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Feb. 27, 2022

83. Building Financial Independence as a Federal Employee with Sam Zelinka

83. Building Financial Independence as a Federal Employee with Sam Zelinka

Join Mike Cavaggioni and Sam Zelinka, as he shares how he secured financial freedom while working for the government. Started working in the government at the age of 18 and also runs a blog focused on retirement, Sam shares that finances are always a constant topic in his family. Very driven at a young age, Sam acknowledges that there is a lack of education regarding money and that it’s not even a rare occurrence for someone to not know how a pension works. In this episode, there are other details with real-life instances as well regarding pensions, say for example, for people who did military service. A lot to learn about pensions and financial literacy in this episode, further reiterated by Sam with real-life scenarios so be sure to stay tuned!

In this episode, you’ll learn:

  • Financial literacy is crucial knowledge
  • How Sam helps rectify misinformation about finance
  • Personal system that Sam and his wife uses for finances
  • The mindset difference between being financially conscious and not
  • Sam’s advice to people who would like to retire by 45
  • And many more!

About Sam Zelinka

Sam i.e. "Gov Worker" started working for the government at age 18 and loved it so much that he never left. He started Government Worker FI in 2019 to help fellow federal employees understand their benefits, take control of their finances, and live their best lives.

Connect with Sam Zelinka
Website: https://www.governmentworkerfi.com
Twitter: https://twitter.com/GovWorkerFI

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Transcript
Average Joe Finances:

Welcome back to the average Joe finances podcast on your host Mike Cavaggioni let's get to today's episode. Hey, how's it going everybody? So today's guest is Sam Zelinka and Sam has been a federal employee. Since the age of 18, he currently runs an early retirement blog called governmentworkerfi.com to help federal employees understand their benefits and plan for early retirement. Sam, uh, we've been talking a lot, uh, on social media, via Twitter. Um, I'm really excited to have you on the show. Thanks for joining me today. Yeah, thanks

Sam Zelinka:

Mike. I'm really excited to be here and I just want to say that, um, I am a government employee, but I'm speaking in my personal capacity to. Um, so nothing I say represents the views of USDA. And this is, um, just, just me speaking. As myself,

Average Joe Finances:

we're just talking to Sam today, guys. So yeah. Got to get that disclaimer, out of the way, make sure you know, that we know who we're talking to and it's, it's not any representation of, of the government or, or anything like that. So, uh, thank you for that. And I'm really excited to have you on, so the, you know, I kind of just did a little wave top touch of, of your background. Like we talked, you know, You've been a federal employee since the age of 18 and you run this retirement blog, right. Called a government worker five.com. And I'd like to talk a little bit about all of that, but if you could, can you just share a little bit about your story? How did this all get started for you? What, what made you decide to go into the, you know, the federal government workspace and then decide to, to blog about what you're doing to retire.

Sam Zelinka:

So maybe, maybe I'll start with the blog and then go back to the federal. Thanks. So, um, like I've always been really interested in personal finance and investing and like, that was something we talk about at the dinner table when I was growing up and I started my federal career pretty early. So. And what do I know about federal retirement? Well, like not a whole lot. So I started reading about how the pension works and all that stuff. And I was like, wow, this is, this is really cool. And I think just like during my federal career, I'd have like conversations with people down the hall or at some meeting or just random conversations. I'm like, whoa. They have no idea how their pension works and this is kind of scary or kind of shocking to me because like, wow, that's, you're kind of, it's like walking into a casino and putting a whole bunch of money down on a table and you don't know any of the rules or like how the game works. So I was always kind of shocked by that when I got interested in the fire movement, um, I started reading a lot of other fire blogs and I was like, well, these blogs are great and I like them, but they aren't. Address any of this, Hey, the aspects you'd have with in terms of federal employment and how does that affect your pension or other benefits? And so I just felt like there was kind of a need there. It was a topic they knew a lot about. I cared about, and then I also really just want to help other federal employees because it is super important. And I think there's just a lot of. Misinformation out there. I mean, OPM has all the information like out there, but you have to like read it and interpret it. And it's like really hard to understand what's going on. So yeah, just wanted to have stuff that's easy to read. If you're a federal employee, Hey, you can read this. Um, and it's, it's there to help them. So that's, that's kinda the story with the blog.

