Hi Money Minder,
Hey there! Just got out of the service at 29 and got a 100% P&T rating from the VA. Started a new job making 85k with lots of room to grow. Need help figuring out how to invest/save my VA disability comp for the future.
Here’s where I stand financially:
– TSP from military days has $31,000.
– New job’s 401k only at 1k, 2% match.
– Mortgage at $248,681 (6% interest) – paying bi-weekly with an extra full payment each year.
– 10k in regular savings.
– 26k in HYSA with Capt1.
– No credit card debt or loans/car payments.
Got a wife and 3 kids, single income home. Kids have great education benefits as children of a 100% disabled vet. State pays 80% of public uni fees, kids get $1,400 monthly from DEA chapter 35 benefits while full-time in school. No 529 accounts yet, just savings.
After tax, I take home $2,411 every other week, budgeted well. VA payment kicks in soon, $4,305 on 1st of every month till I kick it. Will increase yearly with inflation, decrease when kids graduate. Guaranteed 4-5k monthly for life, upping to $4,450 in 2025.
Looking to invest VA money (not salary), max out 401k, TSP, open spousal IRA for the wife, and retire at 60 with 1.5-2 mil + VA payments. Thinking of Fidelity account for ETFs/mutual funds. Hoping to build HYSA to 40k for 12 months of expenses saved.
What’s your take on my next financial move, Money Minder? Appreciate your advice!
Best, Saving for Retirement.
Response from THE MONEY MINDER:
"Hello There,"
Congratulations on receiving a 100% P&T rating from the VA and starting a new civilian job with great potential for growth. It sounds like you have already made some wise financial decisions and have a solid foundation to build on. Given your current financial stats and future goals, here are some practical steps you could consider:
Firstly, it’s great that you have a clear plan to invest in your retirement through maxing out your TSP, increasing your 401k contributions, and opening a spousal IRA for your wife. These steps will help you build a strong retirement nest egg. Additionally, opening a Fidelity account for ETFs and mutual funds is a good way to diversify your investments and potentially earn higher returns.
Regarding your VA disability compensation, it’s commendable that you are looking to use it wisely for your family’s future. Since you already have a solid emergency fund in your HYSA, focusing on building that up to cover 12 months of expenses is a smart move. This will provide you with a financial cushion in case of any unexpected expenses or emergencies.
Considering your children’s future education, taking advantage of the benefits available to them as children of a 100% disabled veteran is a great way to save on their tuition costs. You may also want to explore setting up 529 accounts for them to further save for their education expenses in the future.
In terms of your mortgage, paying an extra full payment each year and planning to make additional payments towards the principal once your property tax exemption takes effect are excellent strategies to reduce your mortgage balance and save on interest costs in the long run.
Overall, it seems like you have a solid financial plan in place. Continuously reviewing and adjusting your investment and savings strategy as your circumstances change will be key to achieving your goals. All the best from THE MONEY MINDER as you work towards building a secure financial future for you and your family.
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