Transcript - The Money Drill at DigiMilEx: Ryan Guina The Military Wallet

Transcription

1 Transcript - The Money Drill at DigiMilEx: Ryan Guina The Military Wallet Introduction: J.J. Montanaro, host of USAA's new podcast, "The Money Drill," was on site at USAA's "DigitalMilEx" conference speaking with bloggers, podcasters, authors, and speakers. Whether you're active duty, reserve, veteran, or military spouse, you'll want to tune in to hear their vital career and money advice. J.J.: Hi, this is J.J. Montanaro, here on the USAA "Money Drill" and with me is Ryan Guina of themilitarywallet.com. Ryan, thanks so much for stopping by "The Money Drill" today. Ryan: Thanks for having me, J.J. J.J.: All right. Well, this is pretty cool. Now, I'm going to ask you about the military and money, but before I do that, I want to kind of talk a little bit about your service. So, tell us about your military service, because I think it's a pretty cool story. Ryan: Yeah. So I joined...i did a year of college, kind of got bored, so I joined the Air Force. And I did six and a half years on active duty, had the time of my life, but after five deployments, I had realized...and that does include a one-year special duty assignment, a lot of TDY, so I was never home. And I decided I want to have some... J.J.: Who wants to be home? Ryan: Right? So, yeah, like 50% of the time, I was gone. So, I wanted to take some time for myself, so I got out of active duty and got married and worked in the civilian sector for a while and then realized that I really missed it, missed being around that environment and that camaraderie. And so, eight and a half years after leaving active duty, I went back and joined the Air National Guard. So, I've been doing that for two... J.J.: Couldn't get enough. Ryan: Couldn't get enough. I've been doing that for two more years now, so I've got nine good years of service, I got about 11 more to go. So... Transcript The Money Drill at DigiMilEx: Ryan Guina The Military Wallet 1

2 J.J.: All right. And actually, some exciting news on that front. So, you got some exciting news, I'd say. Ryan: Yeah. You know, I haven't really been sharing it too openly at this point, but... J.J.: Okay. No, you don't...okay, you don't have to share it. Ryan: No, no. I'll do it. You've already started it. J.J.: I opened the door. God. Ryan: You opened the door. So, I have a commission waiting for me. I have to go earn that still, but I've been selected to be an officer, so that's exciting for me. So, I need to go to officer training school and in that process, I'll get commissioned. So, I'm excited about that. I just haven't been telling people, because it's one of those things, you want to do it first and then... J.J.: Well, yeah. You want to come back and say... Ryan:...and then tell people, yeah. So... J.J.:..."This is what I did." Pretty cool. Yeah, I know. I'm sure you're going to do great for...yeah. Knowing you, there's nothing that's going to hold you back. Ryan: Appreciate it, thanks. J.J.: So, before we talk about some military money hot topics and that sort of thing, tell us a little bit about how "The Military Wallet" came to be and what your goals are and what you do on a daily basis there. Ryan: When I got out of active duty, this was in early and I was unemployed for six months and part of that process was me reinventing myself. I went from a blue-collar background turning wrenches on aircraft...i was an aircraft mechanic in the Air Force...and I got my degree while I was on active duty. And I wanted to do something that utilized some other strengths that I had. So, I worked for headquarters AFMC, which is logistics headquarters for the Air Force. I was doing logistics analysis, so I was able to take my background and some of the terminology and the things that I knew about the Air Force supply system and logistics system and put that to work. That transition, though, was difficult. The finding a job, relocating across the states...i had moved like five or six states away...getting married, having a mortgage, learning about life insurance, health insurance, all these things that in the Air Force or in the military, in general, you don't need...you don't think about health insurance because you've got TriCare, you've got... J.J.: Took it for granted. Yeah. Transcript The Money Drill at DigiMilEx: Ryan Guina The Military Wallet 2

