How to Achieve Financial Independence in the Military

Today’s episode is about options you have to fast-track fire while you’re in the military. If you’re not in the military, this episode might not be for you. However, if you know somebody who is active in the military or thinking about enlisting, please send this episode to them. We’ll be breaking down how unique military advantages from zero cost health care to housing allowances can actually get you to financial independence.

Hello, hello, hello, hello, and welcome to the BiggerPockets Money podcast. My name is Mindy Jensen and with me as always is my in-line co-host, Scott Trench.

Thanks, Mindy. There’s lean-fire, there’s barista-fi, there’s chubby-fi, there’s fat-fi. But today, we’re gonna be talking about Semper-Fi. How was that? We are so excited to have David Pere on today once again. David is a retired Marine Corps soldier turned real estate investor and is the founder of from military to millionaire. Go check that out if you are interested in finances in the military. David built a multi-million dollar portfolio while serving full time and now teaches other service members how to achieve financial independence through real estate. David, thank you so much for coming on the BiggerPockets Money podcast today and assisting me. I am no expert on the intricacies and the details and the realities and the the challenges that are specific to a soldier’s life. This is a hypothesis, a potential plan for consideration for enlisted soldiers and we are so delighted to have you helping poke holes in it, corroborate or agree with me whenever I I happen to accidentally be right in my approach here. David, welcome to BiggerPockets Money.

Thank you, Scott for having me. I should I should probably clarify for whoever wrote your notes. Uh, I was enlisted and uh I didn’t technically get to retirement. I I got to a financial point where I was able to just walk um at 13 years. But that being said, I did 15 years if you count the reserves and I I know a thing or two about the military.

Thank you for coming on today and just to preface this, this is a presentation I’ve prepared. I am very passionate about the uh armed services and and trying to help soldiers and the fire community move toward financial independence. I have given some talks at military academies, actually twice at the US Naval Academy, talking about how the students uh there, the midshipmen uh can go on during their careers and emerge from their five year post graduation service commitment with as much wealth and optionality as possible. And so today I’ve taken that presentation and I have repurposed it for an enlisted soldier and the idea is how far along this journey to financial independence can we get this enlisted soldier, looking at the math. I did a lot of work to research pay, allowances, uh the freedom or lack thereof in the initial stages of that journey and how to play the hand that is dealt to an enlisted soldier to maximize wealth creation by the end of an eight year active duty service commitment, which would be on the high end or longer term for most soldiers. So how’s that sound, David? You ready to to beat up my presentation? Mindy, will you will you do the same?

Let’s rock it.

I will.

Awesome. All right, with that I’ll I’ll bring it up here. All right, this is an all-out approach to early financial freedom soldiers edition. We’re gonna talk about the three choices, three outcomes that I think a soldier can uh have after an eight year service commitment, the three paths they can take. We’re going to talk about the math of the soldier’s game, the rules of their game, we’re gonna talk about their financial baselines, how to house hack and live for free following your promotion to E-4. We’re going to get started with some investing thought starters and I’m going to give you some parting thoughts on what I think is achievable over an eight year service commitment. And David, of course, is here to keep me sane and grounded in whether that is actually realistic because I am not a soldier of course, I’ve studied financial freedom, this is my attempt to apply it to the soldier’s life. All right, so we have a choice here in what we can achieve over these eight years in the army, in the Marine Corps, in the navy or in the air Force, Coast guard, whatever whatever branch you’re in. The first option, which I think sadly too many soldiers end up taking, is to be completely broke um or cash flow negative. They emerge from this stint with no savings. They’re renting their house, they lease or own a fancy car, perhaps a jacked up F-250 pickup truck. There’s a large amount of credit card debt. There’s not much invested in the TSP and there’s a large personal debt. We’re going to avoid this this outcome entirely with today’s presentation. The second one is what we have taken to calling the middle class trap here on BiggerPockets Money, where there is some wealth, we have net worth, we’ve accumulated, and we maybe even done some things right along this journey. We have a little bit of emergency fund, we’ve bought our house and have a mortgage payment, we’ve got a car with a payment, it’s not a thirty-five thousand dollar jacked up pickup truck, but it’s still an expensive car with with a with that big payment that comes out of the paycheck every month. We’ve got moderate credit card debt, we’ve got moderate personal debt. And we do have a balance in our TSP. Most of that wealth is going to be in our home equity and our TSP. And this is not a problem per se, you will be able to retire if you pursue this over the next thirty, forty years, but it’s not the ultimate all-out approach to financial freedom that I like to go for in terms of the fire movement. And I think what what folks are looking for from this video. Um again, the option coming out of this is going to be fairly limited. The soldier is very likely to re-enlist or to go along with a very similar career trajectory following that service commitment if they’re building wealth like this because it will feel like there’s not a lot of cash in their life and they’ll run out after a few months. And then the third option is to have the world as your oyster. This is where we have several hundred thousand dollars in wealth built up, a significant cash position in what I call financial runway, maybe a year or two of spending in cash ready to go. We are living rent and mortgage-free, we drive a paid-off car, we have no credit or personal debt, and most of our wealth is outside of the TSP generating income that we feel comfortable spending. So this is the outcome that we’re going to be looking for today. David, how am I doing so far? Do you believe that these are a reasonable approximation of what is possible or likely and that most soldiers end up in these two camps?

Yeah, I’d say so. And I’d say the world is your oyster. We can probably even push that number depending on, you know, how many times we use the VA loan, but we can talk through that as we go.

Absolutely.

Okay, so before we get any further Scott, I can see somebody watching this presentation who this presentation is made for, they’re military, they don’t really have a lot of financial education uh, coming into this presentation saying, “Well, how am I gonna get this two hundred fifty thousand? Clearly I have to be an officer or I have to be in the military for a long time. I have to be making a lot of money in order to have that.” What is the base salary we’re talking about here? Are these options for everybody?

