Practical Ways to Create Passive Income

Passive income is one of the most popular topics in personal finance. And for good reason! There is nothing more appealing than having monthly income show up in your bank account after doing zero work. However, getting to this point is not always a simple task.

The first thing to understand is that building passive income takes time, dedication and needs to be aligned with your future goals. This is a marathon, not a sprint and you’re going to need a good reason to keep at it past the first few weeks. Some popular ones include:

  • Family: Not wanting to miss your kids childhood because you are at work.
  • Philanthropy: A lot of people may seek to spend their time contributing to a greater good. Often, this involves a pay cut for a length of time.
  • Freedom: Travelling the world, or being able to not live in one set location are important to many people.

What Assets Will Create Passive Income?

Investors seeking passive income have three primary investment options:

  1. Single Family Real Estate
  2. Multi Family Real Estate
  3. Dividend Stocks

All three will help you earn income without having to work for it, but each option has it’s own pro’s and cons. To build meaningful income streams from these assets, first, you are going to have to focus on saving money to purchase them. Whether it’s an initial down payment or building a sizable dividend portfolio, it takes money to make money.

Let’s say you have saved $50,000 to put towards creating passive income. Now, you want to know which investment maximizes your chance for success. Let’s explore how far 50k will get you in 3 different scenarios. These examples are for educational purposes only, we are not providing investment advice in this article. Simply, illustrating a point.

Single Family Real Estate

In the first scenario we’re going to use RoofStock to purchase our single family investment property. Single family real estate is the most intuitive way for most people to break into real estate. It’s logical and approachable. You can even live in your property for a few years and then rent it out down the road. If this type of passive income interests you but you’re unsure where to start, making a free account with Roofstock allows you to see a ton of investment properties all over the country. Alright, back to the point, you have that $50,000 ready to go so let’s see what they can do for you.

Roofstock’s dashboard gives you all the key metrics for any property that’s listed on their site. The asking price of this home is $115,000 (often a negotiable number). Below that you’ll see a sliding scale for down payment (in percent of the purchase price). Change this and Roofstock will automatically calculate your initial investment. The estimate for the initial investment above ($45,223) includes down payment, closing costs and an estimate for any immediate repairs that might need to be made.

Finding an Appropriate Down Payment Amount

You might be wondering why the down payment is only $45,223 when we have 50K to put down. The reason is that when you buy a property, you need to have money set aside from day one to cover repairs. A good rule of thumb is 10% (5K) of the amount you have saved (50K). Things break unexpectedly no matter how well you inspect a property. You don’t want to be facing the stress of a large unexpected maintenance expense.

Above you can see the total return you will make in the first five years. The total return includes: cashflow and estimated appreciation, in this case it is $34,499. All the other numbers pictured refer to annual numbers. The cashflow for your first year will be $4,199. Not bad for a 45K investment! Cashflow is the most relevant of these numbers because it factors in loan payments , property taxes, management fees and maintenance cost. It is the bottom line you will make after all these expenses. The other key number to pay attention to is annualized return (13.9% for this property).

Annualized Return

Annualized return is the percentage return on your initial $45,223 which includes cashflow and appreciation. Roofstock uses Zillow data to estimate property appreciation. The combination of these two values is the total return you make on your investment per year . Annualized return is often referred to as Internal Rate of Return (IRR). We will refer to it as IRR for the remainder of this article. IRR is one of the most useful metrics for comparing total annual return between different investments.

Your Potential Returns

Okay, let’s see how your 50K would perform as an investment in this property.

  • $349/month in income. Maintenance costs come up and decrease this.
  • IRR of 13.9% At this rate your investment will double in five years. See note below.
  • Tax benefits: In addition to cashflow and total return, owning a rental property comes with a slew of tax benefits such as depreciation and maintenance expenses that will likely help you lower your tax bill while increasing income.

Rule of 72

There is a simple rule of thumb that you can use to estimate how long it will take your money to double. It’s called the Rule of 72. Take 72 and divide by your IRR. In this case 72/13.9 is about five years.

If you’ve done the hard work of saving your money, single family real estate is a pretty compelling investment. You can make hundreds per month in passive income while building your equity and reducing you tax bill. The only catch is that you need to put in a lot of leg work to find a property on your own. Again, the most passive way to do this is through RoofStock but you will need to find a property that will allow you to have positive cash flow.

If you are interested in single family investments, here are a few resources:

Multi-Family Real Estate

In the second scenario we’re going to use Upward Capital to purchase our multi-family investment property. With multi-family real estate you are buying a building that has multiple rental units that each generate their own regular source of income. The most basic multi-family property is a duplex which is a single structure with two separate units. Buying a small multi family is similar to buying a single family property. In fact you can even buy up to a quadplex with the VA loan.

On the other hand, multi-family investments can scale all the way to large apartment complexes with thousands of renters. For the purpose of this article, we are going to focus on larger multi family buildings. Larger buildings tend to be more passive, for example a building with over 70 units typically has a dedicated property manager. There are two primary ways to invest in large multifamily buildings: as a syndicator and as an investor.

How to Invest: As a Syndicator


A real estate professional who coordinates investments in a Multi Family building. They do all the legwork (and there’s a lot) for a slice of the pie. They are compensated with a share of the proceeds similar to investors who are entitled to a share proportionate to their investment amount.

Multifamily real estate takes a significant amount of work to break into as a syndicator. The primary way you find properties that are larger than 4 units are through real estate brokers. Most brokers are not interested in sending you their properties until you have already bought one. Here are some of the problems you will need to solve to land your first deal:

  • Finding enough people willing to give you money to make the down payment (investors)
  • Finding a wealthy investor who can put up collateral to get the loan approved. The bank wants to have the joint net worth of the investors be great enough to act as collateral for the loan. Often, you need to bring in a high net worth individual to accomplish this.
  • Finding a loan
  • Underwriting a property
  • Insurance
  • Property Manager (full time). The rule of thumb is full time staff for properties over 70 units.
  • Legal paperwork for this whole process
  • Finding properties which requires dedicating a lot of time developing relationships with brokers who will sell the property to you.

Networking is a huge part of this. You’re going to need to convince people to invest with you while developing a network of professionals such as a broker, underwriter and lender. To help start this process, you’re going to want to attend a few masterminds, read a few books and build a robust network before you start. If you’re curious, here are some of the best resources to learn:

  • If your are curious about learning more but don’t want to commit to a master mind yet then we recommend Financial Freedom With Real Estate Investing by Michael Blank. He is one of the most prolific real estate syndicators and the book is an exciting and useful read whether you plan to lead or invest in a syndication.
  • If you are serious about learning more as a syndicator then it makes sense to join a mastermind. This is a blend of an online course and networking. The War Room MasterMind is highly rated and attended by a lot of military investors.

How To Invest: As an Investor

Syndication can be pretty daunting. While lucrative, it definitely requires a high level of motivation to break into. Fortunately, there are professionals who will do this for you.  If you come to a syndicator as an investor, your job is as easy as investing in property. You get a slice of the pie proportionate to your input. This is literally as passive as it gets.

The trick is to find a reputable syndicator and not someone who’s running a scam or isn’t honest about the investment you are getting involved in. After all, you are forking over a large amount of savings. Here are a couple of options you have to help you achieve this:


Most syndicators only accept accredited investors. These are investors with seven figures liquid net worth that does not include equity in your home or have an annual income of $200,000 ($300,000 if married). If you are an unaccredited investor you will need to get in contact with a syndicator before you invest in anything. Usually this is a phone call where they introduce themselves and walk through what they’re offering. It is okay to call just to learn more. Per SEC rules syndicators need to have existing relationships with unaccredited investors before investing in a property, so this is how that is accomplished.

  • Upward Capital: I know the founder personally and 100% stand behind them. Currently I am saving to invest with these guys. Their most recent deal is exceeding all the predicted return metrics. (The numbers are even better than our example). Military owned and operated. Accepts non accredited investors.
  • Military To Millionaire: David Pere is an active duty marine who is well known in the real estate investing world. He also offers syndication opportunities in his investments. He accepts non accredited investors.

There are a ton of other ones out there but these two are legitimate syndicators with a proven track record. Many other syndications are only available to accredited investors. Lastly, these guys are both military and to me that’s a huge plus.

Your Potential Returns

SEC rules prohibit us from walking through any specific examples but here is what you can expect to see as far as returns on your hypothetical $50,000 investment (calculated using the most conservative returns).

  • Dividends (8-10%)
    • $333/month in income
  • Appreciation (15-20% IRR including dividends)
    • Your initial investment would double in 4.8 years.
  • Tax write offs
    • Similar to single family, you will be able to receive tax benefits that are applied to the building (just in your proportional share).

