Military Millionaire

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Military Millionaire

Hi, I’m David Pere! I’m here to show you exactly how you can build wealth through real estate investing, entrepreneurship, and personal finance. I want to be your guide to financial freedom!

8 Do’s and 3 Don’ts to Become a Military Millionaire

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Simple, but not necessarily easy.

It isn’t hard to save money, invest it in a boring index fund, and let compound interest work its magic…except this is slow, not exciting, and requires discipline.

Luckily service members have an innate amount of discipline!

If you can follow these ten steps (and avoid the three pitfalls below) you can become a military millionaire before retirement as well!

1. Expense Creep

Expense creep is a silent killer.

We tend to increase our spending habits a little bit with every pay raise, it is human nature.

Resist the urge, and save at least half of every pay raise you receive. In the military, you will receive a pay raise with every promotion as well as every other year (every year for your first 4)!

It will be tempting to increase your spending with each pay raise, but you must check that impulse.

If you want to treat yourself to a one-time expense that is perfectly acceptable but don’t buy something that will increase your monthly spending (like a membership, monthly service, or financing a new car).

This is important because you want to be able to save as much of your income as possible in order to invest it.

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If you increase your expenses with every pay raise you will be adding years to your military millionaire timeline.

An easy way to keep these expenses from creeping is to shop on base as much as possible. Gas on base is usually the cheapest you will find in the area, and the commissary is (almost) always cheaper than anything off base.

The commissary is so cheap because they are required to sell everything at cost!

Don’t forget, everything on base is tax-free …depending on state taxes this could save you a fortune!

The bottom line is this; with personal finances, income is seldom the problem…expenses are!

2. Pay yourself first

Repeat after me, “I will always pay myself first!”

Okay, good…now let me tell you what that means.

Paying yourself first is the best way to ensure you save/invest every month.

Imagine this, you receive your paycheck on the first of the month. You pay your mortgage and utilities, buy gas, purchase your groceries for the next two weeks, spoil the kids a little bit, and spend a night out on the town. On the 14 th of the month, you decide to save everything that is left from your first paycheck…only to discover you don’t have anything left.

This unfortunate scenario is a reality for entirely too many people!

According to CNBC, 78 percent of government employees live paycheck to paycheck…

Now, let’s imagine a better scenario.

You receive your paycheck on the first of the month. You have an automatic allotment set up that puts $500/paycheck into an account for saving/investing (that you do NOT touch). This will force you to adhere to a budget in order to cover your expenses for the month.

At the end of the year, you will have saved $12,000.

Let me curb your worries, complaints, and fears about this concept. The beautiful thing about paying yourself first is that you will find a way to pay for mandatory expenses, but you will have already budgeted for saving/investing.

In the first scenario, you would be tempted to spend this $500/paycheck because it is available…and thus hurting your financial future.

I know it is bad to speak in absolutes (they say the gods love to toy with people who use absolutes) but you should ALWAYS pay yourself first.

Stop what you’re doing right now and set up an allotment to pay yourself first.

…seriously, stop and go do that right now!

The military millionaire will pay themselves first.

3. Increase your income

This is the part everybody likes to talk about, making more money!

There are so many ways to increase your income in the military, but here are a few of my favorites!

First, make sure you have taken advantage of any opportunities for promotion. If you’re close to promotion, but need to finish some online training in order to be eligible…finish it.

It baffles me that people miss out on opportunities to get promoted in the military because they’re too lazy to finish a couple of classes.

If you’re eligible to take (and think you’ll pass) the language exam(s), do so. This is free money for bilingual service members.

After you’ve exhausted all means to increase your income from the military perhaps it is time to look towards a side hustle.

I have known Marines that worked as a bouncer for local night clubs on the weekend, and Marines that worked as security guards on the weekend.

The more common side hustles I see nowadays though are things like driving for Dominoes, Uber, Lyft, Bite Squad, Uber Eats, or any number of delivery services.

I like these ideas because the hours are flexible, and (bonus) you can listen to audiobooks and podcasts while doing it.

Learning while working is a huge life-hack if you can take advantage of it!

Another option is to start a small business, if you’re reading this (which you are), it is because of one of my side hustles!

You can even earn more money by volunteering for deployments to receive imminent danger pay!

4. Invest in yourself

I alluded to this above, but the ability to learn while you work is a force multiplier in life!

I like to have a 15 or 20-minute commute to work in order to listen to Audible on my commute.

As I mentioned, listening to podcasts/audiobooks was a bonus for delivery side hustles, but imagine if the military would pay you to invest in yourself…

Newsflash, they do!

Not only does the military pay you to go to basic and advanced schooling for your job, but they require you to attend professional military education (PME) and leadership schools as you progress through the rank structure.

In addition to this, the local education center has monthly financial classes you can attend. They offer classes about budgeting, investing basics, understanding the Thrift Savings Plan (TSP), etc.

Take advantage of these classes as much as possible. The military is literally paying you to gain a financial education!

Also, every command has a command financial specialist (may have a different name depending on your branch of service). Their job is to talk finance and answer your questions.

I recommend that you pick their brain, but a word of warning, some of them got voluntold for the position and aren’t really good with finances, so vet them as much as possible.

5. Make Taxes your [email protected]

I love this one!

Did you know that only about 40% of your income is taxed in the military?