I’m so glad you asked, Mindy. This presentation will go through a very detailed analysis of the base salary, uh, the basic pay for these recruits and the allowances that they’re given like allowance for housing and for uh subsistence. And we’ll talk about those and how those move through. So we got three paths, right? So if you to end up with in the first outcome here with no options, then, you know, spend like a sailor, right? Buy your dream car, get a sick pad, YOLO, double down on that YOLO, party it up, live paycheck to paycheck, never invest. And this is the last time you think about personal finances in your life uh for the next several years. That’s how you end up broke. If you want to end up middle class or in this on this path to that middle class trap, then you will buy liabilities that you think are assets, like that reasonable car, like that nice home, like putting all the rest of the money into the TSP and we’ll just spend a little bit less than we earn, build a little bit of a savings buffer and auto pilot our wealth accumulation. We’ll self-educate a little bit, we’ll read enough to be dangerous, but we won’t really take it from there. And again, that’s fine. If we just move people from category one to category two with this presentation, I’ll be delighted. But again, if you’re interested in the fire movement, then you’re going to need to be all out. This is going to be a little bit of an obsession here. We’re going to spend as little as possible and we’re going to invest aggressively. We’re gonna drastically cut transportation expenses by buying a beater or not owning a car at all. We’re going to hack our housing and learn how to live for free while we pocket all of our BAH or the vast majority of it. We’re going to tightly control our day-to-day spending, build a huge liquidity position. Again, invest primarily at first out of outside of the a TSP, although in later years I would be totally comfortable uh beginning to max out the TSP probably around year three or four. Um we’re going to concentrate our investments, we’re not going to diversify because we’re trying to build a large wealth position in the early days. And we’re going to obsess. We’re going this is not going to be the last time we’re going to think about personal finance. We’re going to read books and really think about this for a long period of time following this presentation. And I think that uh folks like this can have the option to live life on their terms or become financially free within 5 to 10 years, beating David’s time of 13 here. To frame this, we’re going to talk about the shockingly simple math behind early retirement. How does one retire? Well, there’s a very simple way to describe this concept. This is a review for anybody who’s familiar with with the fire movement or the early retirement movement. But the time it takes you to retire is a function of one number, beautifully illustrated by a blogger called Mr. Money Mustache in a blog post called The Shockingly Simple Math Behind Early Retirement. And that number is your savings rate as a percentage of your take-home pay. So if you’re like most people and you save 10% of your take-home pay, it’ll take you about 51 years to retire, assuming you invested about a 7% inflation adjusted return. If you can up that number to 20%, you shave 14 years off your retirement journey. So as you save more and more of your income, that number geometrically shrinks, right? Um we if we can say 50% of your income, you’re not you’re going to retire in 17 years instead of 51 years for the 10% saver. So the reason for this is that the less you spend, the more cash you accumulate, and the less your portfolio needs to generate for you to be able to retire. So this is the game we’re trying to play here. How much income can we produce, how little can we spend, and how can we invest it to attempt to have the option to retire as early as possible.

One of the reasons that I love the house hack so much is that thirty-three percent of the average American’s income goes to housing. And if you can eliminate that, then you just cut your retirement time, based on that chart, in half. And the VA loan being a zero-down mortgage allows you to get into a property at an earlier age than you would be able to having to save five, ten, fifteen, twenty percent down for a property. So that’s why I, like I, when I talk about this stuff, I’m like this is the biggest lever that you have as a service member.

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Real estate is such a powerful alignment, spoiler alert, for servicemen because there’s different rules that service members have to play by than the rest of the population. And those rules have advantages and disadvantages, which I’m going to attempt to list here and get your feedback on David. I think that the advantages for service members is that they’re going to start with zero in the most case or have the ability to start with zero, right? Most college educated peers will start with student loan debt. And these folks will either not need to get a degree or if they choose to get a college education, um can get one for free or for very cheap if they so choose. After tax income potential is actually pretty high. And let’s put that in context here, right? A soldier’s saying, well I’m making like twenty-five thousand dollars a year, how could you call that high? Well, let’s remember here that the average recruit is 19 years old, right? And we’re gonna talk about I’ll show you a chart later on on this what the what the average 21-year-old makes in this country, the average and median and top 1% uh specifically, makes. These soldiers are not making below that average in basic pay, and we’ve got housing and food taken care of either with allowances or in most cases for these new recruits, by living on base and eating and and and living for free and not pocketing those allowances. So I actually think that there’s a really strong income potential uh here for a soldier relative to the others in their age bracket in this country. And there’s awesome benefits and perks, which David touched on here, um, which include special incentive pays, thrift savings plan, great life insurance, free health care, tax benefits, low-cost loans, specifically the VA loan, which we’ll talk about here, and the savings deposit program which offers 10% yield.

It’s so popular to be like, “Oh, we’re victims. We pay our military like slave labor,” and I’m like, “You guys don’t understand.” Like medical, dental, health insurance, life insurance, food, housing, covered, none of that is in your taxable base pay. Unless you buy a car or take on debt, your base pay is your net leftover spending cash. You don’t need to touch a dollar of it to live. You’ve got housing covered, you’ve got food covered, whether you’re in the barracks eating at the chow hall or you get the BAH, move off base and get a three hundred and eighty or whatever it is monthly food allowance. Like it’s covered. And then all this other stuff plus, and you kind of mentioned this, but if you had debt prior to joining the military, the service members civil relief act cuts that debt to six percent interest and lowers your interest rate on all your debt the day you join. I always joke with people, I’m like, when you join the military, you start at basic like freedom where every dollar you make you could do anything you want with it. It has nowhere it needs to go. And then you screw it up by buying liabilities and things on credit because you’re an idiot. And we all do it. But if you could avoid that trap, twenty thousand dollars a year after taxes that you can just invest at eighteen, you know, or forty is is pretty powerful.

Let’s talk about the disadvantages for a second and see if you agree with these. The first is that you can’t scale income. You will never be in the top 1% in your age bracket if you are a military service member. You’ll never be in the top 5%. You probably won’t even make the top 10 or you might crust the top 25%. We’ll talk on that a little bit later, but you will never be in this elite income category. You’ll know your income, it’ll be fairly fixed and the opportunities to outpace that are there, but those even those are limited relative to other career contexts. Second, there’s a limited ability to side hustle. There are very few people are like David here and can really start a profitable, thriving side business during their time in the military. It’s you can earn additional income while you’re in the military, but these will be likely for most hourly gigs outside of their time when they’re on duty. The next is going to be lifestyle freedom. Um you cannot choose where you live as a military service member. Typically you’re going to be assigned to a duty station as you progress in your service and uh perform well. I do believe you get preference in selecting where you want to serve, but that’s not guaranteed and and this is not something I can assume in a model for example in this presentation. And of course there’s a service obligation. Service contracts range from two years to five years. I’ve done an eight-year contract here, which I think is becoming more common as we see more and more folks signing up. Um there there’s actually more more recruits joining the military this year in particular it seems like.

Yeah, so I would say on this, um yeah, the best you can do for scaling income is uh there are some special duties that get a little bit of extra pay but it’s nothing crazy. So the best thing you can do is get promoted. I tell people that all the time. I’m like, “Dude, instead of like going out and side hustling, like focus a little bit of effort on making sure you’re maximized for promotion points because if you get promoted faster, that’s an extra couple hundred bucks a month without an extra amount of time.” When I went to my job school, they were like, you got three choices. Overseas, East Coast, West Coast. Put them in order one, two, three and we’re going to tell you which one you got. And then if you don’t like the one you got, we’re going to be like, well, you chose it. It might have been your third choice, but it was your choice. Um now granted, I got the choice I wanted, which is overseas and I ended up in Japan. But and then yeah, kind of depends, eight years probably more more the officer commitment, but it does depend on your job and there are various uh things that fluctuate. your main bread and butter is probably that four to five-year contract, but there are some options in there. Um and the one thing that I was going to say, Oh, I actually think the service obligation in a way is a benefit because unless you get a DUI or like murder someone, um and like do something that gets you kicked out, you know, drugs or whatever, you’re guaranteed that job for that timeline, which means you can afford to take some risks because you know that there’s job security no matter what the market’s doing and you know what you’re going to make and you know that it’s only going to get better as long as you keep your nose clean. So it could be could be seen as a a double-edged.

