Cow Loan and "get rich quick"

DH has the tiniest naval aviation wings of gold decal made on his many-miled “horse truck.” If you don’t know what the decal is, well, that’s okay. 😁
 
So now that my kid (only child) has a 4 yr AROTC scholarship w/ full room and board from the U (and possibly still at chance at a SA) what do I do with his entire college fund that I have been putting aside since he was a toddler? Do I give it to him in increments? Do I keep it and invest it differently? (Not savvy at that! Lost too much, so I steer clear.) Do I let him invest it? Let a financial advisor invest it? Let him use it as a down payment on a house on campus that he can rent out and later sell? Replace his 16 year old rust bucket car? Retire somewhere where it does not snow? Put it away for my life at the nursing home someday? What would you do in my shoes?
In my DD‘s case I gave it to her while she was at the SA so the income counted now while she’s making nothing.
She’s also financially responsible, took the money and put it in her Vanguard IRA that she opened with her enlisted bonus.
 
I think in some cases the higher education has become a bill of goods. Far too many young people are getting worthless degrees with large debt attached and places of higher education have had no incentive to keep costs down. I see that with the university I attended. At the time I went there in the 1980s tuition was $5000/year and it was considered one of the best private college deals. Now it's $80,000/year and I would be hard-pressed to recommend someone attending it at that price.
Also, there is pressure for people to attend university right after high school but I do think some people should take time off before doing so. I saw this with DD, who after one semester dropped out to enlist. She needed to find herself.
My nephew did the same. Dropped out and enlisted in the Marines. After a couple of tours, he got out and was hiking the Appalachian Trail when he got a letter at one of his stops to call his mom. He'd been accepted to Columbia and need to report for freshman orientation. He is now a well-respected journalist.
I guess since I'm the OP it's okay to highjack the thread to pontificate. ;)
Especially today. I cant imagine paying 50K-80K per year and then take classes on line. Part of the tuition is to pay for the upkeep of the physical facilities and you arent even there, so why pay if you arent there. If i had graduating high school kids, I think i would have told them to ask the school to defer for one year.
 
Doesn't the SA pay for their basic needs like housing, medical, clothing, and food? Other than transportation to and from why would they need a loan? If they are healthy enough to attend a SA, I'm sure they could work anywhere (even walk miles if necessary) to pay for a train ticket?
 
Doesn't the SA pay for their basic needs like housing, medical, clothing, and food? Other than transportation to and from why would they need a loan? If they are healthy enough to attend a SA, I'm sure they could work anywhere (even walk miles if necessary) to pay for a train ticket?
I think they do it to ease the cadets into a more normal adult life. They actually wouldn't need the cars until they graduate, but locking them up for 4 years and then letting them out isn't a good plan for personal growth and maturity. It would be a disaster at every OBC post.
 
It is actually marketed as a “Career Starter Loan” to help the new O-1 get started with their military career. It’s a way for USAA and Navy Federal to get customers locked up for 5 years hoping they stay loyal (and lucrative) customers afterward. It’s offered after the cadets and mids have signed their 2 for 5 commitments.

Stealth_81
 
I get irritated when I hear politicians claim that people lost everything in their 401(k)s. I only know a few people who "lost" their 401(k)s, and they invested all of it in company stock. I was shocked as not having all your 401(k) in one basket, much less company stock seems like chapter 1 in the "Book of Duh". A few people panicked when they saw the decrease and moved into safer investments, the worst time to do so.
Back when my wife was still working in mid-sized corporate America (pre-kids), her company based their 401K on their own stock. There was no option to pick anything else. Luckily she was able to quit and roll things over to a normal 401k before anything bad happened to their stock. In fact just as she was leaving they were taken over, which was good for redeeming options, but the 401k stock was swapped out for Softkey shares and those did eventually collapse some time after we escaped. Multiple baskets indeed.
 
I cant imagine paying 50K-80K per year and then take classes on line.
Imagine being in that situation for high school. Many of the boarding schools are in the $60K range and still haven't figured out how to bring all their students back to campus. Some gave small refunds that didn't make much of a dent in that bill for families, but they still have to pay salaries and keep facilities ready for when students come back to campus, hopefully very soon as the vaccines roll out.
 
