The 5 Best Personal Finance Books I’ve Read All Year

Posted on December 23, 2016 by Doug Nordman

I’m a voracious reader. I was that six-year-old kid you saw staggering out of the public library with a two-foot stack of books, and 50 years later I’m still doing it. Over the first 45 years of my life, I accumulated over 3000 paperbacks, which made me a fun guy to be around during military household goods moves. Hawaii’s tropical climate (and critters) eventually forced me to give away that collection, and a Kindle app has restored our domestic harmony. Now I’ll never run out of storage, and financial independence gives me even more time for reading.

Image of Amazon's "Buy now with 1-Click" button on the order page | The-Military-Guide.com

To order, click on any of the book covers.

Today my weaknesses are NetGalley, BookBub, and the “Buy Now With 1-Click” button on my Amazon account. (I know better than to go for Kindle Unlimited.) I also share a huge number of manuscripts and PDFs from other personal-finance bloggers. My reading pile works out to well over a hundred books per year.

We’re going to share the top five of this year’s survey. You can buy one of them with a discount (rightfully so!), and we’ll update this post when the others have deals. This site might earn a small commission when you click on the links, but your price is the same either way.

The books cover widely different topics, so pick the subject that’s suitable for your situation. You could gift one of these over the holidays or you may decide to wait for New Year’s resolutions.

First and foremost:

Your Playbook For Tough Times

Donna Freedman’s full title is “Your Playbook For Tough Times: Living Large On Small Change, For The Short Term Or The Long Haul”. She has decades of experience at raising a family on very little money, and she does not mince words. This is not merely an advice book but rather an encyclopedia with detailed maps. It includes names, websites, and addresses. It should be displayed on the kitchen wall of every home and labeled “In Case Of Emergency Break Glass”.

Image of Donna Freedman's book "Your Playbook For Tough Times", living large on small change for the short term or the long haul | The-Military-Guide.com

Click the image to order.

We’re not talking frugality or even deprivation. This is survival during long-term unemployment or disability, perhaps while caring for your family and dealing with debt. This is the book you read at 2 AM when the unpaid bills keep you awake. She lists techniques for both spending less and earning more, but also for getting help. She explains how to use United Way’s 211 phone number in your community and exactly what to say for the assistance you need while keeping your self-respect.

The 12 chapters can be read in any order, and each one is packed with specific advice on cutting costs. Ms. Freedman goes into great detail on food, shelter, utilities, and clothing. (The rest of our consumer “needs” are really just “wants”.) Later chapters cover rebuilding your emergency savings, entertaining on a budget (or on no budget), and maintaining morale.

Donna knows marketing, too. Through the end of January 2017, use discount code “MILGUIDE” at “Your Playbook’s” e-junkie cart for a $5 PDF. That expense returns many multiples of its value in helping you get through the tough times. It also makes a cheap gift for anyone who’s struggling yet reluctant to ask for help.

Military In Transition’s Guide to the Survivor Benefit Plan

Here’s a book that every military couple needs to read and discuss.

Servicemember and CFP Forrest Baumhover wrote this short eBook from discussions on the Facebook group. He cuts through the confusion (and hype) by explaining both why most families want the SBP. You only get one chance to choose SBP when you retire from the military, and you only get one more shot at canceling it. (“No pressure.”) Then he goes on to explain why some families don’t want the SBP.

Image of Forrest Baumhover's book Guide To The Survivor Benefit Plan" from the Military In Transition website | The-Military-Guide.com

Click the book cover to order.

For military retirees, the Survivor Benefit Plan is simply the world’s best inflation-adjusted annuity. Its expenses are subsidized by the federal government, but a survivor annuity is not the right choice for everyone. Some families only need term insurance (at a far lower cost) while others might choose to completely skip both survivor benefits and life insurance.

The biggest SBP controversy is comparing apples to oranges. Some military spouses take great comfort in knowing that they’ll have a lifetime survivor income, while others want a lump sum for paying off mortgages or putting the kids through college. Still, others want to use SBP to fund a special-needs trust for their adult disabled children. All three choices have their advantages and their drawbacks yet the vocabulary can be confusing.

Forrest not only covers the discussion but digs into all the numbers and shows the case studies. If you want to check out an early version of this analysis then join the “Military In Transition” Facebook group. You can click on the “Files” link for Forrest’s comparison of “A Term Life Insurance Policy Compared To The Survivor Benefit Plan”.

SBP is still an intensely personal (and for a few, an emotional) choice, but by the end of this book you’ll make an informed choice.

Note: I helped edit one of the early drafts. My spouse and I have both declined our SBP coverage on each other. Read the book to learn why.

The Simple Path to Wealth

(Your Road Map To Financial Independence And A Rich, Free Life)

J L Collins is one of my favorite personal-finance authors, and I’m not just saying that because he has more investing experience than me. He’s one of those guys who will probably never stop working (on projects he loves) and he’ll never retire early. He’s always been more interested in the freedom of financial independence.

Image of the book cover of J L Collins The Simple Path To Wealth Your Road Map To Financial Independence and a Rich Free Life | The-Military-Guide.com

Click the book cover to order.

His analysis simply cuts through all the crap around investing.

Spend less, save more. Invest it in an asset allocation of Vanguard passively-managed stock index funds with low expense ratios. (You might only need one fund). Any questions?

As your net worth grows and you approach financial independence, then seek more happiness in your life. (Hint: it’s not found through buying more stuff.) As your net worth grows even more then you can enjoy more freedom. You can take your financial independence a few months at a time (ditch the job, travel the world) or work less (go part-time or telecommute, spend more time with family). Eventually, you’ll accumulate 25x your annual spending and be free to do what you want.

