What to do??

[andyready5]

I'm new in the military (E-4) and just received orders to South West Florida. We had been saving for a home in case we received orders to New England (home!). Now We have 50,000 sitting in a savings account.

We looked into buying homes in the Fort Myers area but don't want to be stuck with it when we transfer in 4 years. However 4 years of rent is flushing 48,000 down the drain! What should we do with the $$?

I already have a TSP (military retirement plan) set up and contribute 20% monthly.
We are debt free.
My wife is a teacher and should be able to find a job in the area.
We would love to buy a home after this tour but where should we invest until then.

Thanks for all your help!

[kork13]

Welcome to the forums, and to the military! I've been stationed in the same area, and if you enjoy the water, you'll probably really like the Gulf Coast area there. The emerald shores are beautiful.

Unfortunately, the Gulf Coast is not friendly toward homeowners... Home prices there are still either inflated or unstable (declining), property taxes and home insurance are both extremely high, and for military homeowners, the risk of multiple hurricanes each summer while you're stationed elsewhere or deployed can cause more concern than it's worth. Contrary to what some might say, renting is most definitely NOT "flushing money down the drain." Just like for your cell phone or utilities, you're paying for a service -- a place to live. That service includes the flexibility to move at any time (which is extremely valuable in the military), maintenance/upkeep/upgrade costs are few (perhaps nonexistent), insurance is far cheaper, and over the short term (3-4 years), renting will likely cost you less overall for comparable homes as compared to buying.

Personally, I'd recommend that you rent while you're down in Florida. Rent an affordable place while you're in Florida, continue saving, then re-evaluate at your next duty station. You'll have built on your savings, and will have a stronger footing if you then decide that buying a house is right for you.

It's great that you're investing in the TSP, and even better that you're debt free. Are you and your wife also contributing to any Roth accounts? I know all too well how much (little) E-4's make, so Roth accounts are likely going to be the smarter option (tax-wise) for you right now. Your options include Roth IRAs or, starting in October, the Roth TSP.