Average Joe Finances:

Yeah, that's, that's awesome. And you know, you're hitting, you're hitting like, uh, some pretty important topics right off the bat because you know, one of the things that we talk about here on average, Joe finances. In general, how there is a lack of financial literacy, um, or, or a lack of knowledge for, for people that are working in these different nine to five jobs, whether it's federal employment or not, they don't really know what to do with their money to set them, set themselves up for a future retirement. And everybody thinks that, Hey, I'll just save, save, save, and invest in my 401k and then retire at 65 or 70. And, uh, you know, collect social security and then like, that's going to be it, there's so much more to that. And there's so much more that you can do. So you found this particular niche right? In the federal employee space and you found that there's a need for it because as you talk to fellow employees, you're seeing that, you know, there's a lack of knowledge. There's some disparity here. Um, even though all the resources are there and available to them, you know, you had mentioned OPM, right? So for those of you listening, OPM is office personnel management. And the, uh, I know that I'm also a federal employee myself. So, but the, uh, the thing is, is like, you know, when you go to websites like that, and you're trying to. Digest this information. It's not an easy pill to swallow. It's not easily digestible, right? It's just like this wall of text and, and people are gonna look at that and just run away screaming like with their hair on fire and, and hands up screaming. Um, but what you do is you provide, you provide this blog, right. That, you know, provides a lot of this, this same knowledge, but this it's just easier to digest. It just it's a greater value because it's, somebody will actually sit down and take the time to. Hey, this is easier to read. This is easier on my eyes and I'm learning something here. So you're you found this way to provide a service to people in the seat, like kinda in the same shoes as you. Um, and I think that's just absolutely amazing. So I know I'm kind of like really dipping down into the weeds here. You know, that's kind of what this is all about, right. Is providing that financial literacy to others because you've discovered what you needed to do to get yourself to a point where you can retire early. And now you're saying, Hey, you can do it too. And so I just want to say thank you that, you know, for the service that you provide by, by having a blog like that, that provides such great information. So that's

Sam Zelinka:

fantastic. Thanks, Mike. Yeah. Just wanted to jump in there. Yeah. Like maybe expand a little bit, like, so yeah, the government website with all these rules about federal retirement. But if you, if you do like do a Google search, it's not going to take you to a, like a logical spot on the OPM website. And it's so complicated because there might be one rule. If you retire with 30 years of service and another, if you retire with 10 years of service and they're on completely different web pages. And if you don't know to look there, you're going to read one thing. And then that's why you hear these conversations in the hallway. And they're like, no, no, no, you get to keep your health insurance. And it's like, no, you don't, you lose your health insurance. Like they're both right. And like very specific cases, but it's just like all over the place. So, um, a lot of what I try and do is like, if you, instead of like writing. And like the handbook, like legal thing spread out with like different subject matters based on the legal authority. I just like, if you have a question you Google. You hit my website. It's going to walk you through like, logically what, what you're going to find and kind of walk you through those steps in a, in a way that's like designed for humans and not lawyers. Um, so that's like a big part of what I do in terms of like, this really specific niche is like, just trying to help federal employees. You don't need a translator. Oh yeah. So, um, so yeah, that's just. That's a big part of what government worker fire is is, is for these people, providing them like really good information. That's like solid. I'm not like trying to like lie to them or come up with stuff. It's all, it's all good information, but it's compiled in a way that designed for the user instead of like for the government.

Average Joe Finances:

Right, right. Something that has the end user in mind. So, yeah. That's, that's awesome. So, all right, Sam, so. You, you started as a federal employee at the age of 18. When was it that you took a look at like your career where you were going and said, Hmm, I really need to make sure I'm setting myself up to be in a good spot when I decide I want to retire. What, you know, when in your career was that and what was like that turning point? What was the, what flipped that switch?

Sam Zelinka:

Yeah, so I think it was probably, um, it was probably when I was 22, it was kind of. Excuse me right when I was finishing up my, my undergraduate, um, I had, I had applied for a program. It doesn't exist anymore, but it was, they needed scientists in certain like areas that they didn't have a lot of scientists. So they'd pay for you to go to graduate school while you're. Did research with the government. And so, um, I got accepted in that program. I was like starting graduate school. And that was when I became a permanent employee. I was just kind of a temporary employee before that, um, had some different temporary jobs. And so. I was like, okay, well, this is, this is like what it is. And so I spent a lot of time at first study and like how scientists get paid and in the federal government. Cause they're on a special pay scale that has a lot of rules that you need to figure that out. And I think, I mean, I think that was really huge for me because I read this whole big document and it turns out scientists and government. Their pay is determined by a lot of things. But one of the things is like, by how many publications you have and, and some other factors. So I was like honed in when I started graduate school is like, oh, I have the answers to the test. Like at the end of this, like, I know I need to have a lot of publications. So like I'm going to try and publish as much as I can and do these other things that get researchers promoted so I can like climb up, um, in pay as quickly as possible. So it kind of started there on my career track, figuring that out. And then while I was doing that, I was also trying to understand what, what the pensions like. So it's called first stands for federal employee retirement system. So like, okay, what's first. How does that work? What are some of these details with it? You know, what's the thrift savings plan. How does that work? Um, and. No, I spent, and I had time because I was like young and I was in this career and I knew I was going to be in there for a long time because I had to pay back some time. The time I went to grad school, I had to pay that back, um, in that job. And so, um, yeah, I was, I took the time I learned it. Yeah, the federal government's the largest employer in the United States. So I think these things are broadly applicable to a lot of people, but a very few percentage of this large employer. Um, really understand how, how it all works and how they can maximize it and how they can make sure they're getting what they earned. Um, you know, it's not taking anything away, it's just making sure that they're getting what they, what they earned. So