Doesn't the SA pay for their basic needs like housing, medical, clothing, and food? Other than transportation to and from why would they need a loan? If they are healthy enough to attend a SA, I'm sure they could work anywhere (even walk miles if necessary) to pay for a train ticket?
The Service Academies are not giving those loans, the banks like USAA and NFCU are giving them to Midshipmen/Cadets who are close to graduation. For the vast majority of military officers in the US, a car is needed for everyday life. Additionally, many/most graduates will incur SIGNIFICANT costs for their initial uniforms as they approach graduation, USNA grads going into the Navy are somewhat fortunate in this regard.
 
Back when my wife was still working in mid-sized corporate America (pre-kids), her company based their 401K on their own stock. There was no option to pick anything else. Luckily she was able to quit and roll things over to a normal 401k before anything bad happened to their stock. In fact just as she was leaving they were taken over, which was good for redeeming options, but the 401k stock was swapped out for Softkey shares and those did eventually collapse some time after we escaped. Multiple baskets indeed.
Yeah, I knew about some of those companies. Being forced to invest the 401(k) in company stock is dangerous and not a great deal unless you're able to do what you guys did and escape. I would be sweating that my entire time.
 
Yeah, I knew about some of those companies. Being forced to invest the 401(k) in company stock is dangerous and not a great deal unless you're able to do what you guys did and escape. I would be sweating that my entire time.

No sense in having a large position in the company one works for. Typically, you incur extra risk with little or no reward (Sharpe Ratio). I worked for a fortune 10 company for 34 years. Many employees had 90-98% of their 401K tied up in the company stock. The stock had a beta of .99-its performance typically matched the market. So why incur that risk when, you can just buy the SP 500 have the same results and much less risk. Also, employees are also tied into that same companies retirement program and job security. Diversify. The Enron employees learned the hard way.
 
It's cheaper for the company to gin up some new stock for 401K purposes than actually write a check. In this case DW was at an educational software company with little cash on hand and few hard assets, so any 401k matching was kind of unreal.

They were sucked up in Softkey International's destruction of that market just before the internet boom. If they were still around by 2000 many of those titles could have been pretty valuable. (She worked on American Girls, Oregon Trail and a bunch of other stuff that was immediately de-funded and converted to $5 endcap junk in around 1996.)
 
No sense in having a large position in the company one works for. Typically, you incur extra risk with little or no reward (Sharpe Ratio). I worked for a fortune 10 company for 34 years. Many employees had 90-98% of their 401K tied up in the company stock. The stock had a beta of .99-its performance typically matched the market. So why incur that risk when, you can just buy the SP 500 have the same results and much less risk. Also, employees are also tied into that same companies retirement program and job security. Diversify. The Enron employees learned the hard way.
One company that I worked for gave a 50% match on 8% of pay so the equiv of 4% of pay and it was all in Company Stock which was not great but still, I wasn't paying for it. After five or so years, it switched to HALF of the match was in company stock. When I left there after 6 yrs or so, the savings plan was kind of strict for former employees - if you wanted to change the investments, you had to get out of the whole plan and I didn't want to so I let it ride and considered it part of my overall diversification. About 17 yrs later I did a big consolidation of my accounts under one manager and finally got rid of that company stock. There had been a couple of splits and a long climb but my total gain was a LOT but I was lucky in that case. I'd bought stock in another company that I worked for which was one of the market bellweathers and it has not done nearly as well. I still have a few hundred shares almost out of habit but will probably get out of it in the next few yrs.
 
Imagine being in that situation for high school. Many of the boarding schools are in the $60K range and still haven't figured out how to bring all their students back to campus. Some gave small refunds that didn't make much of a dent in that bill for families, but they still have to pay salaries and keep facilities ready for when students come back to campus, hopefully very soon as the vaccines roll out.
yeah my kids went to private high schools and they were close to the 40k range. I think i would have had a cow paying that much for my sons to their learning from zoom. Now if its the normal 8 hours of schooling but on zoom instead, i could slightly live with it but still for that money they should be giving me from internet
 
Kind of a meandering thread but some great advice. Some things may sound foreign to Cadets and new LTs such as 401(k), match... but the general concepts apply to the TSP.
“It's said that a wise person learns from his mistakes. A wiser one learns from others' mistakes. But the wisest person of all learns from others's successes.”
 
