Finances and 2021

Now that 2020 is pulling “rear-guard action” and we are now in 2021, what should DoD Service members think about when it comes to their finances? While every individual person and their family has a different set of needs, goals, and various situations there are always some basic fundamentals that nearly everyone can revisit and go “back to the basics.”

For example, Forbes which has a much deeper bench of staff than our website has provides the following advice on “How to get financially Healthy in 2021.”

Paraphrasing from the long article they posted the checklist goes:

• List out where you (and your spouse) have your money.
  • Is it in a 401K?
  • Is it in the Thrift Savings Plan (TSP)?
  • Is it in a Roth IRA?
  • Is it in a USAA Checking Account?
  • Is it in a RobinHood Account?
  • Is it in Iraqi Dollar bills you gave to your kids when you got back from deployment?
• List out your debts:
  • Do you have an auto loan?
  • Do you have credit card debt?
  • Who/where do you owe money?
• What are your (and spouses) goals?
  • Winning wars rarely happens by accident and you need to have a campaign strategy that enables you to reach and hopefully exceed the financial goals you and your spouse have in mind.
    • Do you want to retire from the military after 20-years and never work again?
    • Do you want to open a small business when you get out? Like that tattoo shop in Oceanside, CA, or the barbershop on Victory lane outside Fort Benning, GA?
    • Do you want to buy real estate and flip houses or create a real-estate portfolio?
  • Like all good plans, break it down into phases, stages, and parts. You can say that in 2021 you are going to eliminate all debt. In 2022 you will create an emergency fund. In 2023 you will start saving for a small investment fund. It is up to you and your situation, but having a plan will help you focus your money where/when you need to.

Charles Schwab recommends starting the new year with the following recommendations:

• Layout a budget and pay yourself first
• Calculate and understand your and your family’s net worth annually?
  • We would actually recommend doing this more regularly as the situation with DoD service members can change quite significantly during the year. While your paycheck will likely remain the same, everything from continuity pay, re-enlistment bonuses, hazard pay, per diem, etc can change on a nearly monthly basis depending on your billet and its location.
• Plan for retirement and big-ticket spend items
  • Life flys by and when you are in the DoD are some of the prime earning years of your life…be sure to recognize this and save money for retirement consistently. Even if you expect to get the full military pension, it could not hurt to have additional savings for retirement.

New Year’s resolutions are notorious for not being resolutions that individuals “hold to” throughout the year. It is our recommendation at BlendedRetirementSystem.com that you make a few resolutions for your financial future and stick to them. The great thing is that unlike years past there a ton of free resources to help you stick to your resolutions.

For example, you can utilize the ability to “Direct Deposit” funds from your paycheck direct to an account you have identified for “emergency funds” so that you can pull $50/$100/$200/etc. out of your paycheck automatically right at the start to ensure you are funding your emergency fund. Automatic deposits into the Thrift Savings Plan are another option as are Roth IRA’s or a brokerage account of your chosing.

Other examples include using “new” tools to track your spending and savings such as Personal Capital or Mint. These tools are free, enable you to get accurate up to the date reports on where you and your family are spending money, ways to optimize, recommendations on how to cut costs, and a variety of other services that historically were not available or would have required a paid service from a CPA or similar individual.

2021 will bring what it may….just as every year does. Having a strategy for finances, even if loosely followed in the words of Captian Barbossa, “More like guidelines will set you up for financial success now and in the future. If this is the year you start taking an interest in the Blended Retirement System, then a previous post we drafted would be a good place to start.

The best place to start in regards to the Blended Retirement System is the official website for the DoD. No matter what else anyone else may tell you, this should be the first source of information for all things Blended Retirement System. After that, websites such as ours and others like Military Wallet can provide you information and perspectives on how to utilize the Blended Retirement System.