I could go into a lot more detail, but let me put it this way: I bought this book for my daughter. I’m pretty sure her spouse will be reading it too.

Can I Retire Yet?

(How to Make the Biggest Financial Decision of the Rest of Your Life)

Darrow Kirkpatrick is still one of my favorite early-retirement authors, and this is his second book. (He’s already financially independent.) He quit work at age 50 to climb rocks and bicycle through the mountains, but first, he exhaustively analyzed the long-term math. He wasn’t paralyzed by the fear of the risks, but his research reassured himself that he was taking reasonable opportunities to reap greater rewards.

Image of the book Can I Retire Yet How To Make The Biggest Financial Decision Of The Rest Of Your Life | The-Military-Guide.com

Click on the cover to order.

Today he spends even more time on difficult questions like “How much will I spend in retirement?”, “How will I handle inflation?”, and “What withdrawal rate should I use?”

Darrow digs into the details behind each question. There are no pat answers, but he shows you the important factors and suggests ways to handle the uncertainties. He also gives you a “lifeboat strategy” to redirect your spending if the economy tanks or if you’re running low on assets. The book concludes with the six most important questions that you’ll have to answer about your new retirement life, including the dreaded “What will I do all day?!?”

He’s become the Internet’s leading expert on financial independence calculators by putting dozens of them through their paces. His book is just as thorough.

Last but definitely not least is a startup reference manual:

Finance Your Own Business:

(Get on the Financing Fast Track)

Yeah, it’s one of the more expensive books on this list. In this case, $11 is a great price for all of the resources, and it’s an investment with an outstanding ROI.

Image of the book cover Finance Your Own Business and Get On The Financial Fast Track

Click on the cover to order.

This is the most comprehensive funding reference manual that I’ve ever read. I know Gerri Detweiler from her show and her FinCon presentations, and she applies her expertise to every program and situation you’re likely to encounter. From building your business credit to finding loans to crowdfunding, the authors cover all of the details. They also explain why you should avoid using your retirement funds and how to avoid the scams and the vultures.

Every good business should be funded with other people’s money. (If you can’t get that support then it’s not a good business.) This book gives you the vocabulary and tools to make it happen.

What’s on your list?

I’m always looking for more references (and recommendations for future posts). What’s on your “new & noteworthy” reading list? What do I want to peruse next, and what would you review in a blog post?

Posted in Reviews | 6 Comments

USAA Provides Answers To The Most Important Member Questions

Posted on November 19, 2016 by Doug Nordman

I’ve finally recovered from jet lag, my voice has returned to normal (from “Darth Vader”), and I’m caught up on sleep. Let’s review USAA’s answers to your biggest reader questions.

doug-nordman-jj-montanaro-digitalmilex

Doug and JJ talking money

DigitalMilEx is USAA’s annual conference for military influencers. We’re bloggers, personal-finance experts, and entrepreneurs. Many of us are veterans, and some of us are servicemembers. (A few of us might be a big deal on the Internet.)

We cover the age groups from Millennials to Baby
Boomers. I was invited as one of USAA’s sponsored guests while others applied for the opportunity.

USAA shares information on their programs and services while we attendees give presentations on skills like entrepreneurship, blogging, social media, and public speaking. I even recorded a short podcast episode with J.J. Montanaro.

But first, let’s get the blogger disclaimer out of the way. The Federal Trade Commission wants you to know that my objectivity and credibility may be suspect because USAA paid for my four nights in a nice hotel, most of my meals, and all of my coffee.

I got a bag of very cool swag (especially from the Innovation Lab!) and a chance to share The Military Pocket Guide To Financial Independence And Retirement with 120 other attendees. The rest of this post will help you draw your own conclusions on whether I’ve turned into a USAA fanboi.

You can read an excellent summary of those events in Spencer’s post at Military Money Manual.

I’ll review the conference events later.  (Best DigitalMilEx ever!)  In this post, let’s dive straight into the questions.

USAA Business Checking

USAA Business Checking

The most frequent reader question by far: What’s USAA’s plan for business checking?

I’m sorry to report that as far as I can tell, the answer is:

The last official update that I heard from USAA was late 2015, and back then the plan was “three years.”  So far, none of USAA’s banking execs have volunteered a 2016 update.

Over the last five years(!) USAA has shared a lot about the challenges of business checking. There are significant regulatory and compliance expenses, and those burdens are growing every year. USAA’s programs have to fund themselves (no loss leaders), and the banking execs are not visibly confident that members will pay the expenses of the service. (Despite extensive feedback from military spouses who want portable business checking.)

I could go on for another thousand words about the obstacles.

We’ve heard enough about “Business checking is hard.” I asked them to reframe the discussion: “What does ‘Yes!’ look like?”

What would USAA need to do and how much would it cost?

I’ll let you know when I hear more.

Yeah, I’m disappointed too. I’m not a potential customer for a business checking account with anyone, but I’d welcome a more helpful analysis of the subject. I’d understand if the corporate decision was “No thanks, too high an expense for too low a benefit” but right now it’s hard to tell that USAA is working the question.

Personalized Debit Cards

It turns out that many of you have multiple USAA accounts, but the Visa debit cards all look the same. On a personal note, us older presbyopian members have trouble telling the difference between one gray USAA Visa card and another bank’s gray Visa card.

USAA is working on it! Until then, one member marks their card with a Sharpie while another uses cartoon stickers.