I’ll also call out the life-threatening risk that is inherent in military service here, which is not discussed in the financial model but is a major uh uh issue. And by the way, something that I am uh very grateful for and proud to pay taxes to support.

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for all of these service members. I’m glad as we get into it, I hope you’ll agree with me that there is uh robust compensation opportunities for folks over lengthy service commitments and that is well earned.

Yeah, and if you if you do, you know, get blown up or shot or whatever, like your family gets a half a million dollars so that helps set them up. I don’t know that that’s a bonus, but it’s a nice morbid way to say it.

Not a bonus.

It’s a good compensation package.

It’s a good compensation package, but I bet everybody would rather have the person than the five hundred K.

Well, I mean my morbid vet humor, Mindy. Allow me allow me to have it. You can’t take that away.

I also made three other assumptions here because I needed some assumptions in order to model this out in Excel and make a fancy spreadsheet. I assumed that our soldier does not um receive BAH or BAS and lives on base and eats and sleeps there for the most part. I assumed an eight-year active duty uh stint here. The commitment may be different, but I’ve assumed that there will be a eight-year active duty uh requirement here and there will not be any reserves as part of that. And I’ve assumed that the soldier cannot choose where to live and will live at the largest military installations in the country during this time period.

Sounds good.

So I’ll just answer three questions. How much will you earn over the service commitment? How much of that can you keep? And how well can you invest the amount that you keep? So over the first three years, a recruits going to earn and and I’ve broken this out into two separate buckets. The first three years where the recruit is aged nineteen to twenty-two and is required to live on base or maybe required to live on base, may not may may not be eligible for an exception there. And there are four income brackets here. There’s E-1 with less than four months, there’s E-1 with more than four months, there’s E-2 and there’s E-3 pay during this period. These are abbreviations for different levels uh of tenure in the military for those who are not in the military who are trying to follow along today. And this is I think a relatively below average scenario in terms of income because there’s never any side income assumed in this at all, uh and there’s no special or hazard pay for these recruits during this entire three years stent, right? Remember this is just four income levels over three years. Most E-1’s, my understanding is get promoted to E-2 in the first few months.

I think it’s right at six months. Yeah.

E-1 less than four months, E-1 more than four months, then I think E-2 is a promotion at six months. Is that right?

Yeah, yeah. I can’t remember if it’s six months from the day you graduate boot camp or six months from the day you went to boot camp. I think it’s six months from the day you went to boot camp.

And the other thing here, which is going to not, I’m going to not throw off your whole thing. We’re going to stick with your assumptions. Um, but there are a very large majority, well, I don’t know if it’s a majority, but a very significant percentage of people who join contracted as an E-2, E-3, and sometimes even E-4 depending on your branch of service. So for example, I was an Eagle Scout before the military, so I joined and I got you get E-1 pay under four months at bootcamp, that’s what that is. And then the day I graduated boot camp, I got promoted to E-2. And then it was like six months or a year later that I got E-3. I was an E-5 at three years and two months. and I was a fast track, but but there’s a significant amount of people who join as E-2, E-3 the day after boot camp and would actually make more than this in that first three years, which is cool.

All these numbers are sourced directly from the military pay’s website, which makes financial modeling a very fun because I don’t have to guess at any of these inputs. Like I know exactly how much money these people are going to make in the first year depending on their year of service, the second year depending on their year of service here. It’s very, very easy. militarypay.defense.gov is that URL. And just to read these numbers off for folks listening um here, this is a great one to watch on YouTube because I did prepare this presentation. Um but they’re about twenty-three thousand dollars for our E-1 who just recruited after the first four months, that bumps up to twenty-five thousand. For an E-2, that jumps to twenty-eight thousand, for an E-3 that jumps to twenty-nine thousand. These allowance numbers are kind of misleading on this slide because for the majority perhaps of these E-1 through E-3 recruits, they will be required to live on base and then they will receive these allowances and then pay them right back for housing. So they won’t actually see these dollars uh come into their life for the most part. But they also won’t shell out dollars for housing or in some cases for food or for a bulk of their food during this time period. This is very simple from my perspective for the first three years for our recruit who’s not like David and is not on a fast track here. Um and they’re just going to progress through these ranks pretty on a pretty average standpoint and they’re going to have low income and low expenses. I model this out and I and I and I said here’s the average American one person household, right? This is not an average American household spending, this is average American household spending for one person households and this is from a year ago, okay? This person is spending about forty-six thousand dollars per year across a large number of buckets including housing, transportation, food, alcohol, personal insurance and pensions, health care, entertainment, apparel and services, education, and then a miscellaneous bucket. But our E-1 through E-3 does not pay for housing. So this eighteen thousand, two hundred twenty-two dollars that the average one person households spends on housing goes to zero. The smart soldier who is making twenty-three thousand dollars per year does not buy a thirty-five thousand dollar pickup truck in this time period. So if this person simply buys a Corolla for example, um I found a Corolla that is less than an hour from Fort Bragg um, formerly Fort Liberty. And this is for fifty-five hundred bucks. This will do just fine for our 19 year old recruit for probably the duration of their service here. It’s got one hundred sixty-two thousand miles on it and will require minimal maintenance. There is no need to spend more than this over that over the course of those eight years. And I think we can drastically cut this transportation expense from sixty-three hundred dollars a year to three thousand dollars a year um and be and be very comfortable.

I have a question for David. Do you even need a vehicle when you’re on a base?

No.

So you could have zero dollars in transportation if you wanted to.

I will say it depends on the installation but for the first four years that I served, especially in Japan, but then in Japan and in San Diego at both duty stations, I was walking distance for everything. And they try to build it out to where like within a five to ten-minute walk at both installations for my first three and a half years I served was gym, chow hall, medical, my unit, my barracks, all of it, pool. And so I did not have a car for the first two years. And then when I went to San Diego, I blew all my deployment money on a Harley that I didn’t need, but I didn’t need the Harley, I just rode it on weekends for fun. And honestly, yeah, you could Uber or mooch rides with friends and you could absolutely get rid of that uh completely. But it’s also depending on the ba base like Bragg is huge. So unless you want to be stuck at, you know, a little tiny hub and never leave, you’re going to want some kind of ride or or a friend to mooch off.

I thought about doing it one way where like, oh, you could put all these to zero or very close to it. But I I want this soldier to live a reasonable life during this this period, right? And a that Corolla will get them around during during this, not not in particular style, but they’ll be able to do all the things that they really want to do, I believe on the budget that I’ve constructed here. And that’s my my hope based on your feedback, David, and it sounds like it sounds like you could go much lower than this and obviously these would look different if you’re deployed overseas. Next I have food. I have a nice picture of the chow hall here, the DFAC dining facilities. I believe that’s the short for here. And the food budget I I believe in theory I could put at zero um for this person, but I believe that despite not receiving BAS, this person will want some variety from the chow hall during their time here so I gave them a budget of about two hundred dollars a month to eat offsite. Uh and this is for a single person. That seems like a pretty reasonable uh budget here considering that the bulk of their food will be paid for by the chow hall. How am I doing here?

I’d say you’re spot on. Yeah, people will inevitably at least on weekends go out and eat.

