Finance Friday Articles
Here are my favorites this week:
Are You Leaving Money On The Table?
Making the Call – Roth vs Traditional
The Ultimate Productivity Hack is Saying No
Here are the rest of this week’s articles:
6 TRICARE Resources You Might Not Know About
All-Time Highs Are Both Scary & Normal
A Primer on Real Estate Professional Status for Physicians
Beyond Fee-Only: 7 Things to Know About the Advice-Only Model
Bull Markets Last Much Longer Than You Think
How to Fast FIRE Your Way to Generational Wealth – Part I
How We Went From Full-Time Physicians to Semi-Retired MDs
How Your TRICARE Costs Will Change in 2020
I Made $15 Million Before I Was 30, And It Wasn’t As Awesome As You’d Think
Make these Five Tax Moves Before December 31st
Six Principles of Asset Location
Smart Career Alternatives and Retirement for Physicians
Strategies To Consider When Building An Effective Retirement Income Plan
Student Loan Advice: 7 Rules of Thumb
The Code, Conflicts, and Client Interest
There’s Always a Bear Market Somewhere
What Causes Physician Burnout? The Medscape Survey
Where Have All The Stock Market Returns Come From This Decade?
Why Opportunity Fund Investors Shouldn’t Settle for High Fees
Why the best person to give you money advice may NOT be an accountant or financial adviser
Throwback Thursday Classic Post – Types of Deployments
This post will help you learn all that you can about deployments. I’ve done three deployments, one as a General Medical Officer (GMO) during the initial invasion of Iraq, and two after residency. In 2010, I deployed with the 15th Marine Expeditionary Unit (MEU) and in 2016 I deployed to Guantanamo Bay (GTMO). In addition, as both a Detailer and Emergency Medicine Specialty Leader I’ve deployed a number of physicians, so I’m pretty familiar with all the details of the current deployment situation.
In the current operational environment, there are a few types of deployments. They include platform-based deployments, individual augmentee (IA) deployments, global support assignment (GSA) deployments, and what I’ll call parent unit deployments.
Let’s deal with the last one first because it is the easiest to explain. For what I’ll call a parent unit deployment, you deploy when your parent unit deploys. For example, if you are assigned to the Marine Corps with a MEU, when that MEU deploys so do you. You go with the unit you are primarily assigned to. The same could be said for a medical battalion, a Preventive Medicine Unit, and many other units.
A platform-based deployment happens to people who are stationed at Navy Medicine Readiness and Training Commands/Units (NMRTC/NMRTUs). Some people who are primarily stationed at NMRTCs are assigned to what is called a “platform.” A platform is an operational unit of some kind. It could be the MERCY or COMFORT, a Marine Corps unit, an Expeditionary Medical Facility, etc. In essence, it is an operational unit who “owns” you if they get activated or deployed. In other words, if your platform is a medical battalion and that medical battalion gets deployed, you would go with them because it is your platform. If your platform regularly drills or does exercises, since it is your platform you may have to participate in these drills and get pulled away from your primary duties at your NMRTC.
How is it decided whether you get placed on a platform, and if so which one? The main determinant is most likely which billet you get orders into. Some billets at NMRTCs have secondary assignments to platforms. For example, the billet I was in at NMRTC Portsmouth was “mobilized to” or “MOB’ed to” an Expeditionary Medical Facility. That was my platform. To be honest, sometimes commands will rearrange platforms, so it is not always determined by the billet you are in. If you want to know if you are on a platform, you will have to go to your command’s Plans, Operations, Medical Intelligence or POMI officer. They are the ones who manage platforms and can tell you if you are on one.
Platform based deployments are the wave of the future in Navy Medicine, and you can expect an increased focus on platforms, platforms training, and deployments as a platform.
An individual augmentee or IA deployment is when a request in placed by an operational unit somewhere for an individual person, you are selected to fill that requirement, and you individually augment that unit. When they deploy, you deploy with them as an IA but stay attached administratively to your parent command. In other words, if you are at NMRTC Portsmouth but deploy as an IA, you stay attached to NMRTC Portsmouth the entire time you are deployed. This is the type of deployment most of us have experienced for the majority of our career, but the Navy is trying to get out of the “IA business” and is shifting, as already mentioned, to platforms.