Multi family may feel like an exotic investment to many new investors. In fact, it can be simpler to invest in multi family real estate than single family. If you focus on saving money and find a good syndicator then you will get all the advantages of real estate without much upfront work required. It is also a great diversification play, you will have a wealth building investment whose performance is not dependent on how the stock market is doing. If you are trying to create passive income streams, multi family investments make a great addition to your overall portfolio.

Dividend Stocks

In the third and final scenario, we will be investing our 50K in dividend stocks. Dividend stocks are a common way to earn passive income. There are a ton of companies out there that pay dividends, but if you’re going to live off the dividend income then it is key to find a company who is not at a risk of cutting their payout. In addition, you’ll want to own companies who continue to grow their dividend year after year. One particular group of stocks that satisfies this criteria is Dividend Aristocrats. These stocks have raised their dividends consecutively for at least 25 years. Let’s pick a well known dividend aristocrat (IBM) and see what a 50K investment with this company would get us.

Source: Google Finance

The P/E Ratio is a measurement of how many dollars you will pay for $1 of IBM’s earning. This is a good way to compare the relative price of a stock. The dividend yield is how much you will earn in dividends for each dollar invested. In this case it is 4.8 cents.

Your Potential Returns for 50k of IBM

  • $200/month ($2,400/year) in passive income (current yield 4.80%)
  • 1.4% IRR. Your investment would double in 51 years. The stock price has decreased so total return is lower than the dividend.
  • Limited Tax Advantages: Dividend stocks will not give you write-offs like real estate but the income is taxed lower than regular income.


The underwhelming annual performance highlights the disadvantage of single stock investing. With dividend stocks especially, investors tend to build large positions in a single high yielding company. If you put all your eggs in one basket and it underperforms then so will your wealth accumulation. For example, the stock price of ATT is the same today that it was in 1997. All your gains would be from dividends only. This does not perform well compared to every other investment which give you both dividends and appreciation.

Dividend index funds are also an option. They are safer because you are not dependent on the performance of one company but do tend to have a lower yield than a lot of individual dividend stocks. One example is Vanguard’s High Dividend Yield ETF (VYM) which is currently yielding 3.06%.

Your Potential Returns

A 50K investment in VYM yielding 3.06% would get you:

  • $127.50/ month ($1530/year) in passive income (current yield 3.06%). The dividends are distributed quarterly.
  • 11.57% Annualized return (equivalent to IRR). 6.2 years to double your investment.
  • Limited Tax Advantages: Dividend stocks will not give you write-offs like real estate but the income is taxed lower than regular income.

Although, individual stocks may have a higher yield, there is significant risk in putting a large amount of your wealth into a single company. As you can see with IBM there is significant risk when that one company underperforms compared to the market. Index funds will allow you to diversify at the cost of a (usually) lower yield. The biggest drawback to creating passive income with dividend stocks is that it takes a lot of money to create enough income to live off of. For example, it would take $500,000 to make $2,000/ month off of a stock yielding 5%. That’s hardly enough to pay rent in most areas.

The other issue is that stock market valuation are historically high. Because the price of stocks has risen for the last 10 years, it is increasingly difficult to find dividend stocks that are attractively priced. Point in case, the S&P 500 historically had a dividend yield above 3%. At the time of this writing it is 1.53%.

Dividend stocks, have a place in every portfolio, but with the current market environment it will take a long time to build serious income. If you are interested in learning more about dividend stock investing here are some resources for you.

Side by Side Comparison

For the more visual types out there, here’s a chart that summarizes what we’ve covered. Passiveness is a relative scale that weights the work required to set up and maintain these investments. For the comparison we used the performance of the Vanguard High Dividend Yield ETF because of the more comparable overall return(IRR).

Return on $50,000 investment among various assets:

Monthly Income ($)PassivenessTax BenefitsIRR/Annualized Return (%)Time To Double Investment (Years)
Single Family3493Y13.95
Multi Family3332Y154.8
Dividend Stock ETF127.51N11.576.2

Pros and Cons

Okay, hopefully by now you can see that if you are willing to save your hard earned money there are some pretty exciting investment opportunities out there. But which is the best? This will depend on your preferences and comfort level.

Single Family


  • Diversification- Performance is not affected by stock market.
  • Medium Liquidity: You control if you want to sell or refinance but that still takes time to execute.


  • Most work to set up if you’re going it alone. Roofstock can help by acting a “syndicator” to streamline the process.
  • Your income stream is dependent on a single rental unit.

Multi Family


  • Less work to set up if you are an investor. A lot if you are a syndicator.
  • Your income stream is not dependent on a single rental unit.


  • Least Liquid- You do not control resale or refinance.
  • Least control of investment-finding a reputable syndicator is key.

Dividend Stocks


  • Least Work- As simple as setting up automatic investments with your brokerage.
  • Most Liquid- Instant liquidity unless market is down then it may not make sense to sell.


  • Lowest Yield: It is difficult to find a quality stock that will yield as much as real estate in current market.
  • Less Diversified: The appreciation of the dividend stocks can still be affected by the overall market.

Bonus: Another way to Invest In Real Estate

Maybe you want to start investing in real estate and earning passive income, but you don’t yet have $50K. You want to start with a $1000 investment and continue to put your savings to work every month. Fundrise will allow you to capture the performance of real estate without a large initial payment.

They do this buy dividing their professionally managed real estate portfolio into shares that you can buy. You can buy these shares like a stock ($1000 minimum starting investment), and have an opportunity to sell them every quarter (three months). You will receive a dividend (which can be automatically reinvested) and they will appreciate over time as the value of the portfolio increases. Essentially, this is similar to buying shares of a dividend stock but the underlying performance is based on recession resistant real estate. Fundrise is a really awesome way to start building passive income if you want to start today.

Here’s Where the Next Bubble May Be

Increasingly, there are articles all over the news about how the next bubble is near. I have been investing and reading financial news for almost ten years now and I promise you it has always been this way. And you know what? Not a single person was writing about COVID 19 before March.

That’s how actual economic shocks work, they come from things that no one is betting against or talking about. Here’s some excerpts from a Motley Fool article circa January 2020 which show why these predictions are mostly noise.

Alright Not a Bad Start

2020 Was a Hell of A Year
Literally Nobody

Netflix is up around 50% over the last year

Bitcoin is up 400% over the last year

I don’t plan on calling the next market bubble and I love the Motley Fool so this is not a jab at them. What I am beginning to question is how mainstream Bitcoin is becoming. I have recently been reading a lot about the Great Recession as well. To me, it seems there are some eerie parallels between the growing pervasiveness of Bitcoin and the wide spread presence of mortgage backed securities in the early 2000’s. Both of these were difficult to value and ended up being falsely perceived as safe. Without making a prediction, let’s ask the important question for where we’re at right now.

What do you think the future of Bitcoin is?

Before we get to that let’s look at what Bitcoin actually is.

What is a Bitcoin?

  • Bitcoin is a digital currency that utilizes blockchain technology.
  • There are currently 17 million in circulation and 21 million is the ultimate cap on how many there can be.
  • There are algorithms that computers run to mine Bitcoin. The algorithm requires more computing power for every bitcoin mined. At this rate it will take 122 years for the remaining 4 million to be mined.

Unique Factors of Bitcoin

  • There is no central controlling authority because block chain technology is decentralized.  If you lose your password to your coin bank there is no help line or anyone you can call. Just ask these guys.
  • There’s not actually bitcoin. Like bitcoin are not digital certificates or something tangible. As Bitcoin is traded, multiple computer servers record the transactions. Your “Bitcoin” are simply part of this tally of who has what.
  • We don’t have a system for valuing Bitcoin. How do you value a tally of things that don’t actually exist? It’s much more difficult than the stock of a company that makes money selling actual tangible goods or a metal such as gold which has intrinsic value.

It’s a pretty insane concept so here’s a quick video to help.

Bitcoins Performance

Bitcoin has absolutely crushed the stock market as an investment. Because of its scarcity, decentralization and success it has gone from fringe investment to mainstream. Companies and large firms are increasingly viewing it as a store of wealth similar to gold. It’s tempting to draw that parallel but remember gold is actually a physical object that you lay claim to when you purchase. Bitcoin is a transaction ledger of things that don’t actually exist. That’s a little different.

Bitcoins success is actually where the risk lies. I don’t think it’s bullish run is over at all, which will continue to suck more people in. Now that mainstream companies like Tesla and Square have purchased bitcoin, executives at almost all companies are at least thinking about whether they should buy it to add to their balance sheets. If Bitcoin’s run continues then it’s likely more companies will give in to this temptation to capture some upside. Furthermore, Bitcoin ETF’s are being bought hand over fist by retail and professional investors alike.

Therein Lies The Risk

The more successful Bitcoin is the more it will continue to permeate throughout our financial world. This is an asset that no one understands how to value and that there is no central figure to provide regulation or assist when it crashes. Bitcoin has shown that it can halve in value in just a few days yet more companies are using it as stores of wealth for their balance sheets. Imagine if the US dollar was half as valuable a week from now and the damage that would cause.