Realistically this number will depend on where you are stationed, but your base pay is about the only thing that gets taxed.

When you look at your leave and earnings statement, everything that has “allowance” in the title does not get taxed.

That’s right, your basic allowance for housing (BAH), cost of living allowance (COLA), basic allowance for sustenance (BAS), etc.…all tax-free.

That means you are already in one of the lowest tax brackets possible, for the amount of money you receive.

Now, there are ways to pay even less in taxes.

One of the easiest is the 401k account in your TSP. The 401k allows you to defer taxes until withdrawal. Yes, this means you will need to pay taxes on the money when you withdraw it in retirement, but it means you don’t pay taxes on it now.

Currently, the maximum amount you can contribute to your TSP annually is $19,000.

Let’s say your base pay is $40,000 annually. If you contribute $10,000 to your 401k account you will only pay taxes on $30,000 of your annual salary!

You could realistically max out your TSP, and live on your allowances in order to mitigate the amount you pay in taxes!

*It can be argued that perhaps investing in the ROTH 401k is more beneficial for military members. You will now pay taxes immediately (while most of your income isn’t taxed) in order to avoid paying taxes upon withdrawal. This is a decision you need to make!

You will need to understand taxes on the road to becoming a military millionaire.

Real estate investing is another great way to minimize the amount you pay in taxes!

6. Make your money work for you

Investing is another force multiplier that will help you build wealth much faster.

For this reason, it is important to understand the basics of allowing your money to go to work for you.

Putting your money to work should be an ongoing evolution. Once you understand the basics of investing, it can be simple to automate!

The three strategies below are some of my favorites, but there are many ways to invest.

*warning* All investing involves (at least some) risk. Make sure you have a firm understanding of whatever platform(s) you choose to invest with. Don’t invest just because you know somebody who made money doing that…do your own research first!

a. Thrift Savings Plan

As I just discussed, the Thrift Savings Plan is a great way to ace your tax-game!

However, that wouldn’t be worth it if it was a terrible investment.

For that reason, I want to discuss a few reasons the TSP is such a great vessel for you to invest.

It is automated.

Yes, this meets the criteria of paying yourself first. If you increase your allotment with every pay raise it will also help you avoid expense creep!

It has low fees.

The TSP has some of the lowest fees available to index funds. The fees average around 0.040%. That means for every $100,000 you have in your TSP the annual fees average…are you ready for this…forty dollars.

I don’t know about you, but I can afford to have somebody professionally manage my money for $40 per every $100,000 I invest. That is a steal!

Most index funds on the market have fees that are at least double this.

There are a few funds that have recently lowered their fees, but it is yet to be determined whether they will be able to maintain this, and/or if their fund will have a competitive performance with the TSP.

The bottom line is that the TSP is one of the best options out there, and you need to take advantage of it.

Another advantage is that individual 401k accounts are only authorized a $6,000 annual contribution. Contrast that with the $19,000 authorized for TSP ($56,000 annually if you’re in a combat zone)!

The TSP is great because you can set an allotment and let compound interest work for you!

This option is even better now that the new blended retirement system (BRS) allows the military to match up to 5% of your paycheck in monthly contributions!

Read this article for more information on TSP investing

b. Index Funds

According to Investopedia, An index fund is a type of mutual fund with a portfolio constructed to match or track the components of a financial market index, such as the Standard & Poor’s 500 Index (S&P 500). An index mutual fund is said to provide broad market exposure, low operating expenses and low portfolio turnover.

But what does that technical mumbo-jumbo definition mean.

It means that an index fund is a lot of stocks lumped together, with minimal trades conducted.

This is a slow, boring way to invest…and that is why it works!

Index funds are a great asset class for the military millionaire.

I’m a fan of the Vanguard VTSAX fund, which owns stock(s) from EVERY publicly traded company in the United States.

That means if you bet against VTSAX you are betting against the entire nations’ economy!

I don’t know about you, but I believe that companies generally want their business to blossom and grow. For this reason, I have faith in total stock market index funds…because you’re riding the coattails of every successful company!

Index funds are the bread and butter of The Simple Path to Wealth by JL Collins.

The strategy you want to employ with index funds is to pick one or two that you like, set up a monthly allotment to that fund, and then don’t look at it more than once a quarter (the less the better).

I only look at mine twice a year, and that is to readjust allotment depending on which fund I want to put a little more into for the next few months.

Don’t stop contributing to this fund no matter what the market does, and don’t pull your money out. I know this is easier said than done when the market is trending downward, but you can’t let emotions get the better of you.

By investing when the market has plummeted you are buying more shares for each dollar you contribute. When the share price rises again (and it will) you now have even MORE money in the fund than before!

This is called dollar-cost averaging, and it works like magic over the long haul!

c. Rental Properties

In case you’re new to the website, this is my favorite.

I absolutely love real estate investing, and a large portion of my articles are written about this topic.

There are so many great reasons to invest in real estate, cash flow, appreciation, depreciation (tax write-offs), and debt pay-down are just a few of these.

I love the idea that I can buy a property, and my tenants will pay off my mortgage, while simultaneously paying me to do so!

As a future military millionaire, there are some great benefits afforded to you.

My favorite of these is the VA home loan!

The VA loan allows you to purchase a 1-4-unit home for ZERO money out of pocket!

