GI Jane Finances

March 7, 2010

The three-legged approach

Filed under: Aim high — gijanefinances @ 9:27 am

I have a three-legged retirement strategy:

Pension:  I have a love/hate relationship with the military.  I love being able to move every 2-3 years to different places, especially overseas.  I love that my salary is not fully taxed–only base pay.  I love the “live below your means” lifestyle:  wear a uniform everyday; driving a beater is accepted and not looked down upon; free education and training; not paying for health insurance; and forced to be physically fit.  I hate having to tolerate the occasional power trips by those who outrank me. I have promised if I make promotion that no one will hear a peep from me.  However, I have risked my career several times in challenging authority…speaking “truth to power” can be kind of scary.  I have 6-7 years left.  I have a had several “take this job and shove it” moments…but they “got me,”  I can’t just walk in the next day and quit.  It is a good and bad thing.  This leg is definitely a marathon, not a sprint.

Roth/TSP: I am encouraged by the market as of late.  I remember when the Dow was at 14,000…those were the good days.  I wish my liquid cash was also $100,000.  Feeling a bit of balance envy when looking at the networth of other bloggers with matching 401ks.  If I can endure leg 1, then who cares right?

Rental:  I think this is the best decision that I have made to date. I decided last year to double the payments.  The original balance was $130,057 after refinancing it in 2003.  I had refinanced due to when I purchased the home in Dec 2001 it was at 7%.  The rate is now 5.875%.  Since it is a rental, I can’t take advantage of the current low rates.  I ran a couple of amortization calculations:

Without pre-payment the total interest paid would have been $96,017 on the remaining balance of $116,321. 

I paid $4000 extra from Dec 09 to Mar 10.  The balance is now $111,291.  According to the calculations without prepayment, I would have reached this balance next year.  In Dec of 2010, the balance will be $100,000.   If I did not pre-pay, it would have taken until 2014 to reach $100,000.  By pre-paying this year, I removed 4 freaking years of payments!

In summary,  paying $1000 more saves $71,624 in interest and reduced the terms by 16 years and 11 months.  Why would anyone want the bank to have an extra $71,624?  Not me.  Seeing how much interest Ms Salliemae would have received without killing her quickly motivated me to pay that sucker off…post haste. 

Other special interest items–

Future home:  Saved $4856 as of now. 

Future car: Not sure how much I really want to spend on that.  My used KIA and cute little cabrio (in the states) are more than enough for now.

GI Jane

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2 Comments »

  1. Wow! That’s a great strategy. It seems like you’re really on top of your game.

    I’ll race you to our first million! Haha.

    Comment by Mike — March 9, 2010 @ 12:38 pm

  2. lol…wish I had it so together at your age!

    Comment by gijanefinances — March 9, 2010 @ 7:09 pm


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