Author Topic: Military FI journey  (Read 3965 times)

Major FIRE

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Military FI journey
« on: September 04, 2018, 07:48:44 PM »
Hello!  Any other military folks out there?  FI is not a particularly popular concept in the military, which is unfortunate because while there are certainly some military specific challenges to FI there are also some huge advantages, particularly when it comes to taxes and travel.

As a quick introduction, I've been in the Air Force for 14+ years now and have enjoyed the majority of it.  In my previous life, I was a computer engineer working for a major auto manufacturer.  It was not my idea of a good time; long story short, I quit and through a combination of luck and circumstance became a pilot.  I stumbled on the FIRE movement around tax time a few years ago while on a layover at an airport in Kazakhstan (I was searching for various ways to minimize tax burden on some rental properties).  MMM was my gateway drug and I found GCC not too long after.

I've been increasingly focused on on FI, particularly the high savings rate (and not buying stupid shit - I'm a gear whore), for the last couple of years.  I was already naturally a saver and an entrepreneur at heart - some focus was all I needed.  I'd diligently saved and invested for quite a number of years but I had no system in place - some stocks, some mutual funds and nothing optimized with regards to tax strategy, performance or fees.  I had several rental properties as well (9 moves in 14 years!) but really hadn't done any analysis on ROI other than I generally had more money at the end of every year than when I began it.  Ditto for investing in a couple of friends' business ventures.

I think the most valuable lesson I've learned is to turn a hard eye onto anywhere I'm putting my money and if I don't want to bother with that effort then I probably shouldn't be involved.  I've unloaded 2 of my 3 rentals (and can't wait to lose the 3rd!), shifted everything over to Vanguard and didn't get involved in a scheme with some buddies to important electric scooters from China - all of which I'm happier for.  No small credit goes to getting married and having a kid over the last two years.  Both husband and dad roles occupy significant amounts of time to do well, as does piloting, leaving little time to be a long-distance landlord or scooter tycoon.

Some of the military specific advantages that folks might find interesting are our pay structure and retirement investment vehicles.  Our pay is split into many different pieces - salary and specialty pays, which are taxable, and allowance for housing, which is not.  Housing pay is based on your locality and rank and obviously can be a huge advantage because this large chunk of your income is not taxed.  It's doubly advantageous if you have a roommate and save the remainder!

In terms of military retirement, there is the holy grail: 20 years of service in exchange for a lifetime pension of half your base pay and healthcare til the day you day.  Talk about a crystal prison!  You'd be crazy not to, right?  As a sweetener, the military also has a program called the TSP ("Thrift Savings Program") that works as an IRA in most regards.  While there's no employee match with the TSP, there's also no limit to the amount of money you can contribute to it.  There's also a Roth version!  One year I spent 8 months in combat zones (which are tax free) during which I contributed $21k to my Roth TSP.  That money will never be taxed - a great deal, though certainly not one I'd ever apologize for because of where I had to go to get it.

The military certainly also has it's downsides - foremost of which (in my opinion) is the lack of control you have over your life.  It's not all Hollywood - "Go take that hill, soldier!" but it definitely means living some places that you'd probably rather not and being gone from home more than you'd like.  I currently live in a pretty rural area in a very poor state - lots of space for flying jets, but not much in the way of even basic services (hospitals, libraries, etc).  The counter to this is that everything changes - if you wait long enough, they'll move you somewhere, hopefully better.  My motivation for making it to FI and "making it to 20" is to have the power to say no to stuff I don't want and the security to take care of my family while saying "hell yes!" to new opportunities down the road.

Before I wrap up this rather long post, I want to touch on travel.  Everyone joins the military for something and if I have to single one reason out it would have to be travel.  The bulk of my 20s were spent literally around the world - large chunks often in garden spots such as Afghanistan and Iraq, but I'm no stranger to Europe or Asia either.  After so many years of out-and-back travel, I really wanted to try something more and ended up landing a (non-flying) job attached to the US Consulate in China.  Not only did the military graciously put me up in China for 2 years, they thoughtfully sent me to language school first.  It was definitely the highlight of both my career and life.

