Cadets and Midshipman: Build Your Financial Foundation in the Military | Military Money Manual Podcast Episode 12

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Cadets and midshipmen at West Point, Naval Academy, and the Air Force Academy or in Army, Navy, and Air Force ROTC have a unique opportunity to rapidly accelerate their journey to financial independence.

When you're young your most valuable resource is time. Time to educated yourself, time to learn good money habits, and time to start investing so compounding interest has a long time to go to work for you.

In this episode Jamie and Spencer recommend several books to start your education and discuss which credit cards to get when you're in college. We also cover investing strategies, opening a Roth IRA, and buying a home at your first duty station.

Cadets can also check out our episode on the USAA Career Starter Loan and Navy Federal Career Kickoff Loan.

Military Money Manual Podcast Episode 12 Links

Outline of episode:

  • Practical advice for checking and savings accounts, high-yield savings accounts, and setting up an emergency fund
  • Book recommendations 
  • Opening an IRA in college
  • Budgeting
  • Annual fee-waived credit cards for military
  • Beginner investment strategies
  • Pros and cons of buying a home at your first duty station
  • Building a foundation of good habits

Military Money Manual Podcast Episode 12 Transcript

[00:00:00] Spencer: Hello and welcome to another episode of the Military Money Manual podcast. I'm Spencer, and today we're going to talk about the foundations of personal finance and financial independence that cadets and midshipmen can start with while they're in college.

I received a couple of emails recently from a freshman at the United States Air Force Academy and an ROTC cadet from a university in Florida, and I'll let Jamie read both of those. 

[00:01:00] Jamie: I think it's great that we have people at all stages listening and sending in questions and trying to get a little bit better at their personal finance journey.

The first one like you mentioned from the cadet at the Air Force Academy said, “Spencer, I've been reading your blog for a while now. I turn 18 in less than two weeks, and I was wondering what my first step should be to get my finances right. I was thinking about getting a credit card to start building up credit, as well as starting a high-yield savings account (HYSA) for an emergency fund.

I already have a Roth IRA set up with automatic investment every two weeks. After looking at your blog, I've researched the American Express Blue Cash Preferred, Chase Freedom Flex, and the Chase Freedom Unlimited card. I'm just not sure which one to get once I turn 18. Do you have any guidance for what to do and what card I should get?”

The second question is from an Army ROTC Cadet at a university in Florida, and he says, “I'll be commissioning as an officer in about four years. Please offer any advice.” 

What do you think?

Spencer: First of all like Jamie said, it's awesome to get emails from people at all stages on their journey to financial independence.

[00:02:00] I certainly didn't know anything about FI when I was 18 years old, or I guess Hudson's 17 which is crazy. Happy birthday if this episode's coming out around your birthday! I think it's awesome that they're both freshmen, and they're both thinking about setting themselves up for financial success while they're still in college.

First I would say, while you're in ROTC or while you're at one of the service academies, it's not guaranteed that you're going to graduate. The training that you're going through and the courses that you're taking, they're difficult. Don't get too distracted by saving and investing for financial independence and let what's important slip to the wayside.

Jamie, where would you want to start with this? I think Hudson jumps right into which credit card should he open first, but I think there's a lot of financial foundation, financial building blocks that everybody in college or just coming out of high school should really focus on first before they start thinking about credit cards.

[00:03:22] Jamie: Yeah, absolutely. I think education and enhancing your understanding of personal finance are very important.

Before we get into that in a second, we'll give you some practical steps of some things you can do. And in fact, Spencer's got a really good article on the website called the Personal Finance Flow Chart for Active Duty Military. Some of that may not be applicable quite yet for a college student.

The first thing that I would recommend is setting up a free checking and savings account at a military-friendly bank like USAA or Navy Federal if you don't already have that. A lot of cadets already do. They invest a lot of marketing dollars into the service academies and ROTC.

Jamie: Once you have that set up, start with an emergency fund. When an emergency fund is in place, things like an emergency trip home, if God forbid someone gets sick in your family or you have to make a trip home for some other emergency, or you need some car repair, although I don't think you can have a car as a freshman.

Those are the first two things I would say on a practical side, checking and savings account at a good bank that doesn't charge you fees every month. No minimum transactions per month, no minimum balance fees, no monthly maintenance fees, or anything like that. That's why USAA and Navy Federal are easy ones.