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very cheap insurance options. So you should you will not be spending anywhere close to a one-person household’s dollar outlay on insurance and pensions here. Correct?

Yeah, I’d argue it’s probably like half of that.

Perfect. So they can even go go lower. I have a conservative estimate here. Soldiers don’t pay for health care, so the 4,000 dollars that a single person might pay for health insurance and health care um on a given year or potentially more is going to go to zero for the soldier. Soldiers don’t pay for education. So the 824 bucks that the average American pays for education is going to go to zero for the soldier. There’s a lot of free resources I believe for soldiers and if they choose to begin getting college credits and degrees, they could do that with their spare time for free or for the bulk of it paid for.

For free. Yeah, tuition assistance will cover you for I have a friend who got his doctorate all the way through uh on tuition assistance and then still had his GI bill for when he got out.

Well, I believe that one of the things that uh uh soldiers and I have in common is a love for beer. Beer makes me happy and is a an important part of life. And I know our soldier’s 19 and would never drink, of course, but I have decided to reallocate some of this budget to reflect shared values here, and I’ve increased this very uncomfortably low four hundred twenty-two dollar alcohol budget per year to three thousand dollars per year. That’s a that’s a large number of cases of natural light for our soldier here uh once they turn 21, of course. I’ve know I’ve modeled that as if they were going to drink at nineteen, I don’t know why. Uh so I put that into the model here for for this. And I’ve also said that this soldier deserves to live a little bit. So I’ve increased our entertainment budget, I’ve nearly doubled it for the average one-person household to 4,000 dollars a year to let them live a little bit. So how how’s this, David? Is this is this a fair budget?

I think that’s reasonable. I mean that’s 300 bucks a month, give or take for, or I guess if you count both, it’s probably 600 bucks a month, right? So, yeah.

This allows the soldier to live from a fun perspective better than the average one-person household by a considerable amount once we exclude the housing and uh transportation.

Which is good because we do be partying. And I saw the your apparel, there’s actually a clothe a clothing allowance. So like it would be for like personal clothes sure, but like your your military uniforms are every year on the year anniversary, you get a clothing allowance that’s supposed to be enough to uh, you know, replace your main items and cover whatever. Now it’s probably not quite that. It’s like six to eight hundred bucks that you get. So uh you could theoretically erase that outside of like civilian stuff. So I think that’s a good low number. Yeah.

Awesome. So this all totals to about eighteen thousand dollars in spend once we’ve bumped up our alcohol and entertainment budgets not counting some of the other savings opportunities that we briefly discussed here uh in my model. And I I believe that I have zeroed out the allowances here in my model because they’re not going to go to to our soldier. They’re just going to go straight on through back to the military for the housing and food there. But I’ve said this soldier over three years, you know, in their uh I’m sorry, this is supposed to read E-2. This does reflect the E-2 pay. But this says these soldiers uh in year one you want to need two and year two is an E-2 and year three is an E-3 are going to get this level of income about 90,000 dollars in aggregate. And their expenses with a pretty good lifestyle, I believe, relative to the average American at least, in terms of their ability to spend on the fun things in life, are going to be about uh what is it, 44,000 dollars, and that’s going to enable them to save after tax 31,000 dollars in cold hard cash. That’s assumes no tax advantage retirement, nothing in the TSP. This is just cash that could accumulate in our soldier’s bank account. Is that realistic, David?

I think so, yes. And it’s also not, like you’ve already pointed out, it’s not accounting for any special duty pay, a deployment for the results in a tax exempt combat pay status for a period of time. Like in my first when I E-3, E-4 for me, I was in Afghanistan for seven months, tax exempt pay plus hazard pay plus whatever. So, and then on top of this, one thing that we haven’t even mentioned on this, is all of this is assuming that this person also chose a job that had no bonuses. And there are like if you go like the nuke program in the Navy, that’s like a 50k bonus that you’re going to get the day you graduate MOS school. Now it’s taxed, but I mean even still, that’s a chunk. You know, I know guys E-2, E-3 who have fifty, seventy-five thousand dollars set aside depending on that. So like there we are like just with those listening like this is the like absolute bare minimum of like income potential.

I’ve learned all these different things. I and again, I’m not an expert on the intricacies and nuances of all these programs, you are. that’s why I’m glad to have you on on today to tell me about these things. This is the the base case that I’ve modeled after a good amount of research, but it just nothing replaces actually living and breathing this stuff for years. And I’m sure it’s front and center for folks like you that entire time really knowing this stuff. So I appreciate you saving me from many embarrassing mis missees here like in in these other other opportunities that I I don’t know about.

All right, so this person’s can save 31,000 and they’re set up to start actually earning pretty serious coin in the next couple of years following this this promotion to E-4, right? So E-4, the pay bumps pretty dramatically. I think it’s about 24,000 dollar difference in terms of this number, 34,000 to the number that they’re going to collect between their annual basic pay and all of their allowances, which I peg at about 58,000 dollars here. And that’s only going to continue to climb as they go out through their service commitment. and I have them getting promoted to E-5 in year six and then being staying at E-5 through the end of their eight-year commitment.

Which again, very conservative because I was E-6 at year I think seven or eight, and I was in one of the slowest promoting jobs in the Marine Corps.

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All right, let’s cash back in. So let’s review where I’m at so far. Soldiers earn very little during the first three years. We have little, we’re going to put that in context in a little bit, but their expenses are also super low. Everything that you can think of almost is going to be is going to be covered or could be covered by a smart soldier during that first three-year period. Most recruits are between 18 and 24 years old with the average being about 19. The first three years of military service, I’m really thinking of as a college alternative um to some degree. Their peers are in college during that period of time, right? The same people in that same age bracket in many cases are in college racking up uh debt and or not earning income. uh, not certainly not income close to what what the soldier is able to earn and then keep. Because of this dynamic, we have a very simple strategy. There’s not really a need for this like complex layer of it. It’s just keep expenses low and don’t blow our pay. Um, that’s it. That’s the whole goal for the first three years. And this E3 to E4 transition is a critical milestone with a huge bump in pay and allowances, huge huge increase in the amount of cash coming into this recruit’s life. But it also comes even more importantly perhaps, with freedom to live off base resulting in the in the option to again, receive those allowances. Is all this correct, David?

Yes, sir.