I Don’t Own BTC So Who Cares?

Well we all do now. Between your retirement account and regular investment account you are almost guaranteed to own the S&P 500. Now that Tesla has bought Bitcoin you have exposure to it if you own the S&P. Sure, their 1.5B Bitcoin purchase is not going to drastically affect the entire index but what if more of those companies see them making money off it and follow their lead? The risk is that the balance sheets of these companies may appear safe when in fact they are built on a house of cards. Combine that with the increasing amounts of money that investors are pouring into Bitcoin. Suddenly, your exposure is everywhere. This brings us to a situation eerily similar to the early 2000’s……

What Does Bitcoin Have to Do with The Great Recession?

Back then, the crisis centered around mortgage backed securities (MBS).

Mortgage Backed Securities

MBS are essentially bonds that contain multiple mortgages in one security. This acts like a bond because the owner of the MBS receives mortgage payments in the same way the owner of a bond receives payments on debt. Because there were multiple mortgages bundled into one MBS, these securities were deemed especially safe. One failure to repay could not take down the whole security.

Overtime, pensions, hedge funds and individuals began to stock up on these new securities. Banks made money selling their mortgages to hedge funds and other banks that created MBS. They began to give mortgages to people who couldn’t really afford them so they could have more mortgages to sell.

Everyone upstream thought they had safe assets without having any way to value or understand these securities. As long as the housing market increased their securities and the homeowners below them would continue to be okay. Obviously, when the housing market lost steam and interest rates increased (making mortgages more expensive for people who couldn’t really afford them) this all came crashing down. Those multiple loans in one security were all bad so there really was no safety from the fallout.

The mechanics of MBS compared to Bitcoin are obviously different. But the broad takeaway is the same.

Here was a hot new type of unregulated investment that people were making tons of money on. As it’s bullish run continued it began to become viewed as more safe. This perception allowed it to permeate throughout the financial world until it formed a substantial part of the wealth of everyone. The lack of regulation allowed an insanely profitable bullish run but it also allowed it to disappear overnight. This is what can happen when market forces are not regulated.

So What’s Next?

Will Bitcoin cause the next bubble? I don’t know anymore than you. And I sure as hell won’t put myself out there and become the next article like the ones in January 2020 that had no idea of the 800lb gorilla in the room.

 I do think as an investor you need to question everything. And I think an important question we should be asking is what is the future of bitcoin? Increasingly, the answer is going to affect all of us. 

For the record, I think Bitcoin is an awesome idea. I’m a fan but I don’t know where this goes from here. I think one the best ways we can prepare as investors is to study the past. To understand bubbles the absolute best book is Big Debt Crises by Ray Dalio. He covers tons of crises throughout history and makes them easy to understand. He also made money in 2009 when everyone lost it because he was able to see it coming. If you want to be a better investor and understand where we might be headed, reading this book will get you there a lot faster than the news.

Thoughts on Bitcoin? We’d love to hear them.

TSP Cheat Sheet and Funds

Investing for retirement is truly simpler than it sounds. It’s also more rewarding than most of us could imagine. See below for FAQs related to common issues when trying to invest in or understand the TSP. For any that aren’t answered below, email your question to We’ll respond to you individually and then include the problem and solution below (anonymously) for others to reference.

How do I Access my Account?

Utilizing your TSP requires you to log into two separate accounts. It’s easier to do both if you have a smart card reader*.

  1. To modify how much you contribute to your TSP, log on to MyPay. TSP is the option on the bottom left hand side of the screen. Once you’re on the page that shows a bunch of percentages, click on the icon that looks like a pen on the bottom right and you can modify how much of several different types of pay go towards either Roth or Traditional.
  2. To modify where your contributions are going, log on to This allows you to select where each and every dime of your contributions is allocated, shift your funds around if desired, and generally control everything related to your TSP besides how much you’re putting into it.  

*(This is the one we’ve been using for a while. Wouldn’t recommend using it on a government computer, but it’s worked flawlessly on both Mac and PC for accessing personal accounts on our own time).

When can I Withdraw?

Short Answer: If it all possible, don’t withdraw until you can do it tax free and penalty free. If you’re not working for the government anymore, you can do it at 55. If you’re still working for the government, then you have to wait until you’re 59.5.

Long Answer: Technically speaking, you can withdraw from your TSP whenever you’d like. The money in your account is yours. That said, if you do it according to any timeline besides that listed above, you’re likely going to have to pay taxes and fees on it. If you’re in a personal financial crisis and you absolutely need the money, then so be it. We all have unexpected crises and sometimes it requires funds beyond what it is our emergency fund and short to mid-term investment accounts. Before you withdraw from your TSP early though, read here for what it will cost you. The long and short is that if you withdraw early, you sacrifice many of the benefits that the TSP is designed to provide you, and you can end up paying fees as if it were a traditional brokerage account… and then some.

How does Matching Work?

Short Answer: Dedicate at least 5% of your pay to your TSP to take full advantage of Agency/Service Matching.

Long Answer: The government automatically contributes 1% of your basic pay to your TSP, even if you contribute nothing. For every dollar you contribute up to 3% of your pay, it’s matched penny for penny. For every dollar you contribute over  3% and up to 5%, it’s matched 50%. See table below for specifics and why the short answer is the better one.

Your ContributionGovernment ContributionTotal Contribution

What’s the Maximum I can Contribute?

The most that YOU can contribute is $1625/month. However, this doesn’t include what the government matches for you… See the table above for why government matching is such a great thing.

Should I choose Roth or Traditional?

This is a popular topic when talking about retirement accounts. In a nutshell, the Roth option involves paying taxes on your income before contributing to the TSP, but none when you pull your money out during retirement. Traditional will reduce how much you pay in taxes now, but you will have to pay an enormous amount in taxes down the road. For the vast majority of military personnel, Roth is the way to go. 


The TSP offers two different types of funds: Individual and LifeCycle. The individual funds allow you to invest in any of three stock market indexes, a fixed income index, and/or a fund that’s simply aimed at not losing money. The lifecycle funds are a combination of the individual funds. They’re automatically adjusted for you as you get older, which is why they’re called ‘LifeCycle Funds’.

Individual Funds

G Fund

The G Fund is the safest fund. It is the only one that guarantees both the principal and the interest. It aims at outpacing inflation while guaranteeing you don’t lose what you initially put in. This interest rate is calculated each month by a weighted average of the previous month’s yield for roughly 150 bonds. Click here for a deeper explanation, but the takeaway is that the G Fund will guarantee that you don’t lose money and try to outpace inflation. 

G Fund Stats:

10 year average annual return: 2.04%

Lifetime average annual return: 4.82%

Total Expense Ratio: 0.049%

F Fund

The F Fund, also known as the Fixed Income Fund, attempts to mirror the Bloomberg Barclays US Aggregate Bond Index. This gives you more potential returns than the G fund, as the F Fund fluctuates according to the US Bond Market. Generally speaking, it is viewed as more risky than the G fund, but less risky than the C, S, or I funds. The F Fund will almost certainly offer you better returns than the G Fund over the course of time, but it comes with no guarantee that the value of your holdings won’t decrease from time to time. More Details.

F Fund Stats:

10 year average annual return: 4.07%

Lifetime average annual return: 6.18%

Total Expense Ratio: 0.06%

C Fund

The C Fund is designed to match the composition and performance of the S&P 500. The S&P 500 is composed of the 500 largest companies listed on the New York Stock Exchange*. As a result, it fluctuates a lot more than the G or F Funds do. For the same reasons, it also grows a lot more over time. If you want to take advantage of the long term growth of the stock market as well as dollar cost averaging, this is a great one to have in the core of your portfolio. 

*More precisely, it’s an index of the 500 companies with some of the highest market caps, including multiple classes of stock for some of those companies. The result is an index of 505 equities, weighted using the free-float method

C Fund Stats:

10 year average annual return: 13.90%

Lifetime average annual return: 10.88%

Total Expense Ratio: 0.051%

S Fund

While the C Fund represents the vast majority of the US Stock Market, the S Fund represents small ($300M to $2B Market Cap) and mid-size ($2B to $10B Market Cap) companies that aren’t included in the C Fund. It aims to match the performance of the Dow Jones US Completion Total Stock Market Index. The upside of the S Fund is that since the companies that make it up are smaller, they typically have more potential to grow. However, the companies that make up the S Fund are viewed as slightly riskier since they’re not quite as large as those in the C Fund. If you want to balance your TSP to represent the US Stock Market as a whole, using the S Fund to supplement the C Fund is a great way to do it. More Details.

