Military Tips

Advice on military life, real estate, finance, education, and deployments

Amex Platinum – Best Kept Secret in the Military

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I am absolutely kicking myself for not getting an American Express Platinum card sooner. Why is this card so awesome? It gives you a boat load of benefits that are perfectly suited for military that travel, but the hefty $550 annual fee is WAIVED for active duty military due to the Servicemembers Civil Relief Act. So you get all the benefits with no fees!

Here are some of the benefits this card offers:

  • Free access to many airport lounges (Delta Sky Club, Amex Centurion)
  • $15 in Uber credit each month, with $20 in December
  • $200 per year in airline fees covered for free (food on flights, baggage charges, change fees, etc)
  • $100 credit for TSA Precheck application (allows spouse to apply for free)
  • Immediate Gold status with Starwood Preferred Guest and Hilton Honors
  • Complimentary access to more than a million Boingo wifi hotspots

Now here is the other cool program they offer that I am using this weekend. It’s called Fine Hotels and Resorts. We are PCS’ing shortly and will be staying at hotels along the way. I was able to book the Four Seasons in Atlanta for $219 for one night. But guess what comes with that one night stay?

  • $100 food and drink credit
  • Free breakfast for two in the morning ($64)
  • Early checkin at noon (if space permits)
  • Complimentary room upgrade (if available)
  • Late checkout at 4PM

Couple Caveats

First, this is a ‘charge card’ so you have to pay the balance in full each month. Honestly, that is why I’m more comfortable recommending this card to fellow military. From reading other posts on this site, you can probably tell I’m anti-credit card. Being forced to pay off the card each month ensures you will not build up a large balance.

Make sure to apply for the SCRA benefits right away. It can take up to 60 days to process. Once applied to your account, you are good for the life of your account and will not see annual fees on any statements.

Military Banking – You Need more than USAA

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I’ve been reading the Bogleheads forum lately. For those not in the know, it is an outstanding personal finance and investment web site based on advice from Jack Bogle. One thing that caught my eye is that most military personnel are using a certain trio of banks once they grow beyond basic checking and saving account requirements. I realized I have done the same.

Where USAA Shines – Banking and Insurance

I joined USAA in 2003 and was impressed with their outstanding customer service. Their checking and savings accounts are free. The ATM rebates are nice. Their customer service when dealing with insurance claims is amazing. I still have USAA today for checking/savings/insurance.

As I added accounts, my first hunch was to always go with USAA. Over time, I realized that is a mistake. I first learned that when shopping for a mortgage for my first home. Other banks were easily beating the rates quoted by USAA.

Shop Around for Home/Auto Loans

When it comes to home mortgages and auto loans, you really need to check Navy Federal and Pentagon Federal Credit Union. Their rates almost always beat USAA. These banks have very good reputations and quality customer service. One thing to keep in mine is the ‘customer service’ aspect is not as important when it comes to loans. Once the deal is done, you pay it back at the agreed upon rate.

Use Vanguard for Investments Beyond TSP

One thing you will learn on Bogleheads is to avoid USAA for investments. Of course, you should always max out TSP first. But if for some reason you are looking outside TSP (like me with my wife’s retirement fund), then you want to look at Vanguard. Why? USAA’s mutual funds have high expense ratios.

For example, the USAA First Start Growth Fund has an expense ratio of 1.44%. The Vanguard Retirement Target 2050 fund has an expense ratio of 0.16%! USAA takes much more of your money to run their investment fund as compared to Vanguard. That is money that will slow down your returns over the long haul, likely taking thousands out of your retirement fund.

I will not dive into returns in this post, but overall Vanguard has a sterling reputation as compared to other mutual funds when it comes to performance.

You can read more about why expense ratio is important here.

Which Service has the Easiest PT Test?

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Let’s say you are a 22 year old male in the military and you’re not great at PT. Which branch of the service would give you the easiest chance at passing the PT test? Let’s compare each branch and see what it would take to complete the bare minimum.

