Investment order in my situation (Military, etc.)

[browne497]

Hello, all

This is my first post on the forum. I've been reading MMM's blog for a few months now and I'm hooked. As you can tell from the title, my question is about investment order in my situation. First, let me explain said situation.

I'm 23 years old and am in the military (going on 4 years). I fully intend to do my full 20 at least assuming I can make rank as needed. My income last year was approximately $37200 with $14,616 (money earned with the military's intent to be used for housing and food but what I didn't spend I could use as I please) being tax free. I've recently PCS'd to the UK and it will be a little bit before I am sure what I will be earning here. Some things regarding my pay change with this move. Though my monthly housing allowance is bumped up significantly to 950 pounds a month ($1260 give or take depending on the day), unlike living in the US, I'm not allowed to save what I don't spend from this so I'm just going to be using the full amount for my home. I also get an additional allowance here specifically for utilities and from my understanding I can use any excess from that as I please, as well as an allowance for Cost of living adjustment as things are more expensive here generally speaking. These are all tax free so my taxable income should remain the same until February but the difference will be minimal. I'm unsure if I will receive any additional pay not mentioned as of right now but I'm too impatient to wait until I find out to post this. USAA's military pay calculator estimates I will make roughly $5200 a month with $1260 of it obviously being allowed for rent only.

Now to my question. I've read the Investment order post but be it from my inability to comprehend or truly needing a different order, I am here to ask about it. My priorities are early retirement (or at least having the freedom to do so without any worries) and being able to buy a home in cash when I get out of the military (assuming I can in fact stay in for 20). However I'm not sure how to go about maximizing my efforts in both goals. Maxing out my roth IRA and Roth TSP are certainly more plausible now with the increase in pay but it still doesn't leave me with much to put in a taxable account to save for the house. Maybe my thinking is misguided but a taxable account just seems like the easiest way to save for a house for 17 years and take out the money when it comes time to buy. So I guess my question is just how should I allocate my income? And is the investment order post appropriate for me? Thanks in advance.

P.S. If more information is needed, feel free to ask for more, and if I already gave to much, feel free to laugh at me :D

[rockstache]

Hi Browne and welcome! There are a lot of military people here, both active and retired and/or veterans. If you are looking to buy a house in 17 years, I would probably not worry about saving for that this very moment. You are going to see huge increases in your pay between now and then, and the very best thing that you can do is to max out that TSP space. I recommend you read Jcollinsnh's stock series before doing any investing, (all of it!), but since you have the TSP, specifically this post http://jlcollinsnh.com/2015/06/02/stocks-part-viii-the-401k-403b-tsp-ira-roth-buckets/. You absolutely should max that tax advantage space before contributing to a taxable account. Once you have those maxed out and you haven't increased your standard of living, then you should start in on the house thing. Another thing to consider - mortgages aren't all bad. There are advantages to having them if you have good credit and can secure a low rate. Others can speak to this better than I.

Perhaps consider posting a case study if you're interested in ways to save? Those tend to draw more attention.