All right, I also want to call out this concept of earning very little in context here. So our median 21 year old in America is earning twenty grand a year. Our average is earning twenty-five thousand and the top 10% are earning forty-six thousand. Our age 19 E1 recruit is earning 25. This is not counting the the allowances, right? If we count the allowances, this number is much higher, but that they’re not seeing this, they’re not feeling this hitting their paycheck or bank account. So I’ve excluded it for the purposes of this discussion. That progresses this way until they’re age 21 year. Our recruit when they’re age 22 and get promoted to E4, they’re going to be earning 58,000 dollars per year, which includes their BAS and BAH which puts them well above the average, well above the median, and a little bit shy of this top 10%, which you know per this discussion point earlier, this is not an elite level of income, but it is a serious compensation amount compared to the average or median person of that same age bracket. And this progresses nicely through age 26 where they they continue to be above uh this level. We spent this time setting the stage for years one through three, right? Years one through three, there’s nothing really to do here except get promoted to David David’s point, do do what you got to do, keep your expenses super low, you know, or or even put a pretty reasonably high ceiling for these entertainment and alcohol budgets or whatever the fun stuff is. but make sure you keep the rest of the expenses low and are actually accumulating cash. And I think a great target for this is is at least 30,000 dollars by the time you hit E4 with little to no personal debt. If you can do that, I think you’ve set the stage for this next phase of the journey, which I think is where we can really begin to to start moving toward financial freedom in years four through eight. And this is where we’re going to see expanding income especially in the in the sense that cash is coming into your life with the allowances. You should see your cash position expanding pretty rapidly. You should see your freedom and flexibility increasing with choices like where you live and what you drive and what you eat playing a bigger part in this and you’re going to have that optionality um to get ahead. I want to introduce this concept though because as you receive the allowances for housing and food, you are then actually responsible for paying for your housing and your food. So we have to add these expenses back into our model here in order to get an a an accurate picture, right? That brings our spending total pretty substantially up here to this much higher number from from a spending perspective. So we have to figure out how we can address that housing situation. And so I found this is where I want to introduce the concept of house hacking, right? A a soldier who is house hacking could potentially live for free or for very cheap near these bases. There’s a steady stream of very qualified tenants by definition near these large military installations. And so I went to the very biggest one, Fort Bragg in North Carolina, uh formerly Fort Liberty. And I found a home for sale. This is a three bedroom, two bath home just a few miles away from the base that is for sale as of last week when I put this together. And I I looked it up and I saw that rooms rent for six hundred to nine hundred dollars in the area. This is not the nicest house, it is one of the cheaper ones, frankly. So I’m assuming that this will rent for six hundred dollars a room for two roommates. I assume that you get a six point four percent VA loan which was the then current interest rate as of last week. And I assume that you have the following expense allocations for maintenance, personal utilities, vacancy allowance and capex allowance. And if we are getting two roommates at twelve hundred dollars a month in rent and we have our we can reduce our cash cost of living to a ridiculously low number. We may even be able to live for free if we’re doing a lot of this maintenance and capex uh work ourselves. How am I doing here, David?

You’re doing great. It’s an easy base hit.

Awesome. So I did more Excel modeling and put this into a how would this impact our soldier over ten years, this single this single decision, right?

Can I just do this real quick? Because you’re gonna have a significant chunk of people who get on this webinar and they’re like, housing’s so expensive. I live in San Diego. As succinctly as possible, I will tell you that you, if you go with like a duplex or a fourplex, you can use seventy-five percent of the rent that’s coming in to qualify for the mortgage and you can qualify to a point, my buddy bought a one point two million dollar fourplex in San Diego County as a single E-5. So I just want to throw that out there that the numbers scale for expensive markets because you’re going to have a whole bunch of ‘not possible in my market’ and that’s wrong.

As a real estate agent, I’m going to jump in and say if you don’t believe David, even though he’s right, you should reach out to a lender in your area and start talking to them, asking them questions about the loan process and get a really good lender who works with the VA program all the time. I don’t live in an area that we have a lot of VA loans and there’s a lot of misinformation about the VA loan. Get a lender who works with this product all the time, not just somebody who says they can do it.

I will say that I have an amazing VA lender that I would love to recommend to you. It is illegal for the lenders to kick any money back to me to recommend them. I just want to prevent you from having a horrible experience.

And I’m sure David at from military to millionaire.com also has some great lenders as well. Is that right?

Where do you think I got my lender?

I was gonna say, I I’m pretty sure that both of you have done a refi or loan through a lender that I introduced you to at one point or another.

There’s another thing like this there there are financial communities out there for military. There’s a like we we are not the only people who nerd out about finance and not the only people who have attempted to to help out uh military members with this. There are communities that are dedicated to this with true experts. You should definitely go seek those out from military millionaire. David’s community is one of those. We are just friends. We don’t have any financial affiliation with from military to millionaire.

Just let me know where to send the check.

I put it together a very simple model here as well for housing and I said, you know, I assume that hey, this person could rent a place and spend 1200 bucks a month on rent, which I think would be very common for for someone stationed near Fort Bragg for example, getting that that uh sixteen thousand or so in BAH. They could buy a place like that house and get no help from roommates. They would they would qualify without without any uh rent income coming in. Or they could house hack. And you can see the drastic difference in cash coming out of their lives uh as if they’re a house hacker, renter, or homeowner. By the way, I assumed a seventy-two hundred dollar cash outlay in my model um per year and that’s what I’ll put in later in the deck uh which is a more conservative interpretation of the numbers on this previous slide just in case those are for folks that are wondering. And then the net worth impact is also very substantial because the house hacker is actually building wealth because that cash coming in from the renters plus the loan amortization plus the appreciation of the property is actually helping them turn their housing situation into a net worth creator for them which is uh not usually the case uh in housing. Rather you rent or buy, you’re usually spending money on housing. It’s an expense that comes out of your life. You’re just losing less wealth as a homeowner over very long periods of time in many cases. So a house hacker can live ridiculously cheaply. I put the housing cost here at 7,000 dollars a year instead of 18,000 dollars a year. And that brings us to if we just stopped here, we say this new person’s they’re going to spend the full, by the way, uh average house food budget. So this assumes that your food budget is going to be consistent with the average American’s household spending for a one person household. So I did not touch that number here. I moved it back up to the average number um because that will come back into your life when you move off base. But if we stop here, you’re going to accumulate a hundred and ninety-two thousand dollars, one hundred ninety-two thousand not a hundred ninety-five. A hundred ninety-two thousand, two hundred twenty-six dollars uh over an eight year service commitment but without investing anything. That assumes a zero percent return. And you’ll also have a rental property, one rental property of this first house hack which you’ve probably moved out of as you’ve moved to different um locations at that point but you’ll have this one house hack that has built 41,000 dollars in equity, right? Does this seem achievable, David still?

Absolutely.

So how well can we invest that nearly 200,000 dollars, right? Well, if we stick our cash in an index fund and earn 10% a year, not using any tax advantage accounts, that bumps that number to about 210,000 dollars in wealth that can be generated, which is a nice bump, but I think we can do a little better um than that. What if we serial house hacked into your to your point. I I I went to the three largest military installations in the country. This one is outside of Fort Bragg, right? This one is going to be Fort Campbell. This is a triplex for sale. This is a duplex in Killeen near Fort Cavazos, um did I pronounce that right? Who knows, they keep changing names. And then this one is near McChord Air Force base uh in uh in near Seattle, Washington. This is actually a duplex for four eighty in Tacoma, Washington. So these would not be the nicest properties in these areas, but they they seem on the surface to me to be serious candidates for further investigation for a house hacker. Um so I I think this is possible and all those I did not do San Diego because it was not one of the top three largest ones. I’m sure there are a lot of folks stationed in San Diego. That’s a harder market. And I think that one of the things you can do if you’re serious about this is cash accumulation is the game, right? How much of this the more this number piles up over your years, the more options you’re going to have with respect to being able to take over a mortgage, bring some cash, bump that bump that down, um fix things up or otherwise find advantage or opportunities in the area that you’re going to be deployed.