Then set up an emergency fund. When we talk about emergency funds, a lot of times you and I both recommend starting with a $1,000 emergency fund. What do you think, Spencer, is that still appropriate for a college student or would you give them a little bit different target to start out with?

[00:05:09] Spencer: I would say the $1,000 is a good goal to shoot for. I'm not sure what a cadet paycheck looks like these days. I think when I was an ROTC cadet, as a freshman, I don't think we were making much more than $250 a month. Now that was 10 years ago, and I think they got paid a little bit better at the service academies, but I'm not sure.

We'll have to do some research and look up the exact dollar amount. $500 initially is a great goal, and you might be able to hit that in just a month or two. You're not really going to have that many expenses as a freshman.

You'll be so busy with your courses and all the other training and athletics and stuff that you're doing. I would say $500 to start with, right off the get-go. You should be able to hit that probably within a month or two and then bump it up to a thousand dollars. And then, the traditional advice is three months of pay or three months of expenses, three to six months.

For a college student, for an ROTC or Academy cadet or midshipman that might not be completely relevant. As long as you do your coursework, and stay in school, you're going to keep getting your paycheck. Yeah, maybe a thousand dollars initially, and then $2,000 or $3,000 as a one or two-year goal, so that you're coming out of college with a little bit of savings.

[00:06:41] Jamie: So USAFA cadets, this is a lot more than I expected. They earn approximately $1,185 per month in basic pay, according to

That's pretty decent, almost $1,200 a month. If you're an ROTC cadet, you might have some more expenses. You might rent an apartment off campus. So keep that in mind.

Everyone's situation is going to be a little bit different, but as Spencer mentioned earlier, graduation is not guaranteed. So if you're banking on a big paycheck in a year or four years, you don't want to be behind just because you're expecting to commission in a few years. If you're a cadet, you definitely should have a very good financial start in your adult life coming out of the academy, any service academy, or off an ROTC scholarship, ideally.

[00:07:34] Spencer: One thing that was in the letter that he sent us was an HYSA. So that's a high-yield savings account. There are lots of options out there. American Express has one, and Marcus from Goldman Sachs has one. There's always Ally Bank. There are so many out there. Really you can just go to any search engine and type in “high-yield savings account.” You'll be bombarded with 10 ads, and there are tons of websites out there that compare the highest interest rates that you can receive on those accounts.

Right now in the low-interest rate environment that we're in 2021 and 2022, you're not going to get that much. Maybe 1% or 1.5%. 10 years ago there were high-yield savings accounts where you get 3%, 4%, or 5%. So it just depends on what interest rates are doing, and that's something that's completely out of your control.

I would say right now, in the current low-interest rate environment, if you want to use a high-yield savings account, that's fine, but really I would focus on you having your cash, you having your emergency fund, day-to-day expenses, your checking accounts, and then some savings set aside.

It doesn't really matter if it's a 0.1% or 1% account over a year. If you have $10,000 in there, the difference will be a hundred dollars or $10, right? You're probably not going to notice that over a year's time. If it helps you psychologically to separate the money into a separate account, then go for it. There's really no harm there.

[00:09:20] Jamie: Yeah, keep it in focus at this time of low expenses in your life. It's an opportunity to get ahead or be very close to zero when you graduate and not start out behind. Don't let overspending or things like that, especially as your income's lower and you're focused on graduation and education, because that's such an important thing. Just make sure you're setting a good foundation for life with that.

[00:09:47] Spencer: So one thing that you mentioned right before you got into the practical advice of the savings accounts is you talked about education and expanding your learning. So are there any books that you'd recommend for a freshman or even a senior coming out of the academy?

I'll just mention one before I let you run down the list, and that's the Military Money Manual: A Practical Guide to Financial Freedom.

This is the book I wrote because when I joined the military in 2010, there really weren't any good guides to achieving financial independence in the military. So after writing my blog for 10 years and doing years and years of research, reading, and writing, I consolidated everything that I learned about achieving financial independence into this book.

So it's available right now,, and it's available in audio, as an ebook, and a beautiful hardcover that's printed right here in the good old United States of America. 

