Financial advice for a young military man.

definitely try and get one of USAA's credit cards (or local credit union equivalent). like you said earlier, buy one tank of gas, pay it off each month. this is what I did to start building my credit. I still have that credit card I got at 18 and I won't be closing it since it is my longest piece of credit history.

 

Whew, at least one of my ideas made it through analysis from the military minds.

Thats the plan my man.

 

USAA is a good place to start - they can roll everything together for you and, especially when you are still not sure of your long term plans and goals, this will help.

We started off with a company called USPA&IRA back in the early '80s. Over time, we got smarter about our investments and began to do more on our own. Then we found a very good agent at Ameriprise after I retired. We moved everything to him - in this case we pay him a small fee each year but get a much greater level of performance than we did with USPA&IRA or on our own.

The key is to sit down and talk with an investment guy who can help get you started - that's the best thing that you can do. The effect of compounding interest is amazing over time. Start now and you will not be sorry.

 

I'll be calling USAA bright and early in the morning tomorrow! Thanks fellas and keep it coming!

 

UPDATE: so fellas usaa is a great place indeed and I got 2 very important things done today

1.got a credit card (300$ limit/and it has a rewards program as well)
2. Set up a cornerstone moderate mutual fund. (50$/month) which is very reasonable for what I'm getting for my money's work.

Just wanted to do an update.

 

outstanding brother. If you are comfortable with it post what mutual fund they got you into. That way we can all make sure they aren't raping you with fees.

edit: holy crap!-1.44% in fees

 

It's called a Cornerstone Moderate Mutual Fund if i heard it all correctly.

50$/month, pretty small to start off but a starting point nevertheless until i make more dinero.

Edit: that's reasonable fee's I suppose.

 

Interesting read, thanks (similar situation)

 

No problem man, knowledge is power.

 

From 27 years observation of a myriad of failures:

1. Don't be in a hurry to get married.
2. Don't be in a hurry to have children.
3. Buy or borrow a copy of the book "Rich Dad Poor Dad" and read it, as many times as necessary.
4. Don't get sucked into the "life insurance as an investment" scam.
5. Only take advice from truly successful people.
6. If you're single, and on active duty, use half of your monthly pay for living expenses and entertainment. Save/invest the other half. If you think this is nonsense, PM me and I will show you how and why.
7. Salesmen exist to sell, they do not provide unbiased advice. Advisers exist to provide educated advice, and it is rarely free.

And thousands more...

I am not a certified financial planner. I am a retired Marine, father, and grandfather. If my experience in the military can help you, I'm glad to share it.

Mike

 

UPDATE:

I just started MY Roth IRA with an intial amount of 500$ investing 100$/month thereafter until i run into more money when i'll add more to this amount.

Thank you for the advice everyone.

 

Im getting my money sorted out before i hop back into the truck and my Project truck.

 

You've made tremendous decisions hat you will be very happy with in the years to come. Starting early is the key since you are able to fully leverage the time value of investment compounding.

If I could add one thing it is not to fear debt. My wife is a CPA and managed our finances throughout our marriage. Despite the fact that we both still work and have my retirement check - and "could" pay cash for cars or could pay off our mortgage, we don't. Why? Because we can earn more money through our investments than we spend on a car or house payment. Wise use of credit can pay dividends - spending other people's money is a good thing as long as you do it smartly.

We are both 58 now and seriously planning on our full retirement (I spent 26 years on active duty and went to work for a small college after I retired) in 4 years or so. We are now paying off the mortgage so it's cleared when we do retire - but have always leveraged that money up till now.

And, until interest on car loans go over 8% or so we'll always use that and keep our funds invested where they generate at least 10% on average.

Again, congratulations on being smart with your future. Studies show that someone who starts investing at age 20 and continues into their mid-30s and stops will have more than someone who invests the same amount beginning in their 30s and continues for life. Don't stop investing, though, look for better ways to meet your long term goals with different investments, consider long term healthcare insurance before you get too old and the premiums become astronomical.

You are way ahead of the majority of your peers!!

 

Great advice "6".

OP, good on you for thinking ahead and starting early!

 

Thanks for the follow up fellas, i really appreciate it. I've got to wait till the spring semester (Jan 2014) before i decide to tackle another investment option, im not sure what i should do then but im sure someone here will be able to point me in the right direction.

I've got to get it all sorted out now and just "forget it" so to speak so when i reach my later years i'll be good to go and plan for my retirement.

 

Just some advice from someone who has dealt with it multiple times. Maybe it has been said, maybe not. Pay close attention to your bank accounts. In specific any deposits from DFAS. They have a habit of paying twice or making additional payments. They don't always catch it right away, but when they do, they will take it all back at one time. Once I even had to deal with them taking back both payments then reissuing my pay. Right now, I have been keeping an eye on $400 that they double payed (not touching $800 in my account incase they take both payments back).

 

Holy smokes. Yeah i look at my account every single day. The Mint app is wonderful for consolidating all my finances and watching it keeps me honest about my spending.

 

I haven't read everything, but I will chime in with my recommendations.

1. Pay yourself before you pay ANYTHING.

What this means is start NOW for your retirement. You will find it impossible to play catch up later. Take a MINIMUM of 10% of your gross income and place it in whatever retirement fund opportunity you have available (401k, IRA, etc) Then budget your expenses based on what is left over. Make this rule #1!!!

2. When establishing credit, the common thought is to get a small credit card, use it for things like gas only, and pay it off at the end of the month. While this is great for LEARNING to budget, it does not help your actual credit rate as much as people think. Credit score rating is best increased by maintaining about 30% credit debt. So if you have a $300 credit card, maintain about $100 balance at all times. You can then do as you want and buy just gas, then pay down your card each month (including interest) to the average balance of 30%. What this does is brings you into a revolving credit score. It increases that number that everyone worries about. Having a credit card with a zero average monthly balance does little to increase your actual score. This is a very common practice talked about in credit planning to increase your score.

3. As for your savings account. General rule is to calculate out your ENTIRE monthly budget (everything from rent, utilities, gas, insurance, food, entertainment...EVERYTHING). Now take that number and multiply it by 3. This is how much you should have in a savings account at ALL times. This money is NOT to be used for "oh, I want that mod!". This money is for "My pay check didn't get deposited on time, but rent is due." Pay your rent with this money, then when the paycheck DOES get deposited, put the money BACK. This money CAN be used in other emergencies like if your Tacoma breaks down, and you need it for repairs, however you should get this money saved back up as fast as possible.


Those are my 3 biggest suggestions.

 

Maybe look into an ira or roth ira, I'm not an expert on them but some have a lot of fees and not much return. When I open one up in a few months I think i will go with vangaurd mutual fund. Also the gov has a small stimulus program for low and middle income you could look into as well.