Freelance Finance

Q: I'm a 35-year-old enlisted Army member and I've just started to think about my retirement. Am I too early? If not, where should I be putting my dollars?

A: It's never too early to start thinking about your retirement! The simple fact is that the earlier you begin investing money into your retirement, the more money you'll have when you retire. Someone who begins to invest money when they're 35 years old will have more assets in that account than someone who starts at 45, and can potentially invest less of his own money and still come out ahead of the person who starts 10 years later. There are several plans that will work well for your retirement. To make a good decision, it's important to contact a financial professional who can look at your tax bracket, your savings, goals and so on.
The first thing I would suggest is a Roth Individual Retirement Account (Roth IRA). In 2008, the maximum contributions are $5,000 for everyone under 50; and $6,000 for people older than 50.
Next, I would tell you to look at the Thrift Savings Plan (TSP). The TSP allows you to invest $15,500, or $20,500 if you're over 50, in 2008.
The biggest difference between these two programs is that your contributions to the IRA come from after-tax dollars (the physical amount deposited into your account on payday after your taxes are withdrawn) and the TSPs comes from pre-tax dollars.
Although it may seems that one plan is better than the other, it's vital to get the full picture on which plan is right for you and contact your local Financial Readiness Office or a financial professional within an investment firm.

Q: I've just returned from serving a 15-month tour in Iraq and am thinking about buying a new car for about $40,000 with all the money I have saved up. I'm an E-3, married, and am hearing this might not be the best decision.
A: Congratulate those who are warning you, because they're probably right. This happens to a lot of Soldiers returning from war who want to buy something to commemorate their homecoming and all the hard work they put in while deployed. While I understand this notion, maybe you'd like to start with something a little smaller scale and less expensive.
Whether it's an inheritance, a bonus or just the hard work of saving, it's important to look at your other financial goals before spending a large amount of money on something you want rather than need. Are you credit card debt-free? Do you have an emergency savings account built up with three-to-six months' worth of salary? Have you begun investing in a retirement account?
There are many financial foundations that need to be laid out before letting that money go to an expensive car. If you answered 'no' to any of those three questions, my advice is that you're better off getting those resolved before buying that pretty, expensive car.

Editor's note: Samantha McKenna has provided financial advice to Soldiers and family members for three years. If you have financial questions for McKenna, e-mail them to her at belvoirfinance
girl@gmail.com. .