S Fund Stats:

10 year average annual return: 13.32%

Lifetime average annual return: 10.34%

Total Expense Ratio: 0.068%

I Fund

While the S and C Funds represent the US Stock Market, the I Fund gives you exposure to the international stock market. It’s designed to track the MSCI EAFE Index, which is an index made up 874 constituents entirely outside of the US and Canada. About 70% of the constituents come from Japan, the UK, France, Switzerland, or Germany, and the other roughly 30% are from any one of about 15 other developed countries. The potential benefits of investing in the I Fund are that it further diversifies your TSP and could potentially allow you to tap into growing companies in developed markets. However, it tends to be more volatile than the C and S Fund, and even more difficult to understand. More Details.

I Fund Stats:

10 year average annual return: 5.87%

Lifetime average annual return: 5.16%

Total Expense Ratio: 0.055%

L Funds

L Funds, or LifeCycle Funds, are a combination of the 5 individual funds, automatically adjusted over time. Each one is associated with a ‘target date’ for when you plan to begin withdrawing from your TSP. As you get closer and closer to your target date, the allocation of the funds is adjusted quarterly to gradually decrease risk and solidify gains over time. See the images below (all from to see how the allocation shifts over time. One of the huge benefits to these funds is that it involves absolutely no work on the part of the service member except for picking the target date closest to when he or she plans to begin withdrawals.

Here’s How Much Your TSP Will be Worth

BLUF: Use this free calculator to figure out what your Roth TSP will be worth based on your own information. It takes factors into account that simple compound interest calculators don’t (taxes, Active Duty vs Reservist, increasing basic pay based on rate/years of service, time from EAS until you withdraw, etc.).

Quick Story

A person similar to one of your high school friends enlists at 18. He plans on doing one enlistment in the military and then getting out. While at boot camp, someone convinces him he should contribute to a Roth TSP.  The details are tough to understand, but after graduation, he logs onto his account one Friday afternoon. Using MyPay and, he sets his account up to contribute 10% of his basic pay to the C Fund in less than 5 minutes. He heads out for the night with his friends, and largely forgets about the TSP altogether.

Our friend is always thinking about getting out and telling friends and family he’s going to do it. In the meantime, one enlistment turns into two, he starts a family, and deployments start to blur into one another. For the remainder of his career, he doesn’t think much about investing, retirement, or even finances at all.

Time continues to pass, and before our friend realizes it, he hits his 20 years. Happy to be out of the military and on to his next career at only 38, he doesn’t put another dime into the TSP – or any other retirement account. He knows in the back of his head that he should probably start saving more aggressively for retirement, but his kids, house, and car seem to suck up all of his money. Also, the stock market seems to always be going up and down, making it too risky to put any money in since he’s not “good with finances”.

When he hits 60, he realizes that if he’s going to retire in the next five years, he needs to get his act together. To see what he has so far towards retirement, he logs into the TSP, hoping for a hundred thousand or so. That said, he’s afraid it might be lower because even when he was an E-7, he was only contributing a couple hundred bucks per month.

What’s the number in his account?

$2.2 Million. Tax free.

What Will Yours be Worth?

To make it easy to figure out what your TSP could be worth when you want to start withdrawing, use this free tool

There are always reasons not to contribute to your TSP. Understand that not contributing is one of the most costly mistakes you can make. Our hope is that the story above and seeing how much yours will be worth gives you a reason to start. It’s worth it.  The TSP is hands down the easiest way to become a millionaire. You can do it by contributing a few hundred a month that you never missed because it is automatically deducted. That’s it. You don’t have to work on wall street or even be remotely interested in investing to be a multimillionaire.

What would you rather worry about? What to do with $2.2 million or having a few hundred dollars extra per month? 

If you want to get out…

You don’t have to do 20 to have a lot of money in your TSP. Play around with the calculator, just make sure you adjust how many years are in between when you EAS and when you’ll withdraw from the TSP.

How To Research Rental Properties

Real estate investing starts with researching properties in a market you are interested in. Your ability to research investment properties will directly affect your success with real estate investing. Having a strong research process will allow you to find properties that fit your investment goals and enhance your chance of success. If you’d like to learn more about that than read on.

Fortunately, it’s not rocket science, once you understand the financial metrics you are looking for, you’re pretty close to being able to buy. Your only limitations at that point are essentially the negotiations with the buyer and the home inspection.  Let’s walk through the process and give you some useful tools that we’ve used to make this process as smooth as possible. With our spreadsheet you will quickly be able to narrow down properties to ones that will make good rentals.

Before we get to that, here are some common terms it helps to understand.

All The Terms You Need to Know


A true rental property is valued based on cash flow. Determining the price on cash flow will give you a solid reference point on what you should be paying regardless if you are buying the house from a retail seller or from another investor. These numbers will be available to you if buying from another investor. If buying from a regular homeowner we will show you how to estimate these in the next section

Out of all these metrics, cap rate is probably the most important. Cap rate will allow you to compare the price of your property to similar properties in an area and see if the price you are paying is reasonable. For example, if most properties in your area have a 10% cap rate and the seller is asking for a price that gives you a 5% cap rate, you are probably overpaying. It also helps you evaluate multiple rental properties and see which would be the best investment (typically the one with the highest cap rate).

We’ll show you how to analyze and property and a new tool called RoofStock that will make this process a lot easier. To analyze properties, we will be using our spreadsheet that you can download below.

Money Gouge Tip: Create an Outline before you go Online

Similar to buying any other home you will want to create an outline of what you want before you start looking. Some things to outline are single or multi family and location. Price is important as is the amount you have for a down payment.

How to Analyze any Property

We’ll use a property in Arnold, MD

Zillow will help us populate many of the values that we need. Within 20 minutes we can get a good idea of whether this would be a worthwhile rental property. Without even contacting a realtor we know it currently rents for $1900 because that’s what it sold for on Zillow. You can also use Zillow to cross compare this home with rentals in the same area.

Money Gouge Tip

Comparing similar properties for rent in the area is a great way to get a feel for your potential rent. I do not recommend using Zillow’s estimated rent value. I have never found it to be accurate. A better calculator is rentometer. Their estimate for this property is $1950. Between that and looking on Zillow you should have a safe estimate. Confirm your potential rent with your realtor when you have moved forward with the process.

There are only two rentals in the nearby area so not much competition. It also appears that rent is slightly higher than what the place is rented at. In addition, the 3/3.5 floorplan we’re considering will easily be able to compete with these other listings

Putting it All Together

Looking at the previous data point let’s assume it will rent for about $2100 and that we will have one month of lost rent due to finding a tenant. So we’ll estimate that to be conservative.


Express the estimated vacancy as either the credit loss or % occupancy. I entered both here so you can see the equivalent way to express them but if you don’t zero one out it will count it twice.

Now, we populate the expenses part of the spreadsheet with data from Zillow. Almost everything is readily available from the website. For property manager costs assume 10% of rent, that is the standard.

 For an estimate of the mortgage there are a ton of estimators available but we used this one. For rates I generally refer to whatever bank you use daily. Obviously this can differ from your actual lender or rates but is a solid estimate for this part of the process.

I have found the most accurate way to estimate homeowners insurance is to get a quote from your current provider. There are estimators online but they can be way off. Getting a quote does not affect your current insurance and is not binding in any way. I consistently find that Geico has the best prices for rental properties and is super easy to run a quote through. I use them for my properties and estimated $900 for insurance for this property by running a quick quote.


Set property taxes and insurance to zero on the mortgage estimate if you are going to account for them in the expenses section of the spreadsheet. Conversely, set the expenses to zero on the spreadsheet if they are part of your mortgage estimate. This will avoid counting them twice.

From a quick preliminary analysis we can see that if we purchase the home for $310,000 with a 20% down payment we can expect to make about $132/ month after mortgages and other expenses. This is expressed by the $1588 cash flow after taxes value. Keep in mind, you will also be getting an increase in equity every month from the mortgage payments being covered by rent

In about 20 minutes you can get a good idea of how a property will perform as a rental. This particular property is in a nice school district and expensive area so you can expect that it will cost more and have a lower cap rate. Searching in a cheaper area will likely yield higher cash flow relative to cost but will change the dynamics of your tenants and neighborhood.

Money Gouge Tip: Avoid The Big Three

As you can start to see with this analysis, not all costs are going to affect your investment the same. There are three costs that are paid annually and have a major effect on your monthly cash flow. They are insurance, property taxes and HOA fees. A large increase in any of these will quickly turn a property from positive to negative monthly cash flow. Out of all three, HOA fees are the one you have most control over. It depends on the area, but in Arnold, MD many other comparable neighborhoods have an HOA fee of $250/month. This would take cash flow from around $113/ month to requiring $118/ month to break even

Researching a Rental Property with Roofstock

If you’re considering a rental property in the future it makes sense to consider RoofStock. They offer professionally vetted rental properties across the whole country. The best part is their listing contains all the same stats that we just analyzed for as well as an extensive home inspection. Let’s say you wanted to buy an investment property that is about the same price range as the Arnold, MD home. Here is one on RoofStock from Columbia, SC.

