Lazy Man and Money

Happy 529 (and Memorial) Day!

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Does everyone have fun Memorial Day plans? I’m taking care of dogs, but I don’t mind. They are a terrific group and the holiday pay is very good.

My wife got up at 3 AM to fly to New Mexico. That’s military life sometimes. Instead of deploying for months like some military, she makes shorter trips. This one is ten days, which seems like a lot to me, but many families are further apart.

Memorial Day is different for us. Strictly speaking, Memorial Day is about honoring the Armed Forces who died for our country. I’ve come to stretch the definition of the Armed Forces a bit. While my wife is weapon-trained, her pharmacist duties don’t require her to carry a gun (usually the meaning of the military). Nowadays, guns are useless against many of America’s threats. These threats can be Amthrax (2001) or Katrina (2005) here, Ebola there (2014), or COVID everywhere (2020).

This is where the United States Public Health Service comes in. Just like the Armed Forces, they are on duty 24/7, ready to deploy at a moment’s notice. When my wife returns from these ten days in New Mexico, she’s going on the list to deploy to the border.

Outside of this blog, you may have never heard of the US Public Health Service. Perhaps you’ve seen some of the officers in some COVID briefings. In general, though, they are invisible. You won’t see their Super Bowl commercial. A promotional budget would be ridiculously comical when they don’t have a base. Instead, officers cobbled together some of their own money to make a high-quality PBS documentary (narrated by Ali MacGraw of Love Story fame):

If you have an hour today, please watch the video and make them a little less invisible. It’s important as they continually face political pressure to lose their funding. You can also share it from PBS’ website or with just this link.

This is a personal finance website, so we need to get to National 529 Day (it’s 5/29 – get it?)

529 Day

I’ve been writing about 529s for years. I started one for my nephew when he was born, and he’ll be able to access it in a couple of years. I only contributed a little money, only $50, on birthdays and Christmas. However, it’s grown to around $5,000.

Most personal finance gurus fund their kids’ 529s more than we do. My wife’s GI Bill will help cover a lot of college costs. We also expect to have more money available as our mortgage will be paid off. Finally, we’re paying a lot for private school now. We get a generous military discount for the school. I believe investing in their education early “snowballs” like compound interest. Hopefully, they’ll get some great aid and scholarships. We’ll also do some college hacking, like dual enrollment.

As I’ve written many times before, our military status is an early retirement cheat code. When it comes to college, that’s definitely true. If you don’t have a cheat code available to you, a 529 plan is the next best plan.

I’ve written two articles that focus on 529 plans:

You may see these bumped to the top of the blog throughout the day.

Government Shutdown = Emergency Fund Win!

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If you’ve been able to tear yourself away from the Breaking Bad hype, you’ve probably heard something about a looming government shutdown tonight. As regular readers know, I try not to get into politics. I’m not going to go into the details of why and how the government shutdown may happen. There are a number of news outlets who are better informed on the topic if you are interested.

Today, I want to write about the government shutdown’s impact on one family – mine.

I realize that most people aren’t directly impacted by a shutdown and much of this talk about the government shutdown may amount to jibber jabber in their mind. After all, do we really care if some people are going to lose their iPhones?

For our family a prolonged government shutdown is more financially dangerous . My wife’s military status means she has to work to pick up the slack from the government workers who are prohibited from working in a shutdown. Because the government can’t pay people in a shutdown, she’ll get IOUs from the government.

The result of the situation is more work paired with no spendable paycheck. I joke about the IOUs and call them illiquid, non-interest bearing treasury bonds. However, it’s not a joking matter, especially for families that don’t have a sizable emergency fund.

The hope is that any shutdown will be short-lived and military won’t have piles of IOUs stack up from the government. I wouldn’t put the odds of a prolonged government shutdown as high, but there’s always a risk.

Of more immediate impact for us is that military leave gets cancelled. Any travel plans are cancelled and you are left on your own to take the financial loss. We have airline tickets, hotel reservations, car rental reservations, and dog boarding reservations and that leads to scrambling to find out what the penalty is to cancel. So far every organization has been sympathetic, except for United Airlines. They want to be sticklers about the cancellation policy and take $200 out of each ticket to reschedule for another time.