3 Ryan:...SGLI, so a lot of these decisions are made for you and it's very simple. And the military does that because they want their troops ready. But when you're a civilian, you have to do all this legwork on your own. So, I started the website as a way to document what I was learning and then help other veterans who were going through that process. And from there, it's grown. Every time...like now that I've joined the Guard, I started writing about Guard and Reserve topics, and now, I get so many questions about those topics. So, it's... J.J.: Those are even more complex. I mean... Ryan: There can be, a lot of going back and forth between Guard and active duty, and it opens a whole new door. And I started a podcast. I don't update it too frequently, but I get a lot of good feedback on that. And it's just, my goal is to help military members, veterans, retirees, and their families and do that in any way that I can, whether that's writing good articles, answering s, answering phone calls. I've done just about everything, so that's what I do. J.J.: And I'll tip my hat to you here because if I'm searching for something and I want to get an answer, trying to refresh my memory or whatever it is and it's military-related, inevitably, I come and I'm looking at your website. So, it's...so, you've got some...you've got it working. Ryan: Well, that's good news. That's the goal, right? And if you don't find mine, check out "The Military Guide". Doug Nordman's got tons of great content. There are several of us now who are either active duty or veterans or Guard retirees, whatever it may be. And you know, five, 10 years ago, these sites didn't exist. You had the VA and you had a couple smaller, kind of your veterans' service organization sites. But now, there's a lot of individuals who are taking their expertise and really going out there and helping people. So, it's kind of the golden age or getting into that age, where just an average person can take their years of expertise and bring it to the masses. And this is great, this democratization of information is wonderful. J.J.: It's also something, I think, from a financial planning standpoint...and you probably see this too, just from all the stuff you read...you also have to check and recheck, because sometimes, you'll stumble upon something and it's like okay, does that really make sense or not? So, you want to research. But certainly, as far as "The Military Wallet" goes, I haven't been led astray and I know we've talked a lot about this. Ryan: Yeah, I'm one of those nerds who dives into Title 10 of the US code and Title 32 and actually reads the language of the code, which can be very laborious, to say the least. But... J.J.: Can you...do you want to do anything...quote any code for us here today? Ryan: No, I can't quote code. But I can tell you that when you find those references, you're like, "No, it's not just this old barracks lawyer who's talking, this guy who who's heard it through the years from somebody from somebody from somebody." When you can go to, I Transcript The Money Drill at DigiMilEx: Ryan Guina The Military Wallet 3

4 think, Cordell.edu...Cornell, I'm sorry, I think it is...they publish it and they... J.J.: Because the code is right there, yeah. Ryan: They publish it. It's very searchable, very easy to find, very readable, actually. And once you can go in there and grab that document and say, "No, here it is in Title X of the US code," or whichever title it might be, then you can say, "Yes, here's a definitive source. So, being able to bring that actual source document from the government, then you say, "Yes, I believe this guy." So... J.J.: "Okay, I believe..." Yeah, exactly. Ryan: "I believe in this." J.J.: That's good stuff. Well, let's talk about hot topics, in terms of the military community and finances. What are you hearing, what are you seeing, what are people concerned about today? Ryan: Yeah. So, there's a couple big ones. Obviously, the new blended retirement system is big, four shaping in the military or reduction of forces. Those are big topics as well. So, if you want to jump on one of those, we can certainly cover them. J.J.: Yeah, let's talk about four shaping. And you know, sometimes when I heard four shaping, I'm like, "Really? That's a great term. That's a military type term." So... Ryan: Absolutely. J.J.:...let's talk a little bit about that to start. Ryan: Yeah. So obviously, you got the sea of frustration, right, because everybody knows what that word is. J.J.: Exactly. Ryan: So, the government came down, they mandated, "Hey, across the board, every government organization needs to cut the spending." And the DoD was hit hard. You know, you have to cut 10% by X year and that means weapons systems, that means benefits, that means pay, it means reducing and numbers of troops, right? And that's what's happening. Specifically, the Army was hit probably the hardest. And I've had a lot of s from people who are being separated through no real fault of their own, other than their career field is overmanned or they haven't hit a certain rank by a certain time. And that's very difficult. In some cases, they're given six months' notice, sometimes, they've got a year notice. Sometimes, they might have one or two or three months. So, it's difficult to plan for that when you don't have that runway. J.J.: And you may have your plan, which doesn't coincide with the military's plan. So, "Hey, Transcript The Money Drill at DigiMilEx: Ryan Guina The Military Wallet 4