Until then, one member marks their card with a Sharpie while another uses cartoon stickers.

The Phone System

usaa-dated-phone-system

We read a lot of hate mail feedback on the quality of USAA’s “interactive” voice response system. Other members pointed out its practice of directing calls based on the area code of the caller’s phone number. This might have been a good idea in 1995, but area codes are meaningless on today’s mobile phones.

One USAA manager was refreshingly frank on the issue: USAA is getting fewer phone calls per member.

Instead of replacing (or upgrading) the voice response system, they’d prefer to move to e-mail, social media, and online chat. If there’s a new voice response system in the member service call center, it’ll be much smaller.

USAA agrees that there will always be a need to talk to a human, and they’ll work on a 21st-century system. In the meantime, they’ll take a look at the area code routing.

Budgeting and Banking on the Mobile App

USAA mobile app logo 640x400

One member had a long and detailed list of bugs in the mobile app. More importantly, they’re a financial counselor who meets with a lot of military clients who could be USAA members. I forwarded her comments straight to the mobile app team, and they’ll get in touch with her.

Better yet, the Innovation Center is opening the discussion with all 11.8 million members in USAA Labs.  Log into your member account, acknowledge their disclosure statement, and review the programs and services that they’re developing!

You can sign up for pilot projects, send your feedback on their current products, and request new features. We see these cool demonstrations in the Innovation Center every year, and now you can share the experience on the website.

Member Widows and Widowers

military-widows

One reader was told that widow(er)s of servicemembers & veterans were not eligible for USAA membership if the servicemember was not already a USAA member when they died.

USAA membership is open to “All who served honorably, and their families” but the interpretation of this policy causes confusion even among some of the staff. I asked about this situation, and I learned a new interpretation of the member policy. Here’s an update from Rich Johnson on the Property & Casualty Insurance Communications team:

“Hi Doug,

I worked with our eligibility team and I got this statement, this is specific to widow/widowers of those who died while actively serving.

STATEMENT:

In 2014, USAA extended membership eligibility to widow(er)s of military service members who either retired or died while actively serving; even if the military service member did not join USAA prior to their death.”

If you have any doubt about your USAA membership eligibility (or a family member), then please call them. If you’re not happy with the answer, then feel free to contact me.

Inappropriate Investments

Money Down The Drain

A financial counselor told me that a USAA financial advisor had put a servicemember into an annuity inside an IRA. (You other financial advisors know that this is totally inappropriate for 99% of investors, let alone for someone on active duty.) The counselor and the servicemember tried to discuss the issue with USAA’s member service representative. They also wanted to speak with a USAA CFP, not just a “financial advisor,” but USAA’s digital shift made that difficult.

If there’s any good news here, it’s that USAA has a Member Advocacy team to review these situations. I took the counselor’s report to the USAA Communications team, and they connected me with the right people, who I introduced to the counselor. The two groups are discussing it now and I hope to hear an update soon.

While I appreciate USAA’s focus on customer service, this should never have happened. In my personal opinion, one contributing factor is the investor’s relative lack of investment knowledge. When you use words with a financial advisor like “extremely conservative” or “absolutely safe,” then you’re boxing yourself into a risk category which may be totally unsuited to your retirement planning. You’ll also end up an asset allocation that’s more suitable for an 85-year-old than a military Millennial.

The best solution is education. Do your own reading from the resources on this site, and start with a simple summary like the Bogleheads Wiki. Understand the investing vocabulary and try to balance your demographic risk profile with your emotions.

One you’ve figured out how much investment risk you’re willing to live with (and sleep comfortably at night) then choose an asset allocation to get you to your goals. Only after you’ve done this self-assessment are you willing to talk to a friendly financial advisor. I’d recommend a fee-only CFP who’s committed to the fiduciary standard.

If that last paragraph seems like a daunting challenge, then contact me or ask a question on the Facebook groups Personal Finance For Military Service Members And Families, Military In Transition, or Military Money Questions And Answers.  They’re run by fee-only CFPs and financial counselors who have been in the military for decades and understand your concerns.

Rate hikes (“the GEICO debate”)

geico-military

I get a ton of questions about rate increases on vehicle insurance, and most of them point out that GEICO is a cheaper alternative. Why won’t USAA match GEICO’s prices?

I hear you. I own stock in Berkshire Hathaway (the parent company of GEICO) and that qualifies me for a discount. (I’ve also learned a lot about the insurance industry from Warren Buffett’s annual letters.)  I regularly compare GEICO’s coverage to USAA. In our case (driving “Hawaii beaters” under 3000 miles/year with no collision or comprehensive insurance) there’s not enough of a price difference to make it worth switching.

Another challenge behind rate increases is 50 sets of state laws (plus Guam, Washington DC, other U.S. territories, and military duty stations around the globe). This chaos only makes sense to the state regulators. USAA and other insurers are experts at navigating these tangled legal systems, and many times their rates are only an estimate of what those state laws could cost the company in an accident. It might also be based on your driving record or experience, but it’s more about the corporate expenses of insuring hundreds of thousands of drivers in that state.

The most frequent answer to “Why did my vehicle insurance rates go up?!?” is moving to a new location with new rules. When another insurer is cheaper in that same location, they might have a different set of clients (with different expenses to the insurer) and they’re willing to take different risks than USAA.

Even if you’re still in the same location, your insurance renewal might be affected by changes to state laws or new information about insurance risks to your vehicle model/year. Your insurance company might simply have decided that they’ve insured too many drivers in your area, they have a higher risk profile than they projected, and they’re boosting the premiums to make up for the new risks.

