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Ask Dave

Husband and Wife Both Deployed...Invest Extra Money

Jennifer and her husband are about to go into a combat zone. What should they do with the extra money?

QUESTION: Jennifer wants to know what she and her husband should do with all the extra money they receive when they are deployed into a combat zone.  Should they put it into the thrift savings plan?

ANSWER: Apply all the extra money to the Baby Steps first.  Start at whatever point you are at in the Baby Steps, making sure you have 6 months worth of income in the fully funded emergency fund if you’re husband has been deployed – you’ll need that cushion of money while he’s gone.

Then you can start funding retirement savings.  The thrift savings plan only has index funds that don’t match, so you’ll want to fully fund a Roth IRA first. Spread your money out in the 4 types of growth stock mutual funds: growth, growth and income, aggressive growth, and international.

After that you can start funding your thrift savings plan.  Within the TSP, put 40% in C, which is a common stock index.  Put another 40% in S, which is a small company index plan like an aggressive growth mutual fund.  Put the last 20% in I, which is international stocks.  Don’t put any in F or G.