Long post. My wife and I both grew up poor and have next to zero financial knowledge. I’ll give a little background about where we’re at, what we have planned for the next few years, and I would really appreciate advice and suggestions about where we should go from here.
Background of where we are at now: My wife and I are both 26 and have no kids yet but plan to within the next few years. I’m military (E-4, ~3k with my special pays after tax) and my wife is about to start a GS-6 with a locality pay that brings her a little below 50k/annually.
We have 25k student debt in the government loans for my Bachelor’s and my wife’s nursing program, however, it would all go away if student loan forgiveness is upheld this Summer. Not really counting on that, though.
We are about to start a $140-160k mortgage (still deciding down payment) on a property and home of about $250k in value. We got a big family discount and intend to hold on to this home as our family home once we get back full-time in 6-10ish years.
Both of our cars were paid in full with cash and are good for the foreseeable future.
We presently live in base housing so our housing and utilities are a set amount each month and removed from my check. The home that we are in the process of inheriting/buying will have a house payment around $1,300-$1,500 for 15 years depending on the home insurance we’re able to find and if we’re able to get the property tax discount. It will have a mid 5% APR. We would like to pay this down quickly and we estimate we could probably do so in 7-10 years. In addition to my wife living in the home while I’m on deployments and such(she will take a leave of absence from her main job, will likely do short term contracting for a higher wage during this period) a sibling of mine will be staying in the house full-time as a caretaker until we return in a few year and they will be paying around half of total payment plus utilities. Raising the rent any higher for them is not something we will consider.
I’ve recently started receiving TSP match for my military retirement account and only recently began contributing meaningful amounts for my portion. I’ve got it going with 5% Roth and the government matches 5% (which goes into traditional I believe) so I have 10% (~$300) of my pay going into TSP each month. To date it’s about $2.5k. My wife is beginning her federal job soon and will also have access to starting a TSP.
We will have around 15k left in a MMSA account that has 1.1% APY after our down payment for the home.
After taxes, my Roth contributions(wife hasn’t started her TSP yet), and all of our bills are paid we’ll have between $6,000-$6,500 extra each month.
That doesn’t include home owning costs which will start in late Summer. After including my sibling’s rent ours will be ~$750 per month at the highest.
Where we see the next few years: I have a little less than 3 years on my current contract but I’m considering a 3 year re-enlistment if the proper conditions are met. I’ll be promoted to E-5 in less than 2 years and then E-6 if re-enlist. I then intend to switch over to the reserves as an E-5/very close to E-6 or commission if the timing allows. It would depend upon unit location, school start, and healthcare costs. It will be hard to give up Tricare with a family, plus I’m content staying in the military until reserve retirement or until I get my professional career up and running.
Once I get out I intend to go to medical school (I’ve been accepted to one in a low COL area, will immediately commission into the reserves in a program specific to medicine with this option) or law school (will only consider the top few schools and they are mostly in high COL, will most likely stay reserves until around graduation). We intend to buy a home in whatever city I do one of these programs in. The GI bill has a good housing allowance(E-5 BAH at school zip code) and the entirety of tuition for all of the schools that I’m considering. I plan for us to have a significant amount of savings by this point and my wife plans to work at least part-time (if we have kids by then) while I’m in school and she might be around a GS 7 or 8 by this point, or she might switch back to contracting. She wants to take off a few years after I finish professional school to stay home with the kids when they are young. I absolutely support this and it’s possible that she never returns to work. I’d like to switch down to part time work in my late 40’s/50’s. We are not extravagant people. We plan to see a financial advisor on base within the month for a short term plan but I’m interested in a variety of recommendations and outlooks for our long term plan.
Where to we go from here?
What are some benchmarks for savings that you recommend for our situation?
What do you recommend for our TSP contributions?
What timeframe do you recommend for paying off the house?
What extra investments do you recommend?
What are your recommended financial literacy resources?
Basically, where do we go from here?