Note that all the relevant information is presented to you. We can instantly see cap rate and other key metrics. These are calculated by the website based on the current rental numbers so there is no estimation or filling out a spreadsheet. You can edit the details in the financials tab for estimated mortgage cost, etc. This property has about the same cap rate and with a 20% down payment would make about $566 in cashflow annually. Many properties on their marketplace are much higher but I chose this one because it has a similar profile. Importantly, the cashflow estimate assumes a 5% vacancy.

Here’s where it gets fun, note that the property is already rented. If you find a property with over 12 months left on the lease (which there are plenty of) or your tenants renew, then your cashflow will be higher because you have zero vacancy. The cashflow predicted by Roofstock factors in a 5% vacancy so you are likely to exceed this number. Meanwhile….

Our first property would be guaranteed to have at least one month of not being rented. Why is this? It’s because you will need to put the house up for rent after buying it. Even if you find tenants in the first month, the property management company will take the first month’s rent as the fee for finding a tenant. Since this property is already rented, you are simply taking control of an already rented property with no gap in rental income. RoofStock mitigates the major risk of not finding tenants right away.

Because you already have the stats available to you, you can take the time to look through the 60 page property inspection and see if this property’s condition is acceptable to you. With a typical investment property you would need to pay around $150 to schedule this.

You can quickly ascertain every single detail you would need to buy the property. That’s why RoofStock is the bees knees. I enjoy looking at rental properties and have bought two on my own before I knew about them. After going through the process multiple times I fully plan on using them for my next property I am currently saving for. To me, it simply does not make sense to try and put the picture together on my own when a professional is offering the same information to me for no cost.


An free online market place to buy and sell rental properties. They have turned thousands of prospective real estate investors into landlords making passive income. Their professional, data-driven approach gives you everything you need without having to go through the homebuying process.

Regardless of how you choose to start your journey in real estate, there are opportunities everywhere. These simple yet powerful processes will make the difference between purchasing a wealth building investment and a money pit you can’t get rid of. It will also save you time as you can quickly focus on properties that fit your investing goals such as cash flow or equity building.

What questions do you have about real estate? We’re here for you.

The Best Way to Use the $200 American Express Travel Credit

American Express has been on a streak adding new benefits to their flagship Platinum card. Their latest addition is a $200 travel credit. This is on top of the $400 in offers that were released last month and in addition to their airline credit.

What: $200 Travel Credit for travel booked through Includes airfare, hotel, cruises, car rentals and tours.

When: Usable through December 31st, 2021

AmexTravel usually has pretty standard rates for plane tickets and most fares. Whatever you book through them will now be $200 off and have a guaranteed refund if you need to cancel. That being said, there are some ways you can make that money go even further.


Amex is running two types of promotions on plane tickets: Insider Fare and Recommended Flights. Though you will save $200 overall with the travel credit, I could not find any fares that were cheaper than google flights. In addition, Insider Fare is denominated in points (though they are decent) so the credit does not apply.

The Fine Hotel and Resort Collection

Amex Platinum members can get insane offerings at awesome hotels in popular spots by booking through the Fine Hotel and Resort Collection. Let’s look at a few different locations over a theoretical one night stay (29-30 May) over Memorial Day weekend:

Washington DC

The Jefferson

Their Website : $580/night
AmexTravel $530/night

The booking is cheaper through the Hotel and Resorts collection. Keep in mind, this is not including the $200 credit you will receive off the price. The booking also includes:

  • $100 Food and Drink Credit within the hotel
  • Daily breakfast for two
  • If available, room upgrade upon arrival
  • Guaranteed 4pm late checkout
  • Early check in at noon

San Diego

Four Seasons

Their Website $350/night

AmexTravel $350/night
  • $150 for the first night after credit
  • $100 property credit. Good for spa as well as food and drinks.
  • 4pm late checkout
  • Early check in
  • Room upgrade when available

Amex was also running a deal for this hotel where you book two nights and get a third one complimentary. These are constantly changing but most locations had at least one place offering this from what I’ve seen.

Money Gouge Tip: Ritz Carlton

Do not use Amex travel for the Ritz Carlton if you are in the military. They have a much more lucrative deal for military which you can read about here.

Final Thoughts

American Express continues to impress with their Platinum card. If you are curious about some of the other great benefits you can check them out here. This $200 credit is a way to make the card more useful in a COVID world; although it’s still not as good as the $300 travel credit on the Chase Sapphire Reserve that can be used for almost anything. Plane tickets and cruises might be hard to book for a while but you do have until the end of the year. Ultimately, the best way to use this credit is to combine it with the perks of the Fine Resorts and Hotels Collection. Combining these allows you to have an amazing weekend in a 5 star hotel without paying 5 star prices.

Written by: Dan Tapia

Ritz Carlton: The Ultimate Military Discount

The Ritz Carlton is arguably the best military discount (outside of those offered by major credit card companies). You can easily score 50% off the lowest rate available online just by following these steps:

Time needed: 15 minutes.

How to Get The Ritz Carlton Military Discount

  1. Decide what location you want to stay at:

    Ritz Carlton website

  2. Check Availability for your location and desired date

    The Ritz is usually sold out during the peak summer season.

  3. Call the location and book the government rate.

    The discount is not available online. You will need to call to book at government (military) rate.

  4. Consider paying with a travel card to combine the perks.

    The Chase Sapphire has a $300 credit you can apply to the total cost.

  5. Give the check in desk your Marriott Bonvoy account number

    This will ensure you get points for the stay. A Marriott Bonvoy account is free and can be linked with the Chase Sapphire for special perks. If you haven’t made a free account, see the link below.

  6. Bring your military ID

    You will need to show this to the desk at check in.

Yes, these five star hotels frequented by movie stars and wealthy vacationers are incredibly friendly (affordable) for military customers. Let’s walk through my recent experience with the Ritz and then look at some tangible ways to benefit from their discount.

Marriot Bonvoy

Earn points towards free stays while saving up to 50% off your Ritz Carlton stay with this free rewards program.

The Ritz Carlton is owned by Marriott.

Anniversary Getaway

I had heard time and again that the Ritz offers good military discounts but assumed that even with a discount it would be a lot. My anniversary was a great reason to check it out and see if it was really worthwhile. It was a three day weekend and I wanted to find a nice place to stay Saturday and Sunday night.

I called the resort at Amelia Island, FL and asked about their military rates. I wasn’t expecting much, their regular rates for that weekend were $550/ night. My jaw dropped when she said with the military discount it was only $260/ night. Without any additional benefits they were offering me a $580 discount to the standard rate for those two nights. Also, the rate was less than other typical chain hotels on Amelia Island. All they asked was that I show my ID at check in.

I booked two nights using my newly opened Chase Sapphire Reserve (which I literally opened because of this article). The Chase Sapphire Reserve has a $300 travel credit so the total out of pocket cost was $220 for a weekend at the Ritz.

Being the off season, we had the whole place to ourselves. Because I booked with the Chase Sapphire Reserve which has Marriot Bonvoy status, our room was upgraded to a sixth floor ocean view room. It was sick. When we got their we found champagne and chocolate waiting for us (on the house). That’s what happens when you tell the Ritz it’s your anniversary.

Needless to say the rest of the weekend was awesome. With the money we had saved booking, we didn’t feel guilty ordering a few drinks like this:

Best Old Fashioned I’ve Ever Had

We enjoyed the awesome bars, restaurants and bonfires on the beach. It was actually cold at night, and we finally got to break out this amazing Sherpa waterproof camping blanket that we have never been able to use in Florida. Being on the beach, under the stars and next to a fire was the perfect way to spend a weekend getaway.

And we did all of that while spending less than we would have at an average hotel.

A Couple of Pointers

The discount is not hard to get but here are a few pointers:

  • You need to call the location you are interested in. It’s not mentioned anywhere online.
  • Technically, what they’re giving you is the government rate. At most hotels the government rate is about the same as the standard which is why this discount is so impressive.
  • Your best bet is going in the offseason. Though this rate is always available, Ritz’s are usually booked during peak travel season.
  • They have tons of locations, and the rate does vary.
  • If you are planning on opening a Chase Sapphire Reserve or Amex Platinum consider the benefits they offer when booking your weekend at the Ritz. By combining benefits you will begin to save some serious money.

As crazy as it sounds, I would consider the Ritz if you are travelling on TAD. Per diem and lodging rates are going to be dependent on the area you are travelling to. The Ritz at the government rate could be very close to that rate. It’s most likely you’ll find this during the off season in a location where the lodging rates aare high. Obviously, you need to do your homework here. This might work in some places but will definitely not work in all.

The Ritz Carlton offers you the chance to have an awesome weekend getaway without paying much money. If you combine their rates with other travel card perks than you are well on your way to an almost free weekend.