Imagine being in that situation for high school. Many of the boarding schools are in the $60K range and still haven't figured out how to bring all their students back to campus.
There’s no delicate way to say this, but my observation re school in the age of Covid: money talks!

While the public schools around us have been very slow to restore in-person classes — if at all — our kids’ private school declared from the outset that the 20-21 school year would happen in person unless something catastrophic occurred. And they’ve stuck to it! They’ve done a terrific job of limiting quarantines to a small set of students via contact tracing, and besides desks that are 6 feet apart, staggered lunch periods, canceled events such as homecoming, and the ubiquitous masks, things are close to normal.

Being a paying customer has its privileges. You can expect — and demand, if necessary — your money’s worth. Accountability matters much more in private enterprise than it does in the public sector (the military excluded). Private schools have a bottom line, and holding in-person classes not only retains their current student body (i.e. revenue stream), it attracts new students too.

Again, no delicate way to describe this, because it comes at the risk of appearing elitist and privileged. We’re fortunate and blessed to be able to afford it. And it breaks my heart that public schools don’t have the same incentive structure that forces them to step the heck up. Such is life.
 
Again, no delicate way to describe this, because it comes at the risk of appearing elitist and privileged. We’re fortunate and blessed to be able to afford it. And it breaks my heart that public schools don’t have the same incentive structure that forces them to step the heck up. Such is life.
In many cases near me, the schools, school boards, school administrations and parents want in person schooling with or at least a hybrid version but sadly, the teachers unions are absolutely shutting it down. The federal government aspires to opening schools but the thousands of school districts with thousands of individual union contracts have stood in the way. Numerous medical groups along with experience overseas and in US systems that are open all point to the low risk level but the needle has not moved thus far.

Full Disclosure: My "retirement gig" is teaching at a public university and I am a member of the union. I put my money where my mouth is and am voluntarily teaching converged (hybrid) at this time and was face to face with some of my students earlier today.

Sorry for the threadjack.
 
YMMV but I am not a fan of index funds as they include ALL in that index with no ability to make alterations for obvious changes in the economic landscape. For instance Sears and JC Penney have long been on a downward trend with little conceivable way to halt the slide. An index fund would continue to hold and even buy more stock in them (as investors buy more of the index fund) as opposed to putting the money into more timely investments. To put it another way, compare the return on a Dow Index fund to the performance of "The Dogs of the Dow" investment strategy which I believe can also be found in fund form.
BLAB: People can write books, even learned people that I don't agree with.
The analysis also hit the Dogs of the Dow and how they never outperformed passive index funds. The focus was on the numerous fees that eat away at any growth and how active pickers don't outperform broad indexes, and take. big hit on transaction/management fees.
 
This loophole was closed - we now also have to do the full 36 months for the full benefit, but all SA's can get 40% after just 90 days extra! @JasonM yes pretty much exactly what you described! Don't mean to hijack the thread, just point out that it can be good to find one with great knowledge of both general finance and military benefits to learn from, as they cross over a lot but not too many people know both well, at least not at the Academy it seems!

Loophole was closed..... but not before I took advantage of it!
 
I think in some cases the higher education has become a bill of goods. Far too many young people are getting worthless degrees with large debt attached and places of higher education have had no incentive to keep costs down.
Sadly, I can't argue with this at all. Name one industry that's managed to raise its prices 20% annually without any matching improvement in the offering, and without any discernable resistance from the paying public? The promise of "free education" -- by way of bottomless financial aid and hints of loan forgiveness -- have driven enormous inflation and cheapened the product terribly.

So yes, I do see higher education as an investment, i.e. worth going into the red in the short term, for the prospect of large gains in the long term. But like any investment, you must pick very carefully, because only a few bets have a high likelihood of paying more than they cost.
 
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