Jamie’s End of Year Review | Military Money Manual Podcast Episode 17

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Make sure next year is your most successful year yet with the timeless financial freedom lessons in the Military Money Manual, available now at militarymoneymanual.com/book

The end of the calendar year is an excellent time to review your progress, success, and failures over the past year.

It's also a good time to look forward and set intentions for the new year.

In this episode Jamie and Spencer dissect how Jamie approaches his end of the year review and how he approaches the new year.

We discuss:

• How to use You Need a Budget (YNAB) to quickly generate end of year reports
• How to track whether you're on pace to FI or need to step up the savings rate
• Jamie's biggest spending categories and what he wants to do about it next year
• Various housekeeping tasks like checking your credit report and setting your contributions to your IRAs and TSP
• Making sure your spending and savings goals align with your values and priorities

Military Money Manual Podcast Episode 17 Links

• Free 5-day course to maximize your travel benefits and learn all about military credit cards
• The Military Money Manual book
• Capital One Venture X Military 2024 | 75k Points, $300 Credit

Military Money Manual Podcast Episode 17 Transcript

[00:00:00] Spencer: If you're saving for financial independence, but you're not living the life that you want to live, then change it now. And if that means you have to spend a little bit extra money, that's fine. Build the life you want and then save for it. 

Okay. Welcome back to another episode of the Military Money Manual podcast. And last week's episode, we talked about goal setting and reviewing your Goals that you set the previous year this year, I'm Spencer. Yeah. Oh, reviewing progress. That's the word words are hard. I'm Spencer from the Militarymoneymanual.com. I wrote the book on achieving financial freedom in the U S military. It's available right now. militarymoneymanual.com/book use promo code “podcast” for a special discount. I've got my good friend, Jamie here. Who's going to talk us through like he does every week, but he's here every week, but this week we're going to be talking about goal setting and how to evaluate your success over the previous or failure, failures happen too.

And yeah, so actually speaking of failure, Jamie, you mentioned to, we've talked about travel credit cards a lot on this podcast and you mentioned it to me last week. That you recently had a travel credit cards fail. And I just wanted to know if you wanted to cover that real quick and,

[00:01:28] Jamie: yeah, so I actually have two confessions, Spencer.

I Flew a little too close to the sun and made two travel hiking mistakes recently, despite all the spreadsheets and all the time and all the attempts to be the perfect student of travel and Military Money Manual course which I was one of the beta students on. So I was, I've been in since the original and I still failed.

So let me encourage you that sometimes it's still, you're still going to make mistakes. And with that encouragement of the story of what happened recently. So recently I talked about it. A few weeks ago, the next card for my wife was going to be the Schwab Amex Platinum. We haven't really talked about the Amex pop up, but the dreaded pop up, if you've ever seen it, says you're not eligible for the sign up bonus because of your spending history or your card history, opening and closing accounts, or you had too many cards too recently.

There, we really have no details of what, when that Amex pop up comes and How to get away from it, but I was getting it for my wife and I just got sucked in. I wanted the Schwab Platinum card. I wanted the hundred thousand bonus points it had at the time. Cause a hundred thousand membership reward points.

That's a big signup bonus. I make it worth over

[00:02:41] Spencer: $2,000.

[00:02:43] Jamie: Yeah. More Uber credit, more airline credit. All those things. And so we decided, my wife and I, and talking to a couple of friends like Spencer is that, Hey, I think it might be worth considering to do it. Even though you might not get the signup bonus, there were some data points where people were getting the signup bonus, even with the pop up well, so we tried it.

It didn't work. No signup bonus lost out on $2,000 worth of Amex points and all the, we got the benefits right away. The other one I haven't told you yet, Spencer's at the time it had a 1 X. Sign up or spend bonus reward, earning bonus for restaurants. And I thought that I was doing that. So I was putting all our dining expenses on the Schwab Platinum card instead of Gold, it's four X.

And then I looked this week and no bonus earnings and they told me that it's part of the signup bonus, which I did not see. And it's not very clear in the terms and conditions, but I couldn't convince them of that. So I lost out big time. I put a lot of spending on a card that was only earning one X instead of four X.

The other one, part two of my failure, and this is all in the last couple. In the last couple of weeks while I've been on the podcast with you pretending to be an expert in this, I'm still a failure. So thank you for accepting me the way that I am. I got the Citi Premier card too close to getting the Citi Prestige card.

And it sure enough is clear right there on the application site that you're not eligible for the signup bonus. If you've had the Citi Prestige in my case within 24 months of opening the premier card. So I met my spending. It was, I think it was $4,000 or whatever. No signup points, no signup bonus.

I think this one was. Either 80 or 100,000 city points, which I think are valued around 1.7 typically. So it's about a $1,200 mistake here on not catching that fine print and just being a little too aggressive and flying too close to the sun. So those are two recent failures I hope you learn from and hope maybe make you feel better if you messed up your, you lost track of your spreadsheet or something happened where.

You have a similar story. We'd love to hear it. If you want to share we'll share it anonymously. If you want info at the militarymoneymanual.com or DM the page @MilitaryMoneyManual on Instagram or whatever and share your failures too, but there you go, Spencer, the album of failure.

[00:05:01] Spencer: Jamie, I forgive you say you five Amex Platinums and

[00:05:08] Jamie: say five Spencers.

[00:05:09] Spencer: Yeah, I don't know. And buy my book I don't know what else to say, but one thing, one thing I will say is in my ultimate military credit cards course, which is a MilitaryMoneyManual.com/UMC3

And then number three, I have you could sign up there. You just put your email in. I'll send you the course. It's free. A hundred percent free. I do make a small commission off of the affiliate links on my website. So that's how I can offer it for free. If you don't want to use my affiliate links, feel free not to, but I really appreciate it when you do. But one of the lessons I talk about in the ultimate military credit cards course is the rules of military travel . And number two is don't stress. This is supposed to be a fun and lucrative hobby. 

So Jamie, I know you messed this one up, but think of it all, when we went to Sensei Lanai half of that trip paid for by points.

Oh yeah. Yeah. I've had so much fun. Not Sensei, but Four Seasons lanai.