5 I'm going to go 20 years, I'm going to get this retirement," and then you get a letter like that. Ryan: Yeah. And that's difficult. So you know, one thing I can stress to everybody on active duty right now is plan for getting out right now. Whether you're planning on doing a career and doing 20, or planning to be in four and done, start planning your exit strategy now. And obviously, you reassess that for every commitment that you have. Whether you're reenlisting or as an officer, if you're taking that next assignment, you know you're going to have another two or three years, or you pin on that next bar or rank, you're going to have that extra service commitment. But start looking at, "What happens if I'm not selected to reenlist or extend? Can I get out? Do I have my education?" Get professional certifications, get your degree or your Master's degree, find your skills that can translate into the civilian world. And then understand that if you are separated, there's a lot of things that you can do. You might be able to go into the Guard or the Reserves and still keep your time. You won't have that active duty time, necessarily for the active duty retirement immediately, but you can still earn that...those retirement benefits. And serving in the Guard and Reserve is certainly an option. And then, on the financial standpoint, you want to make sure you always have some kind of emergency fund set up. And I would say more than ever for military, you know, $1,000 for a lot of people is good because it covers a cross-coast airline ticket, right? So, if you've got to go East Coast to West Coast, $1,000 will cover that or a major car accident or something. But now, for those people who might not know if they're going to be able to extend their career, I would recommend trying to save up several thousand dollars, just in case you get that note. J.J.: I think that's a great point. And to your point, it doesn't happen overnight. It's something that you ought to start right away, because I don't know about your experience, but one of the things I hear is that people...that that creates flexibility and freedom not necessarily to pick the first opportunity that comes off but to pick something that they want to do and something they want to make a career. Ryan: Yeah. And you know, I had that similar situation. I mentioned that I was six months unemployed. And I had a lot of deployments which I mentioned, so I was able to save a lot of money so that when I did get out, I had that runway. I didn't need to go find the first available job, so I was able to be a little more selective. So, instead of just going to be a night stocker at a grocery store or going to work unloading trucks or doing something like that...i could have found something like that right away, but I wanted to keep my options open so that I could wait for something that was going to be more in line with what I wanted to do as a career. And that was a great move, but I wouldn't have been able to do that if I didn't have that financial flexibility. J.J.: Exactly, perfect. Now...so, we've got a few more minutes. I'd love to just get your thoughts and what you're hearing from folks on the new blended retirement system. Transcript The Money Drill at DigiMilEx: Ryan Guina The Military Wallet 5

6 Ryan: Yeah, so there's two schools of thought, right? The first is, "Don't change what I've already got." And you know what? Twenty years, 50%, that's an amazing benefit. On the other hand, it's unsustainable, I think, for the government in the long run. So, something was going to happen. There's been a lot of talk over the last decade. Every couple years, they're coming out with a new study. And there's been talks of maybe bumping it down to like a 25% retirement or 1% per year or something like that and then, more of a 401(k) type matching. So, I think this actually turned out to be a little bit of the best of both worlds. You're going down to 2% a year, 40% of your retirement pay at 20 years, which is still very, very generous. And then on top of that, you get that matching contributions to the thrift savings plan. The other thing that has been mentioned a lot, it's roughly 15% of people who stay in for 20 years on active duty. So, there's an 85% of the military population who never sees that. So, for the group...and I would fall under this. And I believe you retired from the Guard...Reserves? J.J.: Reserves, yeah. Ryan: Reserves. So, you retired from the Reserves. You'd be in the same boat where you did those active duty years and you did that time, but you didn't get that 20 years. It's a cliff vesting, it's all or nothing. But if you've got that opportunity to serve some time on active duty and still have something so that if you move into the civilian world, you can take part of that retirement with you, I think that's great. So you know, there's pros and cons, but I think for most people, especially those who don't go 20 years on active duty, it's a great thing. But to make it work, yeah... J.J.: You got to take advantage of it, right? Ryan:...you got to take advantage of it, exactly. So, to make... J.J.: Make that... Ryan:...it work, you've got to make those contributions. J.J.: Yeah. So, that's the big message that you hear...surround sound around, hopefully...is that hey, everybody needs to start building at least 5% contribution to TSP to make sure they are getting the full amount of what DoD is offering. Ryan: Absolutely, yeah. And then, I think as long as people are doing that, that's just a good life habit to be in. Whether you stay in the military forever or you go out and have a civilian job, if you can save 5% of your salary...or 10% or whatever you might be able to save...if you can take a little bit of that extra raise you get every year and put 1% increase, or those times when you deploy, if you can increase your savings at that point, then you can really set yourself up well for the long run. Transcript The Money Drill at DigiMilEx: Ryan Guina The Military Wallet 6

7 J.J.: So, the potential to have all of these 19, 20, 21, 22-year-old savers to me, is an exciting thing. So hopefully, that's what we'll see. Ryan: Oh, yeah. And I mean, just imagine, if everybody in the military came in, if they started it with a...everybody's going to save 3%, right, or whatever it might be if that's the automatic and they had to go into My Pay and change it themselves and then bump it down, you would...most people wouldn't do that because inertia's kind of what people do, right? So... J.J.: So, that...and that's the hope because that's what they're going to do, is make the autoenrollment for 3%. So, all... Ryan: Perfect. So... J.J.:...you and I have to do, is encourage them to get up to 10%, 15%, bump that number up. Ryan: Yeah. And at the minimum, try to do 5%, because that's where you're getting that 100% match. So... J.J.: Absolutely. Absolutely. Ryan:...yeah. If you can do that, then I think most people would be extremely well off, even if they get out after 10 years. J.J.: All right. Well, Ryan Guina from themilitarywallet.com, thanks so much for stopping by at the USA "DigitalMilEx." And all right, thanks for being here, Ryan. Ryan: Thanks, J.J. Transcript The Money Drill at DigiMilEx: Ryan Guina The Military Wallet 7