Well, and this also assumes that like you said, serial house hacking. Like there’s a very good chance that this person could be at, you know, three to four duty stations in that eight years, if not more, and they could use the VA loan two to three times, maybe more, depending on, and they wouldn’t even need to use it after that. You do it twice and then you could you could go conventional. But I mean depending on remaining entitlement, we’re not going to get overly complex in this, but just looking right there, if you bought the Campbell one and then the Killeen one and then you moved to Washington, I can tell you based on county loan limits that you could buy all three of those zero down because the Washington county loan limit’s probably a million dollars by the time you got there, you’d still have enough entitlement to buy all three at each PCS duty station.

Remember this this recruit has thirty thousand dollars. So we they could put down five percent on this property and use an FHA or low down payment conventional loan on these first two, let’s say they got stationed at Fort Campbell, then Fort Cavazos uh for a year or two each and then they bought this one and in years five or six, they’re stationed in San Diego. Well, now we can use the VA loan and we’ve got all this income from our rentals that we could add to our basic pay and BAH and BAS that helps us qualify for that one point two million dollar property. That’s how that compounds pretty nicely for this person.

You might even want to save the VA loan depending on what your strategy looks like and how long term you’re thinking, um and not and just put down a low down payment conventional for example on this because you have that cash.

Absolutely.

We haven’t talked about assuming a mortgage but we’re starting to get into more of a buyer’s market. This is a rare in practice, but in some markets that are deep buyer’s markets, you may find that you can assume a loan. VA loans are assumable. They come at the uh opportunity cost of the person you are assuming the mortgage from from using another VA loan on the future or using that amount of their VA loan towards a next credit.

If it is a veteran buying the house, they can take over the entitlement from the original owner and then that person can restore their entitlement and use it again if it is a has to, but it is a can. If it is a non veteran assuming a VA loan which is possible, uh then the veteran would lose their entitlement.

Awesome. So even better. And I think that you will find during your time uh in the military that you will be looking at properties near bases that you’re stationed at or duty stations that you’re stationed at that that there will be sellers who have VA loans and you may be the highest bidder because that price that three percent mortgage that it’s assumable may allow you to pay more for that property making you a very compelling buyer. There is a lot of paperwork that goes along with this and it takes a while to do. So it’s a little bit rare in practice than I had hoped for a few years ago, but this is an option available to folks. And if you’re serious about it, you may find opportunities um here and there during your time in service.

You’ll also need to potentially have a lot of cash because let’s say that the VA loan on a property is three hundred grand and you’re buying it for three fifty, somebody’s gonna come up with that fifty grand. So that’s why it’s so important to save your pennies early in this journey so that these options emerge for you in years four, five and six. All right, we also have a live-in flip. This is Mindy’s favorite strategy. You can do the exact side, let’s say we take that property and forget renting it out, uh this first house hack that I said that one hundred fifty-seven thousand dollar place near Fort Bragg, and you you put some money into it, fix it up, make it nice. Well, if you live in that for two years, you can sell it and pocket the capital gain tax-free. If you don’t live in it for two years, you could potentially rent it out for much higher rental. Maybe those room prices go from six hundred to nine hundred bucks a month in rent. So this is a very powerful play to put in place as well in combination with a house hack or two.

I have a question for David. Does this two year limit apply to service members when they’re being transferred to another base?

Okay, so the intent to occupy is a whole thing and people try to gurus try to teach around it, but it’s reasonably assumed to be one year as far as the VA goes. But if you get orders to to PCS or to move or whatever or like something that changes your situation, then you can move out of the house no problem. Oh.

I meant the tax part.

Oh, that’s see that’s what I was raising my hand about. Mm, this is one of the coolest things ever. So the section one twenty-one exemption which everybody knows or at least some know is like the day that you sell the house, if you had lived in it for 24 cumulative months prior to that sale within the last five years, so two out of the last five years you’ve lived in the house, you’re exempt from up to two fifty for a single, half a million if you’re married. The military gets a ten year extension. So if you bought the house active duty and you sell it within three years of leaving service, you just had to occupy it for two of the last fifteen. And so my buddy, for example, bought a house in 2014, moved out of it in like 2017, sold it in 2022, would not have met the two out of the last five, netted five hundred and seventeen thousand dollars in capital gains because this was in San Diego County in in North Park if you’re familiar, and because he was active duty, he got to write off the full half a million and paid capital gains tax on 17,000 dollars. Pretty rad.

Yes. That is a strategy that I have used. Um, I’m gonna give you one more bit of updates. Natalie Colletti told me that it’s two hundred fifty thousand dollars per person on title that is capital gains exempt. So if you have, let’s say, an 18-year-old daughter who has been living in the house and you put her on title as well, now you’ve got seven hundred fifty thousand dollars in tax-free capital gains.

I also want to call out something here on this this live in flip and house hack concept. Like San Diego, people poo-poo San Diego, right? And and you know, it’s too expensive, I can’t ever possibly afford it there. But if you again, if you’re able to to to figure out ways to qualify for that for example by having several house hacks and some income, the appreciation in markets like San Diego can be very powerful. And there’s some some rules that are very interesting. So for example, let’s say that I’m um I’m a Navy submariner, right? Um and I’m I’m going to be out for many months on tour here and I buy a property in San Diego. Well, San Diego’s got, you got to have a license in order to do short-term rentals, for example. But think about that, is there is there an opportunity there for sailor in San Diego who’s going to be out for months in a row to buy a house, have it be a short-term rental because it’s their primary residence, right? Uh and they’re they’re able to get a preferred status on these licensings, they’re able to to rent it out as a tier two or tier three short-term rental. And they’re going to have very limited competition in whatever area that is for short-term rentals because the area typically prohibits them except to owner occupants. Are there opportunities like that in some of these more expensive markets that are there for the creative and prepared soldier?

I would say yes. I actually my last two years in the Marine Corps, I was stationed in Oceanside, north north San Diego County. I ended up renting just because of where the market was at the time and I rented a four bedroom, three bath house and I got the the landlord to agree that I could sublet bedrooms. And so I had two bedrooms on Airbnb out of my house even while I was in it and I paid I think it was 3,000 a month in rent and like 2500 of that I got back through Airbnb. It was great. And some Airbnb and then my buddy John was also a, he hates if I use the word tenant. So we will not use we will not call him a tenant. He was a paying roommate. But I loved I love that guy. That was fun. That was good times.