Average Joe Finances:

right on. Yeah. So there's a couple of things you talk about in that, right. And you had mentioned, um, as you were, you're going through, you decided, okay. I need to figure out this pay scale and figure out how to move up in that PayScale as quickly as possible. Um, Now, then you talked about the F the actual first system, right? Firs and then thrift savings plan TSP. So can you explain, like what the difference between the two of those are? Because some people think that professional employees, that all they get is a TSP and that it's, there's a matching, you know, that you get from your employer, the government, um, and then that's pretty much it, but, but there's a lot more that goes into that. So can you, can you go into a little bit more detail about the difference between furs and.

Sam Zelinka:

Oh, yeah. Like I could talk about that all day. Um, so, so TSP, that's a little bit kind of more defined that stands for thrift savings plan. It works essentially the same as a 401k, um, but it's only available to, uh, civilian and military federal employees, and it only has five different funds in there that match. Certain benchmarks. Um, so there's like a, a C4 and that's the S and P 500, there's a small cap fund international fund, and two different types of bond funds. So it's really set up for federal employees and military members to be able to invest with no, just it's set up so that they can't mess it up. As long as you're putting money in, it's going to grow. Um, and it's gonna, it's going to do just fine in these degenerate categories that get super low for. And for civilian federal employees, if you put in 5%, they'll match 5% and as the same maximum limit as the, uh, as a 401k, so 19,500 a year, and there's also a Roth option. So that's the TSP. Um, The government's 401k and how that does kind of furs is the retirement system. So when most people think of furs, they think about their pension, which is 1% of your salary, your high three salary. So like the last three years you worked for the federal government, that average times, 1% times the number of years of service. So if you work for 30 years, you get 30% of your final salary. Um, roughly. Um, but it's actually a lot more than that. Um, if you're a FERS employee and, um, and you pass away before you retire, your spouse and children receives prefers benefit, your pension benefit, there's, um, a disability retirement, um, that you can earn as well. There's the ability to carry your health insurance into retirement in certain situations. Um, there's a whole, there's a first supplement that supplements the amount of your pension until you reach social security age. So there's like a billion different components to it. And it's actually really valuable. So, um, on one of my blog posts, I kind of did this calculation about what happens if you retire like one day before your like minimum retirement age set by the government. And I calculated you lose about a million dollars, um, your, your pension that like one person. Per year, times, years of service that that's, that's solid. Like you'd still earn that, but like you lose the health insurance, you lose the first supplement, you lose all these other things. And that was like a really big, big amount of money. So. Oh, yeah, go ahead. Yeah.

Average Joe Finances:

So with that, so you're talking about like, if you were tired, like a day before the minimum age that the government says you can retire, so you can, you can retire and start collecting your, um, your first pension, um, before that minimum date, but then you, you wind up losing other benefits. Is that what you're saying?

Sam Zelinka:

Um, you can. Anytime you walk away from the government. If you've, uh, I'll take that back. If you've worked for the government for five years, um, you can get pension at age 62. Equal to that formula. So if you work for five years and quit, when you're 62, you get 5% of your high three salary. Um, if you work for 10 years, you get 10% at age 62. So say you work for 30 years. And the minimum retirement age for most people is 57. So say you worked for 30 years, you started 27 and you retire the day before your 57th birthday. You'd still get 30% of your salary, but you couldn't collect it until age 62. Whereas if you make it to 57, you can get it like on your 57th birthday, like right away, right away. And there's a whole bunch of other things that kick in if you worked a minimum retirement age. So there's a lot going on when, with that

Average Joe Finances:

similar to a, like the military retirement, right? So like, I'm going, I'm going to retire next year with 20 years in the Navy. And, you know, I, I, I start getting my pension right away. Whereas if I was to, um, get out of the military and like, I guess, affiliate with the reserves later on, um, and, and finish up my time in the reserves, I wouldn't actually get my military pension until I think 62 is. Is it 67? I don't remember the, uh, the number off the top of my head. Cause I'm not a reservist. Uh, but, but yeah, so it sounds, it's kind of sounds like that. Like you, you do like a small amount of time, but there's no, you don't have to do any type of affiliation on the outside after that. Right then. So if you just do the five years or the 10 year. No matter what, at 62, you're going to get some type of check, you know, based off of that, that high three salary, right?