That’s right, you can buy your first home without paying a penny.

The VA loan can even pay for any renovations you need to complete!

I recommend that your house hack this first property. House hacking is when you buy a duplex, triplex, or four-plex and live in one unit while renting the others out. These tenants will pay your mortgage, and you can live for free…maybe even get paid to live there!

Not paying for housing is a huge benefit and I recommend that you save/invest every penny that you would have been paying to live there.

When you move out of the property you will make even more cash flow, and be able to re-invest that money again.

Rental properties are a great way to build wealth, but be sure to buy the home as an investment. Turning your home into an investment doesn’t always work if it wasn’t planned to be used that way at the time of purchase.

That is because nice primary residences often cost more to maintain than tenants are willing to pay for rent.

7. Marry Intelligently

This is a controversial point.

I am, however, a Marine…and we don’t shy away from controversial.

Every military millionaire needs a smart, supportive spouse!

I have seen more lives destroyed by divorce than I care to mention. The problem is that people get married for the wrong reasons…love, lust, pregnancy, BAH (sad but true), and other emotional reasons.

Before you get super offended hear me out.

Firstly, let me explain that my parents work for an organization that travels the nation from conducting marriage conferences. I had a great example of marriage while growing up, and have seen a lot of the opposite in the military.

Having seen both sides, and talked to people on both sides of the fence, here are some keys to avoiding disaster.

It takes 18-24 months for the infatuation to wear off. Therefore, if you decide to get married in this time, you’re setting yourself up for potential failure. I would wager that anybody trying to rush you into marriage faster might not be the right person for you (if they are, they’ll still be the right person in 24 months).

No, not that talk…you need to talk about finances.

Know how much debt you’re marrying. If you’re struggling financially, and your future spouse has $100,000 in student loans that they aren’t able to pay off, that is a problem.

If you’re trying to build wealth, but your significant other has a hole in their pocket that might end poorly.

Too many people rush into marriage, and then things fall apart for one reason or another.

Financial stress is the leading cause of divorce in America. Wouldn’t you want to know about their financial wellbeing BEFORE it is too late?

The bottom line is this, marry intelligently. Your partner needs to have similar goals and be on a similar path as you…otherwise it will be a rough journey.

8. Network with another military millionaire

Future military millionaires surround themselves with millionaires.

A famous Jim Rohn quote says that “you are the average of the five people you spend the most time with.”

For this reason, you need to upgrade your network.

Am I saying to ditch all of your friends? Maybe. If your friends are holding you back in life, cut them off.

Stop spending time with negative people!

*Life-hack alert* If you notice a friend is constantly posting negative, or anger-inducing content on Facebook…unfollow them. Unfollowing them will hide any and all of that negative crap, but since you didn’t unfriend them it will go unnoticed!

Trust me, you’ll notice a huge difference when scrolling through social media.

In the same manner, you need to replace the negative Nancy with positive Paul…or the negative Nick with positive Pauline (this is an equal opportunity blog).

There are a few benefits to doing this.

One is that your life will be less stressful after limiting your time with negative people in your life.

Another is that by being around people that have already achieved the goals you want to achieve you will gain a wealth of experience. These people will help pull you up to their level of success, and you will notice massive growth taking place in your life!

I cannot stress this enough, networking is one of the most important items on this list!

Avoid these Pitfalls on the Road to Military Millionaire!

It is just as important to avoid pitfalls as it is to follow the advice above.

These are three common mistakes that service members make, and news-flash…I made all three!

Please, learn from my mistakes

1. New Cars

Vehicles are probably the biggest mistake young service members make.

I have heard some unbelievable stories of what not to do.

I have seen a young service member agree to interest rates over 20% (once over 30%) in order to buy a vehicle.

I bought this Harley Davidson brand new, but at least I had a reasonable interest rate.

It was still a poor financial decision though. I spent thousands of dollars upgrading exhaust, engine, cosmetics, etc. Only to have it totaled a few years later and not get much of that money back.

I would like to tell you I learned my lesson there…but the 2001 Honda S2000 clearly shows otherwise.

I spent close to $6,000 in upgrading this car.

Now, I won’t tell you I regret either of these vehicles. They were both a ton of fun to own, and I absolutely loved that turbo-charged S2000!

…but I will tell you they were terrible financial decisions!

On both of these vehicles, I lost money when I sold them…not even including all of the modifications I put on them.

I literally lost thousands of dollars on these vehicles.

Contrast that with my last two vehicles and you will see why I call these mistakes.

Combined, I drove over 50,000 miles in my last two vehicles, and sold them for $3300 profit when I was done with them!

How did I manage this?

The strategy to avoid this

I recommend you buy a 5-6-year-old vehicle, from a private party that took great care of their vehicle but needs to sell fast.

This is generally pretty easy around military installations as service members will sell their vehicle at a discount when moving to a new duty station.

If you buy at a discount, and take care of the vehicle there is no reason you can’t recoup most of the purchase price if/when you sell the vehicle.

I just did this again!

I found a 2020 VW Jetta SportWagen TDI for $10,900.

This car has a current Kelly-blue-book value of $12,500-$13,300. That means I purchased it

$2000 under market value, which gives me a huge buffer for when I sell it!

The kicker, it looks brand new, gets over 40MPG, and only has 23,300 miles on it!

