How am I doing Financially?

[kaydrelia]

Just some background on me and my current situation:

-24yr old E-3 Air Force.

-No debt.

-About to get married in April. (No kids yet.)

-Investing 15% in my Roth TSP.

-Recently opened a Roth IRA with Vanguard.

-Combining all my money from my bank accounts, I have little over $10,000 saved.

-I drive an old 2005 Taurus. I know it’s not the flashiest thing to drive but it gets me from A to B.

-I live a pretty content and introverted lifestyle. I don’t do typical things military guys do like drink frequently, smoke, go to clubs, or anything like that. About to start school back up to work towards my degree and possibly commission. I’d like to say I’d see myself doing the 20+ years, but I guess it’s too early to tell.

Based on what I’ve shared, how does all this sound? Am I doing well? Should I be investing more in my TSP and/or my IRA? Any other tips as far as investing/ saving money? I just want to make the most out of being in the military financially and in general.

 

[kaydrelia]

@holywalk Thank you! I appreciate it.

 

[striveforagape]

@kaydrelia 1) the fact that you’re asking these questions is more of an indication you will be successful than the numbers
2) always strive for better and make goals - sounds like you have a few (commission, investing 15%, etc) but make sure they stay focused
3) read millionaire next door, random walk down Wall Street, and simple path to wealth. Those combined gives very high chances of success
4) fees matter. VTSAX until you have $500k. After that, you will know enough to realize every financial piece of advise is personal and you own the decision.

 

[hrt4desh]

@kaydrelia You’re actually doing a great job. You could probably up your TSP and use some of your savings for investments. If you plan on staying in, if not for 20 then at least another reenlistment, then you don’t need a lot in savings. You have a steady income and don’t have to worry about living off of it. I’d say $5k is about right but to each their own.

Look into a high yield savings account like the one from Amex. It’s 0.50% right now but that’s better than the 0.01% or whatever from USAA. $10k will net you $56 a year for sitting.

 

[thewriteman]

@kaydrelia You're doing fine. If you end up having kids, remember you don't need a lot of the child-related crap that are marketed these days. You don't need fancy baby clothes, thrift store ones work fine because of just how quickly kids grow. You don't need special gizmos and toys to raise your kids. Kids also grow up only once and you never get your time back, so find a good balance and don't sacrifice your family to "climb the ladder" because you won't always be in the USAF (in fact they can kick you out against your will) but your wife and kids will be in your life forever.

 

[albein]

@kaydrelia

1. You need a new car.
2. You need more cash.
3. You need to set up investment accounts that you can actually access before 59.5.

-----------------------------------

Bring on the downvotes, but this is the only correct answer.

 

[john416]

@albein Why would he need a new car? If the one he has is paid off then he’s chilling.

And the smartest thing is to max TSP/IRA before putting money into a taxable brokerage account.

 

[albein]

@john416 2005 Taurus. How many of those do you see on the roads today? We can reasonably estimate that car has logged over 150,000 miles. And a quick internet search will show that those model years had historically bad reliability.

Why would he keep that car if he's about to start a family? Kids are expensive. Replace the car while he still can.

Smartest thing he can do is to set his family up for success. That means he needs assets that can actually be used.

 

[marinda]

@albein I finally agree with you.

 

[albein]

@marinda This is the same advice I would give everyone in a similar situation based on the same principles I use when managing my money. Nothing has changed. Its completely consistent.

So why do you agree with this but assert that all the other advice is bad?

 

[mudhen]

@albein

1. I don't disagree with this, but I would say putting this at #1 isn't necessary if he has a working car at the moment
2. This is terrible advice. The amount of money being printed right now means that the inflation will be pretty significant once consumers start to recirculate their savings. There are some serious concerns over inflation and devaluing of the dollar in the post covid world economy, and the more he's invested in equities the better (and not just the C fund)
3. Tax advantaged roth accounts are the way to go for him and pretty much anyone else not a senior officer in the military right now, unless you're operating a ridiculous side gig that is paying significantly more than your base pay. There are a few reasons-

-Both the TSP and Roth IRA still have enough liquidity in them to help with a dooms day financial scenario

-Military members are pretty sheltered from a lot of the main reasons for having a large cash account, ie tricare

-Taxes will go up for him as he starts to make more money

-Taxes are guaranteed to go up when portions of Trump's tax provisions expire, and we can also expect an increase in taxes from the incoming Biden administration

 

[albein]

@mudhen Remember 2008? Inflation was supposed to spike then too.

Now I do agree that people will go on a spending spree. But that money will end up with the banks and corporations who will, once again, use it to shore up their balance sheets. They're gonna sit on it. Thus reducing the amount of currency in circulation and depressing inflation. (Its a sneaky little way for congress to look like they are sticking it to corporations while actually backdooring cash to them. -- And an indicator of how F'd up our tax code is.)

You're right about the short term, but aren't looking beyond the next few market cycles.

 

[mudhen]

@albein You’re ignoring the main point of my response and using pretty nebulous conjecture behind your “inflation won’t be that bad” reasoning.

OP doesn’t need more in his savings account than he already has, and your reasoning behind investment vehicles being inaccessible is wrong

 

[h%C3%A5ndflade]

@albein That 10k is a great start to being ready to upgrade OP’s wheels in the next 5 years in case his current car doesn’t last or cost of ownership starts to get too much. I would just keep adding to the emergency/car fun in a HYSA due to a significant purchase coming up soon...even if that means decreasing investments a little temporarily.

 

[cyncincyn]

@kaydrelia This may be an obvious statement, but make sure you are putting in money for 2020 and NOT 2021 into your newly opened IRA. You have until tax day to try and max it out for the "previous" year. $10K as an E3 is very solid. Keep trying to raise your investing %s when you hit your annual raises (first 4 years, then every other [even] year) in addition to when you make rank.