[00:06:06] Jamie: Yeah. Had so much fun and all the goodness there definitely outweighs it. And like you love to say, it doesn't move the needle, so I'm still gonna be okay.

[00:06:16] Spencer: Yeah, exactly. It does sting a little bit. I opened up a business Platinum card the other day and I was rejected.

Because I have over 10 charge cards with Amex. And then I opened up Amex Platinum through a direct application link. And I thought I was going to be eligible for the bonus because I didn't get the pop up, but they said, Nope, you already have an Amex Platinum card. So you're not eligible for the bonus. So there were a couple of stings there, but one card I opened up recently is the Capital One Venture X card.

Yeah, the new one. And yeah, I've got an article about that. If you just Google Capital One Venture X military, or you go to my website and then click on the blog, it should be one of the top articles there. And it's a pretty cool card. It's got a $395 annual fee and it's not waived for the military. And let me say that again, not waived for the military.

So unlike the Amex Platinum card, the Chase Sapphire Reserve. So all the Amex personal cards, all the chase personal cards, all fee waived. But the Capital One Venture X card is not an annual fee waived for the military unless you open it before you enter active duty. And I'm, I haven't got a lot of data points on this, so I'm not willing to go out on a limb and recommend it to service academy cadets, but I would be really interested in some data points.

Go to the article, leave a comment, or like Jamie said, DM me on Instagram, @MilitaryMoneyManual or info@MilitaryMoneyManual.com is my email. I'll respond directly. I respond to every email I receive. And let me know if you open the card before active duty, you apply for SCRA benefits. And I explained how to do that on the website.

Let me know if you got your annual fees waived, because I don't have enough good data points about that. Because if I do, if I get some good data points that you do get your fees waived with SCRA, then it would be a great card to open if you're an ROTC. Or, your senior year of service Academy, Air Force, Navy, West Point, and then and then apply for SCRA once you go active duty and then get your 395 annual fees waived.

But I will say, even though the fees aren't waived, a @300 annual travel credit has to be used through the Capital One Travel portal. Yep. And so that's a little bit of a limb fact, but I use the travel portal. They just bought the site hopper and it is my favorite travel portal. It's better than Chase.

Yeah. Capital one is actually, I think they're trying to make moves here. I've been really impressed with the card so far. It's and when you add it to your Google pay or Apple pay for, the 90 percent of people out there who have iPhones you tap it to the back of your phone. I don't know if that's something you've ever done in another,

[00:08:53] Jamie: like an NFC.

I've never, yeah, that's cool. So

[00:08:56] Spencer: I thought that was really cool. And, you.

[00:08:58] Jamie: Oh. And we should try that with my phone sometime and see if it works with my phone too.

[00:09:01] Spencer: Yeah, I'll try it with yours and then you can yeah, you can help me meet my minimum spend.

[00:09:04] Jamie: I can do a hundred dollars Amazon charges or less on your card.

No one will ever know because you don't track. That's true.

[00:09:10] Spencer: I don't track it. So with that card, with the Capital One Venture X, a hundred thousand points right now for $10,000 spend, but you got six months to do it, so you gotta, you got a good spend. That's a lot. It is a lot. It's a big spend. Yeah.

So if you're a lieutenant, if you're a young airman, soldier, marine, sailor out there. Probably not the card for you because I got an email from a guy the other day. He's like, how am I supposed to meet these minimum spends? I'm just a Lieutenant. I was like, wait, do not. Oh, if you can't meet these minimum spends, don't open up these cards.

And actually that's another one of my rules in the ultimate military credit cards course. And then the last thing I'll say you mentioned the Amex pop up. I've got an article on that on my website. If you just go to militarymoneymail.com/Amex-pop-up. Or go to my website and search “Amex pop up.”

It'll pop right up and that's yeah, Oh, we do. I used to have a soundboard here, but I guess I got rid of it. That's another, again, more data points are needed. It's a really hard nut to crack, like why you go into the jail, how you get out of the jail. It's also called the Amex jail or pop up jail sometimes.

But if you have any problems with that, let me know. And I'd be interested to hear your story. I think my wife. One of us is in Amex jail right now. We're, we can't get pot. We can't get it. I think it's my wife, which is weird because she doesn't have that many Amex cards. Like me, it has

[00:10:30] Jamie: 13, it seems so unpredictable.

There's no logic to it. It seems, but no.

[00:10:36] Spencer: All right. Jamie now that we're 15 minutes into this episode, let's talk about what we're actually talking about today, which is So I talked about last week how I build a state of the money address where I dress up as Abraham Lincoln and put on a top hat and present to my wife in front of a four score and

[00:10:59] Jamie: 365 days

[00:11:01] Spencer: ago, 365 days ago, this is what our money looked like.

[00:11:05] Jamie: How old is, how much is four scores? 80 years.

[00:11:08] Spencer: Yeah, a score is 20 years. So there you go. Trivia question. Jamie, I'm guessing since you're the spreadsheet guy that you do a little bit differently, do you want to elaborate on that?

[00:11:22] Jamie: Sure. Yes. So last week, like Spencer said, we talked about. the way that they do it for his family.

And this week we'll talk a little bit about the way that we handle it. No way is right or wrong. It's whatever works for you guys. The important thing and the, one of the main takeaways is that you do some kind of review, do some kind of goal setting, some kind of vision board or whatever you want to call it to get on the same page.

If you're married or sit down and be intentional and think about it yourself. Yes, so we do love our spreadsheets, and we've talked a lot before about how we use YNAB, the You Need a Budget app, which I do need another disclaimer here. Previously, I guaranteed that you would save more than $84.99 using YNAB for your first year.

They recently increased the price, so I have to amend my guarantee. I guarantee you will save more than $99.99 or whatever it is now. It's almost a hundred bucks. If you use YNAB in the first year, if not hit me up and I'll Venmo you $99.99. Anyway, so we update our spreadsheets, our YNAB and things like that.

One thing I love about the automated version of YNAB, Personal Capital, Mint, those kinds of products is that you don't have to do as much work to create a report. A lot of reports are built in. We look at things like what is our net worth now? And you mentioned that last week for us pulling early 2021 numbers.