Sam Zelinka:

Yeah. You're going to get a check for yeah. That percentage and you will know what it is cause you, you know, your high three will be sat here. Here's a service. Yeah. Yeah. Um, I think the only thing to consider is that there's going to be inflation between that time. So. You know, if your salary is a hundred thousand dollars, you know, today, and then you wait 30 years to start collecting that, you know, maybe a hundred thousand is only like worth $50,000 in the future. And so, you know, your, what you're getting back is going to be smaller than it would be in today's dollars.

Average Joe Finances:

Okay. That's fair. That's fair. All right. So we're, we're talking about, uh, you know, different pensions and things like that, but I want, I want to kind of switch, focus a little. And I want to talk about your own personal financial journey. Uh, so what, what Sam is doing here, and from what I understand, I know, um, you're married with kids, right? Um, and you were able to pay off your house I believe in 10 years. That's correct. And so you did that and you're you're right now, you're tracking to be financially independent in your early forties. Um, so if you could, can you, can you tell us, like what, what route you took and what you did to pay off your house early and to get yourself at a point where you're going to be able to be financially independent in your early forties?

Sam Zelinka:

Yeah, so I think, um, I know you have a lot of stuff on the podcast about, uh, real estate and that kind of stuff, but my family like grew up and we're always talking about stocks and the stock market. Just like you said, there's a lot of different ways, a lot of different pathways to. To get where you're trying to go. So that was, that was kind of like what I was most comfortable with. That was what we were growing up. So, um, you know, I got my first job at 16, 15, 16, something like that. Um, and my dad helped me like open a Roth IRA. Um, and yeah, start contributing to that as a teenager. So, I mean, I think, you know, that compounds and compounds and compounds, um, and yeah, just trying to, so early on, you know, my twenties college, that kind of stuff, like you didn't have a lot of money, but you know, tried to save sound, put some in stocks. Um, and then, uh, I got married. When we were kind of young, we were both in our early twenties. Um, my wife and I, and we didn't really have a whole lot. Um, I was going to graduate school. She got her first job. Um, but we didn't really say a whole lot in the beginning, but then we also, every time we got to raise from that point on, and we got a lot of raises because we had like, just started working or like get out of school or something like that. Uh, we just try and say, Y, like, we try to keep our expenses the same when we got these raises. And I think that was a big chunk of it because we were living just fine. And

Average Joe Finances:

did you find that hard to do with, uh, inflation, like especially, well, well now, like it's, it's pretty crazy, but you know, back when inflation was the normal, you know, quote unquote normal, like two, two and a half, 3%. Um, by, by doing that by, you know, taking all your pay raises and still trying to live off of like, I guess your, your prior paychecks, what w what kind of impact did that have with inflation?

Sam Zelinka:

I don't know. We weren't tracking things like super closely. Like, since I started a few years before I started blogging, We started tracking like every penny and, you know, getting expense reports every month. And now I could probably tell you exactly how much, you know, inflation has affect how much inflation has affected our spending. But I don't know. I mean, maybe we raised it here or there a little bit, but I mean, I think most of the time we just saved it all and then if things were really tight, we would like dial it back a little. We're adjusting. I mean, it was, it's a fluid process.

Average Joe Finances:

I asked that because like, I I've seen, I've read a couple other different like fire blogs. And one of the things that, that, that, uh, uh, a big topic that always gets discussed is, okay, anytime you get a pay raise or anything like that, try to continue to live off of, you know, um, what you were making before and invest the rest. And, and I think that works to an extent, but then I feel like after a couple of years, if you're still trying to live on like five years ago, salary, That you're going to start to really feel the effects of that. And it might take a well in, in today's environment, it might even take one or two years where you get a pay raise and you realize, oh no, we, we gotta, we gotta use some of this. So as I that's, I, I was just curious, like, um, if, if you saw like some type of impact, uh, as, as the years went on,

Sam Zelinka:

I mean, I'm sure. I mean, the answer is we, we did increase spending at various points, but, um, I think, you know, the way we handle their finances was that we tried to put as little amount into joint checking as possible each month, like enough to cover our bills. And there was some like slop in there that we kind of knew what it is. And when it kind of got below that level, then we're like, oh, well, do we need to like tighten things up a little bit? And then if there was a few months where things are tight, we're like, okay, we're going to adjust this and put more into joint checking each month. So, I mean, it's kind of like a lazy man's version of like zero-based budgeting or like a Dave Ramsey, like envelope system or something, but it was kind of just, we know it. We know it's going into joint checking. We know how much is in there at various times a month. And if it gets too low, like, okay, we need to, we need to adjust this. And then if we found that, oh, after several months, there's a lot of enjoying check-in and we're like, well, we need to, we need to take this back down. So this is a fluid process.

Average Joe Finances:

Yeah. So did you find, uh, have you ever tried any of those methods, like the M the envelope method or anything like that?

Sam Zelinka:

And we have not I mean, we just had a system that works, um, and get my wife and I we'd call them finance summits, but say like every six months or so, we'd sit down, look at our investment balances, look at our paychecks, how they were getting like distributed amongst. Like different investment goals and stuff, and then decide if we wanted to change anything. And it is kind of what worked for us. I mean, there's like, it was our system that we worked for us, but it wasn't, it didn't really draw us strongly from say any of that. Big names. Okay.

Average Joe Finances:

Just curious. Cause like I know my wife and I, we tried the envelope system for a little while, which was great, you know, I just, you know, when you have physical cash and you're, you're spending money as physical cash, you're definitely, you definitely are more apprehensive. T to hand over those dollars versus swiping a card. So that does, it does help with that, like disciplinary part of it. Um, but you know, it kind of evolved for us to where now we do sinking funds. So we have, um, you know, funds for every possible, like different expense that we have. Like we have a, a pet, a pet and vet fund, right? Yeah. Yeah. And then like, um, Uh, car maintenance. Uh, we have a holidays and birthday fund. We know exactly how much we're going to spend on each person. It's, it's kind of sick, but, uh, you know, and we, we set it up that way. And then we have our, our allotment every month where, okay. You know, when we get paid, okay, we move this here this year, this year, this much goes into our investments. This much stays in the checking account to pay the bills done. And, uh, and we kind of broke it down that way. Moved away from the envelope system, but basically, you know, digitized it with, with the sinking funds method. I'm, I'm, I'm just throwing that out there because I'm, I'm a big fan of that. So when you mentioned the, uh, the envelope method, I was like, oh, okay. Of kind of just rang that in mind. Let's take a brief moment to hear from our show sponsors. What's going on everybody. So today I want to talk to you about the podcast editing service that we use for the average Joe finances podcast that is edit pods.com. And what I really like about them is it's a subscription-based service. So the prices are fantastic. And not only do they do the podcast episodes for us, but they also make us video. Audiograms social media caption videos. They do our show notes, thumbnails. It's just fantastic products. Go check them out@editpods.com. What's going on everybody. So today I want to talk to you about Buzzsprout the average Joe finances podcasts recently switched over to Buzzsprout and I got to say, I am super happy with the progress. Our podcast is now on every single major platform and reaching audiences that we couldn't reach before, which is just super awesome. Thank you to Buzzsprout for being such a great platform. But also I want to say, Hey guys, if you sign up for Buzzsprout and you sign up for one of their paid plans using our link, you'll get a $20 Amazon gift card. So go check them out. It's average, Joe finances.com/buzzsprout and we'll make sure the link is in the show notes below. Let's get back to today's episode.

Sam Zelinka:

You're listening to the average Joe finances podcast, whether it's single or multi-family real estate, the stock market, or side hustles, we discuss it all strap in and enjoy the ride. Yeah. I mean, we're really similar. We had, I don't know, like it doesn't savings accounts or something in addition to join tech in, you know, plus our investments and that kind of stuff. So, um, we had a car phone, we had a vacation fund, we had pet fund, um, you know, all that stuff. So that way we knew that way when we hit, like, we were putting a little, like very little in joint check-in, but, um, and that was stuff that wasn't tracked like groceries and I don't know, whatever other stuff. Well, the like, you know, mortgage and the stuff that needed to get paid. And then yeah, if there was a car, something went wrong in the car, then that came out of the car fund. Um, I think it would be hard to really just do this like, oh, everything. The minimum amount is going to the joint checking if you didn't have sinking funds, because a lot of things only come up, you know, once a year, something like that. And that would just be way too complicated.

