Allocation Time Management – Economics Term Paper
One of the basic methods used in economics is the allocation time management and money. There are two different types of financial goals: Near Term financial
goals and Long-Term financial goals. Near term financial
goals are goals that can be achieved within five years or less. Long-Term financial goals are goals that can be achieved in within five-ten years.
I have many near-term financial goals that can be achieved within five years. These goals include: becoming debt free, earn a four year degree, have more spend able cash, obtain my own health and life insurance, establish a savings account, and have six-nine months emergency cash
My next near-term financial goal will be an investment in human capital. I plan to earn a four-year degree from Embry-Riddle Aeronautical University. During my two-year stay at Daytona Beach Community College, I have taken out approximately $5,000 in student loans. I have been accepted to Embry-Riddle, which I plan to attend next year. The next three years at Embry-Riddle will cost approximately $84,000, which equals to $28,000 a year for tuition. The Air Force Reserve Officer Training Corp (ROTC) will pay for this. In turn I will serve six years as a second lieutenant in the United States Air Force.
The Air Force Reserve Officer training Corps has many time-oriented problems. ROTC takes up about twenty hours out of my academic schedule a week. I have two four-hour classes that I have to attend on Mondays and Wednesdays. Then on every Wednesday and Friday morning I have to get up at 4:00am and jog 3.5 miles then I have to do an hours worth of static physical training. ROTC helps me keep and maintain my health goals. I had always wanted to stay in shape, and ROTC disciplines me to work out at minimum 3 days a week.
The next near-term financial goal I plan to pursue will help me acquire a savings account with six-nine months emergency cash. After all of my bills are paid off I will have over $150.00 left over a month to save. I plan to open a savings account and invest $75.00 a month into it until I establish six- nine month’s worth of emergency cash. This account will be at Wachovia, I started this account shortly after I started my economics course at DBCC. I will have to repeat the saving trend for two years, and deposit approximately $1,800. I figured that with this saving account I would have a fall back security if I ever got into real financial trouble.
The last near-term financial goals will be paying off my car. I bought a 2001 Mustang Convertible when I turned 18 years old. When I bought it I put $8,000 down as a down payment. This lowered my payments to $191.47 a month. This February in 2004 I will have paid on this car for one year. Some near-term financial goals could be to pay extra car payments to the principle, or refinance the car if my car payment has the highest interest rates of all my bills. Once I have established becoming debt free, obtaining my own insurance policy, and establishing a savings account I will then pay extra payments to pay the car off. Once the car is paid off I will continue to take care of it and basically drive it until it falls apart. Then I will invest in a more gas efficient vehicle to help me save money in the future. I have done some research and I have found that once I commission full time in the Air Force I can then draw health, dental, and life insurance through TRICARE. In the mean time and until 2006 I will continue to stay on my fathers policy through United Space Alliance who in turn sets up my insurance through Cigna Health Care.
I have many long-term goal financial goals. These goals include: owning a house, paying off student loans, buying a car, establishing a Roth IRA for retirement, investing in stocks, mutual funds etc, and retirement. Once I succeed and accomplish my near-term financial goals, I will be in good shape to begin working to my long-term financial goals.
The first of my long-term financial goals would be to own a house. During the first couple years in the Air Force, I plan to live in the barracks. While I live in the barracks I plan to save money for a down payment on a house. I have changed my career in the Air Force, originally I wanted to be an intelligence officer, but now I plan to join the joint NATO fighter task force in 2007. If I succeed and obtain a flight spot I will be station in Texas for a year and then I will be send out to the European Air forces in Germany. Once I get stationed in Germany, which is where the task force is located, the Air Force will give me a $1,500 a month check for a housing allowance. I figured that $1,500 would go a long way in Europe especially if I lived and shopped on base. A usual tour Ramstein can last from four to eight years. I plan on buying a house and living in it until I get transferred to another base.
My next long-term financial goal will be to own a Mustang Saleen. My commanding officer that is a Major was stationed at Ramstein. She told me that if I got stationed there I could buy a car at the base dealership for a lot less then I could buy the same car stateside. All my life I have always wanted a car that will go up in value as it matures. I will consider this car a financial investment. I plan to take care of it and keep it running and looking nice. After so many years I will either sell it or keep it in the family, so one day it will be worth more than I paid for it.
Throughout my adult hood I will be faced with many bills. These bills will include: a mortgage, car payment, and utilities, etc. But, there is one bill I will not pay off right away, this bill is my student loan bill. Since I have only taken out $5,000 in student loans my bill should be small. I can deduct the interest I was charged from my loans on my yearly income taxes. I can do this as long my income stays below certain limits.
My next long-term financial goal will be establishing a Roth IRA. A Roth IRA is an investment account that does not deduct taxes from your earnings. IRA stands for an Individual Retirement Act. I have not taken into consideration when and where I will start the IRA at but i am sure it will be with an agency where I have prior accounts with. In the future I plan to have one for myself my wife and quite possibly my kids. I plan to start this IRA account when I am twenty-two or twenty four years of age. I will invest $2,000 – $3,000 max a year for approximately eight years. As long as the rates stay at 10% I will have over a million dollars by the age of sixty-five.
After I establish a Roth IRA, I will to focus on retirement. If I serve twenty years in the Air Force, I will retire with a full military pension. I will also have TRICARE health, dental, and life insurance for life. During some point in my military career, I will open up a 401K account and begin investing in mutual funds. I plan to open a 401 K after I retire and start a career at another company. The investment group I plan to use is Vanguard; they will invest my 401K in the S & P Index 500. I believe with a Roth IRA, military pension, and a 401K I will be better off in the future and ready for retirement.
Once I serve twenty years in the Air Force I can retire. I would like to retire as a four-star General, but if I retire as a Colonel I can collect about $30,000 a year. I researched the military officer pay scale and I have determined what a four-star General and what a Colonel would make after twenty years of service. A General would make $7779.00 a month, and a Colonel would $4736.10 a month. If I commission at the age of twenty two I can retire at the age of forty-two. Then I can get a job with Homeland Security or NASA and bring in a second income and quite possible collect a pension or start a 401K.
Sticking to these goals will not be easy. I believe that as long as I succeed in accomplishing the following long-term and near-term financial goals I will be in good financial shape in the future. I will be able to live a life without the fear of debt, and live a life with the hope of retirement.