That’s I think where this this creative aspect is. You have the concept of the house hack, you have the concept of the live in flip, rent by the room, renting out portions of a duplex, short-term rentals, these are all variations on this theme and depending on where you are stationed, you may find that there are oddball or creative rules that allow for immense profits especially for the owner occupant. Go looking for those where you are stationed and that may make the price palatable, right? And by the way, you don’t have enough money to buy a place in San Diego? Well, I’ll tell you what, let’s not use me personally, but let’s say you want to buy a place in you know one of these these more expensive markets and you’re an E-4, right? And you spent the last four years accumulating 65,000 dollars in cash when most people are broke. And you read a bunch of real estate books and are active in that community and you want to buy an eight hundred fifty to nine hundred thousand dollar duplex in San Diego County make part of it a short-term rental and the other half a true long-term rental um for that because you’re taking advantage of that owner occupancy exemption for the half that is a short-term rental. Guess what? You’re going to have a good odds of raising money. You know who’s not going to be able to get financing for that who’s hopeless? The dude who’s broke as an E-4 at that same point in time, right? There’s a that’s a there’s a story behind accumulating 65,000 dollars as an enlisted soldier over a four or five-year period that is very compelling, I think for the right private investors if you go seeking them and make this a part of your your journey.

I’m not going to name drop but I’ve got friends who’ve done exactly that as E-4s, E-5s.

That’s someone to bet on, right? Like this like something some discipline was in this person’s life for years to prepare them to put that down there and they need another 60 to 100 grand to do that? I’d bless you there have reasonable odds of getting that. So some parting thoughts here, right? I believe that the theme here is to set yourself up for this several hundred thousand dollar outcome after an eight-year service commitment. You really gotta drastically cut your expenses like housing, transportation and your day-to-day items there. Spending only on what you value. You need to build this huge liquidity position because it’s going to expand your optionality especially in areas like real estate as you have more and more cash. I want to invest primarily outside of the TSP because again, taxes are just not a major factor on this journey for our enlisted soldier in the first eight years. So there’s not really this major tax advantage from investing in the TSP. and I believe that the house hack and live-in flip is going to be far more powerful from an optionality standpoint. But again, after we crest this kind of $50,000 mark, I would not be opposed to investing in the TSP. It’s just it’s not a big difference in these first couple of years, it makes much a much bigger difference over longer time periods. And I would recommend the TSP for someone who is less aggressive taking that middle path. Just some caveats there. We’re going to concentrate and buy a handful of large, aggressive, carefully researched investments perhaps in real estate. And we’re going to obsess. this is not going to be a one-off thing, I’m going to buy some real estate in three years. I’m going to read a bunch of books on real estate. I’m going to join these local networking groups each place and that I’m stationed, maybe a couple of online ones as well and really immerse myself in this world of finance. And I believe you can substantially crush this 250,000 dollar net worth number over this eight-year service commitment that we’ve we’ve uh created here in a pretty substantial portfolio. Might look like hundreds of thousands of dollars in wealth saved, hundreds of thousands of dollars in real estate equity, plenty of runway, all that kind of good stuff. So, how am I doing with this so far, David?

No, I agree with your assessment.

Let’s also briefly touch on officers. I know about 18% of service members are officers. I have a whole separate one for officers uh that is different from from this, but I want to call out that officers earn elite pay across the country. And they they complain about it and don’t realize this, but graduates of the U.S. Naval Academy in particular, they earn the fourth most on a early career and mid-career scale out of all universities in the United States of America. It’s an incredible amount of money that these folks are making. This is from two years ago. Um this has only gone up uh since since then. I couldn’t find the most recent data set but this is an incredible amount. West Point’s up there as well um and I don’t think that Air Force Academy is too far behind here outside of the top ten. This um day one after graduation pay is like 48,000 bucks plus another 34,000 in allowances for a total of 87,000 day one graduate after graduation pay for these officers and that bumps up to like 122,000 dollars in just two years following that and their promotion to O-2.

And they get to house hack right away.

And they can house hack right away. But I will call out that they while they get this free college, this limited education, they also don’t earn meaningfully for four years. I thought about modeling out the hundred dollar stipend or whatever they get every month uh as year ones and four hundred but I was like screw that I’m just gonna put them as zeros for the first first little bit here. If you want me to if you want to model that out you can take the spreadsheet and put that in for yourself. But I I believe that it is entirely possible for enlisted soldiers to generate more wealth over there eight-year commitment then the first eight years from a first D two year four of service for an officer in the military.

It’s all going to depend on the person but the the opportunities are there for sure.

But I will call out that the officer once we get past year three or four or so is start going to start to run away with it. That where the income really begins to get incredible and an officer that’s really intentional about it will start to see that compound super meaningfully without before you didn’t get to house hacking and that kind of stuff. Um here and hundreds of thousands of dollars of wealth after five years if they keep their expenses very low and are very intentional about this. And I I think I’m misspoke. This does include a model which includes a few house hacks during this officer’s journey by the way. And that’s all she wrote.

I love it. I I did one thing I just wanted to touch on real quick just this is total random sidebar but I think like investing near military installations, especially these huge ones were like you know, Fort Bragg is not going anywhere. creates a nice spot where people are super worried about a recession but like if the vast majority of that market’s income comes from a military installation that is going to stay there, it creates a much softer landing point for a market turn because the driving force of revenue is people whose pay isn’t going to change and they aren’t going to get laid off, which is great. And allows you to create that buying opportunity on the downswing. And then simultaneously people are always worried about tenants. by and large, being a military person, your tenant pool of military people is going to be a better tenant pool than non. And that’s not because civilians are nasty and service members are great. That’s because ninety plus percent of service members have a security clearance, they’ve passed background checks, they’ve got guaranteed job, like they they fit the mold for who you would want on a basic criteria. Unless they just screw up their credit. And if they totally screw up as a tenant, every landlord I know asks for their command’s info and can call their boss and be like, “Yo, your dude just like destroyed my house for no reason.” Not that that’s necessarily, I don’t know if that’s ethical, depends on how you work through it, but like it’s an option. And most kids or app, you know, whatever are going to behave decently because they don’t want the reputation of trashing somebody’s house.

There’s all these other qualitative items here and I and I’m sure that there’s there’s exactly what you just said, there may be also risk if there’s a bunch of new construction going in one of these areas, that could that could cause prices or rents to go down with you know so there’s more work to be done for people that are interested in this, but I think the opportunity is fully there for service members enlisted or officers to really come out with a an immense head start compared to their median or average counterparts that are not in service. One of the huge advantages is this ability to just model everything. You just know exactly what’s going to happen so you can plan around that and make your decisions and bets within the context of those rules. Whereas I think, you know, like like other folks can get ahead from an income perspective in a way that service members can’t, but that it’s going to be less predictable in some ways and they’re going to have to play by a different set of rules. So absolutely someone who goes and crushes it outside of the service can get ahead. They can pace far ahead of a service member in terms of wealth if they go all out. But man, this is a good opportunity if you just don’t blow it for a lot of service members.

Scott, I have a couple of questions, one for you and then two for David. Up at the very beginning, you had the cash flow neutral screen where it said these people are buying liabilities that they think are assets. I would just like you to clarify what that means. I know what you mean, but I’m not your target market for this presentation.

