Money: Pilot financial well-being?

[Guest kylejustin]

Is it a mistake to buy a house at UPT if you are only there for a year? The way I look at it is if you pay rent, you are pissing that money away every month for a year. Let's say you pay $1,000 a month for rent, after a year at UPT... you just lost $12K.

If you were to buy a house and sold it after a year at UPT, is it possible to at least break even? If not, would the money you lose be less than what you would have paid rent for that year?

[Toro]

Having just bought my first house less than a year ago, I would advise against doing it at UPT. The asspain and paperwork alone is enough to deter me. Take that with the fact that depending on the buyer's market you may spend a long time after you leave trying to sell that house. Now you're paying rent at your new location and a mortgage at your old location.

With all the associated fees and the fact that the house isn't going to appreciate much in only one year, I think you'd be lucky to break even. Not worth the bother during UPT - you'll have plenty of other things to worry about.

[M2]

Agree with Toro, you should wait until your first duty station. One year isn't enough to break even on real estate, and if you turn it into a rental property you will always have one-year tenants (UPT studs). Think about it, would you want renters like yourself?? Seriously, for that first year it is better to get yourself a low-mainteance apartment.

Cheers! M2

[M2]

Another thing to mention for future reference, when you PCS be sure to hang on to your personal records/files if you are contemplating buying a house at your next assignment. I didn't do so when we left Germany in 1999 and bought our house in San Antonio (in my defense I hadn't planned on buying a house), and the asspain was tenfold. I recently bought some Tupperware file holders and transferred all my files from my metal file cabinet to them, and will probably put them in my hold baggage.

Just something to remember down the road...

Cheers! M2

[M2]

Air Force Personnel Center News Service

April 8, 2005

Release No. 031

Air Force announces Thrift Savings Plan open season

RANDOLPH AIR FORCE BASE, Texas -- Civilian and military employees can sign up for, or change, their Thrift Savings Plan contribution amounts during the "open season" April 15 - June 30.

"TSP is a long-term retirement savings plan, which everyone should consider," said Ms. Jackie Holland, task manager at the Air Force Personnel Contact Center here. "It's a great supplement to military and civilian retirement plans.

"It's also important to note that TSP is not limited to investing in stocks," said Ms. Holland. "People can choose safer government securities as well."

This open season applies only to regular TSP contributions. It does not include TSP catch-up contributions, as they are not tied to open seasons, according to Janet Thomas, of AFPC's civilian benefits and entitlements service team.

TSP offers investors the chance for lower taxes each year they contribute while not having to pay taxes on earnings until they reach retirement.

"Eligible employees can take out loans and make in-service withdrawals from their TSP accounts," said Ms. Thomas. "And you can keep your account, even if you leave military or federal civilian service."

Investment money is deposited directly from each paycheck "so you never have to think about it," said Ms. Holland. "That makes it easy to 'pay yourself first' while only investing what you deem appropriate."

The five TSP funds are: the Government Securities Investment (G) Fund; the Common Stock Index Investment © Fund; the Fixed Income Index Investment (F) Fund; the Small Capitalization Stock Index Investment (S) Fund; and the International Stock Index Investment (I) Fund. TSP also hopes to make "Lifecycle" funds available mid-2005. Lifecycle funds are 'target asset allocation portfolios' that will hold a mix of the five funds currently available. The mix of funds is chosen based on the date the employee expects to need money for retirement. The Thrift Board is still working out the details. In the meantime, a series of questions and answers on the lifecycle funds can be found on the TSP Web site at:

http://www.tsp.gov/curinfo/specint/LFC-Qs&As.html

Additional publicity will be issued when final details become available.

"As with any individual retirement account, the sooner you begin contributing, the better," said Ms. Thomas.

Contribution elections and/or changes made between April 15 and June 11 will take effect June12, for both military and civilian personnel. Changes made on or after June 12 will become effective at the beginning of the pay period following the one in which the election is made for civilians and the following month for military.

Public Law 108-469, signed into law Dec. 21, 2004, will eliminate TSP open seasons. The Federal Retirement Thrift Investment Board is implementing this law effective July 1, 2005. As a result, beginning July 1, civilian employees and military members may start, change, stop, or resume contributions at any time. For civilians the elections will be effective at the beginning of the pay period following the one in which submitted, and for military members elections will be effective the following month.

Some of the specifics of the program include:

Military

-- Military members can contribute up to 10 percent of their base pay, as long as the annual total of tax-deferred investment doesn't exceed $14,000 for 2005. Airmen also have the ability to invest all or part of their bonuses or special pay.

-- Those serving in tax-free combat zones are allowed up to $42,000 in annual contributions.

-- Military members can enroll through the Defense Finance and Accounting Service web site at http://www.dfas.mil/emss/ They can also enroll by filling out a form TSP-U-1 at local military personnel flights, finance offices and family support centers.

-- Contribution allocations (how an employee chooses to invest money among the five funds) can be made by calling the TSP automated ThriftLine (877) 968-3778 for members in the 50 States, Virgin Islands, Puerto Rico, Guam, American Samoa and Canada, or (504) 255-8777 for members elsewhere, or on the TSP web site at http://www.tsp.gov/ For general TSP questions, call the Air Force Personnel Contact Center at (800) 616-3775.

-- Specific TSP information is available for Air Force military personnel at http://www.afpc.randolph.af.mil/mpf/TSP/th...avings_plan.htm

Civilian

Contribution limits are based on which retirement system an employee has. For the current open season, the following contribution rates apply:

-- Federal Employees' Retirement System employees may contribute up to 15 percent of basic pay each pay period. Once eligible, the government provides matching funds of up to four percent as well as an automatic one percent each pay period, whether the employee contributes or not, making the government's contribution five percent.

-- Employees covered by the Civil Service Retirement System may contribute up to 10 percent of basic pay, but do not receive any agency contributions.

-- Beginning in December 2005, there will no longer be percentage limits on how much FERS and CSRS employees may contribute each year. Contributions will be restricted only by the Internal Revenue Code's annual limit, which is $15,000 for 2006.

-- Specific information is available for civilian employees from the Thrift Savings Plan web site at http://www.tsp.gov/ and the BEST homepage at http://www.afpc.randolph.af.mil/dpc/BEST/menu.htm

-- All Air Force-serviced civilian employees will make their TSP contribution elections or changes electronically through the Web-based Employee Benefits Information System at http://www.afpc.randolph.af.mil/dpc/BEST_GRB/EBIS.htm or through the BEST automated phone system at (800) 616-3775. Hearing impaired employees may contact BEST by calling TDD (800) 382-0893 or commercial 565-2276 within San Antonio, Texas. Overseas employees will dial the AT&T Direct Access Number for the country they are calling from and then enter (800) 616-3775. AT&T Direct Access Numbers can be obtained from access instructions can be obtained from http://www.business.att.com/bt/dial_guide.jsp Counselors are available weekdays from 7 a.m. - 6 p.m. Central Time.

-- Contribution allocations (how an employee chooses to invest their money among the five funds) are made via the "Account Access" section of the TSP website http://www.tsp.gov , or by calling the ThriftLine (1-877- 968-3778 for employees in the 50 States, Virgin Islands, Puerto Rico, Guam, American Samoa and Canada; 1-504-255-8777 for employees elsewhere).

More information about the Thrift Savings Plan can be found in the booklet "Summary of the Thrift Savings Plan" on the TSP home page under civilian or uniformed services TSP Forms and Publications.

Cheers! M2