US Army

Standards are found here. To pass you would need:

  • 2 mile run in 16:36 (16 minutes, 36 seconds)
  • 40 push-ups in 2 minutes
  • 50 situps in 2 minutes
  • 22% body fat

US Air Force

Standards are found here.To pass the Air Force PT test you would at least need:

  • 1.5 mile run in 13:36 (13 minutes, 36 seconds)
  • 33 push-ups in 1 minute
  • 42 sit-ups in 1 minute
  • 39 inch or less waist

Note: The numbers above are bare minimum for each event and would actually be considered a failure. You need to do better in at least one of the other categories to pass the test.

US Navy

Standards are found here.

  • 1.5 miles run in 13:30 (can be run on treadmill) or at commander’s discretion: 500 yd swim in 13:00, eliptical for 14 minutes, or stationary bike for 14 minutes
  • 37 push-ups in 2 minutes
  • 46 sit-ups in 2 minutes
  • 23% body fat

US Marines

Standards are found here.

For the Physical Fitness Test portion:

  • 3 mile run in 28:00 minutes
  • 3 pull-ups
  • 50 sit-ups

Note: Like the Air Force, you must do better than the minimum in at least one of the events to pass the entire test, as it works on a point system and the minimum for each area is not sufficient.

For the Combat Fitness Test portion:

  • Run 880 yard Movement to Contact course in 4:13
  • Lift 30 pound ammunition can from shoulder height to overhead 33 times within 2 minutes
  • Complete 300 yard Maneuver Under Fire shuttle run course in 3:58

Result:  US Navy has the Easiest PT Test

Comparing everything together, the Navy has the easiest PT test, due to the lower requirements, and range of options available to complete the run portion (treadmill, bike, swim, etc).

Run Times

We can compare the run times as a one mile pace:

Service One Mile Pace
Army 8:18
Air Force 9:04
Navy 9:00
Marines 9:20

The Air Force has the slowest one mile pace. But while the Navy is just four seconds faster, they can run their test on a treadmill. This gives you a significant advantage, allowing you to simply stay on the treadmill at a set pace rather than pace yourself on a track through the entire test.

The Marines have the hardest test, having to keep a 9:20 pace for three miles!

Easiest run time: Navy

Push-Ups

Service Push-Ups
Army 40
Air Force 33
Navy 37
Marines n/a

The Army requires the least amount of push-ups for any service.

Sit-Ups

Service Sit-Ups
Army 50
Air Force 42
Navy 46
Marines 50

The Air Force requires the least amount of sit-ups. The Navy is not far behind.

How the PT Test Impacts Promotion

While this review of service PT tests showed that Air Force and Navy tests were the easiest, it is important to note how each branch factors these tests into promotions.

From my experience, the Army and Marines place high importance on PT performance. So if you got the minimum scores listed above, you would be looked at poorly on a performance report.

However, Air Force and Navy are typically pass/fail with their PT tests. As long as you are passing the test, your supervisor will be happy. You can still get a glowing performance report if everything else with your work is stellar.

How PT is Integrated into Daily Work

Another factor to consider with these tests is how often you can work out as part of your normal duty day. Army and Marines will provide more time during work hours to run and stay fit. They will have more challenging programs which will likely keep you in shape.

The Air Force has improved in this area, and some squadrons have good PT programs. But you can not expect a Navy or Air Force unit to keep you in top shape like a Marines unit would. You will have to do more on your own to stay in shape.

Keep the big picture in mind when choosing which service to join, and which PT test seems the easiest!

How to Calculate a Second VA Loan Entitlement

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two VA loanI’ve long held the assumption that you could only have one VA loan. I assumed you had to sell your first home or refinance before moving to a second. Well as a current holder of two VA loans, I can definitely tell you that you CAN take out two VA mortgages!

Why Two VA Loans?

My original VA loan was for a home near Shaw AFB. That property is financed with a low rate (2.25%), 15 year mortgage. The rental income almost covers the payment each month, but the loan is paying off fast! I did not want to sell the home but rather wanted to keep paying it off for a while to gain equity.

We did not plan on buying a home when we moved to Robins AFB, but after looking for several months we changed our mind. Rent is fairly high in Warner Robins and many nice, affordable homes were for sale that kept us well under BAH.