Classic example of this is the house, right? This is straight from Rich Dad, Poor Dad. I really appreciate his take on this concept, right? The house, for example, if you buy a standard house and do not rent it out, is going to take money out of your life every month, right? You’re going to pay the mortgage bill, you’re gonna pay the utilities, the insurance, you’re gonna pay the the the taxes, you’re going to pay for maintenance, and you’re going to have to repair major systems every, you know, decade or so around the house. That’s taking money out of your life. People consider a house an asset on their balance sheet and it is technically an asset. But it’s not an asset in the sense that it’s putting money into your life. When we’re talking about acquiring financial assets here, right? A car is similarly not an asset. The less you spend on your car, the richer you’re going to be. The less you spend on housing, the richer you’re going to be over time. We want to acquire assets that put money into our pockets. A rental property, for example, is an asset if you buy it right and make the make the right assumptions here because it should generate more income from rent than the costs to maintain the property inclusive of that mortgage and the maintenance. It should appreciate in value and you should amortize that loan over time. And that puts money into your pocket. So same thing with stocks or bonds or other traditional investments.

I agree with all of the above and I would just like to say for anyone who decides to follow me on social media after watching this, I did sacrifice on the vehicle front for like a long time. So uh don’t judge me for the brand new Corvette Z06 I’m driving. I earned it.

That’s the thing is I this is just the beginning of this journey, right? I didn’t like the model is a tail.

I know, I know. I just someone’s gonna get over there and be like, this guy was just telling me to buy a Corolla and he’s in a…

But that’s it. I drove a Corolla. I wasn’t in the military, but I drove a Corolla for many years.

I had a 1988 Volvo 740 Turbo that fell apart on me.

You do that until the wealth begins to compound past that several hundred thousand dollar mark, right? Once you get to this 250, 350,000 dollar mark that I think a lot of people can get to in their time in service, you know, then the investments begin to compound if you keep at it and you’re going to look up one day maybe in your 30s, maybe your early 30s, this enlisted soldier and like I’m a millionaire now. And guess what, that asset base can buy your fancy schmancy car or your your fleet that David now has, um I believe that are that are pretty fancy, and and you drive it. That’s the point.

Prior to a year and a half ago, the most I’d ever paid on a car was twelve nine, and that was a, you know, I don’t think I’d ever bought a car that was newer than six years and that twelve nine bought me a a diesel Jetta station wagon that looked like a mom-mobile, got 40 miles a gallon and I drove 140,000 miles on it in three years. So yeah, I yeah, I agree one hundred percent. The car is the fastest and slipperiest slope I think for young service members because they want the high interest Mustang.

Yeah. And by the way, like this this is an asset base and a business that you’ve built because of this foundation that you poured that sounds very similar to what I described here, different different types of journeys, maybe even some mistakes that slowed that journey unnecessarily. Then I call up this guy, David, and I say, “Can you go over this presentation real quick before I before I uh we air it?” uh and he says, “Sure,” picks up, he’s in freaking Barcelona just ran with the bulls, several you know cocktails deep, uh and he’s flying back the next day to his house in Missouri with his fleet of fancy cars purchased from the asset base that has been built up over this time. This is the start and then of course it’s going to take another 5, 10 years to compound it into millions, right? This is just the beginning of that journey. But I believe that this person who’s set up for that after eight years is a very good shot at getting to that millionaire mark that the opportunities and options expand so geometrically from that point that it’s impossible to model out. You know I I could just drag it across, but it it’s impossible to model out exactly where those options will take you at that point.

All right Mindy, you said you had two for me.

I have two for you. You mentioned something about the savings deposit program that has a 10% yield.

Uh yeah, this is a it’s just a savings account that is it’s offered when you’re deployed. Um so it is a 10% guaranteed back by the government savings program that is uh for anybody who’s deployed. You can put, I think you can put up to ten grand in it the entire time you’re deployed and and until you pull it out it earns 10%. And you can you can put it in as a direct deposit from your bank or you can you can front load it by like writing a check uh to up to whatever your base pay amount is until you’ve got ten grand or whatever, so.

You can put 10,000 dollars in there while that’s only for being deployed?

Oh and it’s tax exempt.

It’s tax exempt. When I come back from deployment, if I don’t pull that money out, is it still earning 10% or is that only during my deployment?

Don’t quote me, but I believe so. I can’t remember how long I left it in there.

Because I would never ever take that out. I’ll take the 10,000 dollars at 10%.

Yeah, I can’t remember if you have a time limit on that or not. I yanked it right away to go buy a Harley.

Okay. So, uh if you have this, if you’re a service member and you have this option, take advantage of it and then let me know if you have to pull it out after you come back.

But the Harley was less than 7600. Yeah.

The Harley, the Harley was great. The Harley uh I put 11,000 miles on that in four and a half years three and a half years and you know it was not a great financial decision but it was a great life experience decision. And realistically, owning the Harley was less than most cars people buy and the gas was cheaper. And and in California, and if I was an entrepreneur, here would be my justification, in California you can lane split so you don’t have to wait in traffic, which means you save an average of 30 to an hour every commute. Time equals money. But I wasn’t an entrepreneur at the time so it just meant more time to drink beer, but you know.

And then the second one is the service member program to reduce debt where it goes down to 6%.

SCRA, service member civil relief act.

Okay, is that automatic or do you have to apply?

No, I mean you have to notify them but it’s federal it’s a federal act, yeah, for debt that you had prior to service. Now a lot of installations or banks will actually honor it on debt even after the fact. In fact, there are some things, um I don’t know if this is still going on, but for a little while you could apply for a personal loan through AmEx and then the day you got the loan, you could send them your SCRA stuff even if you were already in the service and they would just waive your interest on it and you’d have, you know, interest free whatever um for a little bit. I don’t think they’re doing that anymore but there were there were like there’s like a couple installations that will still work with you even after the fact but the the act basically says anybody you had prior. And I don’t actually know if it includes mortgages, but credit card, auto loan, all of that stuff for sure just cut to 6% flat the day you join.

Okay, so yeah, if you are listening to this episode and this is something, ‘Oh I do have some debt.’ You it’s not going to be automatic. You have to let them know but let them know so now you’re not paying so much interest and then bust out those debts.

Yeah, and then take all the interest you would have been paying and put it into the paying it down.

Yeah, cuz I could see somebody listening to this and saying, ‘Oh, okay, so now they’re going to change it for me, right?’ You have to do the work.

Yeah, you got to go apply.

All right. David, this was awesome. Scott, thank you so much for sharing all of this information with our listeners who are either military or have military members in their life. I hope they learn something new and I would love feedback from you about what you learned or you know how great this presentation was. mindy@biggerpocketsmoney.com, scott@biggerpocketsmoney.com and David, what’s your email?

Go to thebestpodcastguest.com and it has my contact info and all my social media.

I’ll make it even simpler. We’re going to create a new URL at biggerpocketsmoney.com/military. And this will have all the resources we discussed today. It will have our presentation, links to where you can find out more about David and all the great resources at From Military to Millionaire and other other sources there. It’ll have the presentation, like I said, it’ll have the Excel spreadsheet with the quick math. I have it for both officers and enlisted, and uh you can download all that right there and get a link to the the episode here. I’ll make a few corrections based on our conversation today as well before uploading.

I love it. All right, thank you for having me on, guys.

All right, that wraps up this episode of the BiggerPockets Money podcast. He is David Pere from military to millionaire, he is Scott Trench from BiggerPockets Money, I am Mindy Jensen, saying Semper-fi.

Semper-bye.

Goodbye, Semper-fi.

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