The Simple Way To Build Wealth (and Have Fun) with your USAA Career Starter Loan

What is the USAA Career Starter Loan?

The USAA career starter loan is a low interest personal loan offered to newly commissioned officers from all commissioning sources. It is one of two popular loans, the other is offered by Navy Federal Credit Union. Rates and amount are slightly different between the two loans.

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: $25,000 – 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%

Can You Pay the USAA Career Starter Loan Off Early?

Yes, there is no prepayment penalty for the USAA career starter loan so you can pay it off as early as you wish. Because of the low interest rate, this won’t save you much in interest but will get rid of a $600+ monthly payment. Getting rid of the payment is why I chose to pay mine off early.

How Can You Use the USAA Career Starter Loan?

You can use the USAA Career Starter Loan on anything except educational expenses. Common uses that we have seen include:

  • Building Savings
  • Buying Cars
  • Spring Breaks
  • Investing
  • Debt Consolidation

At a minimum, this loan is an excellent opportunity to build your rainy day savings. We recommend around 3 months of expenses.

If you are still in school you will need to estimate what your monthly expenses will be once you graduate. Keep in mind you’ll likely need to move, buy uniforms and put down a security deposit once you commission.

Buying a Car with the USAA Career Starter Loan

A car is a necessary expense for most junior officers. The key is to get a car you can afford, not the nicest or most expensive one you can. Using your entire loan for a car means you’re unable to use it for investments, or anything else, for that matter (covered in next section). If you need to buy a car, here is a resource to help you determine how much you can afford:

Car Buying: How much Car Can I Afford?

Here are additional ideas to mitigate the cost:

  • Can your parents help you? Many people’s parents are able to help them with some of the cost, give them the family car they no longer need, or ask friends or family at similar stages in life if they have a family car they’re looking to offload at a reduced price.
  • Buying a used car: Used cars prices have gone up, but you can still find plenty of perfectly good cars for $20K or less.
  • Leasing: A great way to get a new car without using a lot of your loan. Leasing can be more affordable than buying as long as you don’t go over mileage.

Getting Financing

If you are leasing or financing as a Cadet or Midshipman, your income will often not be enough to qualify. You can add a parent as a cosigner to help you get past this.

Using the USAA Career Starter Loan for Trips

Spring (or summer) break is a once in a lifetime opportunity to see a new place with your friends. After graduation, people will be on different schedules and it is incredibly difficult to take a trip like this. From our experience, it can be worth using some of your Career Starter Loan to make these memories… as long as you put a price cap on it. The max we would recommend is $3,000. Here are some resources to help you create an awesome trip for you and your friends.

1. Travel Credit Cards

Travel credit cards have large bonuses for spending a certain amount within 90 days of opening. Additionally, the (steep) annual fee for these cards are waived for military members. If you know you are going to spend for a trip, putting it on a newly opened card is a smart way to make your money go further.

Pay it off!

You should only do this when you have the money on hand. Carrying a credit card balance will negate any benefits you’ll ever receive.

Here are some popular travel cards. Keep in mind you can find one for almost any type of reward you are looking for, such as hotel points or airline miles.

2. Trip Planning Resources

Oliver’s Travel: You can book mansions throughout the Caribbean or Europe for you and a group of friends to stay in. They are a surprisingly affordable way to have an unforgettable experience. Here’s an example of a place available in Jamaica (drinking age 18) during March 2022 with a cook, butler and beachfront access.

This place would cost 1,000 pounds per person for a week (they are a london based site so just pay with a credit card like the American Express Platinum and there are no conversion fees). Adding in flight’s would still have you well below the $3,000 maximum for an unreal spring break. Check out the awesome places they have and start planning your trip here.

Apple Vacations: Travel company that specializes in all inclusive resorts in the Caribbean. This makes planning group travel to the same location easy. If you’re flexible on location, you can take advantage of one of the deals they are always running.

American Express Travel: A good way to book travel and use the perks of an American express Platinum card. This can include a $200 travel credit, 5X points on booking and a $100 credit from select hotels and resorts.

Ritz Carlton: As crazy as it sounds, the Ritz Carlton has a very good military discount- sometimes more than 50% off. Check out our article on how to do that and see if there are any locations on your bucket list.

Key West: The average price of an AirBnb here is $429. You can save a ton of money by booking your stay with the Vacation Rentals offered by NGIS on base and use that money for adventures (or beer).

Investing with USAA Career Starter Loan

Investing some (or all) of your USAA career starter loan is an incredible financial opportunity, and often a fantastic move. For the more numbers oriented, enter the amount you would like to invest and see how much you would make by earning the average market return of 10%.

How To Invest with the USAA Career Starter Loan

Keep in mind that you are investing with borrowed money. Crypto, options and other high risk investments should be off the table to avoid significant loss. You also need to have a long term focus. If Robinhood makes it too tempting to trade, consider other brokerages designed for long term investing.

Low cost index funds are the perfect way to diversify this money. You can pair these with M1 finance to create a completely passive portfolio. Three of the most popular index funds include:

This is for for educational purposes only and is not investment advice. Past performance does not guarantee future return.

S&P 500

The Standard and Poors 500 index (S&P 500) is composed of the 500 most valuable companies by market cap. This index is extremely popular because it basically represent the 500 most successful companies currently on the market. It is relatively safe because you own all 500 and are not tied to the performance of any individual one.

S&P 500 ETFs



.03% Expense Ratio



.0945% Expense Ratio


Ishares Core

.03% Expense Ratio

The five year return of the S&P 500 is an awesome 17.6%. So, if you had invested $30,000 in 2016 and not touched it, you would have $67,477 today.