I'm really excited about this book. I've been working on it with my editor for over two years. I think it turned out really nicely. And that would be my number one book recommendation for someone at one of the service academies or in ROTC. But Jamie, do you have any, besides The Military Money Manual, other book recommendations?

[00:11:20] Jamie: Absolutely. I will say, having read your book a couple of times already, I do think it is a very good book and is something that every new person in the military should know.  There's a lot of stuff that people who aren't new should know as well.

I'll just run through a few good ones that you can add to your Audible account. Take advantage of that American Express Platinum credit or something. But I Will Teach You to Be Rich is a good one. The Millionaire Next Door, Simple Path to Wealth, The Little Book of Common Sense Investing. Really with all of those, you might not agree with everything that's in there, but you can take a little bit from each person's theories, concepts, and the way that they present their plan to form what you think is your financial independence mindset and your personal finance philosophy.

[00:12:13] Spencer: Yeah. The other book that actually really helped me, which, it pains me to say, was Dave Ramsey's Total Money Makeover.

I read that when I had $60,000 in student loans. I was right out of Air Force ROTC. I was about a year and a half down my training pipeline to my first duty assignment. A lot of the concepts in that book I applied to my life, and it did help me use the debt snowball and get out of debt much, much quicker than a lot of my peers.

I still talk to a lot of people who have been in the military for 10 years, and they're still paying off their student loans. So, it's very liberating when you do pay off that debt, and you finally get back to zero, and you can start building your savings, building your investments, and starting the journey to financial independence even quicker than you would otherwise.

[00:13:18] Jamie: Right, absolutely. I would definitely agree with the Total Money Makeover if you are in debt, which likely a lot of cadets or midshipmen hopefully are not at this point. If you are, the Total Money Makeover is going to be crucial to advancing your freedom.

One other one that we've talked about before is The Psychology of Money, and we both really enjoyed that book. Would that fit well for a freshman in college? What do you think?

[00:13:43] Spencer: I think if you're going to read one book and only one book, Psychology of Money is probably that book of course after you read the Military Money Manual. Just had to get that one in there. I do think that the Psychology of Money, to me, is one of the best. It's broken down into 20 individual sections that you can read independently of each other. What I noticed when I was reading Psychology of Money is that Morgan Housel, the author, really summarized all these other books that we've mentioned, and it really is a one-stop shop. 

If you want the data, if you want the numbers, then you have to go read the other books. He approaches everything at a high level, and it's great. It's all good advice I agree with it. I wish I'd written the book. It really is fantastic, the Psychology of Money.

I think that if you're going to do a deep dive that's a great place to start, Psychology of Money, and then go and read all the other books that we've mentioned because sometimes you have to hear something 3, 4, 5, even 7 times before you finally get it.

And people will connect with one style of writing, and some people will connect with another style of writing. It's definitely one of my top recommended books, and I mention it to everybody from my 85-year-old grandfather all the way down to my 28-year-old younger brother.

I think it's a fantastic book, and just about no matter where you are in your financial journey, I think it'll remind you of some fundamentals and maybe point out some of the areas where you might need to improve.

Jamie, one question that comes up a lot from cadets and midshipmen is, “Should you start a Roth IRA in college?” 

What are your thoughts on that?

[00:16:06] Jamie: For most people, yes. If you have earned income, and you're not trying to dig yourself out of a huge hole of debt, and you have that surplus money, then absolutely you should. Most people, especially in a service academy, should be in a position where they're getting a little bit of money in, and they should be able to probably even max it out each year.

If you're making almost $1,200 a month, $6,000 a year should definitely be doable. That's really nice because we all know the time in the market and the earlier you start investing is what really is the most beneficial for long-term growth and financial independence. So I would say, yes. I think if you have an income and you can spare the money, that's a really good way to start your journey toward financial independence.

[00:16:52] Spencer: I know for myself that when I opened up my Roth IRA, I actually opened up mine in high school because I had earned income from summer jobs. My dad was a big finance guy, and he was like, “You gotta open up a Roth IRA. You gotta start early.” It allows you to make a lot. Especially if you do it in high school or college, you can make a lot of investment mistakes early and learn from them.

I tried chasing performance. I tried day trading. I tried options. I tried. I was 18 years old, and I was in high school, right? I should’ve never been approved for any of these things, but it was the early 2000s. The 2008 financial crisis hadn't happened yet.