Average Joe Finances:

Yeah, right on, so, okay. I'll I want to rewind back a little bit, cause I just, I'm still looking down at my notes here and, uh, there's something that you said I wrote it down because, uh, I find it, um, really awesome that you guys had conversations at the dinner table when, when you were a kid on finances, right. You guys talked about money at the dinner table, like. That was always like a taboo topic. And I, a lot of people that I talk to, um, especially like, you know, millennials and stuff, they, they, they always say that to you like, oh yeah, like we never talked about money. We never talked about bills and things like that. That was always a very touchy subject. And then I've interviewed people on the podcast, especially, um, people that immigrated to the United States. And they always said like, no money was always a topic that we talked about. They're like very successful and, and, and did quite well for themselves. So do you think that having these conversations at the dinner table, by, by everybody being comfortable to talk about that instilled some type of, I guess just a, like in the back of your mind, subconsciously. Just did something for your mentality to, to make you think about money in a different way than I guess somebody who wouldn't talk about that at the dinner.

Sam Zelinka:

Yeah. I mean, I think it was huge. I mean, I think, um, definitely in terms of like confidence in investing in stocks or, I mean, I'll have conversations with people and they're like, oh man, I've got everything in there. G phone because like other other outset, oh, the G fund for those listeners who aren't government employees is. It's a guaranteed fund and the TSP, like I said, there's five funds. The G fund is like a money market or a savings account, guaranteed. Um, so yeah, I mean, I have conversations and have a great return at all. Yeah. It, it it's lower than inflation.

Average Joe Finances:

Yeah. Before I knew what I was doing, I spent 13 years in the G fund while I was in the Navy. It was, uh, I could, uh, I, I kicked myself in the face all the time for that. But, right.

Sam Zelinka:

So I guess so, I mean, there is like tangible things, like, okay, I started off and I was like, okay, well, I'm going to have like all my money in the C fund because I'm not going to retire for, you know, 40 years or whatever. And that's going to be stock fund, um, for your listeners, sorry, using the, um, the government terminology. But, so I think there were things like that, but also just, I never felt like money was a taboo topic and. I knew. Yeah. When I was like, thinking about going to college and that kind of stuff, I had a very clear picture about, um, what college is going to be like the cost of college. Like, and we had a lot of conversations about different people we knew in the neighborhood or whatever. And. Yeah, their kids college and their student loans and other stuff. And I was like, wow. Yeah. Okay. You're like, this is the value of a college degree. This is how much it's going to cost. If I go here or go here, you know, all those things. And you know, this is, I mean, I just felt like I didn't realize it at the time. Cause it was just normal. Like, Hey, we're going to talk about. This is why we talk about stocks or we talk about college costs or that kind of stuff. But, um, yeah. Now learning that, that that's kind of unusual in America is like, okay. Yeah, I'm really glad I had that knowledge when I was a kid.

Average Joe Finances:

It was just the household I grew up in. But other people I talked to you like would always say, oh yeah, No, we, we never really talked about money. It was always like a very touchy subject. And, um, and I, I always found that odd. Um, and I remember too, like, even, even as I got older and I became more, uh, you know, savvy with my finances, uh, having conversations, like even with my dad about like, Hey, I think you should check out, you know, doing maybe something a little bit different. They're like, oh, but you know, what, what are you going to talk to me about that stuff? He's like, I know what I'm doing, you know? But it's like, yeah, it was just never really a topic that my family, uh, like to discuss at all. It was money. So I try to, um, w with my own children just, you know, uh, keep them in the know, uh, and, you know, just educated in finances. I'm not afraid to show them like what our budget looks like and, and what we spend on certain things. I think it's important for them to know that. So they understand the value of the dollar. Um, and you know, on top of that, the other thing is, is financial education itself. You know, I'm, I'm, I'm thankful that, you know, my wife and I like be homeschool our kids. So, uh, you know, financial literacy is part of their curriculum. So it's, it's just something that. Um, I think is super important because I, I don't, I am at the point where it's like, you know, I want to build generational wealth for my family, for generations to come. Uh, but at the same time, I want my family to like my children to be able to go out and do this on their own. I want to give them all the tools and, and put that in their toolbox. So, um, speaking of tools in the toolbox, right? So we're gonna kind of bring this back into being a federal agent. Right. Um, so besides FERS and TSP, which, which are some fantastic, uh, retirement benefits, what are some other benefits to being a federal employee?