In short, it might not be about us or our 25+ years of loyalty. It could be several other factors.

These “other factors” are the reason that USAA won’t try to match another company’s quote over the phone. Their underwriting department put a lot of analysis into that pricing algorithm, and they may be willing to review your situation with a supervisor, but they base their prices on their corporate risk profile for that area. They’re not willing to compete for market share if their overall risks could end up costing millions in payouts.

But their corporate policy doesn’t help you with your rates– it helps minimize expenses for USAA and the rest of its members.

The best answer for your situation is shopping around. Make sure that your USAA policy is correctly displaying your vehicle & driver info, and then contact other insurers. Most of them regularly collect rate data on each other, so they’ll know how to undercut USAA’s quote. If another company is willing to take a loss on you then maybe it’s worth the savings to leave USAA.

Make sure you compare your policy to exactly the same coverage from another company. (I think insurers all use different numbers just to make this impossible.) Does the other insurer offer the same liability limits? Can you get even more discounts for adding more coverage like home, personal property, or umbrella liability?

Be careful with assessing customer service. Does the other insurer’s app have USAA’s features? What’s their customer-service rating? Do they understand military customers and do other servicemembers recommend them? Can you file a claim from the accident scene with your smartphone camera and the app? How fast do they pay claims? Will they reduce your premiums if you garage the car while you’re deployed?

And finally, are your savings matched by convenience? If you have all of your banking and investments with USAA as well as insurance, is it worth adding another insurer and a new bill to your life?

Caution: if you move to another insurer then don’t close your USAA account. Keep some insurance with them, or a few hundred bucks in a checking account, or some other product that retains your membership. 6-18 months after the switch, your new insurer is going to review your policy. They might decide to convert you from a loss leader to a revenue center by jacking up your rates to the standard pricing. Or you might have an unhappy experience with their customer service and be ready to give USAA another try.

What’s next?

I’m over 2000 words into this topic, so I’ll wrap up the rest of the Q&A in a second DigitalMilEx post.

You might have noticed that I sneaked in a bunch of general information about insurance and investing. I’m writing a book about making good decisions with military insurance, and it’ll be full of this type of discussion. There are no easy answers for these highly individual decisions, but I’ll provide plenty of considerations and reader stories for you to apply to your situation.

Please let me know if you have more advice and personal stories to contribute to the book! I’m going to donate all of its royalties to military-friendly charities (just like my first two books), and if your contribution is in the next book, then you get a vote on which charity benefits from the revenue.

Posted in USAA | 2 Comments

“What Happens At USAA’s DigitalMilEx”… We’ll Tell You About It.

Posted on October 20, 2016 by Doug Nordman

I’m invited to USAA DigitalMilEx Conference again! This year it’s next week (26-27 October) at a San Antonio hotel near their headquarters building. I’ve also been invited to a behind-the-scenes visit on the day before.

Please give me your questions and comments— either on this post or by the “Contact me” page or by e-mail (NordsNords [at] Gmail). I’d love to ask USAA about their services, programs, and problems– and I’ll share what we learn there. If you have a complaint or a gripe, I can pass it on (anonymously or for further research) and we’ll figure out the issues. If you see something else that USAA should be doing for us members, then I’ll take it up with them.

This is one of the times when we bloggers can interrogate have a thoughtful conversation with USAA executives or dig into statistics on their programs. We’ll learn more about why they’re shutting down most of their financial service centers. I’ll see what’s new from their Innovation Lab and what’s next for their financial services (*cough* business checking?!? *cough*) or their mobile app. I’ll find out how their brokerage business is doing since the big outsourcing.

I’ll have a chance to buy my cousin (a USAA employee) a frosty beverage or two and find out what really sucks* about working there. (* Nothing. I’ve done this for five years, and he’s still ridiculously happy at his career.)  I’ll network with over a hundred bloggers, podcasters, and entrepreneurs who have a military audience.

Image of the USAA DigitalMilEx 2015 badge | The-Military-Guide.com

Maybe I’m getting a new badge, too.

And yes, at these conferences USAA has been known to show off their underwear machine. Rumor is that… well… *sigh*… I’ll get back to that at the end of this post. It’s very sad.

Because first and foremost (and “at the front of the post”) the Federal Trade Commission wants me to disclose to you that I’m USAA’s sponsored guest. The FTC worries that you won’t be able to figure it out if the FTC didn’t make us explain it.

Here’s what happens when you’re a sponsored guest:

  • USAA offers to pay for transportation, lodging, and meals.
  • They give us a swag bag full of interesting books, corporate data, member demographics, and contact info for their staff. (Maybe with t-shirts, pens, and cell phone accessories).
  • They also let us drink as much of their coffee as we want. (Yeah, they kickstart a conference room full of hypercaffeinated military bloggers.)
  • Some of us even stay up way past our bedtime (on a school night!) quaffing adult beverages, exchanging what we’ve learned about USAA from our readers, and planning the next day’s interview questions.

What’s really happening

Here’s what USAA is really doing for me:

  • four nights in a hotel room with free WiFi (because jet lag),
  • seven free meals plus the closing social’s heavy pupus,
  • the swag bag, and
  • all the free coffee I can drink.

I appreciate USAA’s offer to pick up my plane tickets, too, but once again I’m handling my own transportation because after DigitalMilEx my spouse and I are kicking off another month of slow travel.