The laws were a little bit looser, but you can make a lot of these mistakes that some people don't make until they're in their thirties, forties, or fifties. You can learn those lessons early and then, come to the realization that unfortunately, some people will learn the wrong lessons and they'll find themselves actually very successful at picking stocks. And that's great. If that's your forte then go for it. 

I learned very quickly that index fund investing was the way for me. That was something that I learned early, and I carried those lessons for the rest of my investing life. So, opening a Roth IRA for myself in high school was very beneficial, and I would highly recommend ROTC cadets open it.

Now you're not getting paid as much as the Academy cadets, but your quality of life is probably a little bit better. So I would still recommend opening one up, especially if you work while you're in college or over the summer.

Two things I'll mention about the Roth IRA are you can always pull out your contributions. You can't put them back in. So you have to be careful with that, but you can always pull out your contributions. So if you do need that money, it's available to you. Then the other thing that I'll mention is that you can pull out $10,000 for a first home purchase, and that can come from contributions or earnings.

I did that when we bought our first condo at my first duty station. The down payment was $16,000, and we were able to pull $10,000 from my Roth IRA because of that money, and the rest of the money was from my wife working. With her savings and my $10,000, we were able to buy that condo.

We made money on that, so that was a good decision for us at the time. Opening that Roth IRA when I was very young, allowed us to have that capital.

[00:19:30] Jamie: One other thing we haven't mentioned yet that I have to throw out there, just based on my personality and view of personal finance right now, is budgeting.

You can start building good habits as a cadet, even if the dollar amount is smaller. You can still be intentional with your money and say, “I want every dollar of my pay to go towards this purchase” versus just being reactive in letting life happen to you at the end of the pay period. You're like, “Where did all that money go? Where'd my $1,100 go from my cadet pay this month?” 

So you can build a lot of good financial principles and habits now at a lower risk period, as Spencer mentioned with the investing stuff. It's okay if you misallocate some of your budgets. There's a lower risk doing it now than when you're 21 versus when you're 41. So, start now. Build some of those good principles and habits.

[00:20:33] Spencer: Exactly what you said, Jamie. What's that saying? If you can't be trusted with $1,000, how can someone trust you with $100,000? So when you have such little income, the stakes are actually higher, right?

When you need a budget is when you're not making any money or you're making very little money. As you build those good habits of not overspending, as you make more money, I know for myself personally, my wife and I check what we spend every month, but we really don't budget.

It's because we've built habits where we know approximately how much we spend on going out to eat, and we know how much we spend on groceries, and we pretty much don't deviate from that. Those are habits we built years ago, and that was because we were very strict budgeters when we first got married.

[00:21:32] Jamie: I would argue that you have to have the foundation of doing it. So you can't look at, if your net worth is zero or negative, you can't look at someone whose net worth is $500,000 or several million, and be like, “They're not budgeting.” 

You have to start with a little bit of discipline. Then over time, that discipline will lead to growth, which allows you to take off the reins a little bit and experiment a little bit more with other techniques. I enjoy budgeting, too. We've talked about that several times. 

But going back to the question, Spencer, he mentioned some credit cards that he was looking at. Do you have some first credit cards you'd recommend and at what point is the right time to start looking at them? Is freshman year a good time to start?

[00:22:18] Spencer: I don't see a problem with freshman year. You turn 18 years old, and you pick up a credit card if you have no prior debt.

First of all, that's a great place to be, but you might not really have a credit score established. So I think one of the easiest ways to pick up a good credit card is to go through those military-friendly banks that we mentioned. Pentagon Federal (PenFed) is another, or Navy Federal, NFCU Navy Federal Credit Union. Look at the cards that they offer. A lot of times they'll pre-qualify you just for being a member. They also offer what they call secured cards. So you put $500 into an account, and then they issue you the card with a $500 limit backed by the $500 cash that you have in there.

Just put some gas on it if you're an ROTC cadet or if you're a midshipman, whatever expenses you have, just put it on there. Then pay it off immediately. After six months, you'll have established a credit score, and it'll probably be pretty good. Probably in the mid 700’s because Navy Federal or USAA gave you this card. You showed that you could be responsible with it and paid on time. 

