14 Air Force Leaders Talk Money, FI, and What Confuses Them About Military Personal Finance | Military Money Manual Podcast Episode 53

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Jamie and Spencer recap Jamie's personal finance discussion with a group of 14 Air Force officers and Government Service civilians.

Everyone agreed personal finance needs to be more discussed. Some themes mentioned were budgeting, TSP vs IRA, and investing.

Jamie and Spencer point listeners where to find good financial resources for military service members. They explore how financial readiness should be an additional pillar to consider for Comprehensive Airman Fitness, and how financial independence is achievable for all military service members.

Lastly, reminding everyone that people are hurting, and they need your support, not just with money, but that is a very common issue for military service members and their families.

If you have a question you would like us to answer on the podcast or just need some extra guidance and help with your military money, please reach out on instagram.com/militarymoneymanual or email podcast@militarymoneymanual.com/

Outline of episode

  • Top lessons that I learned after sitting down with 14 Air Force officers and GS civilians to discuss personal finance
  • Comprehensive Airman Fitness and financial readiness
  • Additional resources for financial planning

Military Money Manual Podcast Episode 53 Transcript

[00:00:00] Jamie: In fact, the Chief Mass Sergeant of the Air Force made a post on Facebook about this several months ago, maybe six or so months ago, talking about financial readiness, hinting at it becoming a pillar of comprehensive Airman Fitness. 

Intro: Welcome to the Military Money Manual Podcast, where every episode is all about achieving financial independence in the military faster than before. We believe personal finance shouldn't be boring or intimidating, building wealth can be simple, and financial freedom is the ultimate financial goal. Now, here's your hosts, Spencer and Jamie.

Spencer: Hello everyone. Welcome to another episode of the Military Money Manual podcast. I'm your host Spencer here with my co-host Jamie. This week we're back to recording in separate locations. I'm way down south in the beautiful country of New Zealand and Jamie's on TDY. 

[00:01:00] But, this week we're going to be talking about a really cool opportunity Jamie had recently, where he got to sit down with a group of Air Force officers and GS, or government service civilian employees, and talk about personal finance. So Jamie, where and when did you get to do this, who was there, and what were you guys talking about?

Jamie: It was a really neat opportunity, and I'm excited to be able to share the takeaways from it and some of the lessons that we talked about in that group. But it was a group of 14 officers like you said and government civilians, and we just talked about personal finance and that was the purpose of the group.

In the group, there were varying levels of experience and knowledge. Some people didn't quite fully understand the TSP versus the IRA, and some people had a couple of rental properties, so it was a little bit of a mixed bag. We were all over the place with topics. 

You'll see as we go through the conversation that there are some definite themes that came out of the group. And some things I think that are important for leaders, officers, and NCOs to understand because they’re Airmen, Soldiers, they’re Marines that are dealing with these issues as well. 

[00:02:00] And if we don't start talking about them it could become an impact on mission readiness if we're not careful. 

Spencer: One thing that you said there, Jamie, was some people had rental properties, but they didn't fully understand how to invest in their TSP.

So what may seem like a basic concept to you might seem like a super advanced concept to someone else and vice versa. We all have our strengths and weaknesses especially when it comes to personal finance. So don't assume just because someone's got six rental properties scattered around the world and they're doing really good with their rental property empire, don't assume that they know anything about stock market investing or their TSP.

Jamie: Yeah, it's different. Like you said, we all have our strengths and weaknesses. For example, Spencer and I don't really do much with real estate investing. That's not our strong suit, but a lot of times people get wrapped up in the next cool thing or the hot stock tip of the day from one of their coworkers or, “Hey, you’ve got to download this Robinhood app,” or whatever.

And the next thing you know, they're investing in things they don't fully understand or putting money into a house that may or may not be a good investment. 

[00:03:00] Hopefully they get lucky with it, but you really want to make sure that you're understanding everything you're doing with your money and not just doing it because that's what your friends or someone at work recommended that you. 

Spencer: We saw a lot of that in the last couple of years with the so-called meme stocks and Robinhood day-trading and people getting into options and Bitcoin and all kinds of cryptocurrencies where maybe they didn't fully understand what they were doing and maybe they thought they did, but those alternative investments can be a lot of fun to dabble with and to use to learn about other investments. But, for the vast majority of people, I don't think you should be putting any more than 1% to 5% of your net worth into those funds. And when we're just talking a few dollars and maybe your total invested assets are is a $1,000 and you're like, “What's a hundred dollars?” to throw in there, even though it's 10% of my money. 

