I’m enlisting in the Air Force this December, need some advice on aside from retirement, how can I maximize my earnings while in and savings while out ?
Ps: hopefully going SpecOps!
Plan on doing my 20 years , how can I be financially free ?
byu/Lucky-Ad7460 inMilitaryFinance
Posted by Lucky-Ad7460
14 Comments
Your earnings are going to be pretty much set in stone, but But live on less than you make, invest the difference, stay out of credit card debt. get the big decisions right like not wasting too much money on vehicles and buying a home with it your means. Take full advantage of TSP, and start a Roth IRA. Get every ache documented in your records. The biggest factor in determining your financial success is your savings rate, the more money you save and invest for the future, the more you will have to compound. Lastly have patience, building wealth will look like an overnight success that was decades in the making
lol you say you’ll do 20 now
Give it 1-2 contracts and we’ll see then lmao
But to seriously answer:
1. Max your TSP contributions every year
2. Avoid debt like a car payment and credit cards. If you use credit cards, pay them off properly each month
3. You’ll have little to no expenses so be smart with got money. Don’t drink and eat out every night like an asshole
4. Marry a bro and get BAH and then split the rent half and half and bank the rest
1. Figure out what financially free looks like to you.
A. Does that mean when you are at normal retirement age you will be financially set?
Set aside 5% for your TSP (to get the match), then max your ROTH IRA, then whatever you can go back to the TSP.
B. Does that mean you can leave the military in 20 years and not have to work again?
If this is the case you should set aside 5% for your TSP, then max your ROTH IRA, then take the remaining savings and open a taxable brokerage account and start investing in there. This will allow you to tap into the funds with no penalties to cover you for the time until you can tap into your retirement accounts.
Things to do no matter what:
1. Early on while you are living in the barracks your savings rate needs to be 50% (this includes your TSP, IRA etc).
2. Utilize the benefits the military provides like eating at the DFAC, utilize travel discounts for your travel (SPACE-A, AFVC), and use the educational benefits.
3. Buy as cheap of a dependable car as possible (hopefully without a loan) so you can keep just liability insurance on it.
4. Every time you get promoted take a little bit of it to add to your lifestyle, but the most (or all after a few promotions since then you will be making alright money) of it should just add to your savings rate.
5. Utilize any and all discounts that companies will offer you (T-Mobile has a great military plan for cell phones, ask for military discounts (shop at places that offer as they are supporting you so support them), when you have established yourself you should apply for the AMEX Platinum and the Chase Sapphire reserve (only if you have proven you’re a credit card person by ALWAYS paying off your credit card statement IN FULL every month).
6. Always be seeking financial education and figure out the the pros and cons to every strategy. Don’t be afraid to keep asking why until you are confident that you not only understand, but that you can turn around and teach it to someone else.
Good luck and if you do make it the full 20 years you will enjoy a very valuable retirement (pension, healthcare, other benefits) that will be worth at least a million dollars over the long run.
Make sure you put at least 5% into your TSP; so you are getting the full matching of the DOD. Whatever you put in the DOD will match. If you put 2% they’ll match 2%. However matching vesides 1% doesn’t come into play until 1 year TIS. Then they’ll match you up to 5%. With enlisting and living in the barracks; try to put even more in. But make sure you have enough for bills and play time. When you make rank and get that higher paycheck; don’t go increasing your expenditures. I knew an ensign that was from enlisted and dude didn’t change his life style. They were still living off of their E-6 pay. Man was just pocketing all kinds of $$$.
But assuming you are young, max out your TSP. Put money into your savings like it is a bill you need to pay. The SF pipeline can be up to 6 years long, but go to school on the USAF dime if you can. Max out your TSP.
Side note, never call it SpecOps again and you increase your net worth by 0.001% instantly. USAF has SOF. Special Operations means something else and so does SF.
Max out your TSP.
You know what we say to guys who wanted to be Spec Ops in the AF?
“Two eggs, over easy, side of hashbrowns.”
Kidding! A little bit at least, SpecOps has a VERY high washout rate… ask me how I know!
