2020 was a rough year for almost everyone. And for 2021, more people than ever are looking at financial goals as part of their New Year’s resolutions. For some of you it might mean paying off debt. For others, it might mean establishing an emergency fund. And for a few of you, it might be looking into investing for the first time (if you’re reading this, you likely have already started). Today, we’ll take a look at our top 5 money recommendations for members of the military in 2021.
- Contribute to your TSP and Roth IRA: For those of you that have recently joined the military, you were automatically enrolled into the blended retirement system. This means that you were most likely enrolled in the TSP within 60 days of joining. If you’re not aware how much you are contributing, 2021 is a good time to look and possibly up your contributions. Additionally, you have the ability to contribute to your 2021 Roth IRA (up to $6,000) as the New Year begins. Between the Roth IRA and TSP, you have $25,500 in tax shelters to prepare for your retirement. If you haven’t thought about trying to maximize these benefits, 2021 is a good time to do so.
- Consider a home purchase: The housing market is incredibly hot right now, but rates are low so if you do buy, you’ll save money on interest over the course of the loan. If the numbers make sense for you and your family, consider purchasing a home in 2021. One of the best benefits you have available as an active duty service member is the VA Loan. If you’re looking to purchase and owner-occupy a home, the VA loan is a powerful tool. Rates are low for investment properties as well, but shop around as the market is competitive.
- Pay down that debt: 2020 saw record consumer debt levels as housing debt and student loan debt surged. One area that saw a sharp decrease in the middle of the year was credit card debt. If you are saddled with debt and it’s causing a burden on you and your family, it may be worth paying it off as soon as possible — depending on what it is and what the APR is. As a rule of thumb, pay off high interest credit card debt as soon as possible and continue to make monthly payments on debts with lower APRs. Consistent payments drive up credit scores and that will help you for bigger purchases in the future.
- Invest in yourself: The military has a number of programs that enable you to pursue further education. Whether it is the Post 9/11 GI bill, tuition assistance, DANTES, or the Army’s new credentialing assistance program, educations and certifications are worth pursuing. Consider getting your PMP, enrolling in college, or learning a language. Starting off 2021 investing in yourself will pay dividends for years to come.
- Try Something New: One of the hottest assets in 2021 to date is cryptocurrency. If you’re feeling bold and have the expendable income, consider investing in something new. Maybe it’s learning to trade options. Maybe it’s purchasing your first bitcoin (or fraction thereof) — try Coinbase if that’s your goal. If you explore different financial asset classes that you’re not familiar with, you may end up pleasantly surprised! $
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