$30,000 invested in the S&P500 5 years ago. Source:

Total Stock Market

The total stock market index is the ultimate diversification tool. When you buy this index fund, every dollar is diversified throughout the entire stock market. The advantage of this (vice the S&P 500) is that you gain exposure to small cap stocks, which traditionally grow faster than large caps. The extensive diversification of this index makes it one of the most popular in the financial independence world.

Total Stock Market ETFs



.03% Expense Ratio


Ishares Core

.03% Expense Ratio

The five year return of VTI is 17.39%. So if you used your loan to invest $30,000 five years ago, it would be worth $66,877.00 today.

$30,000 invested in the Total Market Index 5 years ago. Source

Information Technology Index

This index consist of a basket of high quality tech stocks. Big companies like Microsoft and Apple as well as quickly growing companies such as Square and NVIDIA are all included. As you can probably guess, this index has been absolutely crushing it over the last few years. Its five year return is 31.55%. So, if you invested $30,000 in 2016 you would have $118,188.55 today.

$30,000 invested in the Technology Index 5 years ago. Source:

Using M1 Finance to Automate Your Investment

M1 Finance is the perfect tool to start your portfolio with funds from your Career Starter Loan. Like Robinhood, it’s commission free. Unlike Robinhood, you can build your portfolio however you want, and M1 will automatically allocate your holdings according to your preferences. Here’s a quick example:

You want to divide your investments into the following:

  • 20% Total Stock Market
  • 60% Information Technology
  • 20% S&P 500
An example portfolio for your career starter loan.

M1 will automatically invest your Career Starter Loan according to these parameters. You can change the investments or amounts at any time. You can also set up automatic monthly contributions that will be allocated according to how your portfolio is set up.

I find M1 to be much better than Robinhood for long term investing. Robinhood makes it tempting to focus on individual stocks while M1 is designed to give you the strategic view of your entire portfolio. Additionally, M1 has an IRA (Robinhood does not), so your portfolio can grow tax free for life.

For a more in depth discussion on this topic check our article: Investment Strategies for the Career Starter Loan.

Debt Consolidation

If you have debt, the USAA career starter loan offers an excellent opportunity to pay it off at a much lower interest rate. The only exception is student loans. When consolidating debt, it makes the most sense to start with the highest interest rate. Generally, these are the debts you should address:

  1. Credit Cards
  2. Personal Loans
  3. Auto Loans

Our standard loan calculator will help you determine what debts are costing you the most (see the interest paid tab).

An Example Use of the USAA Career Starter Loan

You take the USAA Career Starter Loan and $36,000 just hit your bank account. Now, you want to use it to set yourself up for the years ahead. You want to:

  • Get a car
  • Build your savings
  • Go on a trip
  • Invest it

You take $4,000 to build your rainy day savings, leaving you with $32,000.

Buying a Car

There are a ton of ways you can go about getting a car. I’m going to show you an example of a vehicle that I’ve been following for a while- The Ford Maverick. This truck hits a lot of the wickets: It’s a small truck, gets 30+ mpg and has a nice interior. All of this for a fair price point that isn’t matched by anything on the market today.

Let’s take a look at a lease offer that is available online for this truck.

Good choice – maybe not perfect – but let’s assume you go with the lease. You use the loan for the money due at signing and earmark the payments until you graduate. That’s because this payment would take up a large amount of your paycheck until you commission. After doing the quick math below, you determine you need to set aside $9,500 or so to lease your truck.

Months Until Graduation18
Payment + Insurance (Monthly)$274 + $100 = $374
Total Needed Until Graduation18 x $374 = $9,384

You plan a sweet spring break that costs you (worst case scenario) $3000. Here’s what your loan looks like now:

Investing in a ROTH IRA

If you’re savvy, you’ll want to invest efficiently by using a Roth IRA. You do that because any money you put into a Roth IRA will grow tax free for life. Here’s how you do that:

  1. Open a Roth IRA with M1 finance.
  2. Build your portfolio- for simplicity let’s assume you go 100% into the S&P 500.
  3. Invest $6000 into your portfolio.The annual contribution for an IRA is $6,000 (2022).
  4. Earmark another $6000 and invest that January 1st of the next year.
CSL Start$36,000
Rainy Day Fund – $4,000
Car Payments– $9,500
Spring Break– $3,000
CSL Left to Invest$19,500

So the overall investment to your IRA is $12,000 (which still leaves you with even more to invest normally). Assuming you are 26 years old, when you invest the second $6,000, you will have 33.5 years until you can access that money (59.5 years old).

Let’s round that to 34. The S&P 500 has a historical return of 10%. If you earn that on your investment how much do you think that’ll be worth?


Build Your Portfolio Today

Create a free account and start building your perfect portfolio today. M1 is commission free and has no minimums so you can explore different asset allocations before you invest your loan.

Investing in a normal brokerage

The best part is that we are still left with $7,500 to invest. Feel free to invest this a little more aggressively. We still recommend investing for a timeline of 5 years and not touching this money at least until the loan is paid off.

Final Thoughts on the USAA Career Starter Loan

So there you have it, you can use the Career Starter Loan to plan an amazing vacation, buy a car and build life changing wealth. Both AJ and I are Naval Academy alumni who have seen firsthand how game changing this loan can be. In fact, this opportunity is so big that it is one of the reasons we started Money Gouge. If you enjoyed this article please share it with others.

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