2. Tattoos/Alcohol

*Disclaimer* I have four tattoos and like drinking beer.

I’m not going to preach to you about tattoos or alcohol, both of them have their place.

Just be smart about it if you want to be a military millionaire!

Tattoos are fun, but rather than racing to cover your entire body, plan your designs and save for them over time.

This will help you avoid blowing your paycheck on tattoos and also help you avoid getting tattoos that you’ll regret later (when it is too late).

Alcohol is also fun, but it’s critical to drink in moderation.

Booze is not cheap, maybe you can get friends to buy your drinks…or simply drink less!

I will warn though; DUI’s are fairly common in the military.

This mistake will cost you thousands of dollars. The average cost of a DUI in Hawaii (where I’m currently stationed) is around $12,000.

Whatever you do, don’t make this mistake. It will leave you in financial ruin, and could potentially end your career too.

Talk about a double-whammy!

The bottom line with tattoos, alcohol, and partying is this…

Have fun, be safe, and don’t blow all of your money!

Military millionaires budget for these expenses!

3. Wasting time

Opportunity cost is like the financial sucking chest wound you’re unaware of.

Every dollar you choose to spend on an energy drink, tobacco, or taco bell is a dollar you don’t get to invest.

Over your lifetime that dollar could have become much more valuable!

The problem is that most of us don’t think about this until much later in life ☹

Time is the greatest advantage we have at a young age. If you’re receiving a 10% interest rate your money will double every 7 years. This means you could have doubled your invested capital at least once by the time most people are just starting to save/invest!

The best way to avoid this pitfall is simple…start investing immediately!

I’m not recommending you dump all of your money into a rental property tomorrow. You need to do your research, and know what you’re doing, before investing.

You can, however, increase your TSP contributions, and begin an investment savings account, immediately!

TL;DR Military Millionaire summary!

Becoming a military millionaire is simple.

Having the discipline to stick to the plan is not.

Now that you’ve completed reading through these strategies it is time to get busy!

Write out a plan, improve your budget, automate your savings/investing, and DO NOT STOP!

Don’t let time pass you by…the sooner you start investing, the faster you will become a military millionaire!

Military Millionaire – Seven Crucial Steps

It is possible to retire a military millionaire?

I did it well before retirement.

That’s with making plenty of mistakes along the way.

No trust fund, no help, wife didn’t work.

How can the average military member go from being in debt to military millionaire?

We all see websites, books, and courses from people who were deep in debt and somehow quickly made millions.


These gurus get rich off people looking for shortcuts. Most that try the guru route fail miserably.

It often involves going into lots of debt or paying a lot upfront for a product, course, or coaching.

These products do a good job of making money for who’s selling them.

They do a poor job of making you anything!

It also requires no common sense

So how can you get out of debt and make a million or so when the average military member has a low-income and some debt?

Maybe a lot of debt!

Execute these proven seven steps to become a military millionaire before retirement.

There are not shortcuts. (except for maybe bitcoin)

I hope people know when I’m kidding.

1. Cut your expenses

You have to learn to live frugally. For a lot of people, this is a change in mindset.

This doesn’t happen overnight, but it’s crucial to your success. Ditch the big house, new cars, iPhones, Harleys, boats, timeshares, expensive vacations and hobbies.

O no, I’m losing some of you already! If you need those things above, I suggest trying a no-money-down infomercial course. They won’t tell you to live frugally.

They buy Lambos and have houses by the beach!

Here’s the two choices you have.

  • Look rich now, be poor later
  • Look poor now, be rich later (hint: this is what I’m doing)

2. Make Extra Money in the Military

Next, find creative ways to make extra money in the military. Start a home business, send ask your spouse to work, take on a part-time job (side hustle) if possible. Consider a different career if that will work for your situation. My side hustle was flipping houses. That’s a story for another day.

Step one was to cut your expenses. That’s helpful, but how much you can cut expenses has a limit. How much you can make does not.

You need to grow the gap between what you spend and what you make. Cut expenses AND increase income. Gotta make more money while in the military. This is where the magic happens.

3. Eliminate debt

I’m pretty logical about this. I pay off debt with the largest interest rate first.

Some people prefer to pay off the smallest amounts of debt first, that way they feel psychologically they are getting somewhere faster.

Just get out of debt!

Everybody has their strengths and weaknesses. Dave Ramsey is great on debt.

That’s his strength.

His advice from the book The Total Money Makeover is solid.

If you want a in-depth guide to getting out of debt, read it.

The concept doesn’t take a genius, though. Stop spending and start paying off your debt.

After getting rid of all of your credit card debt, you need to shift your focus to car debt, and eventually knock out that dreaded student debt.

4. Maximize retirement accounts

You fully fund IRAs and TSPs/401ks to take advantage of legal tax breaks for retirement.

How to invest? This is easy. Invest in a low-fee index fund like the S&P 500. Nothing else. This is all a military millionaire needs.

Make sure you are paying low-fees for your index funds. I recommend Vanguard, Fidelity, and Schwab for this.

For a more in depth look at picking index funds and the fees involved, read The 10 Cheapest Index Funds to Supercharge your Portfolio

5. Optional – Pay off your primary residence

IF you buy a house (I only buy a house if it will make money as a rental), consider paying off your primary residence before retirement.

Now I’m losing the rest of you.