[00:04:00] It really just reinforces bad habits where you treat investing as gambling, where you're trying to hit it big and get these home runs. You should just be going for singles and doubles. And that's the baseball analogy there, comparing investing in these meme stocks or into these cryptocurrencies versus investing in a standard Vanguard total stock market index.

Jamie: Yeah, a hundred percent. One thing I want to emphasize is that even with the different levels of competencies, there were still topics that came up in two main themes. 

When I asked, “What do you guys want to talk about?” there were two consistent themes in the conversation. One was budgeting and then one was TSP and investing.

They knew they wanted more structure with their budget, but they weren't sure where to start. And then the TSP and IRA stuff was just “How do I invest? Where do I start? What should I be investing in? What are the proper funds?” Obviously, since I'm not a financial advisor, I can't directly answer those questions and give financial advice like that, but I can share some strategies and some things that I use like passive index fund, low-cost automatic investments. 

[00:05:00] The LADS method that you talk about in your book is where I like to put my money. So we talked about some of that. We talked about TSP strategies and the pros and cons of trying to day trade. There are a lot of people that try to basically day trade within their TSP and jump in and out of the G fund. I think that's not necessarily a great strategy for most people, if not for everyone.

Spencer: I mean, for most people, you just don't have the time to pay attention when it's a good time to get in and out of the G Fund. And it's been proven time and time again, market timing just doesn't work. And if it did, you would have a lot more billionaires out there than we see.

If you have a million people flipping a coin a hundred times, someone's going to end up getting heads every single. Just because they got lucky doesn't make them good, and it doesn't mean that what they did can be replicated by everyone else.

The topic of TSP makes a lot of sense that it was super popular in your group that you sat down talked with because we talked about TSP investing in episode number two, and that's been our most popular episode so far of the podcast. 

[00:06:00] So Jamie, what were some of the other themes that you took away after talking with that, with that group that you sat down with?

Jamie: The first one was that everyone agreed we need more people to talk about this and more openness about personal finance. It doesn't need to be a taboo topic like spirituality or politics or anything like that at work. All of our paychecks are public information. You are sitting next to an E-4 and the E-4 knows what the E-9 makes, and the E-9 knows what the O-3 makes.

Whether it's right or wrong, that's the setup. An O-2 makes more than an E-2. That’s just how the military operates. So everyone knows what everyone's getting paid. Maybe we don't need to be quite as closehold with that information, and we can talk about how we're doing. If you don't want to use dollar amounts, that's fine.

[00:07:00] Talk about percentages and say, “I was able to put 10% into my TSP. I was able to make a 25% savings rate.” The conversation really needs to be focused on helping coworkers, your friends, and your subordinates understand how important financial independence can be to them having options.

Because one day everyone will leave the military, whether it's at 4 years, or 24, or 40 years, they're going to have another career or retirement on the other end of their service. And so we have to get them ready for that. Helping coworkers and friends understand that they have options and that money is a tool to help them achieve their personal goals was something that unanimously decided was an important theme from our conversation.

Spencer: I think another thing that you mentioned to me was that people were almost afraid to seek more information because they don't know who to trust and they don't know what sources are going to be valuable. The government and the Department of Defense have actually put out a lot of good personal finance and just basic budgeting and investing information out there.

[00:08:00] But, again, they don't want to get in trouble by steering anybody the wrong way. It's very vague and very generic, so a lot of people don't feel like it applies to their situation. But, in 80% or 90% of the cases, it does. 

You have to be putting money into your TSP. You need to know where your money's going, and you need to try to avoid high-interest-rate debt. I mean, it's pretty basic for just about everybody. 

Jamie: Exactly. Spencer, you mentioned that a lot of information is out there and there are a lot of resources, but sometimes it's hard to know which one is the best for your scenario.

Whether I follow this blog that talks about day trading in and out of the G fund or do I talk about leveraging debt, good debt versus bad debt? Is that even a thing? There's a lot of websites, there's a lot of blogs, there's a lot of books out there. Knowing which one is a good resource that has your best interest in mind and isn't trying to sell me something like whole life insurance as an investment.

So everyone agreed that there needed to be more training and discussion, and that helps us narrow down the resources that are out there. 

