Fresh Ensign heading to the first duty station in two weeks. This is my first time trying to manage a real, not-part-time paycheck and I feel horribly lost. I'll just spout out a few of my questions and see where it gets me, haha.
For Roth and Traditional TSP in myPay, some places I've looked have suggested maxing out the Roth side and putting the remainder on the Traditional side, but others have suggested putting only 5% on both sides. Which is the better option or are both wrong? I feel ridiculous asking what numbers to put in a few boxes but I've heard many different suggestions.
I've had a Navy Federal credit card with direct deposit for the last couple years and have had no issues paying it off so far. However, I've seen a lot of recommendations to get an Amex platinum card. Is it worth it to get that one as well and use both for the rewards?
How good are the financial counselors on bases? I've heard great things about them but I am admittedly embarrassed to go in and ask for help (unlike here where I'm faceless and nameless). If I want to get started on this before I report, is there an online resource that offers advice dumbed down for someone new to this?
Posted by Unucky-Idiot
3 Comments
For Roth vs Traditional TSP contributions, to me it’s either or. Most people prefer Roth, but either isn’t wrong. When you start getting matching, it will automatically be matched into traditional regardless of which you choose
Amex platinum is a great card, as is the chase saphire reserve. They both have fees, but you can call them to have the fees waived as long as you are active. I might wait a bit to get them until your comfortable in your finances though (just 6 months or so)
I haven’t used a financial counselor on base, but I think info is info. If you already know it, then great! You’ve explored a resource that you can now present to your junior officers or enlisted folks if they end up needing it. Military Onesource also has some financial counseling.
My personal favorite is a book called “Simple Path to Wealth. It’s an easy read you can do in a day or two and it helped me understand finances a lot more
-Roth TSP. When you factor in allowances, your effective tax rate is going to be like 4-6%.
-You should contribute at least 15% of your total entitlements to Roth TSP, which will be about 30-35% of basic pay. Put it into C or 80% C / 20% S, doesn’t really matter which. If you are still building up savings after that, open a Roth IRA and use that.
-You only need about $5k in an e-fund for car repairs.
-Amex platinum is good for the free shit you get (like Disney+ / Hulu / ESPN+ subscription, airport lounge access, NY times subscription, $200 a year in hotel reimbursement, etc). It sucks as a daily driver because you only get 0.6 points per dollar on most common expenses. AMEX gold or capital one visa are much better for daily use.
-Financial counselors on base are someone’s wife getting paid to teach you how to make a budget.
You likely don’t need a financial counselor. You are likely in some of your lowest earning years, so the tax situation would technically favor Roth, but it doesn’t make a huge difference either way for JOs. Either way, put as much as you can stand into your TSP and bump it up with raises until you can max it. The max for 2024 is 23k which is about 1915 per month, which would be ~50% of an O-1s base pay. You should get BAH/etc on top of that but TSP is only pulled from base pay so that is what you use to calculate your contribution. I would recommend looking at your budget and determining how much you can save per month and go from there. If it were me, I would start at ~30% and see how that went and adjust from there. You can also look into opening a Roth IRA and maxing that first if you prefer. Either way, read The Simple Path to Wealth and poke around the bogleheads sub and determine your savings rate and investment mix. (Ie- do you want international diversification or not)
I would give it 3-6 months before applying for a high value card. From my understanding you can’t get the sign up bonus for lower tier Amex cards if you start with the platinum so I would probably start with a lower card and work my way up if you’re into travel hacking. The Chase Sapphire Reserve is also a great car on the level of the platinum. You shouldn’t have to pay the annual fee due to the MLA.