In many posts in the past, I’ve written about various military benefits that we receive. Our situation is still decidedly in the plus column. Nonetheless, there’s always the threat of a looming emergency. That’s we are we this week. It should get interesting.

Update: Well this post has become much more meaningless. It seems that Obama signed a bill to ensure that the military still gets paid (no IOUs). It also turns out that there is a law on the books that if granted leave is rescinded the government has to reimburse for losses… which is enough to stop them from rescinding leave. Getting new leave granted though, that’s a different story.

P.S. I don’t watch Breaking Bad, but I think I’m going to try to marathon it in a couple of months while the wife is on maternity leave.

Ten Things I Think I Think

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It’s been a long time since I put out a random post of things I think I think (which I shameless ripped off of Peter King… though I won’t steal his convention this time by enumerating them).

I hope everyone is coming off a good Memorial Day. Just when I think I can’t have any great appreciation for the military, some terrorist event like the recent Boston Bombings brings it up a notch. I’ve read so many great words were said about the military the last couple of days that anything I could add would just sound like a rehash and I’d probably be subconsciously plagerizing someone.

It’s worth noting that we shouldn’t forget the Oklahoma tornado. Living in New England, I can’t begin to comprehend what I saw on the news with that. The next time we get three feet of snow and the governor makes it illegal to drive on public roads, remind not to complain.

It made me smile that the Comfort Dogs are helping the people affected by the Oklahoma tornado. Have you never heard of the Comfort Dogs? I can’t believe they fly all over the country… seems like there should be a pack in every state, just ready to deploy.

One last Oklahoma and Comfort Dog thought: Should You Have an Emergency Charity Fund?

Deal of the Week

Kentucky Fried Chicken (don’t give me that KFC re-branding crap) has a buy one get one free coupon for 2 pieces of boneless chicken, a side, a biscuit, and a drink for $4.99. I’ve been to restaurants that charge $5 for two soft drinks alone. The Angioplasty Association of America suggests you print out as many as you can and use them up by June 4th.

Entertainment

Did you know there were so many Great Gatsby movies? Me neither. With the new remake of that and of course the new Superman reboot, I’ve been thinking that it’s time to remake Brewster’s Millions. Most people I know don’t it was originally a play, and has been released as a film 6 times according to IMDB. The last one, in 1985 had a gap of 40 years between films… and we are approaching a 30 year gap. Short of resurrecting Chris Farley and pairing him with Adam Sandler, I don’t know how you can match the Pryor/Candy of the last film. Part of me says, “Why remake a classic?” when it was done to perfection. The other part of me says “How do we introduce a great concept of a movie a new generation?”

Having finished off season 3 of Arrested Development over the last week, I found the format of season 4 (streaming on Netflix) to be greatly disappointing. I suppose that getting the actors together for real episodes just wasn’t possible, but I feel like I’m watching just one watered-down episode of Arrested Development. I’m only a few episodes in and the biggest highlight was seeing that many of the actors of the Outsourced make an appearance.

The three teams with the best records in baseball are all Red-based teams… the Cardinals, Reds, and Red Sox. (Okay the Red Sox are tied with the Rangers, but don’t rain on my parade.)

Household

Strange world… I can get some millions of random products delivered from Amazon in 2 days or less, but it takes the fence contractor we hired a month to get the most common fence materials delivered to him.

My “luck” with service people doesn’t end with fence contractors. My wife and I tried to get a cleaning service for our home. In San Francisco, I was able to complete that task on my to-do list in about a half hour. In New England it seems no one wants my business. I called three places and my wife called five more. No one picked up or returned our calls. This includes the popular The Maids brand. We found one person who quoted us an estimated price of $135 over the phone, who offers a 15% military discount. I was expecting a price of $115. During the walk-through she asked if we were military and then came back with the price of… $135.

When I asked about the $135 price after it was quoted as being $135 on the phone previously, the cleaning service lady said, “Well a house this size is usually $150, but with the military discount it will be $135.” Being a bit of a math nerd, I realized that even if it was usually $150 that’s only honoring a 10% military discount. I waited a week and when no other cleaning services returned my phone calls, I decided to counter offer at $125, explaining that it is very close to a 15% military discount on $150. Weeks later, I still have no response to what I thought was a pretty fair proposal.