[00:09:00] The other theme was the TSP versus IRA discussion that we mentioned already. We need more awareness out there that the TSP and the IRA are separate entities with separate contribution limits and separate rules and the pros and cons of each one. Pros and cons of Roth versus traditional, and just informing people so they can make a better-informed choice on things like their investment strategy and their retirement account. 

Spencer: That’s probably one of the most common questions I get or I see online as well. “Does the Roth IRA limit apply to the Roth TSP?”

I mean, the fact that they branded both of them with the same nomenclature is probably confusing millions of people. There's a simple way to rebrand it and stop confusing all these people. But so many military service members out there hear about a $6,000 Roth IRA limit, and they think, “Oh, that applies to the Roth TSP as well.” At that point, it's just too confusing. They throw their hands up, and they don't do anything. 

[00:10:00] If anybody on the podcast is going through that scenario where they want to start investing, but as soon as they dip their toe in the water, they realize, “Oh man, there's all these terms I gotta learn.”

But, not really. It’s pretty basic. If you can overcome that initial reluctance or that initial fear of the unknown, then it becomes much easier to start investing.

Jamie: It can feel really intimidating and we've all been there. We all started once too. No matter how advanced of an investor you are now or how much wealth you've accumulated, you started as a beginner at one point.

And I remember the first time I opened a Vanguard account not knowing what it was going to do, and the website's old-fashioned looking. I didn't really know where to click or what to do. But, you can call for help.

In your book you lay out nine steps that are pretty straightforward and easy to follow. I think that's a great place for someone to start, but you don't have to know everything to start, and that's why I would encourage our listeners to do something and start, and then from there you can build your knowledge and grow. 

[00:11:00] Maybe it's as simple as starting $50-a-month deposit into a Vanguard or Fidelity or Schwab type bank’s Roth IRA.

Maybe start 5% in your TSP. You set that up in My Pay or whatever system your service has and just start contributing. So what if it goes into the G Fund for four months while you work it out? It's more important to start. Although the G fund is not the default anymore, so it's probably not the issue.

Just start something and you can learn as you go and maximize your investments. But don't, don't let the fear of the unknown keep you from doing anything.

Spencer: Did financial independence come up at all when you were having your discussion?

Jamie: Absolutely. That's obviously one of the main things I like to talk about when I'm talking to people about options for you and your family in alignment with your goals and using your money as a tool.

As I mentioned before, the feedback that I got from this group in particular was that they felt that financial independence wasn't really something that was achievable or practical for them. 

[00:12:00] Whether they grew up in the lower middle class or a lower income family, that's something that other people do that's not possible as a service member.

Even though a lot of this audience was officers who make pretty good money in comparison to the average American, there was still that assumption and the feeling that it wasn't achievable for them, which is completely false. 

It can be achievable for anyone at any income level, depending on how much you spend and how much you save. Those are really the variables that you can control. So if you're one of those out there that feels like financial independent sounds cool, but isn't really for you because you don't make enough, or you have four kids, or whatever the scenario is, it makes it feel like it's not for you. 

I challenge you to reevaluate that assumption and to do some objective looking at the numbers and figure out if it can be achievable for you.

When I broke down the math of 25 times your annual expenses to 33 times your annual expenses to get your financial independence number that we talked about before in financial independence episodes, and showed them that for some of the people in the room their FI number could be as low as 1.2 million it made it seem a little more achievable.

[00:13:00] I would say 15 or 20 years ago, if someone would've told me that I could save a million dollars, it would sound far-fetched. I wouldn't believe it, but just by starting and doing one thing at a time, it can be achievable for military families as well.

Spencer: When you were having the discussion, did any significant life events come up about job losses or divorce or any setbacks that people are having on the journey of life?

Jamie: Absolutely. This one is tough. The last theme that I want to highlight from this group is that people are hurting and there's stuff going on for your friends, your coworkers, or maybe our listeners, who are going through something like a divorce or a spouse losing their job. 

I've talked to people recently where they bought a house and then the next week the spouse, the non-military spouse, loses their job.

[00:14:00] Now, all of a sudden they are a one-income family and they just bought this house expecting two incomes. Also, people buy a house, and then a couple of weeks later they get PCS orders that they were not expecting and were told they were going to be there three more years. They bought a house and then boom, you get orders, and it's time to move.

So those scenarios came up for sure in this group. I think it's just another reason to emphasize that, especially supervisors but all people, all service members, and their families need to be able to talk to their friends about it so they can help them be better prepared because people are hurting. Money is not the only problem out there, but it affects or is affected by almost every problem out there.