The other thing to do is right away, set up auto pay. Always set up autopay so that way if you get busy, you're out on training or, you just get, you miss the email that says, Hey, your statement's posted. The auto pay will catch it and it'll take the money right out of your checking account and you won't be putting too much on it, maybe $20 here, $100 there, and just pay it off and do that for a year or even two years. Or even your entire college experience. What you really want to look for is a no-annual-fee card because this is going to start establishing your credit history.

[00:24:28] Spencer: When you do graduate and you become eligible for the Military Lending Act or Servicemember Civil Relief Act, MLA or SCRA, benefits on the premium credit cards like the Amex Platinum or the Chase Sapphire Reserve, and they're going to waive those giant $695 or $550 annual fees for you.

Those cards aren't available if you have a bad credit score. They're going to want to see that you have a good credit score. Especially with Chase, you're going to need to establish some relationship with them before you're going to be approved for the Chase Sapphire Reserve or preferred card.

Again, a no annual fee card once you graduate or as you get close to graduating, like the Chase Freedom Unlimited, or the Chase Freedom Flex, or something like that. That's going to be a great place to show that you can be responsible with credit, and establish that relationship with the bank. Within a couple of months, you're going to be eligible to open up those annual fee waived cards.

You don't want to open up those annual fee waived cards while you're in the service academies or in ROTC, because you're not in the MLA database, so your fees aren't going to be waived, and you probably don't have high enough expenses. It's going to be difficult for you to meet the minimum spending and you might not have that much free time either to enjoy the travel benefits. I would say patience is a virtue here. 

Open up that no annual fee card from a military-friendly bank. If it has to be a secured card, that's no problem. Just as long as it's no annual fee because then you can keep it open forever. I had a no-annual-fee card from college and it's a 15-year card now, so my credit history goes back 15 years. I put a couple of dollars on the card every year just to keep the credit line open.

I can open up more cards now that I have this 15-year card that is aging all of my credit. 

[00:26:28] Jamie: It's okay if your first card has a lower line of credit. If they only approve you for $500, or a $1,000 or $1,500, maybe, is probably the max that I would expect for cadets.

Probably $500 is where they're going to come in for your first card. And that's okay. As Spencer said, all it is about is establishing that you can be responsible, and you pay it off on time. It's also a nice little built-in protection to keep you from getting out of control if you forget and you're not disciplined one day.

Spencer, what about the USAA Career Starter Loan or the Navy Federal Career Kickoff Loan? We did a whole episode on that. What do you think about that?

[00:27:21] Spencer: If you're the person who's asking these questions freshman year, “How do I set myself up for financial success,” you can go two ways with this. 

You could not take out the loan because you don't need it. You're going to have savings when you graduate. You'll be able to cover your own expenses and you're going to be able to buy a car because you were saving all four years because you know that when you graduate, you're going to need either a reliable used car or a cheap new car. 

On the other hand, after reading all of these books, you might recognize that, hey, they're offering me a lot of money at a low-interest rate. If I'm smart about it, I can take that money and invest it. As long as I'm getting that guaranteed government paycheck for my military service, I can make my payments on that loan, and I can get that money working for me earlier. There are two paths you can take here. I would say.

The more aggressive ones are definitely going to want to naturally go towards using leverage using the USAA Career Starter Loan or the Navy Federal career kickoff loan as an investment tool. For a lot of people, it's a good strategy just to never go into debt for any reason if you can avoid it.

So that's my thoughts on the career star loans. You got anything on that, Jamie?

[00:28:50] Jamie: No, you pretty much hit it all. If you're going to take it out just make sure you have a plan for it, and you're not just taking it just have a stack of cash that you're going to blow through.

That's really the theme of that for me. 

[00:29:09] Spencer: Another question that often comes up, and it wasn't asked by this cadet, but I've received it in other emails asking, “How do I start investing? What would you recommend as an investment strategy? I've got this Roth IRA, I'm putting a little bit of money into it or if I'm at the service academy, maybe I'm maxing it out every year.”

Are there any thoughts, Jamie, on where they would start building their investment strategy?

[00:29:40] Jamie: Of course, I have thoughts on it. That's a trap question. 