In the meantime, I checked with a local directory of trusted businesses and found an awesome cleaning service for $75. In all my other searches it didn’t come up. They were ready to clean the same day they toured the home and quoted the price!

I know some people might think I’m living up to my Lazy name with a cleaning service, and in some ways I am. However, one of the reasons I am frugal in many areas is so that I can splurge for a cleaning service.

Technology

CNET had a great article about upcoming seemless wifi connections. The promise is that your phone will automatically use a wifi connection when it is available without you having to select it or log in… as long as you have privileges to be on that network. (Sounds a little like Republic Wireless.)

I’m sure they’ll get the technology piece solved, there aren’t any great barriers to storing login credentials on a phone in advance and logging into wifi. The barrier to making this useful to consumers is a unifying entity to make wifi networks interoperable. For example, if my Bank of America ATM card only worked at Bank of America, it would be serviceable, but it is much better when it works at Chase, US Bank, Wells Fargo, and that shady place near Tijuana where Salma Hayek dances with a snake. Even if I have a pay a small roaming fee to use my wifi out-of-network, it is better than having to buy into that network completely.

Maybe cell carriers realizes that this is a good way to monetize these wifi networks and charge an extra $5-7 a month for roaming on the WiFi SuperNet (which I’ll use for lack of a better name).

My 16 hours in Military Retirement Boot Camp

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I’ve mentioned before that my wife is a pharmacist with the military. That unique career choice has given her some of the greatest perks in the job market today. It’s great job security as it literally takes an act of Congress to fire her. Probably most importantly, from my view is that she’s exempt from be deployed for war. However, today I’d like to talk about another of the great perks of her career, her retirement and pension. (Note: I’ve covered some of this broadly before in Our Early Retirement Plan: My Wife’s Plan (Part 3).)

In the military, personnel can retire after 20 years of service with a pension of 50% of their base pay. This means that my wife is eligible to retire in 7 years when she’ll be 43. When she invited me to her office for a two-day workshop on retirement, I natural said yes. I’m never one to pass up good material a blog post, especially in a unique area that few personal finance bloggers are in a position to cover. Also, since I’m a dork and interested in these kinds of financial matters, this was going be like a trip to Disney World, right? I was wrong. There was no wi-fi and every Internet connection requires VPN software that my civilian computer didn’t have. In addition, the workshop was set up for those on the east coast, so we had to get up before 4:30 in the morning. Some had it worse than me. Several people flew 1,000 so that they could sit in the office with the video conferencing software. I’ll let that sink in for a minute. If only someone could tell the military that there is thing called Skype. There was little interaction on the video conference (a couple of times they took questions), so 98% of the material could have been taped and/or presented on a DVD which could be watched at the military worker’s leisure. A couple of times a year they could have a 2-hour round of questions.

I had hoped that once I got past the format of the workshop, I’d be back in retirement-math-nerd-bliss. However, I had forgotten the one thing I knew about the military: they are experts in wrapping up something with enough red tape to make you want to pull you eyeballs and throw them across the room. Much of the retirement planning workshop covered knowing where to get the 78 forms of paperwork, how to fill them out, and figuring out who is supposed to get them at what time. There’s no one-stop shop with this. The military recommendation was that personnel plan ahead 6 months in advance of retirement in order to complete the process. I can’t think of anything less interesting to write than a military process, so we’ll move on to useful things I’ve learned.

Types of Retirement

It turns out there are a billion types of retirement. While I only considered the 20-year version, there’s also a 20-year one where the military can remove your position. You are free to look for another position, but if you can’t find, they essentially retire you. You can also stay on for 30 years (and with special approval even longer) and collect 75% of your base pay. Also when you hit age 64, that’s going to be forced retirement for most everyone as well. Finally, only with my wife’s branch of the military if she’s disabled she gets 75% of her base pay for life (I’m not sure if that’s in the line of duty or in general).

Terminal vs. Lump Sum Leave

When you plan to retire you have to think about your leave (vacation to us civilians). You can use your leave to effectively retire before the 20 years… or you can take it as a lump-sum payment. This is similar to when you leave any job. However, with the military, you can store up 60-days of leave. This lead to an example where an O-6 ranking officer (where I hope my wife will be in a few years) will get a lump-sum payment of $24,757.12 for those 60-days. While some people get fancy pens for retirement, this is a way to give yourself a very nice long vacation.