It's really motivating when you see a big increase. Say you see you pull your numbers and you say we started here. Now we're here and say it's a 51 percent increase. And you're like, wow, that is really motivating. What we're doing is working. We need to keep up our strategy. And it's really nice.

We'll talk about things like how are we doing on our pace towards financial independence? Here's our goal, review what we have established as our goal, our dollar amount for our financial independence goal. And then how are we doing on the journey towards that? Are we on pace to meet our goal to beat it. 

Do we need to change anything to get caught up? How much did we donate? We talked last week a lot about your charity water and how passionate you are. We are also big believers in giving away a portion of what you've earned. So whether it's a religious reason or not, there's a lot of benefits to giving away and just realizing that life is bigger than you.

The world is bigger than you. The community is bigger than you. It's more important than you. And one tangible way to do that is to give some of it back. So for 2021, we, and this was like a two minute job to pull out a YNAB very simple. We donated 18 percent of our net income. And we still saw.

An incredible growth in net worth with that. That's awesome. I think a lot of it is we, we talked a little bit about luck and you have like luck of timing in the market and stuff like that, but I'm a big believer that we are blessed and our family is blessed because of our generosity and doing things well and doing the right thing. So 18 percent of our net income because we choose to give off our growth. So our starting point is at least a 10 percent or a tie of what we've earned. So that's our starting point. And then sometimes we have other kind of passionate giving that we do that's on top of the 10 percent of our gross.

So that's cool to look at and I didn't realize that it was going to be that high. But it's like I said, it's neat to look back on.

[00:14:46] Spencer: One thing that was really cool when we first started our financial journey is you can grow your net worth so fast because you're starting from so low.

Yeah. Now. It's all about, it's all about income, right? Like we have to increase our income if we want to increase our net worth. But when you have a good savings rate and you're starting, we started from, when we first got married, we've talked about this in a previous episode and how we, you and me, Jamie, together with our wives, we paid off 218, not multiple wives, but we let's just clarify that not together,

[00:15:21] Jamie: not as a team of four.

[00:15:24] Spencer: Each of us. Yes, but $218,000. And so that's each of us starting with negative six figures. And when you dig yourself out of that hole, like you talked about, using the shovel, getting a bigger shovel, Dave Ramsey, we go that episode. We talk all about getting out of debt, but I was just looking at my numbers here.

2013. So I must've been a first lieutenant on January 1st, $16,000 net worth a year later. $63,000. So that's a four, that's a four X increase in net worth. It's a 400 percent increase in net worth in one year. And then the next year, $135,000. So that's a two X increase. So obviously it's going to slow because as your net worth grows, it's harder to make a dent on it with your savings rate.

And eventually hopefully compounding interest takes off. But when you're in those early stages, you're making percentage wise, you're making huge strides and it feels good. It feels really good.

[00:16:21] Jamie: It really does. And recently the market's done really well, which helps it do a lot of it.

And, but it's okay. Even if it doesn't, let's say next year, at the end of next year, the market doesn't do as well. Maybe it went. Down for a year, maybe the market was that bad and you still can use that as an opportunity to evaluate in the long run, looking at 20, 30 years from now, our plan is still what we want to do.

It's still the right answer. We just need to keep in, keep investing, especially while it's low and it'll catch back up eventually. So whatever's happening, you can use that as a guideline, a measuring stick on your strategy and see how it's going. Yeah.

[00:16:59] Spencer: When you're in the early stages of your financial independence journey, you should really be praying and hoping for a market crash.

That is the unfortunate, that's the unfortunate truth is, like a lot of people lose their jobs and some people will lose a lot more than that when you have a market crash. But I remember it, I think it was 2014, that was in 2015. We've enjoyed the longest bull run in U.S. history, Jamie and me, from when we entered. The workforce to, to today, but there was one year in there where I think the market was either flat, like a 0 percent return, or it was slightly negative, or maybe just like a 0.5, I think it was depending on your investment, obviously. Yeah. Depending on, but if you looked at the S and P 500, it was relatively flat and for someone in the early stage of their investment career, you might still be able to increase your net worth, even with a flat market year or even with a down market year, because you're throwing so much cash into the investments. And that's the beauty of the dollar cost averaging too, right? Is now because you're investing through that entire year.

You're able to snap up all those good companies through a Vanguard mutual fund at a really good price. And, six years later, you're not even, I don't even remember what the market did in 2005. I can barely remember what it did this year. I know it's up because all my investments are up, but it's really like we People have amnesia when it comes to investing, from 2000 to 2002, the market completely went down for three years in a row.

And that's something that we haven't had for almost 20 years now. And I wouldn't be surprised if that's something that comes again in our investing lifetime where people start to question like, Hey, does this whole market economy capitalism thing actually work? And we saw that too with 2008 where we had, from October, 2008 to whenever it was, 2011, three years basically for the market to drop and then to get back to where it started.

Okay. So a little sidebar there on us economic history, but I wasn't econ majors, so I gotta, you gotta give me a chance. It's my podcast. This is your chance to shine Spencer. Thank you. Thank you. And yeah, history and economics, my two favorite things. JaMie, top spending areas. Last week I talked about housing.

Nearly, what is it? 57%, so almost 60 percent of my budget goes into housing. You it.

[00:19:27] Jamie: And you still don't even have air conditioning.

[00:19:28] Spencer: And I still don't have air conditioning. I have air conditioning in this room. You can see it behind me on the webcam. If you're on this call. Top spending areas for you. Any, is that something that you guys look at?

Is it something that you think Ooh, like maybe we should dial that back. Or I know for me, one thing, like if we look at travel, and say we spend a thousand dollars a month on travel in one year, sometimes we're like, Hey, we love that. Can we spend $2,000 a month on travel? Do you guys ever do that when you look at your expenses?

[00:19:59] Jamie: Yeah. It's another nice thing about the automated. Report features of some of the online tools. We break down our general spending. About 30 percent of our income goes to general spending categories like groceries, gas, clothing, eating out, rent and internet. And then this year we look back at our savings rate as well.