We had enough money for a small down payment on a house, but not the 20% that is typically required to avoid Private Mortgage Insurance (PMI), which can add over $100 per month to your mortgage. I was also unsure if we would qualify for an almost 100% financed home without VA.

VA Loan to the Rescue

The second VA loan gave us the 90% financing we were looking for, at a low interest rate. It did not have any effect on our previous VA loan.

We purchased an awesome 2,300 sq ft home in a nice neighborhood, with good schools.

Unfortunately, the second VA loan is not a completely new entitlement, but rather a remainder of what you originally spent on the first home.

How to Calculate Your Remaining VA Eligibility

max va loan limit
Maximum VA Loan Limit for Warner Robins, GA

Step 1: Calculate your maximum VA loan limit at your new base, which according to the VA is located here. For most areas this amount will be $417,000. Assuming I am moving to Robins AFB, my new loan limit for Houston County, GA, is $417,000.

Step 2: Subtract the loan value you started with to purchase you first home from the limit. So let’s say I purchased a home at Shaw AFB for $200,000. My VA eligibility at my new base is $417,000 – $200,000 = $217,000.

So the end result is after purchasing a $200,000 home near Shaw AFB, I can take out a second VA loan of up to $217,000 at Robins AFB.

To help understand this, the VA has some examples posted here. I have used a simple way to calculate remaining entitlement, but they are multiplying the same numbers by 25%, because technically that is how much of the loan the VA guarantees. Even though they use 25%, the numbers work out the same.

What if the Home I Want is More Than My Eligibility?

mansion

If the home you want to buy is over your remaining eligibility, you will have to make a down payment equal to 25% of the amount that is over. So from the previous example you saw my eligibility for Robins AFB was $217,000. The home we wanted to purchase was $240,000 or $23,000 over. So our required down payment was $23,000 x .25 = $5,750.

Why 25%? Technically, when the VA backs a loan for you, they are guaranteeing to pay 25% of the loan if you default. So in reality, your VA entitlement is $104,250, which can buy a $417,000 home. If you use buy a home at $200,000, technically you have $54,250 in VA eligibility left… and $54,250 can get you a $217,000 loan.

My Bank Says I Have Zero Eligibility

From my experience many banks do not understand how to calculate eligibility for a second VA loan. Additionally, when banks try to look up your VA certificate it will sometimes appear that you have zero eligibility remaining.

I initially tried to get a second loan with Pentagon Federal and they were adamant that I had already used my VA loan. I even talked to a supervisor and could not convince them of the process for a second VA loan. I finally cut my losses and went with Navy Federal who understood it completely.

Beware of the Higher VA Loan Funding Fees

va loan funding fees
VA Loan Funding Fees

Your first VA loan has a funding fee of 2.15% if you did not provide a down payment. Every VA loan after that has a funding fee of 3.3% funding fee. This is a fairly high fee, and for a $200,000 loan would be $6,600!

The fee applies even if you sold the first home and were not taking out two VA loans at one time. The fee can be financed into the loan, but I do not recommend it.

Let’s say you purchase a home worth $200,000 and finance the funding fee of 3.3%. So your beginning loan balance is $206,600. With a 30 year mortgage at 3.0%, your loan balance in three years will be $192,874. With a 6% realtor fee you would need to sell for at least $204,500 to break even.

The way to avoid this fee is to put at least 5% down. At 5% down your funding fee drops to 1.5%. So from the last paragraph, if we put down 5% ($10,000) but finance the funding fee, our beginning loan balance is $200,000 – (200,000 x .05) + (190,000 x .015) = $192,850.

Can I Take out More Than Two VA Loans?

Man you are greedy! Just kidding. From what I have read, technically you could take out as many loans as you want as long as you do not go over your VA eligibility.

So for most areas your entitlement is $417,000. You could purchase four homes at $100,000 each, all financed on VA loans. The catch is that you have to live in every one of those homes to get the initial loan. So that would have to be four separate assignments where you purchased homes at each.