Anyways, despite failing out of selection myself, I managed to make a pretty successful career. I will retire next year as an E6 with over $1.3m in my own account and more in our household coffers.
It’s as simple as maximize your income where you can and minimize your spending. Then put your money to work for you. r/personalfinance and r/fire are great places to hang out.
I wish communities like this were as easy to access 20 years ago.
It’s good you are thinking long term. However; you should create a series of strategies that will maintain your financial freedom in 20 years should things change. For example; what is your plan if you can no longer continue your 20-year commitment? Are you considering having a family? What if your current criteria for financial freedom changes? With so many variables that could appear across 20 years, it good to build a strategy with the variables you have now and then create forks to new strategies based on possible variables you most likely will consider. For example:
1. Start paying off all debts. You can start doing this before you enlist.
2. Build an emergency fund. At minimum, an amount that can cover expenses for 6 months. Keep this in a high yield savings account.
3. Invest in yourself. Take advantage of the Tuition Assistance and get a degree. This step cares to multiple variables. It will help with an exit strategy from the military. Your military service could come to an abrupt end due to things like injuries, force shaping, or you just not liking it anymore. Another variable will help you advance your military career (branch dependent) so you get promoted faster. Another variable will give you an option to become a Warrant Officer of Commissioned Officer.
4. Don’t buy a brand new vehicle. If you can accomplish it, don’t own a vehicle at all. You can save thousands of dollars by not owning a vehicle. Use bikes, car pools, public transportation, etc.
5. Max out your TSP. The maximum allowed for the year 2024 is $23k. You will get an enlistment bonus for certain career fields. Rather than getting taxed on those bonuses, drop them into your TSP. By maximizing your TSP, you are caring to 2 variables. You will build your retirement account faster and also have a chunky nest egg should you exit the military early.
6. Care to your health. No sense in doing all this work if you are not going to be around to enjoy it. Do not smoke or vape. Do not waste your money on alcohol. Regularly going out to clubs and bars will bleed your wealth. Save such activities for milestone events like weddings, New Year’s Eve, etc. Eat right, exercise, and spend money on enriching your life. For example; instead of spending money on alcohol, spend it on traveling to a destination you can create fond memories from.
6a. Go to the doctor for every injury you incur. Sprain your wrist, see the doctor. Pull your back, see the doctor. Have abnormal thoughts, see the doctor. Even if you recovered from something minor, see the doctor. You need to document everything your body goes through during your military career.
6b. Go to the doctor.
6c. Go to the doctor.
6d. Go to the doctor.
7. If you’re going to start a family, try not to get married until you have less than 10 years remaining in your career and get a prenup to protect your assets. Also try not to have children until you’re halfway through your career. You will save yourself and your children from tons of headaches and heartaches by exiting the military by the time your children turn ~12 years old.
8. Use the dining facility or cook your own meals. Spending money on restaurants; including fast food chains, bleeds your wealth. Learn some good meal prep options that cost low and fill you up. Some examples include:
– Beef and rice
– Chicken and rice
– Pasta
– Stews
9. Get out of the barracks/dormitories as soon as you can so you can start collecting housing allowance. Find an apartment or rent a room that offers you to save a considerable amount of your housing allowance. It is common to see multiple military members sharing an apartment or home and car pooling to work.
…
I could go on, but I need to grab something to eat. Best of luck.
Take it from someone who will hit 20 years next month, if you only do one thing read this: [https://jlcollinsnh.com/2011/06/08/how-i-failed-my-daughter-and-a-simple-path-to-wealth/](https://jlcollinsnh.com/2011/06/08/how-i-failed-my-daughter-and-a-simple-path-to-wealth/)
u/WTF_Just-Happened has great advice, had I heard that and listened to it 19 years ago. I’d have been FI years ago rather than just now getting close to it.
* Don’t marry someone who is financially irresponsible or just immature in general.
* Live as close to your unit/job as you possibly can, ideally within easy biking range.
* Buy or rent cheap, ideally within biking range of your job/unit.