So not just spending, but our savings rate this year looks like it's going to be about 35%, which is right about our target, a little bit lower than we probably want, but we also, my wife started working in September. So that. It may take up to 40 percent by the end of the year which is about where we desire to be currently right now in her job, we are putting 40 percent of her pay towards her company, 403B and it's so unusual where the HR called her and said, Hey, did you mean 40%?

4%, we're like, no 40 is that's correct. Please put it all in there. And after only a couple of months, I'm looking at that account. It's wow, that, it's not moving the needle yet. When we keep up that job for a couple of years and then watch that grow. And it's really awesome to see.

As far as other top spending areas this one stings a little bit, and there's probably not much we're going to take on actioning from this, but just knowing we actually have Costco. Each came in with 3 percent of our total spending at those two stores. So 6 percent of our total spending just goes there and we don't even do a lot of grocery shopping at Costco right now, but most of that is, probably not groceries.

So there's probably some room to trim that a little bit, but because the overall picture is so positive. And such positive momentum and strong momentum. Who cares if we spend 6 percent of our income at Costco and target. So that's a couple of the things we look at as far as spending goes.

Yeah.

[00:21:54] Spencer: One, one thing out of my book, The Military Money Manual which as always is available exclusively right now, militarymoneymanual.com/book promo code podcast for a special discount. But I've got a chart in there of working years to financial independence based on a 6 percent real investment return and a 35 percent savings rate puts you solidly at.

21, 22 percent of working years to financial independence. And if you crank that up to 40%, it puts you exactly at 20 years. So in a military career, if you're going to go for retirement, that's 20 years right there. When you're talking about that 35 percent savings rate, not meeting your goals.

That's just because you've set such lofty goals like you. You guys are still solidly on the path to FI and. The average American savings rate, I think for a couple of years, a couple of the last couple of years, it was negative, like people spend more money, they never save anything.

So it's yeah, I think it's cool that you guys have made that a priority, but you've just automated it. And when you spit out the report at the end of the year, you're just like, Oh, cool. Thirty five percent. It's just it just happens. Yeah, it worked like you didn't feel the pinch.

Yeah, what do you, what's your iPhone? You have an iPhone 13, like 12 mini.

[00:23:11] Jamie: I'm. Oh, that's right. Yeah. Yeah. Hashtag first world problems. I'm suffering here. It's almost as bad as having an Android, probably. Oh, yeah.

[00:23:19] Spencer: Who wants that? Yeah, but the Costco target thing is interesting to my wife.

Every time we go to Costco, she's we lose money with this membership because you like, you see a surfboard and you're like, Oh yeah, I need another surfboard. It's no, you don't. You don't even use the surfboard that we have.

[00:23:37] Jamie: It's ridiculous. Like you go in there for a rotisserie chicken cause it's only $5 and $275 later you have two shopping carts full of stuff and the lady's counting them as you walk out the door.

This is, Oh my. What a genius business model they have, but they are, they make it work. And the line for gas is you're saving like 2 on this tank. Why is everyone lined up for gas? I don't get it.

[00:24:02] Spencer: I don't get it, man. People. It's the same thing. That's another episode we should probably do is like military discounts and veterans day free meals, because I think you and I had some hot takes on it with, I think it's gone over the hill. It jumped the shark a little bit. It was a nice gesture and then, especially like there are veterans out there that need that free meal yeah they're going hungry and so I don't want to knock that.

But for, for a lot of people like. Waiting three hours at Applebee's for a $12 meal. That's not even that good. Sorry, Applebee's. Sorry,

[00:24:42] Jamie: Applebee's. They're never gonna sponsor us now, man.

[00:24:44] Spencer: Sorry. I know. Hey, actually I was gonna talk about that. Our Applebee's sponsorship this week. 

[00:24:50] Jamie: Yeah it's such, it's so tough, but when you get, when you, when early on, it's like cutting coupons, like there was a time in our life where we cut coupons and a 25 percent coupon was worth our time because.

That helped us move the needle as crazy as that sounds now. Now unless if there's something at the commissary, it's save 50 cents, like I'll grab it off, but I'm not going to go looking through the newspaper, subscribe to newspaper, looking through the newspaper, following these blogs about how to double up on CVS where they're paying you a dollar and 18 cents to buy two shampoos.

Like it just, it's not doing anything for me other than wasting my time.

[00:25:27] Spencer: And I think. It's people who don't value their time. I think, if you're listening to this podcast right now, if you're in the military, I think at an absolute baseline, even if you're an E-2, E-3 listening to this podcast, 40 bucks an hour.

I think you have to start. At 30 to 40 bucks an hour of your time is worth that much. So if an hour of effort saves you 30 or 40 bucks, yeah, sure. Do it. If you like driving for Uber, if you can make a hundred bucks an hour driving for Uber and spoiler alert, you probably can't because of the way that the system is set up.

Then yeah, do it on the weekends, to pay off debt, but your time. On education or getting better at your job, or, if you're enlisted and you like the military and you're like, you look at those officers around and you're like, dude, I can do their job, then go to school and get a commission and be paid much more for, unless you're in a very specific career, like pilot.

Or even they have RPA operators now who are enlisted. And you can make mondo dollars when you get out as a contractor. So I think your time can be, you have to value your time. If you're saving 25 cents for five minutes. Of effort. It's not worth it. It's just not worth it.

So Jamie

[00:26:49] Jamie: before we need a soundboard, I think for Spencer rants like some kind of little jingle that we can play after this.

[00:26:56] Spencer: Yes. Thank you. I do. I do need a, yeah. And it's always I want people to value their time more than I think that they do, that's what I, all right Spencer rant complete.

Do you want to talk about your investment performance for the last 12 months? You can talk about generically, you can use specifics if you want. I think last week I shared mine for, actually, I haven't done mine yet this year, but I know my TSP is up. Yeah. Yeah. I shared my 2020 stuff last. Last week my for 2021.

I know my Vanguards up. I know my TSP is up. How about you? How are you doing? How were your investments this year?

