Stipend and budget= Savings?

HowBoutThemApples

HowBoutThemApples

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How much could I put into a Roth IRA monthly at USNA? Could I put in 400/month with all of the deductions on the monthly stipend?
 
Wow..a '25 Candidate already planning on how to save his earnings... a regular Alex Keaton ! Great that you are thinking about retirement funds this young, but I wouldn't spend to much time thinking about it , at least until you get accepted.

Midshipman never see their entire pay ... my recollection is that the pay is somewhere around 1/2 base pay of an ensign, but it gets put into a "funny money" account" to pay for unforms, Midshipman Actitvies, and various fees that get deducted whether you use them or not (Barber, Tailor, Cobbler, etc). That might have changed over the years --I'm sure a more recent grad can correct me.

The "take home pay" that each Midshipman increases with each year at USNA (as does you opportunity to spend it). I'm sure that it has gone up since my day, but it's still not enough that there is a significant amount left at the end of the month.
 
Sean17 said:
How much could I put into a Roth IRA monthly at USNA? Could I put in 400/month with all of the deductions on the monthly stipend?
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Good for you that you are thinking this way.

With all the puts and takes, you will have a limited amount of available dollars each month.

This is a link to the 2018-2019 USNA Midshipmen Stipend and Budget Book. I thought I had the link to the 2019-2020, but I can’t lay hands on it at the moment. It changes just a bit each year as pay goes up a few percentage points.

Encourage family to give you cash gifts in lieu of “stuff,” and plow that money into an IRA, which requires you have a sufficient amount of earned income.

Learn how to build and manage a budget, a lifelong skill, and know the difference between needs and wants. Google Mint. Handy device-based budgeting tool.

 
My plebe take home pay was around $50 per month. It went up a little each year, but topped out probably around $200 my firstie year. I'm sure it's gone up with inflation, but we could afford to order out chinese once or twice a month, a few slurpies from the 7/11, and a frozen yogurt at Dahlgren occassionally. Not much left over unless you're prior enlisted with a few years of service. Many kids take their second class loan and put a large chunk in an IRA.
 
Roughly speaking, mids’ monthly take-home pay goes from $100 as 4/C to $200 as 3/C to $300 as 2/C to $400 as 1/C.

DD said it was worth getting up at Zero Dark Thirty to help with graduation day at the end of plebe year, just to add a stripe to her shoulder boards and instantly see her pay double!

Now, she’s thinking of using her starter loan to seed her retirement fund. A much better use, in my mind, than buying a car that could be mothballed for months at a time while she’s deployed.
 
Mids are paid $1150.50 per month, or roughly 30% of O-1 pay. Due to taxes, FICA, SGLI, class funds, NAAA, etc. you will take home the following amounts:

4/C: $125
3/C: $225
2/C: $300
1/C: $500

To answer your question, no. You can not contribute $400 monthly to your IRA until at least 1/C year. This does not mean that you can't save money. I am very frugal and managed so save $50-$75 of plebe pay each month. 3/C and higher are eligible to for held pay (explained below straight out of the 2023 PROBOOK).

"Held Pay is an account managed by the Disbursing Office and DFAS that applies to all midshipmen. To ensure sufficient funds are available to meet future mandatory issue (i.e. gear, uniforms, books, etc.), not all pay is released. For example, if you make $1,087.80 as a 4/C, and pay $600 in deductions, you would have $487.80 left. However, $362.80 is deposited into your Held Pay account and $125 into your direct deposit account. This process will continue from month to month, accumulating funds into your Held Pay account. If enough Held Pay accumulates, it will be released to you every February, July, and November. Please note that 4/C midshipmen are not able to accumulate Held Pay due to the amount of debt initially incurred. In order for Held Pay to be released to you, your account balance must be above the following minimums:
4/C MIDN are not eligible for Held Pay release due to insufficient funds
$1,500 for 3/C MIDN
$1,350 for 2/C MIDN
$1,000 for 1/C MIDN"
 
A lot of good comments above:

Many midshipmen who are interested in investing- invest their help pay checks. Held pay can get really confusing but basically after plebe year midshipmen can expect to get a check around $1,000 at the end of February, July, and November.

You will consume a lot your regular monthly pay one weekends with your company mates going to restaurants and hanging out. Therefore, held pay is your best shot to start up an investment portfolio.

Another investment avenue could be the loan you can get at the start of your 2/C year. This loan is a 32,000-36,000 dollar loan with an extremely low interest rate (around 1%). Some mids think it is genius to invest the loan, others think it is stupid. I guess it just depends on your risk tolerance.
 
Temple17 said:
A lot of good comments above:

Many midshipmen who are interested in investing- invest their help pay checks. Held pay can get really confusing but basically after plebe year midshipmen can expect to get a check around $1,000 at the end of February, July, and November.

You will consume a lot your regular monthly pay one weekends with your company mates going to restaurants and hanging out. Therefore, held pay is your best shot to start up an investment portfolio.
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Another advantage to West Point. Nowhere to go, nowhere to spend your money.
 
Temple17 said:
A lot of good comments above:

Many midshipmen who are interested in investing- invest their help pay checks. Held pay can get really confusing but basically after plebe year midshipmen can expect to get a check around $1,000 at the end of February, July, and November.
Click to expand...

For a normal mid, how much overall pay should they receive over the 4 years? Quick math of above around 21-22k after the initial ace loan is paid off. Is that accurate? That seems right to me based on a 54k gross pay estimate of above minus taxes, loans, fees, etc.
 
justme said:
For a normal mid, how much overall pay should they receive over the 4 years? Quick math of above around 21-22k after the initial ace loan is paid off. Is that accurate? That seems right to me based on a 54k gross pay estimate of above minus taxes, loans, fees, etc.
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That sounds about right, maybe a bit less. Aside from the initial ACE Loan there are still a lot of deductions for uniform issue during Plebe Year, then mids will probably end up spending around $2k on textbooks (Tip: If possible buy used from eBay or from uperclassmen to save! College bookstores are notoriously ripoffs and sadly USNA’s is no exception. For some classes they'll be required to buy from the bookstore though).

Laundry is $73 a month, whether or not you use the service, then about $130/month goes toward barber, tailor, and cobbler, again whether or not the mid uses it.

Then $24 to Navy Athletics (which the Brigade loves to humorously complain about, since the athletic directors are paid very highly compared to other comparable programs.), $15/month to the Alumni Association which if paid each month entitles the mid to lifetime membership upon graduation (Not sure what the benefits are but maybe someone can explain), about $30 each to MWR and to the Class Fund for events like Ring Dance, and optionally SGLI if the mid has it (Since mids are not allowed to have dependents anyway, many opt out.) Federal income tax and FICA are the same but obviously state taxes vary depending on the mid’s home of record. So the average deduction across 4 years at the Academy is probably around $600-700 leaving an an average of about $350/month. And the held pay system limits the amount given to each class.
 
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