How to not be poor

I was a lowly enlisted who started with $0 at 18. 50k at 23. Got out. 2 duplexes at 26 and 35k in my accounts not including property equity. I’ve paid no rent since I got out and rn I make $900 a month extra from real estate. $500 first property and $400 from roommate. Starting an accounting degree next month. So I’m doing alright. I hope people can read this and understand what they should be doing with their finances. And I hope this teaches people about how retirement actually works. And how much you need to be putting in to actually retire at retirement age.

How to not be poor.

Checking account: used to collect your paycheck and pay off your credit cards automatically every month.

HYSA(High Interest Savings Account):used to hold your emergency fund. It grows 4-5% nowadays. You can transfer anytime. It takes a couple of days but I set a reminder on my phone for the 25th to make sure my checking has enough.

Your HYSA is meant to hold 6-12 months of living expenses.

That’s basic finances

Slightly more self control finances are credit cards

Get the navy fed green card which is 1.5% cash back on everything and the blue one that gives more cash back at the gas station, grocery, and restaurants. Use these two cards any time u use a card for small discounts that add up over the year. Set to pay in full automatically at the end of the month.

Breakdown: Pick the max you can save a month. Set auto transfers for that amount to your HYSA. Once you have 6-12 months of an emergency fund set up auto transfers to your index funds. Credit cards are set to be auto paid every month.

Here’s how to invest properly for retirement

Use the VA Loan to buy a property(budget 5k)
Essentially if you rate bah while you are in the military you should be buying a property every year. I’ll explain it in chunks after I do tsp.

Max out Roth tsp(23k a year)
This one is income dependent. If you can save 28k a year do both. But I was enlisted and I couldn’t. If you are lowly enlisted just save $800 a month and do 5% tsp. All you have to do is direct those $800 into your hysa and once that’s good change it to VTI.

How do I know how much I need to retire

Its just simple math

-Whatever your retirement account total is 4% of that is how much you can pull a year forever.

-So 1 million is 40k a year or 3,333

-if you want to make 5k a month in retirement. It’s 5k X 12 X 25=1.5 million. Or 5k X 300=1.5 million.

-you can read more on the FIRE subreddits

Why buy a rental property

So you want 5k a month in retirement. That’s 1.5 million dollars. That will take maxing your Roth TSP with 23k 24 years if you get 8% growth.

I get properties that make $500 a month each at the moment with the Va loan. So that would take 10 years. It won’t go that way so I’d say 12-15 years to have that much cash flow with expenses.

What to look for when you buy a property

-use rentometer.com to check the rents
-built after 1980
-$500 a month profit
-check crime in area
-Block foundation

Big expenses
-hvac:lasts 15 years
-Windows:15 years
-Electrical panel:25-40 years but some panels are dangerous Google the brand before you buy the home
-Roof:25 years
-Repairs or updates you want done

Final things
– it’s just my opinion that people should be buying real estate rentals. You don’t have to. You’re gonna have to learn how to do repairs yourself and manage the property yourself for a while. Some people don’t like the idea of living in a multi family property. You don’t have to. I’m just putting out information I have learned that I wish was put this way when I was 18. I learned all of this for free from the internet and it’s clear the majority of Americans don’t know about finances and retirement investing.

The key to this is to sit down and figure out all of this in one go and set your monthly automatic transfers and forget about it.

If you aren’t interested in real estate and you’re 18 and about to join the military as an enlisted. Do 5% Roth tsp and save then invest $800 a month. Get 5k in your hysa and then buy $800 a month of of vti. You’ll get out after 4 years with 40-60k. Make sure to log into your tsp asap. Mine was in the g fund and wasn’t growing. Put 100% of it in the 20xx fund. The farthest year out. It’ll auto do it for you. If you want a nice car just look at how much you have left after your save/invest and get a loan for whatever you feel comfortable with. Just have the loan end before your contract does. Go use your gi bill for a degree. Claim everything for disability and have a great life.

Edit: on camp lejeune with this plan you will have $861 after tax a month to blow on whatever you want every month.