[00:27:33] Jamie: Good. Good this year. Pretty happy. And we talked before about not checking your net worth and your investment portfolio to option or too often. So it's a good opportunity at the end of the year to just get an update for that.

If you only do it. Probably no more than once a month or every couple of months, maybe, I don't know, I don't know if I'll ever be able to not check it more than once a year, but I don't know, maybe if I'm stupid rich one day, but in general, just our generic Vanguard random investment money in the last 12 months was up 33.

7%, which is great. Our Roth IRAs were 25 and 19%. And that obviously is just based on the different risk strategy that we have inside of that. And inside of those funds and how we chose to allocate inside of there. We have a couple other miscellaneous investment accounts for different kinds of long term goals. One day, maybe five years from now, we want to do X.

And so we have an account that's just for that. title. So we have one that's 6%, one that's 10%, one that's 16 percent and one that's 26%. So pretty positive there. 6 percent is not great, but it's a lot. We chose a lower risk for that one, more conservative portfolio. And then obviously I have three kids and so we're saving for college.

So that one of my goals for next year is going to be to relook at our 529 because they did not do as well. Why are those allocated in a way where I, the best I did between my three kids is 7%. so Yeah, I got to look at that one. I'm not really happy with that.

[00:29:05] Spencer: The youngest has.

Not just a decade, but decades ahead of her. You, I don't have a pontificate on this. It's easy for me to pontificate on a lot of things, but one thing is it, I 529 plans are great and I think they should be part of a lot of people's investment portfolios, especially, with, you have kids I'm thinking actually thinking about opening a couple for future nieces and nephews for for me, but I would still allocate the investments how I have allocated the rest of my investment portfolio.

I wouldn't do anything super conservative and I, in fact, I might even tilt 100 percent stocks because, especially if the child isn't even born yet young, yeah, you've got at least nine months plus 18 years ahead of you before they're thinking about tapping it for college. And then, if they.

There's tons of ways to get money out of 529 plans if they don't use it for college, right? Yeah.

[00:30:00] Jamie: Yeah. You can transfer it to another, not, I'm not a legal expert on this, but you can transfer it to another cousin or your grand, someone's grandchildren, like whatever the situation is, another family member.

And they've really, in the last few years, loosen the definition of education expense. It can be used for things like primary school. Not just college basically. So there's options there. In worse, worst case, like if I end up having to pay a fee, I can't do anything else with the money.

I can find some relatives to help with their education or just suck it up and pay the fee to take it out. I do not plan to do that, nor would I ever endorse that, but there's options there. But honestly, the 529 is probably the one where I devoted the least amount of time to because it's such a far off goal, right?

My oldest is just under a decade away from college still. So it's not, it just doesn't feel as impending as like the FIRE journey of throwing wood on the fire. So I probably just let that one slip a little bit this year, but again, it's a good opportunity to recognize that, but Oh, okay, I need to look at that and figure out what, what went wrong.

Why are some of my, if my overall strategy is X, how come some went 33.7 and some went seven or less? And what do I need to do there to get those kind of bottom performing ones back into my strategy? Cause I, I must've messed something up.

[00:31:21] Spencer: Because if you consider college, it's just another expense as part of FIRE.

And it might be a fixed expense. Like the first six or eight years of my financial independence. Retirement or not retirement, but when I'm financially independent, I don't have to rely on wage based income anymore. Has this additional expense of college, then you can just invest all your money as you would for your general fire plan.

And then, okay, I have this additional and there's plenty of calculators out there that will help you, figure that out and be like, all right, let's say that the first eight years of your, fire or of your retirement, you have to spend an additional $20,000 a year, you throw that in the calculator and it can spit out, a number for you.

[00:32:05] Jamie: Yeah, and a lot of people won't last thing about this rabbit trail of college savings. A lot of people don't think you should say take care of yourself first before taking care of the kids. I think it's a personal decision and there's no right or wrong here. In my opinion, student loan debt is such a major issue.

If I can do anything to help take away That my children may start their adult life in such a negative hole. Like a lot of people are today, I want to do that. Like we're still going to be fine. The needle is still being moved in the right direction. Net worth is still increasing, so I can take care of both.

It doesn't have to be an either them or me equation on, on college savings or not. But Spencer last week, as we looked at goals for, we talked about the recap of this year. What do you guys do to set goals for next year? 

Do you guys have a vision board or anything like that?

Like, how do you get to the why of what you're planning to do, whether financial or not next year? Because that is important to figure out why you're doing anything. How do you guys get there?

[00:33:09] Spencer: I think it's primarily just focused on our Biggest goals, which are freedom of choice, freedom of movement, freedom from certain things.

So like freedom from health problems, freedom eventually from wage based income, right? So financial independence, financial freedom. And, but also so much of it is just, while I'm in the military, I get three days of leave a year and that's it. If the family is getting together for a family reunion in June there goes seven of my days.

If we're going to go to her parents house for Christmas, that might be two weeks and then it's, I got a week left. So where do we want to spend it? Yeah. So I think

[00:33:56] Jamie: because you do want to spend it. You don't want to just not waste leave.

[00:33:59] Spencer: That's right. Yeah, that's right. I know I've got so many guys working for me.

They have 100 days of leave and I'm just like, take it. Go take leave.

[00:34:07] Jamie: The world will survive without you.

[00:34:09] Spencer: That's right. But yeah, we don't do a vision board. We'll talk about it. And I think the biggest thing, like I talked about in last week's episode, is just throwing down that, that.

Every month, January through December and then week, weeks one, two, three and four and just talking about, okay let's like, let's do the big rocks. And there's a whole concept that if you want to fit all these things into a jar, you gotta put the biggest rocks in first, then you put in the pebbles and then you fill it with sand.

And the big rocks for us are Christmas, usually Thanksgiving, which my wife's family doesn't celebrate, not because they're communists, but Because I live in New Zealand and [00:34:47] Jamie: She's not thankful for anything.

[00:34:49] Spencer: Actually, we just hung up all the thank you cards that we've received over the last year. That's our Thanksgiving. 

[00:34:55] Jamie: That’s cool. That's cool. I feel like I'm going to get called out by her for that comment. Sorry.