Most importantly, Ritz Carlton’s are amazing and knowing that you paid half as much as everyone around you is an added bonus that allows you to relax and enjoy your time there.

Money Gouge

Two military guys sharing the perks of military service and helping you understand how money works.
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Where to File Your Taxes For Free

Disclaimer: We are not tax professionals. This article is not tax advice. It’s purpose is simply to inform you about your options this tax season. In addition, we are member supported, some of the links on this page are affiliate links . When you use these links we may make money at no cost to you. Written by Dan Tapia

Tax season is upon us! The IRS started accepting returns on Feb 12th and they’re due Thursday April 15th. Let’s be real, no one really enjoys filing taxes but it is a great opportunity to get some of your money back that you paid in taxes this year. It’s easy to file on your own and get a nice chunk of change back. Here are the fastest most effective ways to file your taxes for free you you can focus on what you want to do with the refund.

The good news is that you have plenty of options to file your taxes for free while maximizing your refund and keeping you in line with tax regulations. This is incredibly important when you also have a security clearance that could be pulled because of a tax discrepancy. You don’t want to over pay in taxes or filing but you also need it to be done right. The first consideration to doing that is whether you are taking a standard or itemized deduction.

Standard Vs. Itemized Deduction


The standard deduction is offered to all taxpayers. Even if you have zero deductions you are entitled to these amounts:

  • $12,400 for single filers
  • $24,800 for married couples
  • If you do not have tax deductions that will exceed that, take the standard deduction. This is where most people fall.
  • The amount you get back depends on your income. The average last year was $2535


Itemized deductions apply for people who have tax deductions that are greater than that amount. Some common things that will get people over that limit include:

  • Real Estate
  • Children
  • Businesses
  • Charitable Donations

If you are curious about what some of the many deductions are, here is a law firm that breaks it down for you. They’re lawyers and we’re not so you’re better off learning it from them. If you’re taking the standard deduction then there are plenty of free options for you to file.

The Best Ways To File

If you’re filing a standard deduction all you need is your W2 and any other forms of income you may have (such as a 1099). You will also need statements from your brokerage account (Robinhood just released theirs).

It doesn’t make sense to pay someone to do a standard deduction for you. It’s quicker and cheaper to do it on your own. These software programs will walk you through your tax returns, are easy to use and will maximize your refund while keeping the IRS off your back.


  • Free for all service members. Can file one federal and up to three state tax returns per one source account.
  • Includes Access to Military Tax Consultants-they are trained in all matters of taxes but specifically in deployment/combat pay.
  • Requires military one source account. Available to immediate family members as well.

Credit Karma Tax

  • Credit Karma is completely free for everyone.
  • There is no limit to your access; it is free for people itemizing or taking standard deduction.
  • Includes audit defense and reimbursements up to $1000 if filed incorrectly.
  • 4.8/5 (1,000,000 reviews)

H & R Block

  • There is no specific discount offered to military members with H & R block for filing online but it is free for basic filings.
  • 10% discount off the software if your purchase at an exchange
  • Audit coverage and protection for your filing starts at $20.
  • 4.4/5 (440,000 reviews)

Turbo Tax

  • Free State and Federal Tax Filing For Enlisted (Not officers)
  • Includes reservist
  • Applies to any online products including Premier (which is for real estate) and small business
  • Reimburse you for any filing discrepancies and audit protection
  • 4.7/5 (95,000 reviews)

What Service Is Best For Me?

Whether you’re taking the standard deduction or doing some itemizing these services can easily handle your return. You have multiple options to file for free but here’s what we recommend for certain profiles.

Junior Officer Taking Standard Deduction

Married or unmarried doesn’t really matter here. If you’re a JO who has not deployed overseas we recommend using Credit Karma because it is completely free. It can even handle any itemized deduction or any tax credit you need. Multiple people I know have used this and have had great experiences.

Anyone Who has Deployed in the Last Year

We recommend using MilTax. You are likely receiving multiple pays and trying to understand what part of your income may or not may be taxable. This is especially prevalent if you were in a combat zone. Having the ability to speak with an expert in this area is a huge help and OneSource works hard to provide this for us.

Newly Enlisted Who Has Not Yet Deployed

You have the most options of anyone! Credit Karma and Turbo Tax are probably your best bets. Both will allow you to file for free, quickly and accommodate any unique deductions or credits you may have. You can absolutely use MilTax but it will be quicker to use the other two if you don’t have CAC access.

Military Member with Real Estate or Business Holdings

Okay, if you own one house and you live in it then any of these services will work because you are almost guaranteed to be taking the standard deduction. However, if you own multiple properties or have a small business your options are limited. Turbo Tax will work well for enlisted in this situation because you can use their more advanced software. For officers and enlisted alike, Credit Karma will still cover you for free and their software has all the abilities that the higher tier of Turbo Tax does.


If you have significant rental properties or business write-offs use an accountant. The $500 fee is worth it’s weight in gold. They’ll be able to maximize your more advanced write-offs and keep you out of trouble. There was no significant change in my investments between 2019 and 2020 but switching to an accountant increased my refund by over $4000.

If you have any additional questions on your specific situation, we’re here for you.

Increase Your Income with Side Hustles

Sometimes your work schedule or events like COVID result in you having a decent amount of free time. While spending time off is a must most people often find themselves bored if they don’t have anything to do for a long time. A side hustle is a way to fill that time and help you advance your financial goals. We at MoneyGouge have created a list of simple and easy ways to earn extra cash that can make a big difference in your bottom line.

One thing that has become extremely prevalent in the last decade is the emergence of “side hustles”. A side hustle is anything that you can do outside of your normal, everyday job to earn extra money.  Yahoo Finance announced in 2019 that nearly half of Americans have a side hustle boosting their income.  Now, with COVID in full force, more Americans are turning to their side hustles to make up their income deficits. Chances are you have a skill that you can monetize. Fortunately, its simpler than you may think.

Delivery Driving

First let’s start with the biggest side hustle there is, delivery driving.  Uber, DoorDash, Postmates, Instacart, and many more services run their entire business model on independent drivers.  You can either deliver people or food (I recommend food from past experience).  Realistically, you’re not going to make insane amounts of money and your fuel efficiency is a big factor in that.  However, with a decently fuel efficient car you can make anywhere from 10-20 dollars an hour depending on your area.  It is super easy to sign up and you decide when you work.  Plus you can make tips.

I worked for about 16 hours over a period and made about 150 bucks after gas expenses.  This side hustle works best in suburbs, areas that have a good combination of chain restaurants and not too dense where everyone walks from place to place.  You could always do traditional driving services, taking people from place to place, but people can be messy, cause delays, and especially during COVID, food is just safer.  When I first started I didn’t get many rides (something about the algorithm that rewards consistent drivers) but once you do it for a few hours you will get requests as you finish others so you can go almost non-stop. Again, fuel efficiency is everything. If your car is getting less than 20-25 MPG or is expensive to maintain than you may want to avoid this side hustle.


Coaching sports, tutoring, or any form of mentorship can be lucrative.  As a military member you have a wide breadth of experience that others will pay to learn about.  Tutoring for the ASVAB, teaching someone your AFSC, working with younger people to learn about your degree specialization, anything you are competent in and can teach others.  When I was deciding how to enter the military I remember learning about a swathe of ASVAB tutors that were mostly veterans or high-school teachers that really just taught out of a practice book.  It was a simple side hustle but they help many people improve their future.

Coaching is also an option.  This can be tough with scheduling but especially if you have a younger child this can be a win win.  You will spend more time with your child and get paid to coach a youth sport.  Being a personal trainer is also an awesome side gig.

Physical Work

TaskRabbit and craigslist has tons of openings for day laborers.  Landscaping is another business that many people do on the side.  For basic landscaping all you need is the equipment, manpower and some basic knowledge in order to have a successful small business.  I know of one service member who owns a mold removal company that makes a killing. All it is is two guys in a van that remove mold from peoples houses.  A lot of universities also have email registries that send out weekly emails with odd jobs and labor requests. 

You will find the more you look the more you can find people who are willing to pay others to do relatively simple work.  Whether it is cleaning out a garage, moving someone’s furniture or even just day labor in a small business, there are plenty of people who could use an extra pair of hands.  I also know of some peers who do power washing on the weekends, this could be expensive if you need to invest in a good power washer. It alsod epends where you live. In humid climates like Florida power washing is a necessity.

Build a Business

There is a major disconnect between the perception and reality of entrepreneurship in this country. No, you do not have to be the next Jeff Bezo’s or be a software engineer. Here is a quick (true) story about a family friend of mine who embodies what entrepreneurship actually looks like.

Our friend is a teacher in New York. He is a big outdoors guy and loved to spend time at the beach during his summers off. One of his favorite activities was paddle boarding at a beach in the Hamptons. He has always been interested in business and investing as well. He quickly realized that there was no current paddle board rental company at this beach which his favorite spot. Pair that with the summer traffic for the Hamptons and it was a no brainer.

