I'm re-enlisting this week and with the SRB multiple's where they are at I'm looking at taking the lump sum option (knowing that it is only 85% of the instalment option) I am still going to yield 20G after taxes. The tenative plan is to pay of my remaining CC debt ($7,500), putting $5,000 in my daughter's 529, $2,500 into my money market and the remaining $5,000 into my Roth. I typically use my money market as my safety net and my traditinal saving's acount is used for week to week spending money. Now with Zero CC debt I will probably start adding more into the 529 to build that up a little quicker. Anyone have any recomendation's? I am an average investor who will never claim to know it all, just claim to know almost enough.

Disclaimer: I'm not a TSP fan.

Good move except for the credit cards. After they are payed off either cut them up or don't use them unless it is an emergency, and then pay them off at the end of the month. You will be suprised how much disposable cash you have with no CC bills. And when you pay cash for something I think you give the purchace more thought as to do you really need it.

Good plan, but recommend going easier on the 529 and pay yourself first. You still have time to put money in your ROTH for 2007 ($4000) & 2008 ($5000). You can later use your ROTH contributions (not earning) to assist with paying for your child college. If you have too much in a 529 they may miss out on assistance programs.

Check out Upromise.com, it’s a great program that can assist with the 529.

quote:

Originally posted by Seagull1965:
Good move except for the credit cards. After they are payed off either cut them up or don't use them unless it is an emergency, and then pay them off at the end of the month. You will be suprised how much disposable cash you have with no CC bills. And when you pay cash for something I think you give the purchace more thought as to do you really need it.

Yep....I just finally paid mine off last month after being in debt with credit cards for the past 8 yrs.

I'd either put $20K towards a home or college for my 13 yr old son.

Don

As far as saving for college goes, I will add to PdlPirate's comments. I have had a few financial advisors make a comment similar to the following:

"You can get a loan for your kid's college but you cannot get a loan for retirement."

I am certainly not saying don't put away money for college but I would make it a small percentage of my overall savings plan.

I agree w/ all ESPECIALLY w/ the one about the college fund. Some of us are lucky that our kids do see the light and go to college when given the opportunity. But honestly, there is nothing you can do if when the times come they say "no" or if they do go, all they do is party. I would never save for a college fund. There are tons of financial aid out there and students loans can be deferred while in school and you have 20 years to pay the off...if you are going to pay them for your kids. Otherwise, they can get a job and pay them. You can still help while in school w/ out of pocket expenses if that's what you can do. But yes, pay and cut your credit cards. Easy on the ROTH but yes contribute towards your retirement. And having an emergency fund is VERY nice to have.

Hey alot of great advice here and it seems that we are on the right track, Some intersting views on the 529 here! Much apreciated. It reminds me of a conversation I had with one of my Senior Chief's about whole life ins vs term life ins! That can be interesting.

Pirate85 I have already maxed out my 2007 Roth at 4G, the 5G was for 2008. I should have mentioned that.

tank and Keko you guys have me really thinking about my 529 now!

I told you I dont know it all! It's good to hear the different opinions on this, after all it's not often we get handed $20,000.00

thanks all.

S

You're way ahead of me. I got two different SRBs and not much to show for either one. At least now I would know enough to invest, but I would probably lean towards a new Harley! (So I haven't learned much yet!)

Kind of on the same subject. My youngest kid is 21 years old. At the age of 13 he started mowing lawns. I started the business and got the DBA. Through the knowledge of my tax person (who we did and still do her Lawn) she issued me a 1099 for my kid making him an employee. She explained about the roth IRA. I told my kid if he put half of his earnings into the IRA I would match it. The first year he was able to put in $500.00 so I matched that. With interest as it has normaly run in the last few years at the age of 65 he will have approx. 250K in his retirement. Just to give you an idea how it will add up. He knows that he can't touch it untill he is 59 1/2 and has added more so life will be good for him. My oldest boy there is no hope for him as he is a Coastie.

Some good info above. Let me throw out a few more ideas...

Paying off the credit cards is sound advice. And...keep them paid off! At roughly 12% APR, you'll be saving about $75 a month in interest. (Which if you're not paying out, is a pay raise in my book.)

You'll probably get a decent income tax refund. I say that based on having a child, and from the saver's credit from maxing out your 2007 IRA. So you've (probably) got an additional windfall from your taxes, plus the "pay raise" mentioned above.

Okay...pay off the credit cards, put some into a 529, ensure that you have good emergency and reserve funds, and max out your 2008 Roth.

However, and this is a big however, I don't see a "transition fund" for when you get out of the Coast Guard. How about starting to build a good pot of money to ease your transition to civilian life? You can accomplish this with a tax-friendly index fund, such as an S&P fund, or a good money market fund. Deposit some of your bonus in there, and add to it each month.

If you need money to fall back on as you transition to civilian life, it's there. If you want additional money as you retrain, it's there. If you get a great job and don't need it, it's still there. It can be used for home buying, additional college funds, or to simply generate additional income.

As mentioned above, a lot of folks plan for their children's education, and for their final retirement. Unfortunately, a lot of folks don't plan for that period of time between Coast Guard retirement and final retirement. And that can be upwards of twenty years.