Delta’s New Pricing Model is Terrible for Military Families

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Delta Basic Economy

Military families need to watch out when booking flights through Delta, as their new default pricing ‘Basic Economy’ sets you up for a nightmare on the aircraft.

Basic Economy Explained

When browsing Delta.com, the lowest prices displayed are now ‘basic economy’ fares. With these fares your seats are not assigned until check-in. That would typically be 24 hours prior to take-off.

However, from personal experience on three recent Delta trips, these seats are being assigned about an hour prior to departure!

Why it Hurts Families

My family of four travels twice a year to see relatives in other states. We are currently stationed near Atlanta so typically choose Delta as our preferred airline.

When purchasing tickets a few months back, my wife mentioned we would not be able to choose seats until check-in, possibly leaving my son (9) and daughter (6) sitting by strangers. I told her ‘don’t worry, they will make sure our family is together when we’re at the gate.’ Boy was I wrong!

We asked the gate agent to help move our kids near me and my wife. You could tell several other families were asking for the same thing, and it was too much for them to accommodate. They said they could not help us. We would need to ask fellow passengers to give up seats so we could be near our children.

The problem with that is you are in a middle seat, asking people in an aisle or window to trade with you. Luckily we were able to beg fellow passengers and get my wife near my daughter. I was two seats behind my son. It was very stressful for our family, and stressful for the kids who do not like flying without a parent near by.

A Fee for Sitting Near your Children

I know you may think… just buy the more expensive fare. Those fares are around $60 more per person, so about $240 for my family. For a $300 round trip fare, we would pay 17% more to choose our seats ahead of time.

I know the average fares for the cities we travel to, and the lowest price basic economy fare is not reduced from what was available in the past. So we are not saving money with this new model. We are being forced to pay a 17% surcharge to sit near our children!

The Wall Street Journal recently covered this same issue.

Rewarding Airline Status Holders

Delta Credit Card

This is another way for Delta to add value to their credit card and rewards program. If you want the perk of choosing seats near your family, just sign up for a Delta credit card and become a ‘medallion member’! No thanks!

What you see at the gate are business travelers in the good seats, with families spread out in every middle seat, kids crying because they cannot see their parents. Nice.

Looking Forward

Congress is considering new laws that will require airlines to seat families together.

I suggest you contact Delta and complain about this policy.

In the meantime, I am looking for another airline to fly on that does not implement this policy.

My Biggest Mistake as a Landlord

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My wife and I have been landlords for about six years. The biggest and costliest mistake we made during that time is renting to a subpar tenant. What do I mean by subpar tenant? Story time!

We were fortunate to have a great renter during the first three years of renting out our home. Our tenant got orders and moved to a new base in January, which is a bad time to rent out a home. We listed the home for rent, and our property manager helped advertise the house.

After almost two months of waiting for a renter, my wife and I got nervous. This vacancy had cost us almost $3,000 and we couldn’t take it. Our property manager called one day and said she had potential renters. It was a married, Army E-4 with bad credit. She were offering $150 less than our normal rental rate. Our property manager said it was risky but she would leave the decision up to us.

We decided to cut our losses and accepted the new tenant.

Fast forward one year. Our property manager tells us the tenants are unable to pay their rent on time, but promised to catch up in three weeks. I didn’t worry about it. But in three weeks she pays $300 instead of $1250! Now I’m getting nervous. She says she needs just two more weeks to come up with the money. We wait a bit longer. The two weeks comes and she pays $200!

She is getting further behind so we tell the property manager to start the eviction process. I also call her squadron first sergeant on base to notify him of the situation. He was concerned and talked to her, but said her husband was leaving her and there was nothing they could do. When she finally moved out, she left damages on the house of over $2,000!

We were able to get some of our money back, but in the end we took a $3,000 loss on missed rent and damages due to the the bad tenant.

The lessons learned for us were:

  1. Being in the military does not make someone a good tenant, and military leadership cannot FORCE someone to pay their bills
  2. We needed a vacancy reserve to calmly ride out the time between tenants. Now I try to save up three months of expenses to get through those times
  3. Trust your property manager and your gut when accepting a tenant.

Overall, it was an expensive lesson learned for us, that luckily has not been repeated.