The FTC fears that USAA’s blandishments will cause me to be less… objective… at attempting to influence your personal finance decisions.  Of course, you’re only 500 words into this post and you already know me a lot better than the FTC.

Yet USAA and I have more of a business relationship than the FTC realizes. My spouse and I are 35-year members (back then USAA insured your car’s “in-dash cassette deck”). Our daughter and her spouse are dual-military USAA members— they appreciate USAA’s support during her command’s Hurricane Matthew evacuation and his deployment’s Silkworm missile attacks. My father is also a USAA member, and the member service reps in USAA’s call center know exactly how to handle a conservator’s appointment letter for insured CD rates to help pay for an Alzheimer’s care facility.

But wait, there’s even more. For the last five years, I’ve been able to ask USAA’s Corporate Communications group about all of your questions. (I usually get an answer right away– they joke that it’s handled by their “Team Nords”– at least I think they’re joking.) A few days later they’ll connect me with an exec who answers followup questions during a 20-minute on-the-record interview. Earlier this year they offered me free Pro Bowl tickets to join their media team for the week of pre-game events. What it really meant is that I could spend four days discussing military personal finance with senior USAA execs and thousands of Oahu servicemembers & families.  During that week I learned a lot about USAA’s corporate plans (from the people who make the plans) and I heard an earful from USAA members.

Ask me about…

This year’s DigitalMilEx connects us with USAA’s Communications team, their financial advisors, their member service execs, and their Military Transition group. We’ll dig deeply into the statistics of their social-media outreach from an exec who literally has a PhD in the subject. We’ll hear updates on USAA’s financial-readiness programs and their Educational Foundation. We’ll learn how they’re attracting new members and retaining them. (I’m particularly interested in how they’ll support multi-generational members from WWII veterans all the way to third-millennium kids.) We’ll find out how their big-data research is helping to reduce member expenses even further.

We’ll learn more about USAA’s hiring statistics of active-duty servicemembers, veterans, and spouses. [Please contact me if you’re in those groups and interested in working for USAA. You might not know insurance or banking or finance, but they still want to talk with you. They’ll even offer free software developer training to help code more mobile apps. If you’re a leader, they want to talk with you about executive development. Seriously.] USAA wants nearly a third of their employees to be Reserve/National Guard servicemembers, veterans, or military spouses. They even have military billets on their staff for active-duty servicemembers.

We’ll also hear from an all-star group of authors, bloggers, and podcasters. Many of us were at FinCon last month or we’re online together all year long.

Best of all, USAA invites a combination of alumni (*ahem*) and new guests. If we haven’t met yet, I’ll be the balding pony-tailed middle-aged guy in the aloha shirt. Please come over to our group, interrupt me, and introduce yourself to say hello. I’d like to learn more about what brought you to USAA, and your readers know things about the company that I haven’t heard yet. I might even know the answers to some of your questions.

USAA’s Underwear Machine

I’m sorry to report the rumor that USAA’s underwear machine is no longer in the building.

For at least the last five years, it was there to support (so to speak) employee fitness. If a USAA worker wanted to get in a workout but didn’t have their exercise clothes with them, the underwear machine could provide the gear for them to still meet their fitness goals (and to earn a rebate on their employee health insurance). Next week I hope to confirm the details of its demise.

Besides the underwear question, what else do you want me to find out about USAA? What member-service issues can I discuss for you? Any other comments?

Posted in Entrepreneurship, USAA | 2 Comments

5 Reasons Why Military Retirees Keep Working

Posted on September 8, 2016 by Doug Nordman

A reader posted a forum comment about his co-workers:

I’m always intrigued when I hear about recently retired military personnel with pretty good pensions who take new jobs after retiring in their mid to late 40’s. If they want to work that’s fine of course, but it’s pretty sad that many of them probably feel they need to work, because of society, pressure from their spouse etc. My personal favorites are the upper middle class level military retirees, like junior officers up to majors whose pensions are somewhere in the ballpark of my annual earnings (or maybe more) and are working at new jobs. A clear case of financial independence and not knowing it, or at least not embracing it.

It’s far more nuanced than that, and everyone faces similar issues when they reach financial independence. I’d pay attention to these examples (positive or negative) and learn from them.

Commitment to service

Some retirees feel a commitment to service because they’ve spent over two decades taking care of people. It feels perfectly natural to move to customer service, education, police/security, EMT/medical, or some other field that lets you continue to take care of people. One of my college classmates earns a large income and donates it to charity. He’s just happy to show up to work every day and help other veterans. I joke that he’ll never learn how to retire, and he jokes that he’s given up on finding me a job.

Image of money in a pile of 20 dollar bills | The-Military-Guide.com

It’s not just about the money.

I personally fit into the “take care of people” category. But I want autonomy to go with my complexity and fulfillment, and I don’t want to take on the commitment of supporting a team. Writing on my own gives me the best compromise.

“You Can’t Handle The Truth!”

A few vets have acquired the “military inferiority complex”. We’ve been told our entire time in uniform that we’re worthless and weak, we’re barely able to perform at our current rank (let alone promote), and we can’t hack it in the civilian world (“Now drop and give me 20!”). Then we leave active duty for the Reserves/Guard (or leave the military entirely) and we discover that we have skills. Those core skills that we bring from the military (augmented by training in the new job) can translate to fulfilling careers with ample incomes. I’m sure a few vets belatedly realize that they let themselves be tricked into staying in uniform as long as they did.