[00:35:01] Spencer: Probably. And yeah, all the hate mail, all the DMS on Instagram, but Yeah, we don't really. Set a vision board or a dream session other than just conversation. It's a conversation that we have and there, it'll be like for her birthday.

We're going back to the, we're going back to the Four Seasons Sensei and I and that was just a, it was a conversation. You're like, what do you want to do for your birthday? We like going to this resort. Okay, let's go to that resort, it's, and that's, it's nothing cosmic and maybe we're boring about it, but that's.

It's for especially in a married couple, it's so much of it. It's just communication and what do we both want out of this? And, if you can figure out how to have those conversations, then Again, 80 percent you're doing you're moving the needle.

So I, what about you, sir? You guys do any of that stuff?

[00:36:02] Jamie: Not really a formal sit down. I think probably like you at some point we set here's what we want for our relationship, for our life, for our family. And so that's just an ongoing discussion more than a big, sit down pow wow just happens over time. And like you said as different topics come up, then we're like how does this fit in with our why? How does this fit in with our long term goal? For example, the decision for my wife to go back to work or not, she hasn't worked full time in, I don't know, three, three or more years, at least three years.

And so that was a big discussion of, what are the pros and cons of this. So it is just underlying with the why. Helps all those discussions go a little bit easier and better.

[00:36:45] Spencer: One thing that we did, I can't remember which book recommended this, but, and it's ridiculous and I'm probably gonna be made fun of by my wife for mentioning it in public, but we've actually written down what else is new.

I know. We actually wrote down our relationship vision and. We've just got, I'm not gonna read the bullet points because they're quite private. But I will read one of them and that's financially and vibe. And that's part of the reason why we have the annual update on, where's our money and how's it doing.

And that way, and actually just the other day I'm gonna share this story and hopefully I don't get in trouble for it, but I spent a lot of money on a purchase, which I'm not going to mention cause it's a bit silly. And I You know, afterwards we had a conversation like, is this really our priority? Is this really what we want to be spending money on?

Or are we being a bit frivolous at the moment? And we decided that it was a bit frivolous. And Spender, Spencer we decided. Spencer, the Spender strikes again. And, if only I had this Military Money Manual to keep me on the straight and narrow, but I think setting, just having the conversation, talking about priorities and then deciding what you want to do with your time.

Because I think time is the most valuable resource. You can not get more time. Even Elon Musk and Jeff Bezos only get 24 hours in a day. Now they can outsource so much. Life that it feels like to get more than 24 hours in a day. But they don't. Yeah I think some of the, some of the goals that we'll talk about at the end of every year, our net worth.

What do we think our net worth can be next year? And sometimes that's just based on what, honestly, what we'll do is we'll look at our savings rate. We'll look at what our projected income is, which is pretty easy in the military because it's. Probably not the same it was last year, unless you get a promotion or a time and service step up.

And even then that's going to only affect it by a couple thousand dollars. But just look at your savings rate. If you're saving 25%, you make $4,000 a month, then you're saving your net worth should be $12,000 greater. At the end of the year, unless there's a stock market correction or a stock market crash.

How much debt can we pay off this year? That's not a question that we've asked in a long time because we became debt free, but if there's something we can do to move the needle if we have a promotion and now all of a sudden we're making an extra thousand dollars a month, maybe half of it goes into our Roth IRA and half of it goes towards our.

Our car loan or our student loan debt. And all of a sudden now we're going to be debt free six months earlier. Or we realized, Hey, we were going to be debt free in 2023, but if we start making these payments now, we can be debt free by the end of 2022. And that's motivating when you're like, Hey, by this time next year, we don't have to have this conversation.

We don't have to send those. Those checks, that's not checks anymore, but we don't have to send those ones and zeros to Sallie Mae or whoever services our student loan. So any other goals that you guys talk about or there might be suggestions for other people listening.

[00:40:00] Jamie: Yeah. The TSP and the IRA are probably two of the biggest ones I think you should talk about. Spencer is under the BRS, the blended retirement system and not, I am not. So we have different strategies of how we allocate money. If you're getting the TSP match, then you want to space it out throughout the year.

So you can make sure you get the match. Cause you have to contribute some to get their batch. And if you're like me where it doesn't matter can we drop in, can we max out our TSP by March? And so there's more time in the market. Is that possible? So we'll look at that. We'll look at Roth, our Roth IRAs.

Do we want to drop $6,000 each in January, or do we want to go more dollar cost averaging and do 500 a month or what do we want to do with that? So TSPs, IRAs are big discussions to have. We talked last time about sinking funds. 

Are there any, any big expenses usually for us that kind of comes with vacations?

Are there any like travel , any travel points, accumulations, goals, any new credit cards that I probably should take a break for a couple of months to recover from my confession earlier, but it's worth it. If you're in that game and you, or you want to get into it more, it's a good chance to talk about what's next there.

And then we also talked about giving both of us are big on that. So what are we going to do next year? Are there any big projects you talked about looking towards? Would you say Madagascar, Malaysia, Madagascar? Yeah.

[00:41:20] Spencer: So that

[00:41:22] Jamie: would be cool. whEther it's a percentage of our income, what charities or what causes do we want to support?

They're all great opportunities for goals to set for next year, some ideas to hopefully get you started.

[00:41:35] Spencer: Yeah, those are all great. I think the other thing to do, while we're approaching the end of the year, or even in, the first month of the next year is there's some very actionable things that you can do.

So I know for myself personally, and because of COVID right now, you can actually pull your credit report. Every week from all three bureaus and that might go away soon if you're listening to this podcast in the future, if you are welcome and let us know how it is,

[00:42:02] Jamie: It'll tell you right on the website if they're still doing it.

[00:42:05] Spencer: Yeah, that's true. But even if it's, I think it used to be annual. That's why it's called annualcreditreport.com. But that is the only official government backed site to get your credit report. Annualcreditreport. com. Don't go to anybody else. You never, you never need to pay for your credit report.

[00:42:22] Jamie: Yeah, you don't need to know, you don't need to add on for your score.