The final type of deployment is a global support assignment (GSA). With this type, you detach from your current command, move or execute a permanent change of station (PCS) to a processing center that becomes your new military command, and then you are given orders to deploy. For example, my last deployment was a GSA. I detached from Navy Personnel Command, my old command, PCS’ed to my new command, the processing center in Norfolk, and then was given deployment orders to go to my unit in GTMO. During this time my parent command was Expeditionary Combat Readiness Center or ECRC, the processing center, and they were primarily responsible for my fitreps and pay issues.
The unique part of a GSA deployment is that pretty much as soon as you report to the processing center you have to contact your Detailer and Specialty Leader to get orders to your next command. The GSA orders usually only last up to a year, and you’ll need orders so you can PCS to your next command when you get back from the deployment. This is the major downside that people complain about with a GSA…the fact that you get PCS orders and have to leave your old command, which people may not want to do. On the other hand, it can be a major benefit. If you are stationed somewhere you don’t want to be, volunteering for a GSA can get you out of there because you’ll PCS away. In addition, because you are volunteering or accepting a deployment, it may give you some leverage with the Detailer or Specialty Leader. For example, you could say, “I’ll deploy on this GSA, but only if you are willing to write me orders to Hawaii as follow-on orders.” That may not always work, but it is worth a try.
Those are the major types of deployments that currently exist, and here are some additional resources:
CNO Message to the Force: We Must Be Protectors and Exemplify Our Values
Chief of Naval Operations Adm. Mike Gilday
Mission one for every Sailor — active and reserve, uniformed and civilian — is the operational readiness of today’s Navy. That means being ready both in our personal and professional lives — and part of that readiness is continuing to hold ourselves to high ideals of integrity and service.
Reflecting on my first three months as chief of naval operations, I want each and every Sailor to think about who we are as a Navy and the constitutional oath we commit ourselves to. That oath is what binds us together. It is the foundation of our profession. It is our north star. It defines us.
It is no overstatement to say that naval service requires deeper and broader knowledge than it ever has before. You must summon all your energy to ensure that we are ready to fight today; not tomorrow, not in some distant future but today. That all starts with good order and discipline at every level of the chain of command.
To be clear, we must be men and women of integrity. We must be honorable. We must be standard-bearers. We must be above reproach. And we must not give anyone cause to question our fundamental values. That is what sets us apart as a fighting force.
Leaders, I am counting on you. I expect commanders at every level to epitomize integrity and exemplify our core values at all times. Senior enlisted leaders, I expect you to anchor up and show your Sailors what right looks like on the deck-plates, day-in and day-out. And I expect every Sailor to display the character and honor that has always defined our Navy. These ideals are central to who we are.
The responsibility for ethical and professional behavior must be taken seriously — and we must own it at every level. We must be protectors and exemplify our values.
I’m counting on each of you to set a strong personal example of responsible behavior, both on and off duty.
While there is much work to be done, the tenacity and ingenuity of our Sailors will take us where we need to go — and do so at a flank bell.
See you in the fleet.
Market-Based Approach Driving DHA Forward in MTF Transition
Here’s a link to the article about the DHA transition:
A Simple and Military Specific Summary of How to Save for Retirement
I’m a huge fam of Jim Lange. He’s a noted expert in financial management, saving for retirement, and estate planning. He’s written a number of books
He sends out a monthly newsletter that I get via snail mail, and it usually has a useful article in it. If you want it, you can get it here.
A previous edition had a section called “Jim’s Point-by-Point Summary of the Whole Retirement & Estate Planning Process.” It was simple but extremely useful. Below in bold are each of the points he lists for people who are still working, which is most of my readership. Let’s take each bolded point and militarize it for you so it is specific to those of us in the military.
Contribute at least the amount to your retirement plan that your employer is willing to match or partially match.
For those under the legacy retirement plan, this is not an option. For those under the new Blended Retirement System (BRS), you need to contribute 5% of your basic pay to the Thrift Savings Plan (TSP) to get the pull 5% DoD match:
You also need to make sure you contribute 5% every month and don’t fill the TSP too early. If you max it out in October, you won’t get a match in November or December.
If you can afford to, contribute the maximum allowed to your retirement plan even if your employer does not match.
This is $19,500 in 2020. You can do an extra $6,500 if you are 50 or over. You can even do more if you are in a combat zone.
Once you have maximized contributions to your plan at work, contribute the maximum you can to an IRA, even if you cannot take a tax deduction on it.