I’m a nuclear-trained submariner and I still feel like that myself occasionally. I’m perpetually surprised at the revenue opportunities all around me with low barriers to entry. I personally regret staying on active duty for 20 years when I could’ve gone to the Reserves at 12 (but was too busy and too ignorant to recognize the opportunity).

Some retirees just want to see whether they can hack it in the tough civilian job market. If you got paid six figures to supervise a financial educational foundation with a few employees, you’d be tempted. If you knew that some of your routine would be talking story with clients in their 20s, traveling around the nation, attending events, and doing interviews for national media… why would you ever retire from that career?

Some vets want to see what they can do with their abilities. I personally know at least two dozen military veterans who worked hard to become entrepreneurs (Blake Hall of ID.me comes to mind, as does Jacob Wood of Team Rubicon). When you can apply your military skills to a project where you have complexity, fulfillment, and autonomy (plus a lot more control than you had in the military) then you have no reason to quit.

Lifestyle

Some of us are adrenaline junkies. We thrive on danger & crisis, even if it’s “just” a short-term administrative deadline. That motivation certainly correlates to careers in police, fire, security, medical, disaster response, sports, and just about anything competitive. And yes, it’s generally a testosterone-poisoned issue, which in my case is mostly handled by surfing & full-contact taekwondo. Yet even my spouse, with her background in emergency planning and disaster response, can hardly bear to watch our state civil defense staff scramble to keep up as the hurricane approaches.

Some vets start a bridge career for the camaraderie, especially in the defense or utility industries. It’s a whole new audience for your sea stories, and it’s much of the routine that you were accustomed to on active duty. Nuclear reactor operator at the electric company? Maybe. Test pilot or aircraft designer? Sure! It also involves elements of service, adrenaline, and climbing the career ladder. But it’s good to hang out with people you enjoy being around.

A few vets have their identity tightly tied to their military career. They didn’t really develop many outside interests, let alone hobbies. They miss having a staff whose sole duty seemed to be to entertain them and make them feel needed help them get things done. Now they’re adapting to a new identity and trying to figure out how to do things for themselves. Eventually they’ll have to figure out what they want to do with the rest of their lives (or have it figured out for them by a major life event)… but not today.

Coping Mechanism For Disabilities

A distressingly large number of vets are severely disabled and dealing with tremendous pain or depression. Working might not be a fun barrel of monkeys, but it gets them out of the house and distracts them from problems that will accompany them for the rest of their lives. For a few, it gives them a reason to live.

The vets in this category are generally glad to be employable, especially considering that they’re paying huge sums for long-term care insurance or concerned about having enough assets to cover their care if they’re crippled. This issue doesn’t always manifest as a wheelchair or other visible signs, either— I personally know a few dozen veterans who struggle with huge issues on the inside that can’t be seen from the outside.

A Changing Family Dynamic

Some vets have disabled family members who will need lifetime care. The vet is contributing their income to a special-needs trust or paying for caregivers.

A very few vets start a bridge career because they’re uncomfortable with their families– or their families can’t stand having them around the house.

These vets have been absent for much of the family’s last 2-3 decades, and they don’t understand who’s really running the household. Instead of hanging around the home trying to take charge, or optimizing domestic routines, or setting new disciplinary standards, or offering helpful suggestions… they come to the workplace where they can be paid to do those things. Or their spouse told them to find a job and get the heck out of the house for at least eight hours a day.

All too many vets have gone through financially devastating divorces. It’s possible that those “upper middle class level military retirees” with “pretty good pensions” have given at least half of that income stream to their ex-spouses. On top of that they may also be paying child support, college expenses, or even mortgage payments. This is a controversial and highly-charged issue among both vets and ex-spouses.

A handful are trying to make up for perceived failures in their military careers. One of my old commanding officers claims that there are dozens of retired generals, admirals, and senior enlisted who are crying themselves to sleep every night because they only made the top 10 of their rank instead of being #1. That CO, however, cheerfully retired to start his consultant firm to advise other companies on corporate crisis management.

Consumerism

But yes, the original comment at the top of this post speaks some truth. A fraction of the military’s retirees never saved any money on active duty, and they have the possessions to prove it. They have no idea how to manage their finances, and frankly they don’t see the point.

They just keep converting paychecks into new consumerism lifestyle responsibilities as quickly as they can. They’re usually assisted by one or more spouses and perhaps adult children. Because life is too short to drink cheap beer, even if they’re working 40+ hours/week to pay for it.

I personally knew a retired admiral who never saved or invested. He was well into his 70s and still working to pay for his family’s lifestyle… because his pension wasn’t enough to cover the expenses.

“Wait, what?”

It’s possible that some military-retiree workers are blissfully ignorant about financial independence. Please send them my way so that we can help them work through the lifestyle questions.

Call to action:

Rather than feeling sad for your co-workers, you could ask them what motivates them to go to work. The answers might surprise you and could offer new opportunities for self-reflection on your career goals.

Another poster chimed in:

I’m financially independent, retired from the military with 22 years. I’m 44 years old, single, and can easily live off my pension and savings. I have a paid off residence and a paid off car. I just always wanted to teach. When I retired I started in JROTC (high school) and then moved to a contractor position as a college ROTC instructor in a location I preferred.

I don’t know for how long I’ll do it, and I have a ton of things I want to do when I stop working. It was just something I wanted to check out. It was a chance to figure out my actual expenses after living overseas for many years. I also liked the idea of having a “soft landing” and some structure in transitioning from military service to civilian life and eventually to full retirement.

If you’re a military retiree who’s financially independent and still working for a paycheck, please tell us why! Your story will help other servicemembers understand, and it may even motivate them.