This is controversial and most people would deem it impossible, but I did it on a single military income.

While this isn’t mandatory, having your primary residence paid off before your military retirement can have a huge psychological benefit.

No big mortgage payment to worry about!

I will admit, using mortgages responsibly to invest in real estate is a solid strategy, and over the long term wealth can be built faster this way, but there is amazing peace of mind in having a mortgage paid off.

It’s also a good idea to lower your debt to income ratio later in life, especially closer to retirement.

More info on this including the pros and cons of paying off early can be read about in 5 Surefire Ways to Payoff your Mortgage Fast

6. Traditional investing

You fund a traditional brokerage account. I prefer to keep my investments simple. Same S&P 500 index fund. Nothing else for me. If you want more options with how you invest, here is a great resource. This article is not mine.

These six steps are enough to be a military millionaire. Paying off properties is optional, but very cool. If your spouse works, shoot for a million each.

The seventh step is a bonus step. I’m a BIG believer in real estate. The passive income from it will continue to flow to me for years to come with almost no work on my part.

Now you are out of debt, properly invested, and have enough money for at least a 20% downpayment on something.

7. Buy rental properties

This needs to be done wisely. You don’t buy a house at every assignment. Buying a house when you are stationed in Hawaii or Monterey, CA will probably not make a good rental.

You do the math and make sure the house will make money as a rental property.

In one city, I rented a house that would not have done well as an investment property, but my wife liked it. I didn’t buy it because it would not have made money as a rental property.

I then bought real estate in a different part of the same city that would work financially as a rental. We didn’t live in this property, it was purely an investment property.

So at this point I’m renting the house I’m living in and I bought a house that is an investment property all in the same city.

The rental numbers looked great, so I kept buying rental properties in that same location there after I PCSed. I haven’t bought anywhere else yet.

My rental properties were purchased for prices ranging from $30k-$60k each. I paid cash.

Want to know my biggest tips for success in real estate?

I offer a FREE 6 Day Video Mini-Course showing methods to buy real estate at a HUGE discount.

If you use mortgages, make sure you have at least 20% down. Avoid PMI and avoid being highly leveraged. Do not fall for that no-money-down crap that certain gurus will try to sell you. It could land you in trouble!

Rule of thumb: If you or your spouse want to live in a big, new house, don’t buy it. Rent it. It’s almost impossible for these to make good rentals. (Living in a big new house also contradicts the first rule of cut your expenses.)

I know many of you want to buy a house while you are still in debt. You are eager to make money in real estate NOW. This is how you will pay off that debt and retire wealthy.

In most cases, it won’t work.

I highly recommend the slow and conservative approach of paying off your debt first.

Slow and steady wins the race.

Yeah, I know it’s boring.

But it’s the surest way I know to be a military millionaire.

Rich on Money

Do you agree with my steps? How about my approach to mortgages. Comment with your thoughts on this strategy or how you did it.

My TSP Page which is a comprehensive guide with all the new rules on TSP withdrawals as well as my spin on things.

39 thoughts on “Military Millionaire – Seven Crucial Steps”

I’m an E-8 with 6 years to go until I’m retirement eligible. I currently max my TSP and my wife contributes 6% to her crappy 401k, but she is down to working 6 hours per week so the contribution is minimal. We have a mortgage on our primary residence which I bought at foreclosure auction. I instantly gained about 50k in equity doing that- and it’s a nice place to live. Probably wouldn’t make a good rental so I’m viewing it as a long term flip. I’m not sure if we’ll stay in the same town once I retire, so I do struggle with the idea of trying to pay off the mortgage early or not. We have 3 kids under 6 so I am stuck with trying to pay the mortgage early or save for college, or both. I also own a condo in the town where we live that was my bachelor pad and I now rent out and break even with (it technically cash flows but that’s only when comparing rent to PITI and HOA, not expenses for maintenance and vacancy). I could sell it and finally get as much as I paid for it 13 years ago, or keep it and let the renters pay down the mortgage and use it as my college savings plan. I also hear the siren song of investing in rentals and have quite a bit of cash saved that could go toward a down payment or two. I’ve been kind of stuck as far as developing a strategy goes. I’ll be 48 at retirement and hopefully will only work part time from 48 to 60 at which point my TSP should be able to cover any difference. So my questions for you and other readers:
1. Pay off house earlyish?
2. Start 529s for the kids?
3. Attempt both at the same time?
4. Sell the condo or keep it as a college savings plan?
5. Look to buy a duplex or some other rental property as a way to help fund expenses between military retirement and full retirement age?

You want to be LEAN and MEAN for retirement.

-Pay off the mortgage as fast as you can

-Get rid of the rental property if it’s not making good money.

You said you have some cash right now. Contribute the max towards each kids 529 this year, then put the rest on the mortgage.

There is a guaranteed savings in paying off a mortgage early. Their is also a huge psychological benefit. There is no guarantee that your investments will make money over the next 3-5 years. Paying off early is the way to go. It makes retirement much easier. No mortgage payment.

Based on the limited info I have, I would sell your other rental property. You are maybe breaking even to slowly pay down a mortgage. Very slowly. You’re losing money on not having that loan invested in a rental property that is paying a better ROI

Don’t have a rental property unless it is making at least 6% cap rate. Less than that, you are better off selling.

Make sure you crunch all the numbers and see what you are really making on your rental. It’s usually much less than people think.