If you are able to fill your TSP account, next you’ll need to open an IRA at an investment firm. Vanguard is the obvious choice due to their across the board low investment fees and unique non-profit structure, but you can do this anywhere (Schwab, Fidelity, etc.).
If you make too much to contribute to a Roth IRA, you just use the back door Roth IRA option.
Consider your personal tax bracket when trying to decide if you should contribute to a Roth or a traditional IRA/retirement plan.
With a traditional plan, you take a tax deduction now and pay taxes later when you take the money out. With a Roth plan you pay the taxes now and the withdrawals are completely tax free.
The general principle is that if you are in a lower tax bracket now than when you are retired, you do the Roth. If you are in a higher tax bracket now, you use the traditional.
No one really knows what the future holds, though, making this decision tough. Here are some resources for you to check out when making this decision:
Traditional/Roth TSP Comparison Matrix
Roth vs. Traditional IRAs: A Comparison
Do not take loans against your retirement plan. Allow the tax-deferred or tax-free status of the account to maximize the growth of your money.
While the TSP allows loans, I refuse to link to any information about it. Once you put money away for retirement, you don’t borrow from it unless it is an ABSOLUTE EMERGENCY.
Period.
The Bottom Line
Here are the point-by-point summary of steps Jim Lange suggests you take if you are saving for retirement:
- Contribute at least the amount to your retirement plan that your employer is willing to match or partially match, which is 5% of basic pay in the BRS.
- If you can afford to, contribute the maximum allowed to your retirement plan even if your employer does not match, which is $19,500 in the TSP ($26,000 if you’re 50+).
- Once you have maximized contributions to your plan at work, contribute the maximum you can to an IRA, even if you cannot take a tax deduction on it. Use a back door Roth IRA if you need to.
- Consider your personal tax bracket when trying to decide if you should contribute to a Roth or a traditional IRA/retirement plan.
- Do not take loans against your retirement plan. Allow the tax-deferred or tax-free status of the account to maximize the growth of your money.
Flag Aide for Asst. Director for Combat Support at DHA – O3/O4
DHA is looking for a Flag Aide for the Assistant Director for Combat Support (currently Maj Gen Payne) to report NLT Nov 2020; here are the official announcement and PD. This is a rare opportunity for one of our O-3/O-4s to be at the epicenter of the readiness arm of the Defense Health Aagency.
Applications (LOI, CV, Bio) should be submitted to CDR Melissa Austin (contact is in the global) NLT 6 Jan 2020.
MHS Female Physician Leadership Course – Call for Nominations
We are announcing the call for nominations for the 2020 MHS Female Physician Leadership Course (FPLC) to be held April 15-17, 2020 at Defense Health Headquarters in Falls Church, VA. The target audience is Active Duty and Reserve female physicians (MD/DO) in the grades of O-4 select to junior O-5 (less than 2 years’ time in grade).
The nomination form, course details, and the formal advertisement are all here:
Please follow the instructions on the nomination form carefully. Submit packages as a single PDF to CAPT Nicole McIntyre (contact info is in the global) by COB (EST) on 15 JAN 2020.
Finance Friday Articles
Here’s an article about the upcoming change in the TSP I Fund. They are adding emerging markets like China to the I Fund’s international stock holdings:
Viewpoint: Let’s Keep a Level Playing Field for TSP Investors
Here are my favorite articles of the week:
Step By Step Guide to Opening a Brokerage Account
The 1% Rule and How It Can Save You Time When Evaluating Rental Properties
Here are the rest of this week’s articles:
10 Questions to Ask Yourself About Your Investments
Conflicts of Interest: Are You Getting Good Advice?
Creating a Dynasty: Building Family Wealth Across Generations
How much can we earn in retirement without paying federal income taxes?
If It Doesn’t Cash Flow, Don’t Buy It
Missing the Target with Target Date Funds
Monte Carlo Analysis: Understanding What You’re Dealing With
Oldies But Goodies – Financial Books You Should Read
The End of the Year Unwanted Payday
This Anesthesiologist Retired At 43 By Avoiding The Normal Traps That Trip-Up Doctors’ Savings
This Law Lowers Interest Rates for Active Duty Servicemembers
Throwback Thursday Classic Post – The $121,500+ Guest Room
(This is one of the most popular articles I’ve ever written, and I’m on my 3rd exchange student, so this room has cost me way more than indicated in the title.)