Related articles:
Outliers: The Story Of Success by Malcolm Gladwell
Finding Your Military Work-Life Balance
Reader story: Stay For 30 Or Retire At 27?
“Just One More Year” Syndrome
“I’m Setting A Good Example By Working At A Job”
Ernie Zelinski’s Get-A-Life Tree

Posted in Career, Military Retirement | 14 Comments

A Retired Sailor, Recommends 50 of the Best Personal Finance Books Ever Written

Posted on August 24, 2016 by Doug Nordman

This list was compiled from the recommendations of dozens of veterans and their families. I’ve personally read or used all of them and I was not paid, compensated, or otherwise bribed to recommend them.

Many of them are free through a website or local library. The products are all worth their price, but I recommend working through the free resources before spending money.

What books or research papers or websites have brought value to your life? Post them here and I’ll add them to the next edition of the book!

If you’re a frequent Amazon shopper then please consider signing up for Amazon Prime That link is an affiliate code which reduces your shipping expenses and expands your movie viewing choices!

Best Personal Finance Books

Military Personal Finance Books

“Guide to Personal Financial Planning for the Armed Forces” by Colonel S. Jamie Gayton and Major Scott P. Handler. Updated for 2013! One of the best decision-making guides for military pay & savings issues.

“The Military Advantage” by Terry Howell of Military.com. Best benefits book. Ever.

“The $avvy $ailor” and “The $avvy Naval Officer” by Ralph Nelson. Step-by-step explanations of avoiding debt, starting a savings system, and planning for a career full of earnings and investments.

Retirement Books

“Work Less, Live More” by Bob Clyatt. The latest and best on early retirement and semi-retirement. Includes CD of spreadsheets and other analysis tools.

“The Adventurer’s Guide to Early Retirement” by Billy & Akaisha Kaderli. The latest and best on perpetual travel. You can read more about them over at RetireEarlyLifestyle.com.

“Cashing in on the American Dream: How to Retire at 35” by Paul Terhorst. One of the first early-retirement books. Timeless retirement lifestyle advice, now being sold for a penny.

“Get A Life, You Don’t Need A Million to Retire Well” by Ralph Warner. Retirement lifestyle advice from the co-founder of Nolo.

“How To Retire Early and Live Well” by Gillette Edmunds. Another classic manual.

“Rags to Retirement” by Gail Liberman and Alan Lavine. Extreme frugality, expatriate living, perpetual travel, and other creative ideas.

“What Color Is Your Parachute? for Retirement” by Richard Bolles & John Nelson. Thorough advice on self-assessment and retirement lifestyle planning.

“The Joy of Not Working” and “How to Retire Happy, Wild, and Free” by Ernie Zelinski. “Get-a-Life Tree” and other planning tools.

“Prime Time” and “Encore” by Marc Freedman. “Bridge careers” and a lifetime of service. This is what most of us were thinking about when we retired from the military, but it doesn’t always have to be this way.

“Retiring as a Career: Making the Most of Your Retirement” by Betsy Kyte Newman. Planning your retirement lifestyle and thinking through the issues.

“The Boglehead’s Guide to Retirement Planning” by Taylor Larimore, Mel Lindauer, Richard Ferri, and Laura F. Dogu. Bogle’s index-fund advocates on saving and spending during retirement.

“The Wealthy Barber Returns” by David Chilton. Classic detailed introduction to basic steps of getting your financial house in order.

“The Investor’s Manifesto” by William Bernstein. Presents “investing for the liberal arts major” without any of the icky math or charts from his earlier books. Excellent guide for the beginner. Bernstein’s long-time readers (especially of “The Intelligent Asset Allocator“) will appreciate his efforts to simplify an overcomplicated subject.

Frugality and Savings Books

“Your Money or Your Life” by Joe Dominguez and Vicki Robin. The classic work that inspired the simple-living movement.

“The Complete Tightwad Gazette” by Amy Dacyczyn. Complete and detailed frugal advice from a veteran’s spouse.

“The Millionaire Next Door” by Thomas Stanley and William Danko. The demographics and mindsets of millionaires applied to savings and business.

“The Ultimate Cheapskate” by Jeff Yeager. “Focus on the big lifestyle decisions, not the $3 cup of coffee.”

Investing Books

“The Intelligent Investor” by Benjamin Graham. The bible of value investing since 1949. Multiple editions and updates.

“The Four Pillars of Investing” and “The Intelligent Asset Allocator” by William Bernstein. Asset allocation clearly explained with examples of real-life investment portfolios. Read “Four Pillars” first and go back to IAA for a second helping of details. Bernstein has also written fascinating books on global trade and economics.

“Triumph of the Optimists” by Elroy Dimson, Paul Marsh, and Mike Staunton. Pragmatic review of over a century of investment returns among 16 countries.

“Why Smart People Make Big Money Mistakes” by Gary Belsky and Thomas Gilovich. Vital investor psychology guide for self-assessment.

“The Retirement Savings Time Bomb” and “Parlay Your IRA into a Family Fortune” by Ed Slott. How to fund, maintain, convert, and withdraw from IRAs.

“Are You a Stock or a Bond?” by Moshe Milevsky. Applies novel concept of “human capital” to investing and asset allocation.

“A Random Walk Down Wall Street” by Burton Malkiel. Classic analysis of efficient market hypothesis and index-fund investing.

“All About Asset Allocation” by Rick Ferri. Explains the basics of asset allocation and starting an investment portfolio.

