GI Jane Finances

August 21, 2010

Revelations and Epiphanies

Good news! I will finally find out the promotion results on 26 Aug.  I am also planning on visiting Chicago, North Carolina and Toronto in Sept.  Chicago for my godson’s confirmation ceremony.  My friend bought a house in North Carolina.   Also, my very good friend of 19 years lives in Toronto.  I have never met his sons.  He works for the United Nations in Toronto and travels a lot.  He did visit me in San Antonio and Louisiana.  I visited him once in Ohio when he was head of the college dormitory housing.  I have a dear uncle, aunt and cousins who live in Toronto.  The last time I was there was in the early 90’s.  I remember being very bored, but was impressed on how clean and safe everything was.

Enjoyed the past two Suze Orman podcasts.  She really has changed and adapted with the current climate.  I was delighted to find out that she has a “use cash” program.  Suze is challenging people to not use debit and credit cards.  I thought she became a shill for credit cards and sold her soul to myfico!  I only use my credit card for grocery shopping and any purchases on online mainly for the points.  I pay off the balances as soon as it is posted.  My new AMEX gold card will not let me pay quickly for some strange reason (I’m sure they are hoping that I forget). But I use cash to pay my rent, utilities and any local shopping I do.  If you use a credit card on the local economy, there is an extra charge.  

Her opening guest did the cash only challenge for two months and saved $800.  She did fall off the wagon and had to move in with her parents.  I think she is on the right path at age 26 and trying different strategies to win with money.  I started trying new things at 27.  Next, I learned good stuff on long-term care health insurance.  It is helpful since my parents are discussing how they are going to retire without having a pension.  Genworth has a policy for $6000 a year. Suze said to buy LTCH insurance by age 59.  I’m sure it will be double in the 19 years when I will need to buy one. 

In the two “How am I doing segments” she had one couple who had about $1.3M who retired early but had their money in money market accounts in their 50’s.  Money Market?!?! I thought I was conservative.  The wife needed to return to work for the health insurance.  Suze admonished them because their plan would cause them to tap into the principal since their investments only currently generate 1% in interest.  They just needed their plan to be tweaked and rearranged. 

The second segment had a single 45 years old  retired but working Army veteran.  I always like it when she features someone in the military.  I was very impressed with the amount of cash retirement and emergency fund savings: $239,986.  Suze thought she had a low amount saved for retirement considering her age.  I kind of agree with her.  However, it is unfair to compare a servicemembers retirement savings to what a civilian would have at the same age.  The military does not match in the Thrift Savings Plan.  The military TSP did not begin until 2001.  So, she must have invested in something like a Roth, Traditional IRA or some other vehicle for around a decade.  Therefore, kudos to her for retirement saving since only about 20% of servicemembers end up with a pension.  She may have saved the other $100,000 from her deployments.  Plus, she still young enough to start another career with a $2,100 pension that is worth at least $1M. 

Now, the bad news…she is overleveraged in real estate.  Her primary mortgage is underwater by $36,000.  She has a rental with some equity.   Mortgage debt is $267,636 and home equity is $182,364 equals -85,272.  If that isn’t bad enough, she cosigned for an $189,000 mortgage note for her daughter.  That brings her mortgage debt to $274,272 (without knowing if her daughter property has equity).  I was in her same spot with two houses–without accounting for the rental equity but without the $100,000 in liquid cash and about 8 years younger.  So, she can turn it around and may have to chip away from her cash like I did.  The big wild card is if her daughter will be able to refinance the mortgage in her name…which I doubt especially in this time in age.  Unless, she ponies up $37,800 to help her with a 20% down payment.

Interesting segments.  I think I learned a lot.  Suze is my hero again…for the moment.

GI Jane

August 14, 2010

A dream deferred…warning rant ahead

The Air Force Personnel Center is playing games with my future!  The Lt Col board results have been delayed until late Aug.  The results were supposed to be released in June.  I heard a rumor that AFPC is concerned about announcing the Selective Early Retirement Board and promotion results in the same week.  Funny, every other rank gets to find out their results…the Staff Sgt. list was just published.  Hey, if retirement eligible Lt Cols have not planned on transitioning out of the Air Force, tough cookies.  I have been planning as of now and being kept in limbo after my board met 5 months ago!  I may not know until freaking Oct at this rate.  Thankfully, Air Force Times did an article on the delay.  It does not offer any explanation, but at least I am comforted in the fact that other people are frustrated as well (rightfully so).

Other news, getting ready for another operational readiness exercise…feeling kind of apathetic.  It is nice meeting other augmentees who come in from all over the world to participate.  I am supposed to test for my red belt on Friday.  Do not know if I can make class and fulfill my exercise responsibilities at the same time?  I am looking forward to wearing the red belt–it is the last one before black! 

Cheers,

GI Jane

August 8, 2010

August networth

Filed under: Uncategorized — gijanefinances @ 8:15 pm

Cash: $24,327

Roth: $46,439

TSP: $61,600

Total: $132,366

It took my breath away seeing my TSP reach the 60s! 

Cheers,

GI Jane

August 1, 2010

Cautionary tale: Suze Orman

Filed under: Uncategorized — Tags: , , — gijanefinances @ 4:34 pm

Suze Orman had on her 25 Jul show a retired Navy pilot named Jeff.  Orman’s books and shows did help me in the past, so I still watch her. But I am having mixed feelings about her get-well plan for Jeff.  He retired from the military in 2008–the height of the recession.  Jeff became a contractor and the gig dried up.  He now has: $281k mortgage, $53K credit card debt, $37k in student loans and $10k in other loans.  His pension is $2700 a month.  He would like to know if he should sell his pension for $130k?  My quick answer is h#ll no!  The pension is worth millions of dollars.  He should check out the defenselink.mil calculator to see how crazy an idea it is.  Jeff is on unemployment, paying child support and $700 out-of-pocket on his mortgage.  Suze tells him not to sell his pension and declare bankruptcy.

In this case, I think Dave Ramsey’s teachings would have been better suited for him.  I think he would have told him to default on his credit cards, put the house on the market and reduce the asking price to sell it.  He has more of an income crisis and declaring bankruptcy will not solve that.  Suze is more into touchy feely stuff rather than roll up your sleeves and attack the situation.  She opened up with a segment about her garage attendant not remembering to have the car ready…very out of touch (it pains me to type that:).

If Jeff did not retire with $90k in credit card and student loan debt, he would not feel as overwhelmed.  I was stressed out selling my $150,000 house with several thousand in student loans…and sold it while living overseas in 2008 by listening to Dave Ramsey.  Suze used to advocate keeping your student loans as long as possible because it was “good debt.”  Now she has swung in the opposite direction telling people to keep 6-8 month emergency fund and stopping another caller, Dennis, into  immediately retiring.  His family was diametrically different from Jeff.  They had about $700,000 and a $4k month pension.  Their expenses would be $3k after they sold their rental and pay off the primary mortgage.  Since I do not know what the $3k in expenses were…maybe property taxes on a $500,000 house?  I think if the family moved into a more modest house, they could retire.  Stanley Kramer’s book, Stop acting rich, spoke to how having a high overhead–like a $500,000 house, prevented people from successfully living below their means.  It is a good book about how status symbols are like a hedonistic poverty trap.  I like the idea of keeping your overhead low–like monthly expenses, so you do not need a huge income to feed it forever.

GI Jane

Create a free website or blog at WordPress.com.