The Boglehead’s Guide to Investing is a very long book that I recently did again through the audiobook. If you look it up there's a whole bunch of forums and stuff that basically follow the founder of Vanguard. Spencer and I both are big fans of index funds and simple investments. It follows that strategy. I would definitely recommend starting there and not overwhelming yourself with too many options because there are a lot of funds, a lot of banks, and a lot of things to research like fee structures, to front load or not, and how the funds turn over. 

There are so many different variables that it's a very simple one unless you're a finance nerd and really want to get in the weeds, The Bogleheads’ Guide to Investing and the strategy you can find on their forums. It is really one I would recommend big time.

[00:30:44] Spencer: Yeah, they have their lazy portfolios or three fund portfolio, and it's just made up of a US stock market index fund, an international stock market index fund, and a US bond fund. I implemented that investing strategy when I was in college and that's still what I do today.

It's worked out great. Now, granted, we've been riding the longest bull market in history, but it's a simple strategy. It's very low cost, and I don't have to think about it. I can focus on other things like increasing my savings rate or the stuff that's in my control.

I don't have to worry about how my investments are performing. I would recommend Googling “Bogleheads three-fund portfolio” for a good place to start. If you're in college or you're at the academy, you probably have a little bit of free time. Now is the time to do your research and figure out what strategy and what kind of investor you want to be.

I definitely recommend the passive index investing strategy, but I know a lot of guys who are into some crazy stuff like crypto and Tesla calls and they're doing okay. I couldn't do it. It doesn't fit my personality. I can't sleep well at night knowing that essentially I'm gambling with my retirement savings. 

So that's what I recommend for the investment strategy portion. Finally, Jamie, or a couple of other questions we got here. 

Buying a home at your first duty station. Thoughts on that?

[00:32:33] Jamie: I personally am not going to recommend that in almost all cases.

My personal opinion is a little bit heavy here. I think in the military, buying a home, you have to be very careful with it because your first duty station might be a longer training period or you don't really know how to be an adult yet. Handling income and buying a home is a big commitment.

Most people probably don't have a significant down payment to help contribute to that. What we're finding right now is as housing prices have gone up recently there are a lot of military people who are stuck in homes that they can't get rid of. What we saw a decade ago in 2008, 2009 was a ton of military people having to move away and end up short-selling or foreclosing on their house because they weren't expecting orders or they were expecting orders but weren't expecting the cost of the price of their home to go down so much so there.

There are definitely some people who are very good at owning a home and picking out the right home that they can rent out while excelling as a long-distance landlord. There are some people who can just have a knack for fixing it up themselves a little bit so they can likely get value out of it on the other side.

But for most people, I would not recommend starting there because it is such a big investment that you're probably not well set up for. For most people in the military, you have no control over when you're going to move, when you're going to get reassigned, or if your training's going to go well. There are just too many variables, especially early in the military moving every two to four years.

You have to be very careful before you buy a house. We've been in 12 ½ years and bought one house and it worked out well for us. A lot of it I think is just luck sometimes, too. 

[00:34:23] Spencer: So much of real estate investing especially if you are buying a place to live in yourself and you're not thinking about, “What is my strategy? What is my plan when I PCS?” could be gambling.

We bought one condo at our first duty station, and we got lucky. We made money on it, but it could have gone the other way. I really caution people, especially first duty station, to get there, get settled, and make sure that their pay is coming in.

You should make sure that you understand what your job is because in some jobs you show up and you work from 9 to 2, and you have every other Friday off. Then some jobs you show up and you're working from 7 am to 7 pm, and you have to come in on Sunday sometimes.

You're not around and maybe you bought a fixer-upper because you're the handyman, but your spouse isn't, and now they're living in a cold leaky house and they're trying to raise your kids while you're away on TDY and that can put a lot of stress and strain on your relationship.

It's always more important to, especially early in your military career, give yourself flexibility. Just rent either on base or off base. Start with that. Then again, do the education, do the research. If you are the type of person that wants to be a landlord or wants to buy houses and fix it up and flip it, go for it! I know tons of people who do. Go check out the Bigger Pockets Real Estate podcast and website. Lots of military people. The other one is From Military to Millionaire and Rich on Money

Rich Carey bought 20 homes in Alabama. He was in the Montgomery area, and he did it while he was overseas in Japan and Korea. 

[00:36:41] Jamie: Which to me sounds incredibly stressful to me. 