Spencer: Definitely. One thing that we talk about in the Air Force is comprehensive airman fitness, and the traditional model is physical, mental, social, and spiritual. So it's like the four legs of a table. What do you think about adding financial to that model?

 [00:15:00] Jamie: This was the thesis of my talk, if you will, that financial readiness of an individual member or that member's family can impact military readiness, and it could even become a national security issue if it gets too extreme.

I don't want to make it seem crazy, but if someone is distracted by a tough time with their spouse or they're going through a separation or having mental struggles where they need to seek counseling, that can impact military readiness as well. Like if they become unable to deploy or unable to do their job, unable to arm if they're in a career field that carries a weapon, things like that.

Obviously, the most important thing is taking care of that member and their needs at the time, but I think financial readiness is just as important as the other pillars. In fact, the Chief Master Sergeant of the Air Force made a post on Facebook about this several months ago talking about financial readiness, hinting at it becoming a pillar of comprehensive airman fitness. 

[00:16:00] Whatever your branch does as far as whole-person-concept for your holistic health, I guess is another way of thinking of it. Maybe consider talking about financial readiness as part of your unit’s down days, resiliency days, or wingman days or whatever you call it.

Like I mentioned before, if someone is called to do their job, whether it's deploy or go TDY or man the guard shack or man an ECP or whatever it is, and they're distracted because they're in debt, or they're worried about the loan shark, or they're worried about the payday loan coming due in a couple of weeks, then they're not going to be able to do their job to the full extent of their ability.

In fact, one of the most alarming things that I learned from this group, from another friend named Joe, is that in the Air Force the number four reason for suicide attempts is financial stress. That alone should be a reason to highlight the need for talking about it more and raising more awareness about financial readiness.

It was number three before. The only reason it went down to number four is because work stress moved up. So it hasn't gotten any better from going down from three to four, but the number four reason, specifically in the US Air Force for suicide attempts is financial troubles. So that's alarming as well.

[00:17:00] Spencer: Yeah, like what you said there, Jamie, how many times have we had a safety briefing on don't deep fry a frozen turkey? 

It doesn't have to be that often because even someone who enjoys talking about finances and investing in personal finance if it's every month, people tune it out, right? If it's like once a year or once every six months and all you do is you just get everybody together and you can be super high level, “Hey, make sure you're throwing 5% into your TSP and getting that match. Make sure you have an emergency fund.” 

If you want additional resources the DOD has a ton of official stuff that leaders can point their troops to. I think it's really important that there are a lot of resources out there, and if you feel like you know the difference between a TSP and an IRA, there are so many websites out there now, and so many YouTube channels.

[00:18:00] One place that I'm always willing to point military service members to is on Reddit military finance. It's just r/MilitaryFinance. That is a group of almost 29,000 service members who are just interested in helping each other out and answering really advanced questions sometimes about military finances.

Like, “Why did the TSP not accept my additional contribution when I was in a tax-free combat zone” all the way down to, “Hey, can you help me understand the difference between the Roth IRA and the Roth TSP contribution?” But again, like so much of this stuff, if you just Google it, Google does a pretty good job, especially on financial stuff.

At least the first couple of results are not going to be complete BS. Usually, Google's a pretty good resource that you can turn to and apply your filter. If it's got a “.gov” in the name, that's probably a good resource. There's always my website, militarymoneymanual.com. I try to present information as best as I understand it. 

[00:19:00] But there are a lot of resources out there. 

I just heard one of our podcast listeners, he is a flight commander and has about, I think 20 to 25 airmen working for him. When he has his initial feedback or you know, his midterm or final feedback with his troops, the two questions he always asks is, “If you're in the BRS, are you contributing at least 5% to your TSP?”

Then the second question is, “Do you have an emergency fund? And how much is it?” One thing that he's found really valuable because he's almost an O-4 now (dual income, his wife's not military, but she also makes money working for the government). He's always careful to present anything in percentages because sometimes it's difficult if you're an O-4 making almost $150,000 a year to talk emergency funds with an Airman or a Soldier making $36,000 or $40,000 a year.

[00:20:00] But you can always break it down into percentages, and you can always start having the conversation and have them build those habits when they're not making so much. Hopefully, that will help them when they do start making more money.

Jamie: Yeah, I think that's very important. If you're a supervisor like I said, it's on you to talk about this, and this should be one of the topics that you talk about with your Soldiers, your Airmen, your Marines, and anyone that you command or lead.