[00:42:27] Spencer: The scores are free and you can get a free credit score from USAA, Navy Federal, Amex, Chase, Capital One, Credit Karma. Yeah, everybody gives you a free score. You do not need to pay for a credit score. Please do not pay for a credit score or credit monitoring unless you've had some kind of, Privacy invasion.

Yeah. But yeah, one thing that I've done is I'll pull every credit report or I'll pull one credit report every four months. So I'll space it out throughout the year. And then that one company, you mean every company? Yeah. So Experian and let's say January and then four months later, I'll pull trans union.

And then I'll pull the third one, which I can't think of the name for months. Thank you. Equifax. Yeah, but that's a great strategy.

[00:43:13] Jamie: Spencer. I do the same thing. That's a really good strategy.

[00:43:16] Spencer: Yeah. I've actually gotten away from that strategy. Now it's coded so you can there's no rules anymore and I wouldn't be surprised if they actually make that permanent because.

There's really no, if the credit, the people trying to issue you credit can check your credit score whenever, or your credit report whenever they want. Why can't you like, it's your data, you should be able to own that.

[00:43:35] Jamie: So I didn't tell you this. I actually had some fraud recently, Spencer.

No someone opened a checking account. So this is like a buyer beware in my name. They didn't steal any of my money, thankfully, but this is a strategy to watch out for what they told me. The bank told me that. If the new gimmick is to open an account and then try to divert payments, like your stimulus check or whatever, it's coming from the government to that account.

So watch out for that. The indication for me, I got an email from the bank saying, here's how to, welcome to your new checking account. And I used to be a customer of this bank. So I was like, Oh, that's some weird glitch. They just used an old mailing list or whatever. Two weeks later, it was like, here's how to use your new debit card.

And I'm like that's weird. So I call them up and they're like, Oh yeah, we show that you opened up an account on this day. And I was like, yeah, that definitely wasn't me. So anyway, I just recently went through and pulled my credit report, made sure nothing else was out there and went through the process of reporting that putting a fraud alert on with all three credit bureaus.

To lock things down, just make sure that they take extra steps to make sure that no one tries to do that. But yeah, anyway, I just pulled credit reports to double check and make sure nothing else was there. You can see all the soft hits on your credit and it's credit karma, all these banks are checking it like weekly basically.

So we should be able to as well.

[00:44:49] Spencer: Yeah, definitely. Free data. But the other thing I was going to mention about credit reports is you can put an active duty fraud alert on. Your accounts if I think if you're just active duty and it's up to a year, I would highly recommend if you're going to do any travel that you do not do this, but if you do have some fraud or you do have someone steal your identity, then it can be very valuable to lock your credit down and they have to make contact with you at a phone number that you specify before any account is open.

It's actually ridiculous That somebody can just open a bank account without contacting you in any way in your name, but yeah Especially online nowadays. I know. Yeah, it's insane. But all right, so that's one action step there annualcreditreport. com verifying your my pay tax withholdings, you know If you've gotten married recently if you have some kids you might need to reduce your tax withholdings Tsp allotments like we talked about if you can bump it up or for me, because I've maxed it out last year, now that we have a 3 percent pay increase probably coming in January, I might actually need to turn it down a little bit because I'm in BRS and I don't want to max it out too early.

And then if you're going to get a pay increase in the middle of the year, from a time and service thing or a promotion, then you also need to watch out for that and make sure if you're, especially if you're in BRS, that you don't max out the TSP too early. If you're not maxing out the TSP, then you definitely need to look at how you are going to max it out?

And, can you increase your contribution so you can max it out? Yeah.

[00:46:14] Jamie: Or, maybe you're almost done with debt. So you have to start contributing or you've never done it before. And now after listening to this amazing podcast of these beautiful humans behind the microphones, you're like, yeah, I need to start contributing to my TSP.

Here's your chance to log in and do it.

[00:46:30] Spencer: Other things to consider traditional versus Roth. Maybe you've got your spouse going to work, so now you're making more money and her or his money isn't isn't as tax advantageous as yours. So it's, maybe it's time for you as a couple to switch to, or one of you to switch to Roth.

And then you have a little bit of tax diversification Whether it's traditional or Roth accounts, insurance, reviewing that, making sure that you've got enough coverage, auto home renters. One thing that I took out recently was an umbrella policy. I've maxed out my auto insurance and I want to make sure that as my net worth increases that I'm covered in case, and I've got a pool God forbid someone were to have an accident or, something was to happen with the pool.

That's something that I could be personally liable for. And then if you got, any big life events happening, you want to make sure that your investment portfolio is set up to, if you've been extremely risky up until now, maybe it's time to dial down the risk a little bit.

If you just got married and you've got some additional income coming in, you don't need to be as risky anymore and you can add some more stability to your portfolio. Jamie, did you have a recent experience with the investment strategy change or portfolio diversification?

[00:47:42] Jamie: I Don't know in, in that area, investment strategy as much, but it was my wife going back to work.

We tweak some stuff with that and just, normal checkup stuff, nothing too big. As far as that kind of stuff. I will say though, that one thing that has come up recently is the importance of your kind of end of life planning. Whether it's a documented and legal will on file advanced medical directives.

If you choose to have that, what, basically what, how much life support do I want and for how long under what conditions. And if you don't have that, then you could just be there forever. On a ventilator and things like that. So if you don't want that to be the end of your life, then you have to document some of that stuff.

Account beneficiaries are really huge. And so If I can give one big takeaway based on recent events for my family, the time to look at stuff with your family is not after the passing of a loved one. Stuff is raw, emotional, and sad. So the best thing you can do is be open and honest with it.

And here's. Here's my wishes. Here's my paperwork. Here's where everything's saved. Here's how I have an account at this bank and an account at this bank. Here's what to expect. This account has a beneficiary of this person split 50-50, or, whatever you want to do. And just tell everyone what to expect.

If you set a beneficiary, Then a lot of that stuff doesn't need to involve a lawyer at all. So the TSP can, you can have a beneficiary set SGLI. Keeping all that stuff updated is so important. If not, it's going to be one last kick in the one last punch in the gut is probably a better way to say it.