“The Only Guide to a Winning Investment Strategy You’ll Ever Need” by Larry Swedroe. Clear and basic advice on starting and maintaining an investment portfolio.

“Stocks for the Long Run” by Jeremy J. Siegel. Advocates benefits of buy-and-hold investing.

“The Coffeehouse Investor” by Bill Schultheis. Low-maintenance portfolios for the deployed (or lazy) investor.

“The Boglehead’s Guide to Investing” by Taylor Larimore, Mel Lindauer, and Michael LeBoeuf. Leading advocates of Bogle’s invention of index-fund investing.

“Common Sense on Mutual Funds” and “The Little Book of Common Sense Investing” by John Bogle. Founder of the first modern index fund and Vanguard.

“J.K. Lasser’s Your Winning Retirement Plan” by Henry “Bud” Hebeler. Innovative and very conservative “negative feedback” approach to investment planning and adjusting retirement spending to investment returns. Extremely detailed analysis of when to take Social Security benefits. See other tools at his website “Analyze Now!”

“The Informed Investor” by Frank Armstrong III. A Vietnam veteran and financial advisor on commonsense investing.

“Investing in Real Estate“, 4th edition or later, by Andrew McLean & Gary W. Eldred. Common-sense advice and hype-free guide to analyzing and buying investment property.

“Landlording” by Leigh Robinson (7th edition or later). The best modern guide on managing rental real estate. Not for the lazy or faint of heart.

“The 10 Commandments of Money” by Liz Weston. A personal financial guide for this generation!

Addendum: Recommended by the members of Early-Retirement.org

(I’ve read most of these, and a few more are on my library request list. They’re not necessarily better or worse but could appeal to readers with a different style or a different approach to the subjects.)

“How to Buy Stocks” by Henry Hecht and Louis Engel. If you must buy individual stocks, read this first to understand the vocabulary and the stock-exchange rules.

“The Only Guide You’ll Ever Need for the Right Financial Plan: Managing Your Wealth, Risk, and Investments” by Larry E. Swedroe. Published August 2010. Haven’t read it yet, but his “The Only Guide You’ll Ever Need” books are clear, unbiased explanations of how investing works (and doesn’t work). This one revisits asset allocation and risk tolerances, subjects of considerable renewed interest in 2008-09.

“The Richest Man in Babylon” by George Samuel Clason. The perpetual classic on real-life investing, which really hasn’t changed much over the millenia.

“Manias, Panics and Crashes: A History of Financial Crises” by Charles Kindleberger. Another classic review of phenomena that haven’t changed over the years. Written in 2005, it didn’t predict the 2008-09 recession– but the authors wouldn’t have been surprised by it.

“Beyond Greed and Fear: Understanding Behavioral Finance and the Psychology of Investing” by Hersh Shefrin. The more I learn about investing, the more important it seems to understand our own investor’s psychology. This explains why investors have such a hard time following their own highly logical asset-allocation plans.

Military Research Papers

“A Comparative Study of the Life Satisfaction of Early Retirement Military Officers”, doctoral dissertation by Russ T. Graves, professor at Texas A&M College, 2005. Available online at Texas A&M University research archives. Analysis of survey data indicating that the vast majority of officers immediately begin civilian careers after military retirement. (Their server may limit access so search the archives for “Graves Russ”.)

“America’s Military Population” by David R. and Mady Wechsler Segal, excerpted from the December 2004 issue of the Population Reference Bureau’s Population Bulletin, Vol 59, No 4. Eye-opening demographics and statistics on veterans and the services.

“DoD Statistical Report on the Military Retirement System”: Detailed summary of military retirees by age, rank, service, location, and other factors.

Financial Research Papers

Reprinted study of 4% safe withdrawal rate: “Determining Withdrawal Rates Using Historical Data” by William P. Bengen, originally published in Journal of Financial Planning, vol. 7, no. 4 (October 1994), pp. 171-80. Reprinted with “Best Of” collection in 2004. First study to analyze withdrawal rates and conclude that 4% plus inflation was “safe”.

The Trinity Study: “Retirement Savings: Choosing a Withdrawal Rate That Is Sustainable” by Philip L. Cooley, Carl M. Hubbard and Daniel T. Walz, professors of finance in the Department of Business Administration, Trinity University, San Antonio, Texas. Widely publicized study confirming 4% safe withdrawal rate.

Tversky, A., & Kahneman, D. (1981). “Prospect Theory: An analysis of decision under risk”, Econometrica Vol 47 (1979), pp. 263-91. Also “The framing of decisions and the psychology of choice”, Science, 211, 453-458. Classic studies of investor psychology.

Jennings, William W., and Reichenstein William. “The value of retirement income streams: the value of military retirement.” Financial Services Review 10 (2001): 19-35. The importance of considering retirement income when choosing an asset allocation.

Fraser, Steve P., William W. Jennings, and David R. King. “Strategic Asset Allocation for Individual Investors: The Impact of the Present Value of Social Security Benefits.” Financial Services Review 9 (2006). SSRN. 10 July 2006. Social Science Research Network. 31 Aug. 2009. Analyzes the significant impact of Social Security benefits on asset allocation.

Raddr’s home page. An early retiree’s analysis of asset allocation, diversification, and withdrawal rates.

Financial Articles

William Bernstein’s “Retirement Calculator from Hell” five-part series:

Philip Greenspun on early retirement: Practical advice on getting things done before and during retirement.

What books or research papers or websites have brought value to your life? Post them here and I’ll add them to the next edition of the book!

Posted in Investing & TSP | 3 Comments