I have a wife, two children, two dogs and the need for three bedrooms and two bathrooms. In March 2015 I purchased what I consider to be a modest 4 bedroom, 3.5 bath, 3000 square foot house in a nice neighborhood with quality public schools. The 4th bedroom is largely unnecessary, but like many people we occasionally have visitors and feel that it is nice to offer them a bedroom as opposed to a hotel. This is the story of how that 4th bedroom cost me over $100,000, far more than it would cost to provide our visitors with a hotel room…a REALLY NICE hotel room.
The Guest Room
The guest room and its accompanying full bathroom are approximately 600 square feet. The house sold for $140/square foot, meaning that this extra room and bathroom cost me $84,000. Where I live, you can get a decent hotel room for $100/night. In other words, I could have purchased 840 nights in a hotel room for any guests we have and I don’t think we’ll ever have 840 guest-nights unless we stay in this house for a very, very, long time. In addition, we have a quite comfortable queen size Lazy Boy sleeper couch that could have substituted for the guest room.
Running total: $84,000
The HVAC Incident
“The way they installed this, I don’t even think I can fix it.” That is not what I wanted my HVAC repair man to say, but that is what he said. The guest room did not have its own HVAC zone and because it is above the garage and the insulation is not what it could be, the guest room is always too hot or too cold. And what’s the point of a nice guestroom if it’s not comfortable? After spending $5,000, the guest room had its own wall mounted HVAC unit and zone.
Running total: $89,000
The Exchange Student
Since we have an $89,000 extra room with a bathroom and its own HVAC, we are hosting a Spanish exchange student during the upcoming school year. Hosting an exchange student will likely be a great experience for us all, as I assume it will expand our horizons and hopefully forge a lasting relationship with someone for us to visit in Spain.
I suspect this student, like most humans, will eat and drink and cost some money, so I’m adding that to the running total.
Running total: $89,000 plus whatever a 16-year-old boy eats and drinks during a school year.
Despite the fact that he is of driving age, he is not allowed to drive in the US. This, of course, led to…
The Manny Van
Sometime in August, I will have a wife, two kids, two dogs, and an exchange student. It is (was) going to be tough to get around and do the traveling we’d like to do in our Toyota Prius and Ford Fusion Hybrid. Having a 12, 15, and 16-year-old in the back seat, while technically feasible, was not going to be fun for anything other than the shortest of trips. Plus, we like to bring the dogs.
Enter the $32,500 2015 Toyota Sienna minivan, which I like to call the “manny van” when I’m driving it. I can now haul all living beings for whom I am responsible in the manliest of vans.
Running total: $121,500 plus whatever a 16-year-old boy eats and drinks in a school year
The Moral of the Story
One of the classic financial mistakes that almost all physicians make (including me apparently) is that they spend too much money, buying too expensive a car and too large of a house. Sometimes something as simple as wanting a guest room can lead to unintended and expensive consequences. If we didn’t have a guest room, I would probably have an extra $100,000 and I wouldn’t be driving a “manny van”.
GI Bill Transfer Exception to Policy Expires 12 JAN 2020
The Department of Defense exception to policy (ETP) that extends the ability of service members with over 16 years of service to transfer Post 9/11 GI Bill benefits to their dependents expires on 12 January 2020. As outlined in NAVADMIN 178/19, as of 12 July 2019, any member who has greater than 16 years of service will no longer be eligible to transfer education benefits to their dependents.
The good news is that these changes DO NOT impact Servicemembers who previously submitted and have an approved Transfer of Education Benefits (TEB) application in the Defense Manpower Data Center (DMDC) milConnect web portal at https://milconnect.dmdc.osd.mil.
Eligible Servicemembers who have served 16 or more years may transfer Post 9-11 GI Bill benefits to their eligible dependents until 12 January 2020 with an additional 4-year service obligation on Active Duty or in the Selected Reserve (SELRES).
Who isn’t eligible? (NOT an exhaustive list, just most common reasons):
- Approved retirement or fleet reserve. – Can’t obligate the required four
years. - LIMDU, Medboard, etc. have not been found fit for full duty and are not retainable for four years.
- Less than four years to high year tenure (HYT) date or statutory retirement.
***There are ZERO exceptions for the 4-year additional service obligation.***
Joel Schofer's Career Planning Blog 