He did some research and after a few phone calls and emails was able to secure a license to operate a paddle board rental at Meschutt Beach. Just like that, he had a monopoly on paddle board rentals.

The next problem was to get paddle boards. He went online and acquired a few lightly used paddle boards from Craiglist and Facebook market. He had a pickup and also bought a used trailer for holding the boards. Total out of pocket cost: around $5,000.

Here’s the best part. Now that everything was set up he got to spend his Summer chilling on the beach. He would take people out for lessons if it was there first time but basically got paid to do what he was already doing. By the end of his first season he had made tens of thousands in profit and most of it was cash. He reinvested it to get more boards for the next season and was off to the races.

The business has since grown: he has expanded to other locations in the Hamptons, branched out into delivery and full day rentals and hired employees. None of that is rocket science. The key to success is recognizing an opportunity and then actually doing the research to see if it might just work. This is where most business ideas end and it’s a shame. There are tons of opportunities out there to start a small business that can bring in side income. 

Be Creative

There are plenty of other ways to make side cash.  Some people play poker, flip houses or cars, or even build websites.  The most important part of a side hustle is to make sure it is profitable and to make sure you are able to maintain your normal job without sacrificing too much personal time.  Most side hustles will correlate to your passions.  Odds are, whatever you do for fun, you can be paid to do.  I know multiple people who get paid serious money for streaming their gaming via Twitch.

What To Do With The Money You Make

So what can all of this side money lead to?  Well as a finance guy I can simplify some basic financial principles to put into perspective how impactful side hustles can be.  Let’s say you are able to make 500 bucks a month, some businesses can earn much more than this but we can use this as a baseline.

 500 dollars invested monthly, with a return of 12% (fairly average), will result in a 1 million dollar balance if you put it into a Roth IRA (we have other articles on what this is) after 25 years and 6 months.  Compound interest is your friend, and socking away 500 bucks a month can change your life when retirement rolls around.  You don’t have to take it from us though, Warren Buffett said it best.

It’s not about timing the market, its about time in the market.

WarREN Buffet

Whether you’re investing, paying off debt, or saving for a large purchase a side hustle is a serious way to take years off your financial goals. If you have questions or another current side hustle that we didn’t mention feel free to contact us!

Written by Greg Besser

How to Turn The USAA Career Starter Loan Into a Life Changing Investment

Written by: Dan Tapia

TLDR Summary at end

If used correctly, the career starter loan is an incredible opportunity to build a strong financial foundation early on. That being said, we understand it is often used for necessities such as buying a car or paying down debt. We saw our very own classmates do just that, as well as several other paths people chose to take with their loan. We’re here to tell you how those different choices have played out five years down the road. We’re hailing from the future to share them with you.

The Navy Federal Career Kickoff Loan

  • Amount: $32,000
  • Interest Rate: 1.25%
  • Loan Length: 5 years
  • Estimated Interest you will pay over 5 years: $1,027.07
  • Only available to officers commissioning from a Service Academy
  • You can defer payments until up to 90 days after commissioning.

USAA Career Starter Loan

  • Amount:$25-36,000
  • Interest Rate: .75-2.99%
  • Loan Length: 5 years
  • Estimated Interest you will pay over 5 years: $690.47
  • Requires active duty checking and direct deposit with USAA over life of loan
  • Academy: $36,000 @ .75%
  • ROTC/OCS: $25,000 @ 2.99%

One thing you need to understand is that it helps to have a plan before you take the loan. Even if you think you know about investing I promise you everything changes once you see more than $30,000 in your bank account. This is especially true if you are at a service academy with relatively low living expenses making a few hundred dollars a month. It’s more money than most 21 year olds have seen in their life.

If you’re interested in investing your loan then check out our new resource: Investment Strategies For The Career Starter Loan

Having a plan is what’s going to keep you from buying a car because you “can afford it” or going all in on a stock you know nothing about. These become incredibly tempting once that money is in your account, but if you fall for these traps you will miss one of the best financial opportunities of your lifetime. And oh by the way that brand new car? You can’t take it on deployment. Here are some real life examples of how we’ve seen this loan used – including our own stories.

Buying a Car with the Career Starter Loan

I totally understand that you need to have a car in the military. As soon as our class got our career starter loans Jeeps, trucks and Mustangs began to coincidentally show up in the parking lots.

Welcome to the Car Show

Let’s break down some math on an academy grad (who shall remain nameless) who chose the fancy car route with his loan. Most of you are likely assuming this story will start with “he bought a new corvette” or “He blew his money on a Mustang GT”. Well, The unsuspected culprit today is actually that souped-up truck that military parking lots are notoriously full of. Midshipman X spent the entire $36,000 as a down payment on a $60,000 truck. That’s still $24,000
(the price of a small new car mind you) on a car loan at 4%. Meaning a monthly payment of roughly $442 on top of that $620 a month he’ll owe to pay back the starter loan for the next 5 years. That’s over $1,000 a month good ole Midshipman X will pay for his brand new fancy truck! And we haven’t even lumped insurance into that yet…If only Midshipman X had heard of Money Gouge 5 years ago, maybe he could have avoided this costly mistake!

Blue Car
Resist the Shiny Object!

I understand that this is incredibly tempting. I love cars and it was really difficult for me to get past this. If you are dead set on buying a car here are a few considerations:

  • Are you better off financing through the dealer? Dealers usually give the best “deals” to buyers who are financing a car. Nowadays, interest rates are so low that they are very similar to the interest offered by these loans. If your credit is good enough you may find yourself with a loan that has similar interest and lower monthly payments. If not, then using the low cost career starter loan to buy a car makes more sense.
  • Can your parents help you? I’m going to be brutally honest here. If your parents have saved up for college and you attend an Academy/ROTC they might be able to help you with a car purchase because college costs were significantly reduced. I am not making any assumptions and I understand people come from all sorts of  financial backgrounds. That being said, most people I knew actually had their parents help them with cars. Some got new cars but most people, like myself, took the old family beater. The details determine the feasibility, but honestly this is a great move if it’s available to you.
  • What will your life look like? I love sports cars so I totally understand the temptation. But you need to understand how impractical a two seater sports car is. 
    • You are guaranteed to be moving across the country after graduating. That means putting a ton of miles on whatever car you buy. Also, you will 100% be living out of your car at some point and need the room for your stuff.
    • A lot of bases are in places where it snows.
    • If you are getting deployed right away or moving OCONUS it will be a while before you see your car but you will still pay for it every month.
    • If you are under 25 the insurance for a sports car is downright depressing. I was paying over $300/month for my Kia Stinger with a clean driving record. I would much rather be investing that money than handing it to an insurance company.
  •  Buying a fuel efficient used car makes more sense than a fancy new one for almost everyone. The military lifestyle means you will be putting tons of miles on your car and that it will be sitting in a parking lot for months at a time. And let’s be honest, the features of a 2015 model are not significantly different from a 2021. If you want to explore car buying more than our article on that will help you with that process.

Investing the Career Starter Loan (The Wrong Way)

So there I Was..

Sitting in an economics elective class. You would think that of all majors, economics majors would know how to invest their loan. WRONG. The truth is we were young, dumb and knew enough to be a danger to ourselves. My buddy sitting next to me was talking about a Canadian gold mine stock. He had read a few “convincing” articles on how it was about to takeoff. He also had over $30,000 to put into it courtesy of USAA. I tried to talk him out of it but he was dead set. He pulled the trigger and bought a little over $30k in the middle of a lecture. An hour later the stock tanked and was worth only 40% of the value. He decided he was going to hold until it went back up. A week later the stock was kicked off the NYSE.

I know not one but three people that vaporized their Career Starter Loan in less than a day. They bought crypto and hot stocks that they read about on Yahoo Finance. It is important to recognize if you are the type of person that will be susceptible to this. If you enjoy reading about stocks and making trades on Robin Hood then you will 100% be tempted to trade your loan. $30,000 will hit your Robinhood account and the temptation to double it or trade it will lead you to take unnecessary risk.

Not losing such a large amount of loaned money is more important than the gains you will get from it. Trading such a large amount will also lead you on an emotional roller coaster as you make or lose large amounts of money. There is a whole field of study called behavioral finance that demonstrates how humans are subject to biases that make them bad at trading stocks. This quick video shows one of the many ways our brain is terrible at dealing with money.

I saw two people lose 70% on a penny stock in a matter of hours and one who did the same with crypto. Imagine making payments of over $600/ month for five years on money that no longer exists. That’s the opposite of building wealth. Unfortunately, I do not know of anyone that successfully traded with their loan and actually made money.

Having a plan will keep you out of trouble if you are interested in finance and stocks. Invest it the right way with a long term, hands off approach so you don’t lose your whole loan in a matter of minutes. If you’re insane enough to bet your whole loan like this at least go to the casino so you can get a free drink out of it.