One other thing I wanted to add about buying a home is if you're comparing the amount of your mortgage plus homeowner's insurance compared to the amount of your rent payment. A lot of places it is tough to find a rental house that on the surface is less than a mortgage payment. 

But remember, when you're a homeowner, you have expenses. You're responsible for all the repairs. It costs a lot more to maintain a home when you own it than as the renter where you just tell the landlord, “Here's what's wrong.” They have to send someone to fix it.

So don't just compare mortgage payment to rent payment and say, “Oh, it's cheaper to own a house.” Sometimes it's going to be true, but there's a lot more to it than just those two numbers.

[00:37:38] Spencer: I think we've covered a lot of good advice, a lot of good stuff for new cadets. One thing that I would want to say before we close out here. 

We talked about the practical advice of checking and savings accounts, and getting a no-annual-fee card from one of the military-friendly banks and starting a Roth IRA if you have the additional income while you're in college. 

A couple of book recommendations, The Military Money Manual on my website, I Will Teach You To Be Rich by Ramit Sethi, The Millionaire Next Door, The Simple Path to Wealth by J. L. Collins, The Little Book of Common Sense Investing by John C. Bogle, and The Psychology of Money by Morgan Housel are some of our book recommendations. 

The USAA Career Starter Loan could go either way. It's definitely a tool, but like any tool, like a hammer, you can use it to build a house and you can also use it to hit your thumb and really hurt yourself.

Just be really careful with using the Career Starter Loan or the Navy Federal Career Kickoff Loan investment strategies we talked about. 

Starting with the Bogleheads is a great place to start building your understanding of what assets are and how to build a portfolio. 

Then when it comes to buying a home at your first duty station, I think we're both pretty opposed to that. For the right person, it could be a smart move. 

Then the final thing I want to leave you with is, we talk about all this money stuff. We're big spreadsheet guys, Jamie more so than me, or Google Sheets. But there's this idea of living outside the spreadsheet, right? Building the life you want and then saving for it. 

I know when I was first starting my financial independence journey, I was a very frugal person. I said no to a lot of events with friends. There were ski trips that I didn't go on, and now that I'm older and have more money than I did then, I wish I had said yes to those ski trips. There are memories that I missed out on because I was so focused on my goal of financial independence.

My advice to all the cadets out there, ROTC, and Academy, is don't miss out on life just because you're trying to save for financial independence. I think If you build the habits, you have the goal, and you make saving and investing a priority in your life, sometimes it's okay to say, “You know what, this month I'm not going to contribute to my Roth IRA.”

But you can't do that every month. You have to build, and that's why I think it's so important to set up automated systems. Every month you do contribute to your Roth IRA, but maybe one month you say, “Okay, I'm going to cut back in this one area. I'm not going to go out to eat or out to the bars as much this month because next month I'm going on vacation with some of my friends.”

I think if you have those trade-offs between the things that you want, but you always keep contributing to the things that you need, like your Roth IRA and Roth TSP, then you can build a life you want to live full of memories and fun and family and friends and great experiences.

You can still achieve financial independence much quicker than I think you realize. 

[00:41:02] Jamie: So I have three questions and three key takeaways that I would like the listeners to leave the podcast with today. 

So the first question is, “Am I set up to graduate from either the academy or from ROTC debt free? What am I doing to ensure that I'm not starting out in a huge hole when I start my adult life officially?”

Number 2, “Is opening a credit card with no annual fee, as we talked about, is that right for me right now? Or what's my strategy? When am I going to do that, if I'm going to do that?” So think through that.

Number 3, “Should I take out the cadet loan?”

Spencer mentioned episode number nine, where we did a whole podcast on that, but you want to think through it. That's a big takeaway. 

The three action items or takeaways I would leave with you today are budgets. Have a plan for your money. No matter how much you have coming in, have a plan for how you allocate it to what you value in life. 

Numbers 2 and 3 go together, and that's just read and learn. As you said, Spencer, they have a lot of opportunities for some free time in college, no matter what level you're at.

As a freshman at the Air Force Academy, you probably have a couple more months before you have a lot of free time. Reading, learning, and educating yourself will set you up for success over the next couple of years.[00:42:24] Spencer: Those are great takeaways. Thanks, Jamie.

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