running a marathon at a sprint pace (for a while anyway).

Everyone else - stay safe and healthy!
« Last Edit: March 27, 2020, 07:59:08 AM by mgnhrvth »

Nords

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Re: On Track for Military FIRE?
« Reply #51 on: March 27, 2020, 07:57:39 AM »
Thank you @Nords and @Retireatee1 - Always appreciate the feedback!

@Nords - you are right, saying that I “feel natural overall” about selling the property was poor wording. I want to sell on time (this summer) and within the price range discussed with my agent.  What I was trying to communicate is that, if the property doesn’t sell (and I have to revert back to a rental property), I will be able to manage financially. Feedback from my agent below:

“We haven't had any real issues with our real estate market here. There are less international buyers but they make up only a small portion of our sales on Oahu. So far we haven't experienced any major issues. As we get closer to the listing date I will re-assess the market value.”

I am very fortune that my current and future employment (at least the next four years) is not in jeopardy. And my current renters are military so no impact to their ability to pay rent.
 
Sounds good.  There are so many military families who don't do the cap rate math or who overlook the opportunity costs.

2020 Developments:
Given the recent market dip, I borrowed $20,000 from my parents (0% interest) and deposited it into my Vanguard Index Fund (VTSAX - Vanguard Total Stock Market Index Fund Admiral Shares - ER 0.04%). I will pay them back upon receipt of my Blended Retirement System (BRS) Career Retention Bonus ($20,000) in July 2020. 

I also have my Roth IRA with Vanguard (also VTSAX - Vanguard Total Stock Market Index Fund Admiral Shares - ER 0.04%).

Like most folks, I have experienced a dip in assets overall but do not plan to modify my savings plan/goals nor my asset/contribution allocations.
Well done. 

This volatility (in both directions!) has been incredible.

mgnhrvth

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Re: On Track for Military FIRE?
« Reply #52 on: May 08, 2020, 01:32:53 AM »
Update to the March 2020 post.

MARCH 2020 ASSETS
Cash: $13,000
Roth IRA: $81,700 (Vanguard)
Roth/Traditional TSP: $175,000 (contributing 22% of pay)
Investments: $20,500 (Vanguard Index Fund)
Savings Deposit Program (SDP): $11,000
TOTAL: $301,200

MAY 2020 ASSETS
Cash: $16,000
Roth IRA: $95,000 (Vanguard)
Roth/Traditional TSP: $208,500 (contributing 22% of pay; account distribution and contribution allocation are 20% S and 80% C)
Investments: $47,000 (Vanguard Index Fund)
Savings Deposit Program (SDP): $12,000
TOTAL: $378,500

ASSET DELTA: $77,300
No plan to modify current savings plans or goals nor the asset/contribution allocations.

LIABILITIES:
Mortgage: $312,000 (Bought in 2013 for $382,000 @ 3% interest; current Zillow value: $572,000)
Personal Loan: $20,000 (0% interest) will be repaid upon receipt of $20,000 work bonus in July
TOTAL: $332,000

Selling the Property
Moving forward with selling the property this summer. My current tenants are set to move out at the end of the month (May 31). I’ll have a couple weeks of minor house repairs then the property will be on the market mid-June. From my real estate agent:

“While there were fewer sales in April, median prices for both single-family homes and condos were greater than last year—an indicator that Oahu housing values will hold steady, even as we see fewer sales.”

If the property sells, my plan for earnings is to deposit most of the earnings into my Vanguard Index Fund but retain some in cash for any required taxes. If the property sells, this will also be the first time since 2013 that I will be 100% debt free.

2020 Developments:
Still on track for the move to Europe in October 2020. While there is some additional paperwork needed to execute a military move due to COVID-19, I don’t anticipate any issues or delays. Only negative with this move is that I will be required to start paying taxes again (which I haven’t done since mid-2018!).

2020 Goals:
Max Roth TSP - on track for $19,500 by December 2020
Max Roth IRA - DONE January 2020
Execute OCONUS orders - Scheduled for October 2020
Contribute $20,000 to my Vanguard Index Fund - DONE March 2020

It bears repeating: fellow medical staff - hang in there, take care of your physical and mental health. COVID-19 response and management is and will continue to be a marathon.

Everyone else - stay safe and healthy!

Nords

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Re: On Track for Military FIRE?
« Reply #53 on: May 08, 2020, 11:12:41 AM »
Just reading about your upcoming PCS, I have to admit that I miss traveling!  Or at least I’m ready for a break from yardwork.

You’re probably all over the tax situation with the sale of your rental, and you’ve already seen Paul Allen’s comments on possibly deferring capital gains taxes:
https://www.katehorrell.com/favorable-tax-rules-for-military-when-excluding-capital-gain-from-sale-of-principal-residence/

I’ve always struggled to estimate depreciation recapture on rental properties, so here’s another good summary (via Kate) from CFP Forrest Baumhover (a military retiree):
https://www.katehorrell.com/understanding-depreciation-recapture-taxes-on-rental-property/
The tricky phrase is “up to 25%”, and it’s not clear to me when it’s less than 25%.

If you haven’t already heard about the Hawaii Real Property Tax Act (HARPTA) from your realtors, here’s a couple of links to the rules and the forms:
https://stott.com/wp-content/uploads/2016/01/HARPTA-Rev-04-2017.pdf
https://tax.hawaii.gov/forms/a1_b3_6harpta/

Your VA loan may be assumable by the buyers.  (That depends on the lender's rules, not so much the VA.)  If the buyers assume your VA loan then that reduces your loan eligibility (until the loan is paid off), and you'd also want to be formally released from your liability.  It's fairly straightforward but your buyers might have other options besides assuming your loan.
https://www.military.com/money/va-loans/pros-and-cons-assuming-va-loan.html
https://blog.militarybyowner.com/4-common-questions-about-va-home-loan-assumption

mgnhrvth

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Re: On Track for Military FIRE?
« Reply #54 on: June 20, 2020, 01:43:52 AM »
The DON CY21 Continuation Pay Rates for Active Component and Reserve Component Blended Retirement System Participants was released on 17 June, 2020 (attached).

Interestingly, no changes to the Continuation Pay Rates multipliers for any component (2.5% Active, 2.5% FTS, 0.5% Reserve) from CY20. My interpretation is that means that the Continuation Pay Rates multipliers have been rendering the goals for target retention of staff at the 12 year mark ensuring continued service through the 16th year of service. It also signals that the Continuation Pay Rates multipliers are 'priced' at the right level to prompt the additional 4 year commitment.

I hit 12 years of service in July (next month); it'll be interesting to see if the BRS CP is paid on either the 1st or 15th pay period or as a separate payment. I'm still in a CZTE so hopefully, the BRS CP will be tax exempt.
« Last Edit: June 21, 2020, 08:37:08 AM by mgnhrvth »

Nords

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Re: On Track for Military FIRE?
« Reply #55 on: June 21, 2020, 08:29:34 AM »
I hit 12 years of service in July (next month); it'll be interesting to see if the BRS CP is paid on either the 1st or 15th pay period or as a separate payment. I'm still in a CZTE so hopefully, the BRS CP will be tax exempt.
Thank you for the update!

It's nice to see that work out.  If you have to go to a combat zone, you might as well get all the deployment benefits you can.

I wonder if those multiples are changing minds at 11 years of service, or if the people signing CP contracts were simply planning to stick around anyway.