It’s been less than a month since my last post of financial independence links, but they’ve been coming fast.
First, I’m not a big fan of debt. If you’re going to use it, you might as well put it to work on assets (like real estate) instead of on depreciating liabilities (like new vehicles). But I even draw the line at debt like student loans when there are any other alternatives. I’d never go into credit-card debt, although I can understand why hundreds of entrepreneurs are tempted to use it to grow their startup businesses. Taking on debt should be a deliberate, analytical decision instead of a consumer impulse. It’s better to avoid it than to become an expert at managing it.
Having said that, if you’re going to use debt then you should know how to do it right. Grace over at PersonalLoans.org wants to remind you about all the high-tech ways to focus your attention on your debt. Treat your debt like a submariner treats a hostile contact: use those tools to organize your tracking, determine a firing solution, shoot the target, and move on to financial independence!
For example, our next link is MoneyCrashers. (Sounds like fun, right?) I know that people have a wide variety of learning styles, and what you don’t learn from reading this blog may be more interesting in a different format on another blog. I met Andrew at FINCON12 and I’m impressed with the community they’ve built. Take a look at their summary of investing strategies for servicemembers, and their overview of the military pension system. Their blog is a tremendous toolbox for improving your financial fitness, whether you’re still in the military or out of it.
Another great educational resource is the Consumer Financial Protection Bureau with its Servicemember Affairs branch. You may have heard about this in the military media because its Assistant Director is Holly Petraeus, the spouse of the retired Army general. (Hey, she supported his career, now it’s her turn to have her own.) Start with their Financial Fitness Forum and browse the other links that will help you protect yourself from bad money habits and shady marketing tactics.
Next I’d like to recommend a wonderful post from MrMoneyMustache that explains how to find a reasonable compromise between “wants” and “needs”. I met him at FINCON12 and he really is an expert at reducing consumption, but he does it with a sense of humor. Caution: the website contains strong language (and mind-blowing lifestyle concepts). This post involves catheters and bedpans, but it’s just a thought experiment. When you work with that metaphor, you’ll be able to quickly distinguish the difference between the things that really make your life better, and the things that just make your life take care of more… things.
I got a lot of feedback on a recent frugality post, and guest blogger Rob dug up an update on a guy who makes us all look like wild-eyed hard-partyin’ spendthrifts. Ken Ilgunas managed to cut his expenses to just $103/week (less than $5500/year!), although he admits that it’s not for the faint of heart. If you ever find yourself contemplating fiscal austerity due to student loans, you can’t do much better than this. The story even has a happy ending.
While you’re getting rid of your bad debt, you’ll want to figure out how to forecast your future financial independence. I’ve put up several posts on the problems with retirement calculators, but this one neatly sidesteps those problems. It lets you pick your lifespan, it assumes that you’re not going to spend all your money before you die, and it even allows you to change your spending as you age. If you want to dig more deeply into the math and assumptions behind the calculator, Todd has written a great eBook to cover those details.
Let’s move on to several topics that apply exclusively to the military. There’s been significant concern about the effect of sequestration on military pay and benefits. Last week the administration released a report estimating those effects, which are expected to be minimal for servicemembers. Military pay will not be impacted, and the VA is also sheltered from sequestration. Tricare funding could be affected, but not Tricare For Life. Of course there will be major impacts on DoD weapons programs and operational budgets, but pay & healthcare should not change.
Rob and several other readers have directed our attention to the Marine Corps’ announcement of TERA and early separation programs:
FY13 Marine Corps Enlisted TERA
FY13 Marine Corps Officer TERA
FY13 Marine Corps Officer Voluntary Separation Pay
But if you’ve subscribed to the blog then you already knew about this back in May. If you meet the MARADMIN requirements for these programs, then review the post along with your finances. You probably have only a week or two before the program fills up.
Since it’s a new fiscal year, the Army is also implementing its own TERA program. (The link opens a PDF.) You can read more of the TERA details from Curtez at LifeAfterTheArmy.com.
I’ve also had several reports from alert readers that the Defense Finance and Accounting Service has opened the Roth TSP to all branches of the military. Note that you’re in charge of figuring out how much of your pay is available to contribute to the Roth TSP– DFAS won’t do it for you. However they’ve included a Roth TSP worksheet (the link opens a PDF) to help you determine the amount that’s right for your finances. If you’re expecting a bonus, this worksheet will also help you determine how much you can contribute. Then you can get on MyPay and start saving in the world’s largest (and cheapest) collection of passive index funds.
Finally, if you’re still getting a paper check from the federal government instead of an electronic direct deposit, the Department of the Treasury is cutting off the paper checks next March. Fewer than 1% of military retirees are still getting an old-fashioned check.
By the way, I’m looking for a blog theme with a bigger header image. (It needs to be compatible with the Genesis framework.) Up at the top of this page is (what’s left of) the current image– the 4-6-foot waves off White Plains Beach on Oahu as you’re looking toward Diamond Head. I’m considering the cover photo that I’m already using on my Facebook page: another surfing photo of bottom-turning through 2-4-footers during a session with my daughter last August. Any other suggestions?
Frugality after financial independence
Problems with financial calculators
Ask your Dad if you should contribute to the Roth TSP.
Is the Roth Thrift Savings Plan right for you? (With an update from USAA’s CFP experts.)
Does this post help?
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