In the future, do not buy the house you are living in unless it would be a good rental.

If you like the house, but it’s not a good rental, the just rent it instead of buying it.

Rent the house you want to live in, and buy houses that will make good money.

Start your criteria for looking for a rental property by applying the 1% rule. A house that costs $100,000 rents for $1000 a month or higher. If not, it’s not worth considering.

If you can’t find a good rental, invest your surplus money is low fee s&p 500 index fund or something equivalent.

Remember, never more than one mortgage at a time. I have 0 and I love it!

This is a great, common sense list Rich! And that’s why it’s not so common.

I’ve used leverage in my own investments, but people don’t realize how perilous the debt journey can be. The market and the timing of your successes in real estate are very unpredictable. And losing control of your debt is one of the easiest ways to lose control. I’ve seen MANY people go out of business because of their debt. For other reasons? Not so much.

With that said, I think there are some strategies that can be a happy medium – like using leverage and then debt snowballing it quickly (7-8 years). This allows you to buy intensely in one phase (perhaps when the deals are available), and then focus on management and debt pay down in the next phase. Then repeat if you want.

Fun debates, but the bottom line is your proof is in the pudding. It’s worked! So, if people resonate with that strategy, it’s worth emulating.

Chad, thanks for commenting over here. i definitely recommend your blog to anyone who wants to figure out real estate. You do it right. Debt can accelerate your profits. The opposite is also true. Your point is well taken. It can be done smartly. That being said, I do caution beginners against too much borrowing.

Are you even able to get a loan for 30-50K? I like the idea of debt snowballing. I am an older fart so time is of the essence for me:) … been reading Coach Carson for some time..
Rich, very much enjoying your blog ! Very clear and concise and love the humor in-between. By the way , who is your property management company:) . I am stepping away!

Yikes, that question scares me!

You can get a loan that low, but it’s not easy, and not really worth it. That’s why I ended up paying for all these houses in cash. I’m not against using loans, but these houses were too cheap!

Superb article, Rich. I just sold my first rental property (which I owned for 7 years). It did not cash flow very well since I bought it to live in and not as a real investment property. If all of my investment/retirement money ($470K) is in TSP, IRA, and a taxable account with zero in real estate, would it be wise to take $40-70K from one of my investment accounts and buy a property outright or just save the $40-70K from the new money I have coming in? I have a pretty high savings rate ($60K per year). Just trying to figure out if I should stop investing (no new money) in retirement accounts and move to the real estate arena. Me and the wife have been analyzing properties in our home state of GA for the past 5 months for fun and we have found some properties that look pretty good on paper. Thank you for your sacrifice to our country. We really love reading your articles!

I would say save from the new money coming in. Just make sure the investment looks good on paper before you invest!

Awesome information. I’ve been obsessed with real estate since enlisting two years, but my first base ended up being in England so I deemed it fate to be put on the back burner – after stumbling upon your site I have since reconsidered.

I assumed I had to compromise between staying overseas and diving into real estate but am beginning to believe it’s more than possible to have the best of both worlds. Between me and my wife we are saving around 60% of our income and I believe by my next base I can purchase a multifamily in my home state.

Thanks for the inspiration, and you’ve found a new frequent visitor to the site.

Let me know how I can help.

Just out of curiosity, why did you opt to pay off your student loans instead of doing the Loan Forgiveness through the military?

I don’t believe that program was available to me. I haven’t heard of it.

Great article Rich!

We used all seven to become military millionaires.

I retired from the army 10 years ago. I still can’t believe how many people ask me what job I was going to get after retiring. They really couldn’t believe that I was really retiring at age 42. Even after 10 years I still have friends that ask if I ran out of money yet. LOL

We were not able to pay cash for our rentals but instead put 25% down. Then payoff in 12 to 24 months. It really snow balls quickly when you throw all that rent money into paying off the next rental.

Best advice I can give is do your homework. I never buy a rental that doesn’t cash flow after mortgage, insurance, vacancies and repairs at least $500 a month.

I tell everyone if I can do it anyone can. I have a GED and never finished college. I just started buying houses and didn’t listen to all the negativity.

Thanks military millionaire. I want as many people to know that it is possible!

Great posts for everyone! I’m here to read and learn before we take the plunge. Air Force members here as well but late in the game! Thanks Rich!

This is straight out of every finance book and magazine written since 1981! IRA’s and 401K’s won’t do it, circa 2006. Explaining it simply: somewhere, some trash network directly connected to the Rothschilds, the Abrams Complex, (until 2003), now the Pentagon and Gen William Walker (ret) is funneling former military personnel questionably legal amounts of cash via CEO-appts in places like Serbia, where Gen Patreaus’s status as CEO of of a certain Serbian Television network amounts to a violation of looting laws, and no one stops these scumbags.

There should be an investigation that is able to follow IG lines, but the money we are talking about is the devil’s and he will see the US fall, first. And if you lift up that rock a tad higher and see who all is crawling under it, it lays bare the fact that change must come. And I will leave it to your imagination where the retired Gen millionaire came from….or the scummy retired Colonol class that got that way such as the one who owned the Camelia Hotel complex in Columbus, GA….

I’m keeping your comment not because it adds substance, but because it’s frickin’ looney tunes. Either that, or I’m just not intelligent enough to know what the hell you’re talking about!