And talk about it on a regular basis. You define what that basis is, in my opinion, but it should be something that is talked about enough where they feel comfortable asking questions or getting pointed to the right resources. I would say you, listener, may not be in this situation unless you just recently found us. If that's the case, welcome, go back and listen to all of them and you'll be in a pretty good spot. If you are listening to this, you're probably the kind that needs to go help people. You might already be doing it, and we thank you for that. It could be showing them resources like this podcast, showing them The Military Money Manual book, Spencer mentioned his website as well.

[00:21:00] The book is like a two-day read at the most, about 120 pages. Really easy to read, just breaks it down at the beginner level, but it's not so basic that someone who's more advanced would be bored by it. So that's really nice. 

Then the last one that I would point people to, well, two more, Military One Source is a good resource for a lot of things. The other one would be the Military Family Support Center, Military & Family Readiness Center, or whatever it's called for your installation. They almost always will have a financial counselor, a budget expert, or maybe a certified financial planner, depending on their experience.

Someone is there to help you start a budget if that's what you need, to learn the basics of TSP, etc. They probably have classes that they offer on a monthly basis that you could take, and then they can also point you to more resources. There's a lot more out there as well. And again, it can be overwhelming, but those are some to get you started.

Spencer: Great suggestions there, Jamie. 

Jamie: Thank you so much for listening to us today and we appreciate you joining us. Today we talked about the top lessons that I learned after sitting down with 14 Air Force officers and GS civilians to discuss personal finance.

We talked about how, budgeting, TSP, and investing are the hot topics. Some of the themes of the conversation were everything from people wanting to know more information about personal finance but not knowing who to trust, agreeing that there needs to be more training and discussion resources for TSP versus IRA, and how financial independence can be achievable for you, even if it might not initially feel like that.

The last reminder is to remember that people are hurting. They need your support, and they need your help, not just with money, but that is a very common issue for military service members and their families. 

If you enjoyed this podcast, which we hope you do every week, we appreciate your five-star reviews on Apple Podcast or on Spotify.

[00:23:00] And as always, if you have any questions, you can reach out to us on Instagram @militarymoneymanual or via email at info@militarymoneymanual.com. 

Outro: Thanks so much for tuning in to this episode of the Military Money Manual Podcast. If you are enjoying the show, please feel free to rate, subscribe and leave a review wherever you listen to your podcasts. This helps others find the show and we really appreciate it. Thanks again for tuning in and we'll catch you in the next episode.

Spencer: Hey guys and gals, Spencer here again. Before I let you go, I want to let you know about two things. 

First, my 100% free course. It's called the Ultimate Military Credit Cards Course, and you can sign up today at militarymoneymanual.com/umc3. 

I've been running this course for over four years now, and we just celebrated our 7,000th graduate!

In this course, I walk you through an absolute beginner's guide to travel credit cards and opening your first fee-waived credit cards in the military. 

Again, you can sign up today at militarymoneymanual.com/umc3. It's 100% free, no spam, and you can unsubscribe at any time. 

Second my book, the Military Money Manual: A Practical Guide to Financial Freedom is available on my website and Amazon today. Head over to shop.militarymoneymanual.com. Or if you want the Amazon version, search Military Money Manual. 

This is the book I wish someone had handed me on my first day in the military. In this book, I cover the exact money tactics and investment strategies I used on my path to achieve financial independence while I served in the US Air Force.

The book is the best personal finance book specifically for you. Whether you're an active duty, guard, reserve, a military spouse, enlisted, or officer. Any ROTC or Academy cadet can benefit from the tactical and strategic advice I lay out in the book. But don't just take my word for it. 

Here's two reviews of the book, Ryan on Good Reads wrote, “The most comprehensive investing personal finance books, specifically written for military members I've read so far. This book should be handed to every new LT at commissioning.” 

Matt on Amazon said, “This book's incredibly straightforward, easy to understand, practical, and useful. This book should be on the Commandant’s reading list.” Thanks, Matt. 

If you're interested in the book, head over to my website, shop.militarymoneymanual.com, and podcast listeners can use promo code “podcast” to get a special discount on the ebook, audiobook and hardcover book. 

You can find the audiobook on Audible, the ebook on Amazon Kindle, and the hardcover book on Amazon, or again, head over to my website and use promo code “podcast” for a special discount. 

Thanks for listening.

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