* Take up free and/or really cheap hobbies like the gym, running, reading library books, TryHackMe, home labbing [I’m waiting on an Exchange mailbox migration to finish as I’m typing this], or … this leads into the next bullet point
* Use TA! It’s another free hobby, you might learn something, and it’ll help the resume.
* Use CA! [I’m Army, so use whatever the Air Force calls this]. Take certs that are worth college credit, qualify you for work roles, are worth promotion points, and help your resume.
I’m about to retire in a few months at 20 years. E-8/Navy
I was just having a conversation about finances in the office the other day with a bunch of fellow E-7/8’s.
I was fairly surprised at how little they have saved in their career, and how a couple had their tsp in g fund still after 15+ years and have no savings.
I’m not perfect, I didn’t take my finances seriously until after a few years in but from my experience, trying to max your tsp contributions is huge. And most of all, in my opinion, is not living beyond your means. When I hit e-5 I made a change and never really lived beyond an e-5 paycheck. Lifestyle creep is real, and it can really fuck you over. I have a few hundred thousand between vanguard and tsp now, which I won’t touch for another 30 years.
After retiring my biggest expense will be a house, however with the way va disability is going I may be at 100% so that will help out a lot. Wife works and collects VA disability also.
So, save, contribute to tsp, don’t buy a new mustang at 26%, buy a used civic or corolla, and go to medical.
Plan on not doing 20 and make it work then when/if you do you’ll have an extra surprise
20 years? Just serve for 90 days, get medically retired with 100% disability, and go to college for free. People who serve for 20+ years are the real losers here, trust me I’m one of them.
j.k max the tsp, roth ira, extra money into brokerage, live frugally, dual income household, no kids, and go to the doctor for everything…
When you’re an e nothing living in the barracks
-eat at the galley/dfac as much as possible
– get frozen chicken, frozen broccoli, and Uncle Ben’s 90 second rice, and sauce of your choice as an “in case meal” when the galley sucks. Really cheap (rivals what the galley/dfac spends) nd healthy meal
-get a moderate not excessive small car. Honda or Toyota in particular might last your whole time in service.
– try to live minimally and don’t have have more than a week and half of clothes for civies and don’t get the latest and greatest for every marginal hobby you might have.
-max contribution to TSP
When your single but getting BAH
– live in a pretty cheap place that’s a minor commute to work
– get a roommate
– don’t order out if possible
-continie the e nothing lifestyle just not in the barracks
When you have family and get BAH
– continue single with BAH lifestyle
– Set up an allotment for child care expenses. This is tax deferred.
– Visit care.gov and see if you qualify for a childcare stipend.
– Try to keep your spouse working. Not every SAHM is a dependapotomus and thus the family is struggling financially, but almost every financially struggling family has a dependapotomus SAHM.
– Apply for WIC
General tips
– set up id.me so you can apply military discount to online shopping. Sometimes ongoing sales and military discount stack (I got a king size mattress for $500)
– Always ask for military discount.
– Museums and parks are free/cheap sources of entertainment.
– if you like to party, drinking at home and only having a drink or two while out is cheaper
– having a minimal at home life so you can save up for a big trip can be rewarding (is for me). Doesn’t have to be a trip, but really any big luxury expense.
Put into your TSP, don’t buy a Hellcat.
Got a car already? Cool, that is your car until it either breaks down or you can buy a new one in cash.
Got an Xbox or a PC? Use it until again it literally breaks.
Eat at the cafeteria every meal if possible. GROCERY SHOP instead of going out to eat.
Don’t pick up bad habits like dipping, smoking, and drinking. Your buddies go out drinking? Go with them; be the DD, have them buy your meals and gas.
Max out your TSP.
Cool with your parents? Have them collapse you into a phone plan with them and give them your military discount. I’m 32 with a wife and I’m still on my parents phone plan cause my mil discount is cheaper than if they had standalone plans. Generally 4 lines is cheaper than 2.
Utilize your tuition assistance, especially as a junior soldier. Apply for the Pell grant and congrats the fed gov will literally deposit money into your checking account when you finish the semester.