Just went over 14 years of service. Entered as an O1 and am now an O4. Will be a millionaire within 5 months. All cash. I have 1 rental that has not really made me money but the tenants are making my payments. I have about $60k in equity in it now but not making money on the rent/mortgage delta, at least not after repairs are factored in. I have gotten here by living like an E4 my entire career. While my buddies live it up in expensive condos or townhouses, I have rented VERY modestly. While others buy expensive cars, my 03 carolla keeps chugging along nicely. I am buying time…not things. I am looking for complete, 100% freedom from the 9 to 5 routine upon separation. I know I can be doing some things smarter, such as buying cheap homes rather than renting cheap residences; however, there is a simplicity and low stress aspect to my approach that, while I know I could be even more efficient, makes it worthwhile to me. Financial freedom is not impossible. People make it seem as such. All you need is common sense. Maximize your savings rate and do it consistently. Pay yourself first. Don’t follow the masses…sometimes the “m” is silent…

Sounds good. Congrats!

I am commenting because I am looking for an impartial perspective to my situation and (hopefully) affirmation that I am on the right track. I agree with all the points that you said, except for not buying the big house. However, my situation is different that most military as I am AGR, meaning I don’t have to worry about being stationed somewhere else so it’s basically apples to oranges.

I still have a little more that 16 years left until I can retire, which will put me at 51 years old. Currently, I have 95K in my TSP and am contributing the annual max of $18,500 to the Roth TSP as an E-6. My wife is working and her employer puts 15% of her salary ($85,000) into an IRA. I currently owe $220K of a $300K mortgage on a house that is valued at about $340K.

My plan is to pay off the house within the next five years and then start putting about $4K/month into an investment account spread across a few mutual funds/index funds. My hope is to have around two million in savings between me and my wife by the time we retire which should add plenty of cushion to my pension.

Every retirement calculator I look at tells me that I’m basically going to run out of money around 80 – 85, but I just don’t see how I could. I believe that I will barely be touching more than my pension, as most of income now goes to retirement savings, paying off my house, and childcare for my children. At retirement, all of these expenses will be gone, and I imagine I will have plenty of disposable income.

Do you think I am missing something, or is this a symptom of the retirement calculators putting too much emphasis on current earnings?

I don’t necessarily see the reason to pay off your mortgage in 5 years if you are retiring in 16 years. I think you would be better of investing the money that you would have used to pay off the mortgage early. The advantages of paying off a mortgage early are more psychological.

Fully max your TSP/401ks and IRAs for wife and yourself, then start investing money in taxable accounts, assuming all other debt is paid off. I think you’re doing great!

I’m retired AGR. You will never run out of money if you have a military retirement that is indexed for inflation (actually a bit less than CPI depending on inflation but I digress). The standard withdrawal rate is 4% and you can run a monte carlo simulation (can find online) that will show you the percentage chance of running out of money based on initial balance, withdrawal rate, inflation, investment rate of return, etc. But the 4% is just a baseline rate and there are actually some other rates that may work better for you. For instance, I created a spreadsheet that shows an initial withdrawal rate of 9%, decreasing a bit after 10 years and at age 95 I still will have a decent investment balance.

I ship off to Parris Island in about a month and I’m trying to find an aggressive plan to use my money, considering I’m getting a sizable enlistment bonus. I want to start investing once I join the Corps and being 19, I’ve never done large-scale investing like real estate. I’ll have to live in the barracks (unless I marry the first girl I meet haha) and so buying a house seems a little far-fetched. Do you think it’s still a wise investment to buy properties while I’m still living in the barracks?

My last assignment was as a company commander of a basic training unit at Fort Benning so I’ve had the chance to spend a lot of time with new Soldiers. My advice to new military members is to max out your TSP in the C and S funds. Since you will be in the blended retirement program, you’ll be getting a 5% match on your contributions so make sure you take advantage of that free money. Next, open up a Vanguard traditional IRA where you will buy $5500 worth of shares of VTSAX each year. If you have money left over, open up a brokerage account with Vanguard and invest in VTSAX. Let the brokerage account grow while living in the barracks by investing 50% of your base pay. After a couple years, you’ll have a higher net worth than 99% of your peers who will have spent their pay on cars and video games. You can then explore “house-hacking” a multifamily at your next duty station using the VA loan and start building a rental portfolio.

I didn’t start investing in real estate until I grew my Vanguard account to $100k which took about 3-4 years. I regret not maxing out my TSP since commissioning as a brand new 2LT. Had I done so, I’d be a lot better off (though $400k net worth isn’t too shabby for a 30 year old CPT).

I think your best idea is “no expensive hobbies”. ALL of my buddies have hobbies, hunting, fishing, boating, sports, whatever. I chose to find a productive hobby that I enjoy – real estate. I spend 20 hours/week and usually end up making about $50/hour(flipping, new build, working for other builders). Multiply that x 50 weeks for 20 years = wealth.

Hobbies can be expensive! You picked the right hobby. Someday, you’ll have enough money to pick two or three of the expensive hobbies if you want. I like making the money first, then having the hobby, if I even want it at that point!

Thanks for this expanded information.

Question, you mentioned in passing that Vanguard is doing “something” that may cause them to increase their fees. Therefore, can you please clarify, thanks.