[00:49:18] Spencer: We're trying to keep our clean rating on. Don't want to have an apple iTunes here,

[00:49:24] Jamie: but it is an act of love to have your end of life stuff organized and planned in advance. There's a lot of stuff out there on this. If you ever did any of the total money makeover, any kind of Ramsey stuff, he calls it the legacy journey or just having a legacy box.

So I have a file, my brother and my wife know where the file is in our safe, how to get into the safe, everything they need to know. Is in there and they'd be able to take care of all our accounts easily because everything's organized with directions in that one area where they can find everything easily, that's my last and final act of love, if anything ever happens is that I helped make it easier for them to be taken care of.

Yeah. Jamie Rant.

[00:50:13] Spencer: Yeah. So you were talking about Jesse Mecham, who's the founder of YNAB. You need a budget. Yeah. He advocates for a burn it all down in January. Can you talk about what that is? And what are we burning down? Cause I'm ready. Is it a piano? Is it

[00:50:31] Jamie: So I never heard of this before.

I, the YNAB podcast again, that's, you need a budget. Y N A B is this company and on their podcast last January, I believe, January, 2021, I'm like, what is burn it down January or forget the title. Basically what he and his wife do is they look at. All their balances. Hopefully I'm paraphrasing this correctly.

And they'll say, okay, you say right now we have $15,000 allocated for our emergency fund. Do we still want if someone gave us a check for $15,000 right now, is that what we would still do with the money? Would we still keep the money allocated for this? Or would we take $5,000 of it for that and use $10,000 to pay off the car loan?

Or maybe you had set aside $5,000 for a vacation, but because of COVID or work changes or whatever, you're not able to travel anymore. So in January every year they advocate, burn it down, burn everything down that you have in your budget. Look at your balance of money available and reallocate it based on your current goals.

And basically it might change from what you thought last January's goals were going to be. So that's one technique. I didn't personally do that because. I think that what I had last January is probably still the correct answer but it's a cool concept.

[00:51:40] Spencer: Yeah, I really like that.

Just making sure that how your money is currently allocated is still aligned with your priorities and your goals. So Jamie, we talked about a lot of things. There were a lot of action items in here, but let's just leave the listener. With kind of the big picture, and then I think you've got three takeaways and three questions for the listener.

So I'll take it first and then I'll, and then I'll turn it over to you. What I would like the listener of the podcast to take away this week as we head into 2022, is take the time, look back, analyze, see where you made mistakes, see where you had successes, and. Take an hour, 30 minutes, 15 minutes, five minutes.

Just do it a little bit and reflect on your successes, your failures over the last years. aNd then think about how you want this reflection to go next year. And what kind of action steps are you going to take? What specific things are you going to do so that you're either in a better position?

What kind of things do you want to avoid so you don't end up in a worse position and one book that I just picked up was 4,000 weeks which is time management for mortals and what he essentially lays out is You get about 50 weeks in a year you get about 80 years of life. So you have about 4,000 weeks of your life and when you think about it that way, you know every week that ticks by. That's a week gone that you no longer have access to your 4,000.

And when you think about your life in those terms, you want to make sure that every week is aligned with your values and your priorities. And that, if you're saving for financial independence, but you just had a terrible week and you fought with your spouse, you didn't get along with your kids, you ate crap food, you didn't work out.

You're not going to be a different person. When you get to financial independence, no matter where you go, there you are like you take along all of those problems and all of those issues with yourself and you're not going to be so become the person that you want to be in financial independence now, or if you're already, if you're listening to this podcast and you're already financially independent, you don't have any excuses.

Your time is your time. You've got the money. If, and if you don't have the money, then you're not actually FI. So think about that too. And then the one other takeaway I want to leave with people is. You get 168 hours in a week. I'm really big on numbers and time right now, but 168 hours in a week, you're probably spend about a third of that asleep and how you spend the rest of the time is how you're going to spend your life.

So when you get to the end of your life, you're going to look back and how you spent every day. Is going to be the summation of how you spent your life. So if you're not spending every day doing exactly what you want to do, if you're saving for financial independence but you're not living the life that you want to live, then change it now.

And if that means you have to spend a little bit extra money, that's fine. Build the life you want and then save for it. So that's what I'm gonna leave the listener with as we head into 2022. Jamie, what do you got?

[00:55:03] Jamie: Man, that's so deep. Spencer rant. Yeah, I think we need two categories. One is like a Spencer sermon and then one is a rant.

Both, both amazing and cherished. And I love them both. Okay. My, my main takeaways, I'd say similar to you do some sort of end of your review, especially if you're married, whatever it looks like. Look at your progress and hopefully be motivated by it. But even if it wasn't great, then you have to motivate yourself to do better next year.

Number two, do some type of goal setting for next year. Be intentional about it. It will put you well ahead of the majority of your peers just by. Doing like you said, even a few minutes of talking about it. Number three is just intentionality is overlaps. Number two. So bear with me. It's that important that it's in, in number two and number three, but intentionality and whatever you choose to do, be intentional in saving money, be intentional about paying off debt, be intentional about setting a savings rate and sticking to it.

Be intentional about maxing your TSP, your IRAs opening a TSP. Like what? Or investing for the first time, whatever it is, just be intentional about it. And that will spark progress and change and put you well on your way towards financial independence just by taking some few intentional steps. We talked a lot about practical action items, if you will, this episode. And so you have a lot of ideas and there's a lot more out there. And we'd love to hear if you have other ideas. Hit us up with those as well. 

And then the three questions to summarize, and it doesn't just need to be financial, remember, but how do I want to improve next year?

And that kind of goes with doing your goal setting. And number two, looking back, what were the good things we did? What were the bad things we did and what do we need to change? And then number three, what are my goals and action steps to next year? How do I improve you look with those three takeaways and those questions.

The goal is for you to be better for you to be a better person and financial independence and choosing what to do with your life is a huge part of that, in my opinion. 

So those are my main takeaways and questions for this episode.

[00:57:08] Spencer: Those are great, Jamie. Thank you so much. All right, listener, we will be with you as always next Monday when we drop another episode.

This has been the Military Money Manual podcast, Spencer and Jamie. See you next week. Have a good one.