Sam Zelinka:

Yeah. Um, I mean, I think the one I enjoy the most is, um, annual leave. Um, so we get, uh, an incredibly generous amount of vacation. Um, so after you've been with the government for 15 years, you get eight hours of pay period. So that's like 10% of, I mean, I kind of consider it, like I only work 90% of the time because every 80 hours I work, I get eight hours off. Um, so that's a really good one. Um, and, um, yeah, the, the government health insurances is pretty good. I mean, it's, um, it's better than a lot of the private sector plans. I mean, it's not the world's most. Health insurance, but it's very solid health insurance. And if you work until your minimum retirement age, Uh, you can take it with you into retirement, which is pretty unheard of, um, you know, besides the military, like there's, there's nowhere else that you can just take your, take your healthcare with you when you go. Um, so that's, that's huge. Um, I mean, I think those are, those are the big ones. Uh, probably I'm spacing on a couple, cause it wasn't really thinking about that. I have a whole post on my blog where I talk about all these random benefits of working for the federal government, but those are the two that pop into my head right now.

Average Joe Finances:

And those, those are two great benefits that pro. The ones I figured you would, you would actually touch on too. So, uh, that's one of the things I enjoy about being in the military as well as is the annual leave and then the, uh, the medical benefits, uh, that I too will get to carry into my retirement. Um, which is, which is huge, especially with the cost of healthcare, uh, you know, in the United States, it's, it's pretty astronomical. And if you don't. You know, good health insurance or, or coverage, uh, you can find yourself, uh, you know, not saving for retirement, but saving for hospital bills for the rest of your life. So it could, it could be pretty daunting when you, when you think of it that way. So, all right. So besides what you're doing with FERS and TSP with your investments, for your, your future retirement, uh, what are some other things. You yourself invest in.

Sam Zelinka:

Yeah. Um, so a lot of stocks, a lot of index funds, a few individual stocks, um, and those are spread across Roth IRAs and tax bond, investment accounts. Um, And then, um, you know, a small percent in cryptocurrencies. Um, and I kind of look at those as like pretty volatile and like, I don't know what's going to happen with them, but, um, you're not on the old layer. You're afraid to lose in there. It's like, if it, if it disappears, it disappears, but if it, you know, like if it goes to the moon, if it goes into yes, like I bought, like, I just kept seeing on Reddit, like everywhere, everywhere. Like this January was like talking about doge coin. And I was like, I was like, what? Like, no. And then I was just like, then I was like, I don't even remember where on Reddit. I saw. I was like, okay. If somebody over here is talking about doge coin, like I just need to buy. So. And, you know, like it went up, you know, I thought about it was just like putting a bet on like a sporting event or something like that. Um, and you know, it did like, I don't know, like a, like 18 parlay or something better type performance. And I was like, oh man, I should have had a bigger thing. So then after that I started, it kind of made me realize that people are going to put money into cryptocurrency. And I don't know if they're going to have any value. Like if you read, if you go on Reddit and read like the cryptocurrency Reddits, they're all like, oh, this, this like coin is super valuable because it's going to do smart contracts or it's going to do this, or is going to do that. And I'm like, I don't know if it's going to do any of that, but if people are like, well, Pay more money in the future for it, or if it does get adopted or if it does, then it's going to go up a lot. And so like, yeah, it's kind of fun money, but it's also, I mean, I think, I don't think it has any value. Like a stock is like partial ownership in a company and it's going to have some value and it's going to pay some dividends, like finding a cryptocurrency. Like buying a kind of crazy collectible thing, but if enough people buy them and say they're going to buy them and then it could really take off and I wouldn't want to like, not have anything in it. Um, so that's kind of my thoughts on cryptocurrencies. I wrote a really funny post on doge coin on my blog that like got shared. Uh, time and like Google was recommending it to people I'm like, you may, you might be interested in. So yeah, it felt like I needed to get a dovish coin tattoo after that. Cause it was like my, my blogs blogs brand for awhile.