Perhaps I misspoke if it was the video. USAA is changing how their investments are run, and it means that some of their funds may have front-end loads, or basically an up-front cost when you buy. I don’t know the details about this yet, but watching it carefully.

So glad I came across your article. My husband and I have been “investing” in real estate since we got married (all were our homes at each post, which only worked well in TX and NC profit wise).) Our starter home was probably our best investment and after 11 years of renting it we ended up selling it. (Bad decision in my opinion). Now my husband is 5 years from retiring and has got it in his head that he wants to buy land now in Montana (20+ acres). While investing in land is great imo, I feel this plan is too risky because we have never been or visited Montana ( we came to this conclusion after seeing their veteran homestead exemption). On the other hand, we already have IRAs for each of us and have our 2 boys setup with a trust small trust fund. So our retirement portfolio looks pretty good. With my VA compesation (medically get from military at 100%) I dont have to work and makes it ideal for us to invest without feeling a lot of pressure, plus his retirement in 5 years I feel also puts us in a good situation. Also, we have a home that is huge in TX, giving us a ton of profit. Basically, my texas tax exemption makes my mortgage 984 and rent is $2000(home has pool) . But what I am trying to ask is, is making a decision to buy land now before his retirement a good idea? Or is it to quick of a decision to make?

From a purely financial perspective, I don’t think it’s a good idea. The land may or may not appreciate. It’s not a purely financial decision, however. He may want to own land there for reasons other than investment. That has to be considered.

Love the article and pretty much all of your other articles – super helpful to a newbie in the real estate investing world. I am in the same boat as you were, being a Military Officer (O-3). I have been matching the TSP BRS at 5% contribution since I was able to, in order to get the “free money” as you put it, and have been maxing out mine and my wife’s ROTH IRAs. I am considering either a) contributing my full $19,000 toward the TSP C and S funds to max out my tax advantage , or b) using that same money for down payment(s) on properties that cash flow in a debt snowball type of strategy, where the ROI is potentially higher

I understand the tax advantages of IRA and TSP, but to me if I contribute the full 19,000/yr + 6,000 + 6,000 = $31K, I will not have as much money to invest in real estate (

10K/year) with possible returns of 12-15% vice the VTSAX 7% long term average that I have been seeing.

Just curious if you were in my chair, would you go with option a, b, or a combo of both? Thanks in advance for the time.

That’s a great questions, and a tough one. I had the years between 2002-2020 where I didn’t contribute the max to my TSP, and I regret it (plus my wife keeps yelling at me about it). That is a guaranteed legal tax advantage, combined with the power of compound interest over the long term. I’ll say the priority is on maxing TSP and IRAs first, then saving up for a down payment second. Whether or not you will do well in real estate is not as sure as whether the TSP and IRAs will do well over the long term. I would argue you find a side hustle of some kind to make that extra money you need to invest in real estate.

That’s my answer.

Thanks for taking the time to provide a response! Also that all makes sense given the potential uncertainty of initial success in real estate, and i will consider the TSP a little more moving forward.

It’s also the guaranteed advantage from tax advantaged accounts. Good luck!

Great advice! Keep it coming. I do have another warning for military members (especially senior NCO & Officer). Beware of FirstCommand!

During my Officer’s Basic Course, the regimental commander required us to go to a MANDATORY reception hosted by USPA & IRA( now First Command). They pressured all of us to buy super expensive investment products. I wasn’t an investor at the time, so I wasn’t informed enough to comment but something didn’t smell right. I left the meeting intent on learning about this group, I did’t want to be the only fool to miss out on the best investment opportunity of my lifetime. ��

Five years later my battalion commander required all his subordinate officers to attend a free steak dinner and presentation by FirstCommand. However, this time around I was a little more investment savvy and a new Boglehead.

The rep became very hostile when I pointed out all of their world class investments had very heavy front-end loads and I could beat their returns easily with Vanguard index funds. They insinuated that I was an idiot and tried to guilt and pressure everyone else to invest. I made it a point for the rest of my career to attend all the free FirstCommand steak dinners I could and educate my fellow soldiers.

From what I understand, a few years after this, they had to pay a fine to the SEC for fraud. Their advisors now claim they messed up in the past but new management has emphasized their fiduciary responsibility. WOW, that would be great if that actually occurred.

However, they still pressure military members to buy expensive investment products and annuities BUT have now added whole life insurance to their products. Of course, they heavily push their insurance products.

These people play on the trust of military members by claiming they are former military and understand service-member’s needs more than anyone else. Yes, people have earned money investing in their products over the long haul by consistently investing over the course of their careers ( utilizing convenient payroll deductions). However, their portfolios are much smaller due to the expensive investment products.

Their sales practices and how they pray on fellow military members makes me angry. However, it absolutely infuriates me that my chain of command forced me to attend their presentations.

I’m out of the military and don’t have your platform to educate our brothers and sisters. Rich, please look into this group and see how they currently operate and offer your opinion on this site to fellow active duty members and recent retirees. You are awesome!

I don’t necessarily want to write a separate post trashing first command, but I’ve certainly heard they are shady!

If your chain of command forced you to attend their presentations, that’s probably illegal. I’d go to the JAG about that!

Do you have any other article that can help beginner future soldier all this info im reading is somewhat confusing

I’m working on it! There’s a whole blog full of stuff.

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