Oh yea...BLOW SOME OF IT! Go on a vacation, buy something neat, or generally indulge yourself. This is a bonus for continuing to serve your nation. Enjoy some of it today!

PS - You indicate you're not a fan of TSP. May I ask why?

I reccomend investing in a good no-load mutual company like Trowe Price.

quote:

Originally posted by Brian_Jordan:
Oh yea...BLOW SOME OF IT! Go on a vacation, buy something neat, or generally indulge yourself. This is a bonus for continuing to serve your nation. Enjoy some of it today!

PS - You indicate you're not a fan of TSP. May I ask why?

We are planning a nice vaca this Pcs season. and hoping to go to Italy 2010.
The Tsp would appeal to me more if the Gvmt matched your contribution's and the 10% hit for early withdrawal is a little scary. However I do love the tax defered contribution's but eventually like anything your going to pay tax! Bottom line I want my net worth primarily liquid! I like the roth's because of their flexibility. After my SRB deposit in my money market account I will be sitting on over 15 thousand earning me 3.5-4% which is pretty good. Like I said, I use the MM acount as my safety net so it does not get touched, I guess with my mothly contributions to it I could also use it as transition funds like you mentioned.

Enjoy Italy! I made it through there a few times while at Activities Europe. Gotta love a job where you're "required" to lay over in Rome or Palermo when going to Lampedusa and Sellia Marina. Made it there for my big European roadtrip folowing my retirement as well.

As far as TSP goes, participation in the program is the icing on the cake, in my opinion. No we don't get matching funds, but we do get a twenty-year pension. So the tax savings in TSP is an extra benefit. If we had matching funds, we'd have two completely different retirement plans. I don't think Congress would open the purse strings for that. (Nor should they!)

The 10% penalty is to take the money out. You can always borrow against your TSP account.

As far as TSP being pre-tax, so are traditional IRAs, and 401(k) plans. Taxes are manageable. As we age, we may be eleigble for mortgage, property, health, business, and charitable deductions. And contributions give you a tax break now. That's more money in your pocket today to save and invest (or spend).

Basically, taxes aren't the boogie man that some cry out about. And, truth be told, if that money has been growing tax deferred for twenty, thirty, or forty years, I don't mind paying my share for good roads, clean water, efficient government services, and jails to keep scumbags in.

Finally, a clarification..if your horizon is longer then five years or so, you may want to take some of that MMA money and go looking at mutual funds. Their historic return of roughly 11% will beat the MMA's return hands down. 4% will keep the monthly income dribbling in, but 11% growth for twenty or thirty years will be staggering.

This message has been edited. Last edited by: Brian_Jordan,

Brian you bring up some very good points. I am going to look into mutual funds because your absolutley right! So instead of dumping that money into my MMA, would you open a TSP with it and do the 3.5% monthly contribution (the new raise)? I can easily convert my MMA to MF. Thanks for your input.

S

Basic Buget training..jk

I would buy land..sure you,ll have to pay taxes..but on undevoloped relestate it ain,nt bad..and i bought a ac in younger days the wife and i dreamed of building a house there for years..the house happened but not there futher south on 5ac..but i still own the 1 ac..might sell or give it grandson..well see.

Also for all those people who said cut up credit cards..yeah riiiiight..what's in your wallet?

credit cards are easier to replace than cash..

There like a gun ..imho..if you need them there nice to have..but just because you have one does,nt mean you have to use it.

I use mine on the weekends..for dinner at my favorite resturant Dennys and gas money...that alone is way to much paper to be packing..life is short..try to enjoy it.

sc

This message has been edited. Last edited by: spacecowboy1,

quote:

what's in your wallet?

Debit card.

yeah ...debit cards are good..too..although i never use mine..most banks charge you..and frankly i pay my cc off at the end of the month anyways.

Also once on my old car..I broke down near a pep boys..and if you did,nt already know..they offer a discount on your first repair..i think it was 10% for just applying for the card..and lowes has a deffered payment plan too on stuff..like my wifes convertable aka a riding lawnmower..or her own CoastGuard cutter..a year same as cash sc

Cutting up a credit card is a bad mistake if you use credit wisely. A credit credit has more federal protections than a debit card.i.e if you make a purchase on a credit card and dont like the product you can dispute the charges and the credit card company will not pay the merchant. A credit card is protected by the truth and lending act:http://www.access.gpo.gov/nara/cfr/waisidx_04/12cfr226_04.html

I think most of us realize that one credit card is a good thing, Because of paying mine off I called USAA and they dropped my apr to 10% with a 6g limit! That's it, the only card we need. By the way if you bank with USAA they will re-emburse you any fee's you acrue in the billing month when using your debit card, ie: all ATM fee's, cash back awards (Usualy about 7-8 bucks) and a slight interest payment. I shred all my old cards but I make sure I leave the accounts open. closing acounts is a slight hit on your credit report!

quote:

Originally posted by 92guru:

quote:

what's in your wallet?

Debit card.

I use my debit card about 99% of the time. I do have one credit card now only for emergency travel and to make it easier to rent a car. Most car rentals don't take debit cards, but luckily some do.

Don