Cow Loan and "get rich quick"

UHBlackhawk

UHBlackhawk

5-Year Member
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This applies to all the SA's. Please, please, please. If you take out the loan do NOT use it for "get rich quick" investments. For every case you hear of someone who is successful, there are probably a dozen Cadets and Midshipmen (if not more) who start off their careers with huge debt and nothing to show for it. It happens with every class. DO. NOT. DO. IT. I know you think you're smarter than the others, but you aren't.
 
UHBlackhawk said:
This applies to all the SA's. Please, please, please. If you take out the loan do NOT use it for "get rich quick" investments. For every case you hear of someone who is successful, there are probably a dozen Cadets and Midshipmen (if not more) who start off their careers with huge debt and nothing to show for it. It happens with every class. DO. NOT. DO. IT. I know you think you're smarter than the others, but you aren't.
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What are you talking about? What loan?
 
smith12345 said:
What are you talking about? What loan?
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USAA offers a "Career Starter Loan" to cadets/mids in ROTC or SA's. You can find more information here.

The low interest rates for SA cadets/mids is what draws many cadets in. Its easy to think "oh i'll put this in a fund that averages a 10% return and make profit!! This is a great way to start my career" Others will buy a 2021 Jeep or Mustang with the loan.

Many advise against it because of the UNNECESSARY risk that is involved. Here is a great article I found that advises against it.

However, some people can make a profit off of it IF they invest smartly and conservative. Here is an article on how it could be used smartly. (This article is outdated and mentions CD ladders which are essentially non-existent anymore. Keep that in mind)

Taking out the loan should depend on if you need it. If you want to take it out to invest, that's on you. But do a lot of research before hand and make sure you have plan for what you are going to do with that money. It's possible to make a profit but its also possible to lose all that money. There's a common saying of "its impossible to build wealth when you are in debt". If you take out that loan, you will be in debt. Would you rather be in debt by choice or debt free? That answer will depend on the person.
 
On a different note: My 3C MIDN said they were briefed by someone from the Finance Dept (I may have the wrong Dept. name). The MIDS were told that its to their benefit to pay off thier ACE Loan early. I can not understand what the benefit would be to pay off an interest free loan early? What am I missing?
 
AROTC-dad said:
My DS is debt free, collecting combat pay and padding his brokerage and TSP accounts.

He's in a good place....at least financially.
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I’ve tried to instill in my kids what my dad taught me. Get rich slowly, and be the “millionaire next door” no one suspects.
As pointed out, avoid new cars. I look for 2 year old, low mileage, lease returns. Then drive it until the wheels fall off.
Invest early and steadily. TSP is stupid easy.
Avoid debt and pay it off quickly.
My mother was a school teacher, my father an under employed salesman. They raised a “large brood” and all of us went to college.
Yet, when my mother died over 20 years ago their estate was worth more than a couple million. In spite of my mom giving away the max amount to children as gifts in the last few years.

I’ve talked to mine about the loan. I advised avoiding unless for the items listed in the article. If they do invest it against my advice, I told them to at least mix it amongst some mutual funds from someplace such as Vanguard. Nothing sexy, yet someplace where they most likely won’t lose everything.
 
rickdunnjr said:
On a different note: My 3C MIDN said they were briefed by someone from the Finance Dept (I may have the wrong Dept. name). The MIDS were told that its to their benefit to pay off thier ACE Loan early. I can not understand what the benefit would be to pay off an interest free loan early? What am I missing?
Click to expand...

When I worked as a CFO for a bank, it was in the best interest to not pay loans off early if your debt to income ratio is strong. Paying timely plus a little extra helps your credit score. Maybe that has changed.
 
I wish I could send my 18 y.o. kid back in time to about 1988 to work in the basement kitchen of student union at 6.30 am making sheets and sheets of ruebens and poor boy sandwiches for $3.25 an hour. Alas time travel has not been invented...instead he asked if he can open an eTrade and a Robinhood account because he learned about "investing" in his Personal Finance class.
 
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