Nice to meet you all and thanks for hosting Jeremy!

gocurrycracker

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Re: Military FI journey
« Reply #1 on: September 06, 2018, 05:52:23 AM »
Hello Major FIRE, welcome, and thank you for your service.

My uncle is a lifetime Air Force guy and I almost went to the Air Force Academy, but I ended up on a different path mostly because of that whole "control over your life" thing.

One of my early retirement inspirations is a Navy guy who had a book and website - https://the-military-guide.com/
Worth checking out.

Sounds like you have things figured out. Family time is way better than work time, and you are in the final stretch to a pension.

Best of luck!

Jeremy

BigDeal

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Re: Military FI journey
« Reply #2 on: September 12, 2018, 10:39:17 AM »
Major Fire, good to see you fly boy. I retired from the Navy five years ago. I actually started terminal leave exactly five years ago on 23 Sep 2013. As you get closer to pulling chocks make sure you get your medical taken care of. If it hurts, see a doc. If it aches, see a doc. If you are having some depression or PTSD, see a doc. I promise you, after 20 years of doing the shit you do, in the places you do them, you are a little bit broken. I believe we age 2-3 times faster than normal humans. Get that shit in the record because if you dont, it will be complete ass pain dealing with VA. I have a lot of friends that retired that are broken. But they did not do the leg work before getting out and now they dont get squat. I figure you been looking out for your airman and Uncle Sams assets for 20 years, bout time you looked out for yours. Even if you dont get a single dime in compensation for disabilities, if they are rated service connected you wont have to worry about their affect down the line. Or the secondary affects. Also make sure you get to TAP class, I think they call it GPS. Try and go to it at least three or four years out. And then once or twice again your last year. It is drinking from a fire hose and one time is not enough. Make sure your spouse goes with. That will provide some watch team backup.  Good luck to ya hard charger. Cheers, BD

Major FIRE

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Re: Military FI journey
« Reply #3 on: September 17, 2018, 06:56:34 PM »
Thanks for the advice BigDeal!  I've got my MFRs for burn bits in Balad and Afghanistan, nasty base water at home and am just crossing my fingers that my luck holds but much better to be safe. How's retirement?? And Congrats!  Is it what you thought it would be?  I see a lot of my friends scrambling for civilian jobs on base just swapping flight suits for polo shirts... which doesn't look too appealing to me.  Right now my goals mostly involve (1) happy wife, which I think ironically means returning to work for her and (2) raising chickens. 

Major FIRE

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Re: Military FI journey
« Reply #4 on: September 17, 2018, 07:02:10 PM »
Thanks Jeremy!  I have actually read Nords' book and enjoyed it.  It's got some good stuff in there, particularly when making an argument for the full 20.  The Air Force Academy is a good school but I wouldn't encourage my kid to go... I was pretty happy that I got to enjoy college and a bit of life first.  You clearly did right!  Taipei is a pretty sweet gig - I spent about a month there on a language immersion when I was learning Chinese and was wistful for a bit that I had to go to the mainland.  There's a pretty big contrast between the two cultures.  Once I got over the shock though I really enjoyed my time in 大陆 - it can be pretty aggressive and rude but also invigorating.

BigDeal

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Re: Military FI journey
« Reply #5 on: September 18, 2018, 06:01:29 PM »
I love retirement!!!!  I think I love not getting up a O dark thirty to run. Or having to shave every freaking day. Or leaving my wife and kid to bad guy land to melt in the sand. I dont miss that at all. But I do miss my shipmates. I used GI Bill to get another bachelors. I still have seventeen months left and not sure what I want to learn now. I will either get a master scuba diver license with it or learn to weld. Maybe both. I started terminal on 13 Sep 2013 and have not looked back. Did I tell you how much I love it?