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Archive for May, 2019

Changes (and Decisions) Abound

May 24th, 2019 at 01:47 pm

As is typical with military families, we're once again entering into another round of life-contorting changes. I'm up for my next assignment, and the most likely locations are scattered around the world... Germany, Italy, Saudi Arabia, Korea, Arizona, Colorado, or Idaho are all on the table, and we should find out exactly where we're headed next within the next month, with the actual move probably sometime in Oct/Nov. I also just signed a contract to stay in the military for another 5 years, but it did come with an annual lump-sum $20k/yr bonus, so we're going to use that money to help us with our upcoming move & our to-be-determined housing situation (more on that to follow).

As for DW, she was just medically retired from the military in April due to some mental health issues (she's now mostly doing better, gratefully, but was disqualified from deployment & therefore got the boot). She's struggled with accepting the abrupt end to her military career, suddenly becoming a SAHM, but I'm slowly convincing her that it's really a good an opportunity for her to pursue her actual passion, to become a physical therapist. She's been taking a couple pre-req classes, and soon she'll start shadowing the physical therapist on base to regain some recent experience, then depending on where my next assignment takes us, she'll be applying to schools for earning her DPT. Financially, we're in a good place for it -- she gets a small retirement/disability pension from the military, plus she's got the Post-9/11 G.I. Bill that should cover most of her costs. I'm excited for her, and as long as we can keep her focused on that end goal, I think she'll end up very grateful for this opportunity.

The other big change (or decision, really) on the horizon will be what's going to happen with our current house. We like our house, it's in a great neighborhood, and we'd love to come back to live here in Alaska at some point in the future. We also love the idea of building a small portfolio of rental houses, and currently have one in OKC (our previous assignment) that is doing very well. However, this house is double the value of our other rental, we still owe $279k on it, and our total PITI (not escrowed) is ~$2700/mo. Realistic rent for it is probably between $2500-$2600/mo. So the cashflow would be tight, particularly in vacant months. One option we're considering is to recast our incredible 2.375% mortgage, and doing so with a $50k-$60k payment would reduce the payment to $2200-$2300/mo, which would make it much more manageable. The ROI isn't phenomenal, but we'd be looking at ~12% IRR on it, so not terrible either. On the other hand, if we just went with selling it outright, we'd probably do no more than break even (perhaps even take a "small" loss of $10k-$15k. We're starting the conversation with our realtor friend, and we may end up just dual-listing it (sale or rent), and take whatever bites first that looks good.

On the back side of the upcoming move, what's next? Buy again, or rent? Between our cash & investments, we'll have at least $40k-$50k available regardless of what happens with our current home, so that should probably cover at least a 20% downpayment if we do buy another home. However, depending on the location, just living on base & renting might not be a bad option either. We'll have to evaluate it carefully once we know where we're going. I really like our current rental, and I'd like to keep some property here in Alaska (either this one or a different place)... But I don't want to overextend us with rentals dotting the country. Once I eventually leave the military and we settle down in one place, I'll most likely sell everything and rebuild the real-estate portfolio locally (whether that's here in Alaska or perhaps elsewhere).

Who knows what the next few months/year will bring for us... Alot will be driven by the location of my next assignment. I hope they release our assignments soon!

Saving is simple -- do it early & often

May 24th, 2019 at 02:33 am

So I guess for my kickoff post, I'll lay out the foundation of everything that has brought me to where I am. And honestly, it's a mind-boggling reality. As I was putting together the numbers for my 'About Me' section, I was shocked to realize where we actually stand. As a 32 y/o military officer, I have built up a net worth of nearly $1M... I almost don't know how it's possible.

I went to college in 2004 with $3k to my name. I had gratefully earned a full scholarship to an outstanding university, and my small income of a few hundred dollars a month was sufficient for my needs (not much, obviously). In 2006, an instructor pulled me into his office with a few of my friends, and he taught us about retirement accounts, budgeting, debt, investments & mutual funds, and a bunch of other financial topics. In a way, he's my inspiration, because that's exactly what I want to be able to do for other people. I want to help them learn how to be successful with their money. And successful I have been, and I credit him with starting me on that path.

Soon after, I started my Roth IRA, and set up automatic transfers into the IRA and into my savings account. Mind you, I had a $10k annual income, so it wasn't much... But that didn't matter -- I had started! The next year, as a senior, I managed to max out the IRA, and have never stopped doing so ever since. That has been a cornerstone of my financial life.

When I commissioned as a military officer, I was young, inexperienced, naive, and relatively well-funded (suddenly earning $40k). Gratefully, I applied the lessons I'd been taught, created a basic budget, and started saving aggressively. I had been living on almost nothing, and with 2 roommates, continued to do so. That meant that saving 40% of my income was no problem, even in spite of my car payment (man, if I could go back & not get an 11% car note on a new Civic... Lol).

From then on, 40% toward savings has just felt right. In spite of living in (and enjoying) Florida, Oklahoma, Japan, Oklahoma again (stinking tornados), and now Alaska, I (and eventually my wife) have always managed to save right around 40% of gross income. "Live on less than you make." It's simple advice, but so very fundamental to financial success.

Which brings me to my point: by starting early, saving consistently, and living well within my means, I find myself in the strange position of nearly being a millionaire in my early 30s. I started my career with absolutely no expectation of wealth (after all, who joins the military for the money?!?). I simply created my budget based on priorities: 1) tithing; 2) basic essentials of housing, food, utilities, transportation; 3) saving; 4) everything else. By taking out & sending away my savings before I spent any of my disposable income, I simply never missed it, and it was always there when I needed cash for something: a car, buying a home, emergency airfare, paying for our wedding & honeymoon, or wiping out my new wife's student loans. Saving early & often has given me the freedom and flexibility to do a great many things. With the foundational philosophy of saving aggressively, as I've moved up in rank and pay, the dollar figures involved have grown, but it has merely accelerated my small family's financial strength. We stick to the plan, safe regularly, and we want for nothing. When something is important enough to merit spending our money on it, we do so with little hesitation. That freedom is directly enabled by the savings habits that I learned in college and have applied ever since.

Getting started!

May 24th, 2019 at 01:33 am

I'll start by explaining my purpose here: I'm creating this blog with the goal of it serving as a clearinghouse for my thoughts & ideas related to money matters, family finance, or anything else that impacts or is impacted by them. I live in my head (I'm a strong INTJ by personality), so my thoughts are often widely varied & ephemeral. I'm hoping I can use this blog as a means for me to process & think through my ideas & opinions. Anyone is welcome to join in my ruminations, and your comments, ideas, advice, or opinions are welcome...But in the end, please just understand that I see this blog as being solely for my own benefit (or therapy, perhaps). Welcome to my world!