Types of Health Care Available

When you retire you can health care from the VA (Department of Veteran’s Affairs). However, it seems like that isn’t what most people use even if they have it for free. You also get TRICARE, which the health care that we have now. In retirement, you get TRICARE Standard which has some reduced benefits. However, for the paltry sum of around $500 a year, our entire family will be covered by TRICARE Prime, which gives us the equivalent coverage of what we have now. That’s IF (can I make that “if” any bigger?) they don’t raise that premium substantially. There’s already rumblings that the cost of TRICARE will have to go up to ease some of the financial burden on the government. I’m planning for it be a good deal more.
Survivor Benefit Plan – Woohoo!

This is the reason why I wake up before 4:30 and go to these retirement things. If my wife retires and then dies, her pension ends too. Me and the dog are left blogging for dough (and Jacoby is a terrible blogger). Fortunately, there’s a Survivor Benefit Plan (SBP). This allows for the surviving spouse to get 55% of the base amount of the pension. So if my wife retires after 20 years and gets 50% of her base-pay and dies, I would be able to get 55% of that (or 27.5% of her original base-pay). However, in order to get this benefit, you have to pay 6.5% of your base-pay each year in pre-tax dollars. The pre-tax is key because alternatives like annuities use post-tax dollars.

We are years away from making a decision on this, but the guidelines at the seminar were something like this: For every 5 years that you pay the SBP premium, the surviving spouse has to live 7 months longer. If you retire and live for 30 years paying the SBP, the spouse needs to live 35 months (let’s call it 3 years) for it to pay off.

The key things to think about here are the life expectancy of the non-military spouse, your assets (savings, investments, etc.), and spousal income (can I teach Jacoby to be an ace blogger rocking LazyDogAndMoney.com?).

Life Insurance

While my wife is working she’s got a life-insurance plan called Servicemembers’ Group Life Insurance (SGLI), which is a very low-cost life insurance policy. This gives me $400,000 if she dies before retirement (I’d get another $100,000 from the military itself). This is a great head start, especially since we don’t have any children yet. In 5-6 months that will change and we’ll have to think about life insurance for both of us. However, SGLI goes away at retirement, so if my wife retires in 7 years, we’ll have a 7 year old and no insurance. At that point we’ll have to look into Converting SGLI to VGLI with VGLI being the veteran’s version of the same life insurance. Unfortunately VGLI, isn’t any cheaper than civilian insurance. In fact, at the workshop they made a point to say, it is expensive. The main advantage to VGLI is that there is no physical or any kind of health test that can be used to deny coverage. File VGLI under “It is good to have options.”

Long-Term Care

The workshop brought in an outside financial advisor to try sell the audience on long-term care. That half-hour will be a blog post in itself. Look for it sometime the middle of next week.

The Rest of the Workshop

They covered a lot of other details that 99.9% of my readership don’t really care about. Here are some examples:

Upon retirement the military will move us anywhere we want in the continental US. (There’s a loophole where if you pick an expensive place to move to, you can negotiate a cheaper international destination. Rather than have them move my stuff from Maine to Hawaii, I might be able to negotiate a move to Montreal. Your mileage may vary with this.)

There’s also the Tricare Retiree Dental Program, which runs around $99-160 per month for family coverage (depending on the cost of living in your area). Oddly to me this is much more expensive that health care costs.

The most personally intriguing thing of stuff that may be little interest to anyone is an alternative health care option to TRICARE Prime called U.S. Family Health Plan (USFHP). This is apparently an outstanding medical plan for a few people who happen to live in the right area of the country and meet the most random of eligibility requirements (almost like being born on the fourth week of March). Fortunately for me, it seems I qualify. In one of those odd oversights, my wife, the actual military member does not appear to. Also, it is available back in Boston, where we are from, so it is of no use to us now that we live in CA. However, they are closing it off to new enrollees later this year because it is just too expensive to maintain, so I might be able to act quick and get grandfathered in.

They covered a bunch more stuff that really isn’t worth covering here. Perhaps next year, now that I know what to expect, I’ll go and report for my friend Ryan at The Military Wallet.