Investing the Career Starter Loan (The Right Way)

In my opinion and from what I’ve seen index funds are easily the best way to turn your loan into serious wealth. A lot of advisors are against taking a loan to invest. But that wisdom is not talking about a loan of about $30,000 at an insanely low interest rate when you are still in college. Those same advisors would also agree that investing large amounts of money as early as possible in life is the absolute best way to guarantee wealth.  You have an insane opportunity in front of you if you put that money to work and just let it sit.

Ignore the noise about the stock market as well. I promise you, in 2015 the market looked overvalued and had been on a streak for years. No one thought there was more room to run. Here’s how that played out:

  • $30,000 invested in S&P 500 in 2015 is worth just over $60,000 today.
  • $30,000 invested in 2015 in the Vanguard Technology Index (VGT) composed of all those “overvalued” tech stocks would be worth $104,000 today. That’s the type of money where you buy investment properties in cash.

The best part is it literally takes no effort. Just open a M1 Finance or Vanguard account. Instead of worrying about stocks and following the market, you can let it grow in the background while you focus on your demanding career. With M1 you can even build a portfolio of index funds and choose the percentage allocated to each. For example, if you did 50/50 VGT and VOO (Vanguard’s S&P 500) then you could set up recurring monthly contributions that would automatically be divided between the two. My wife invested in ETF’s like this and more than doubled her loan.

Which Brokerage Account is Best for You?

Interested in comparing brokerages and seeing how M1 can automate your portfolio?

Why My Wife is Smarter Than Me

My wife invested $30K of her Career Starter Loan in 2016. It was invested in a few blue chip tech stocks and index funds. She chose to go with her family financial advisor to help her decide where to invest. This is totally okay if you are uncomfortable with investing such a large amount of money or you are new to investing and want that security of a professional protecting your money. Just make sure your advisor uses a fixed fee. This is a flat rate they charge regardless of the amount they manage. My wife has not touched any of her investments since buying them and today they are worth over $80K. If you’re interested in exploring the idea of a financial advisor, Military One Source or Fleet and Family at your duty station are great places to start and offer them free.

Yes, you will still have loan payments but who wouldn’t be willing to make monthly payments to have $60-100K of assets? The best part is that time is on your side. Investing the money right away allows you to arbitrage the low interest rate (less than 2%) with the higher returns (10+%) the market is giving you. The money will grow with little to know effort of your own. If you are more interested in real estate, you can get appreciation, cash flow and tax breaks.

Buying Real Estate with the Career Starter Loan

If you are motivated, patient, and willing to put in the time, this is a totally doable option. There are a few considerations you will need to address:

  • Getting a loan: You will not be able to qualify for a mortgage when you are a cadet/midshipmen. You can get around this by waiting until you commission or partnering with someone who can qualify for a loan. I partnered with my dad who was also interested in real estate and was able to qualify for a mortgage.
  • The rest of your financial picture. You will likely need all of your loan for your down payment. If that’s the case do you still have emergency savings, transportation and money left over in case something breaks in your rental property? You will not be able to invest safely if the answer to these questions is no. Again, this can be mitigated by partnering or focusing on less expensive properties.

How I Doubled My Career Starter Loan

I was highly interested in real estate after getting my Career Starter Loan. After a lot of research, I felt confident enough that buying a townhouse in the Annapolis area would be a worthwhile investment. I knew I would not be able to qualify for a mortgage so I partnered with my dad to buy a place. The mortgage was in his name, but we went 50/50 on all the costs. I ended up putting down around $30K between a down payment and closing cost. The place has been rented ever since, and today I have about $75K in equity.

If you are still interested in real estate at this point there are a few ways to go about it.

  • You can look in a local area that you know and understand very well. This will give you a good idea of properties that will rent but requires a lot of research to verify it.
  • Another option is to use RoofStock. They are a tried and true company that does all the heavy lifting for you. Many of their properties are already rented, less than 100K and they pre-screen property managers to find the best. The reason they are so popular is because they mitigate the risk of trying to get it right on your own the first time.

Interested in Buying a Rental Property in the Future?

If you are interested in learning more about buying a rental property in the future Roofstock is a great place to start. Making a free account allows you to see investment properties across the country that are for sale and the analysis of their performance.

Real Estate should be approached with caution- not because it is a bad investment- but because it is a large investment relative to your income and net worth as a junior officer. If you are incredibly cautious and mitigate the risk then it is likely to be a life changing investment. If I had done this again today, I would use RoofStock (but I had no idea about it in 2015).

Another alternative is to save the money for a down payment on a house at your future duty station. You can then split the house with roommates. This is a really good way to ease into real estate but you still need to meet all the criteria above before you ever buy a home.

A Simpler Way to Buy Real Estate

If you are interested in the diversification, cash flow and appreciation real estate can offer but are not yet interested in buying a property there is a way to buy real estate like stocks. The advantage of this is that it is super passive, pays dividends and is not affected by the stock market performance. One of the best out there is Fundrise. They hold a large portfolio of professionally picked real estate. You buy share of different portfolios just like a stock and then set and forget it while your money and dividends grow. You can sell your shares once per quarter so it is much more liquid than a house.

All the advantages of real estate, with the simplicity of a stock.

Fundrise provides dividends, appreciation and diversification. This is an awesome way to passively grow your investment if you are not yet ready to buy a property. If you are considering index funds for the simplicity, it’s worth checking them out too.

Building Savings and Taking Trips

Regardless of whether people spent their loan on a car or invested it, almost everyone took a small amount and applied it to one of these categories. If you have not saved money up until this point then you should take some of this money and use it to build your savings. I would recommend having at least $5000 in savings when you commission. It sounds like a lot but a security deposit alone will likely run you at least $1500 and life costs a lot more on the other side. The peace of mind you get from having money in the bank is huge.

You can even keep it in a high interest bank account like Marcus or Ally. Today they only give you .5% interest but back in 2019 I was earning 2.5% in guaranteed interest with Marcus. I suspect that as interest rates increase in the next few years we’ll see that again.

You don’t have to go crazy, but if you take some money ($2,000 or less) and use it for an awesome Spring break it’s 100% worth it. It is incredibly difficult to take these trips after you graduate. So many people deferred trips like this until after they commissioned and then they never actually made them. In the real world Spring Break is not a thing. Also your friends will be on completely different schedules and will be all over the world. Not a single person who used some of their money for this regrets it. I know I sure didn’t. I especially hold this to be true if you are at an Academy. You don’t have many opportunities to do something like this in such a  regimented environment. Take advantage of them while you can.

The Money Gouge Recommended Way To Use Your Loan

Here I am hailing from the future to share with you what I have learned and what I have seen others do with their loans. Hindsight is 20/20 and I have had the luxury of seeing how everything played out for those who spent their loans in various ways.

In general here’s what we recommend:

  • If you don’t have a decent savings, use some of the loan to increase your savings to at least $5,000. Good work if you have already cleared this bar!
  • If you need a car: Are your parents able to provide you some support? Whether they can or can’t buy the bare minimum you need. Spending a little money on a trip and investing as much as possible is a lot better than blowing it on a fancy car.
  • Depending where you are at this point it’s okay to take a little money and have a fun spring break. Just don’t go crazy. Trust me, it doesn’t take much to make memories that will last a lifetime. Still take the time to research a good deal, it makes it all the more exciting knowing you didn’t over pay.
  • Invest whatever is left. Hopefully, you’ve set yourself up to where this is still a large number. Technically, this is the bottom line, the more you invest, the better off you will be later on. Speaking from experience if you get this right it will grow to be an amazing amount much quicker than you would think. If your new or nervous about investing keep it simple and stick with index funds. If you are more motivated and your finances support it then real estate could be right for you. Opportunities like the Career Starter Loan can put you leaps and bounds ahead of your peer group. In fact, this opportunity alone is one of the major reasons we started our website.

Bonus: Invest Your Career Starter Loan with a Roth IRA

If you want to take some of your investing portion and put it in a ROTH IRA that is totally fine too. Any money you invest in a Roth will be tax free for life. The catch is you will not be able to withdraw it until you are 59.5. The current annual contribution limit is $6,000. One way to play this is if you get the loan in October-December you can invest $6,000 before the year ends and $6,000 on January 1st. After that, you can just put the rest in a regular brokerage such as Robinhood or Vanguard.


Knowledge is the Best Investment

Congratulations on having access to such a large amount of low interest money at such a young age. This loan is one of the first financial opportunities that you will be given as a result of your service and the countless hours of BS you put up with by choosing service over being a regular college kid or graduate.

If you have any specific questions about your situation feel free to reach out to us on our facebook page. Whether you’re looking for advice or just trying to figure out your next move, we’re building a community of military investors and would love to have you.

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