Average Joe Finances:

Oh, that's awesome. Yeah. I don't, I don't, I don't mess with too many cryptocurrencies I have in the past. Uh, but now there's only one that I have. Um, and the only reason why I have it it's because it's actually related to the podcast because the podcast, I have it up on this site called Oriel, a U R E L. And basically, um, based on like listens, people can vote for your podcast or leave a tip and stuff like that. And then you get these things called hive coins. So I have a whole bunch of hive coins from because for whatever reason, the podcast did surprisingly well on there. So I have all these hive coins sitting in this wallet and I don't know what to do with it. And it has a monetary value. Like I can cash it out, I guess. I don't know. But that's like the only one I have and that's like the only crypto wallet I really have. Um, and, uh, it's interesting though. I mean, I, I had, I had a guest on not too long ago. Um, that episode hasn't aired yet either, but, um, that can we kind of like dove a little bit deeper into crypto and he was helping me learn a little bit about it. Um, he kind of explained blockchain a little bit better, um, because it wasn't something I really knew too much about, or like, Cared to get to like involved in. Cause I just, I just, I just didn't see it really, but, you know, after talking with him and, and, and understanding more about why there's like this crypto craze, um, you know, it's, it was a little easier for me to digest, um, and understand that a little bit better, but it's still not something that I'm a hundred percent sold on or would like really invest in like, um, like I'll, I'll have that small percentage that I have right now. I didn't even put any money into it myself. So, um, I just kind of leave it, leave it there, you know, let it sit. And if it, if it goes up in value, then fantastic. If it doesn't do anything well, I didn't lose anything. So I'm good with that.

Sam Zelinka:

I think that's, that's a good strategy. And I mean, but I'm also kind of just a big believer in like, um, you know, people are adults and if they want to like, like put it all on, like, you know, whatever car Dano or like Bitcoin or something, like go for it. Um that's. Yeah, but I think for me it's a small percentage, but I do think like, we really don't know, like it's really young, so it could either like boom or Boston. We just, just have no idea.

Average Joe Finances:

Yeah. I mean, time will tell. Right? Well, we'll see what happens. Who knows, you know, uh, 20 years from now, you'll probably know. You know what Mike, ah, man, I should've, I should've bought more crypto. Dang it. You know, or, Hey, I should have bought less or, or not got into it all. I mean, you know, w w we'll see what happens. It is. That's the other thing too, is like, it's, it's really, it's still, it's still too young to think about like, What the potential could really be. Um, there, there's not enough. Like, I guess that data to really make like, uh, have some type of analytical thought process as to where crypto can be going. As some people can sit here and say all day that it's gonna, you know, it's all gonna skyrocket. Um, but I, I mean, I th we'll see, we'll see what the future holds. I don't, I don't want to go down this crypto rabbit hole. I can go down rabbit holes all the time, but this is one-on-one to try to avoid so gonna gonna move on from there. But, um, okay. So let's say that, uh, we have somebody that is. You know, a new federal employee, they, uh, you know, age of 18 or, or, uh, maybe they went to school and, um, you know, they're, they're in their early twenties and they're starting off as you know, in civil service and they say, Hey, okay. I know that I want to retire by 45. What would you recommend to somebody who's starting government service? Let's say at 20 years old. So we'll say we'll give them a 25 year period. What would you recommend to somebody to do if they wanted to. Retire at 45.

Sam Zelinka:

Yeah. I mean, I think at the advice there's is probably going to be really similar to, um, some of us that is not in government service. Right. So you're going to need to have a cashflow plan for how you're going to cover your expenses. So after 45, their situation's going to be a little bit better because at age 62, they're going to get their deferred pension, which is going to be like 25% of their final salary. So that's going to help out kind of towards the end. So that's good. Cause if they burn through their money a little bit faster than normal, they'd have that safety plan. They're still going to have to figure out health insurance and, um, some of these other things. Oh, that's right. Because if you, if you stop before 57, you lose that.

Average Joe Finances:

If you stop before 57, you lose that. So it's like a huge, that's definitely something to consider.

Sam Zelinka:

Yeah. It's definitely something to consider and they do have, um, now it seems like every few years and my office and other. It's different, but they offer a thing called a early out buy-out. Um, so there for you have 20 years of service and are age 50 or 25 years at any age, um, you can retire early with full benefits, health insurance. Immediate pension and all that stuff. So, you know, if they've got 25 years of service, maybe like you want to stick around a little bit and see if it seems like there's going to be a like buyout situation or early out for them. Um, I don't know. I mean, yeah, each situation is going to be a little bit different, but I think, you know, if you're just starting off and you're early in the game and a federal career and, you know, you want to retire early, then it's just a matter of knowing. What your federal retirement's going to look like after early retirement.

Average Joe Finances:

Yeah. So, so plan for what that cost is going to look like between the age of 45 and 62, and have a, have a good plan for that. Uh, that includes, uh, health insurance now, right? When, when they start collecting their pension at 62, do they get the health insurance back or is that. It's just gone. It's gone. Wow. Okay. So that's, that's good to know. So it's not like, you know, you, you get back on, uh, and you're back where everybody else is at. Um, once you hit 62, you know, you're getting the pinch, uh, the pension, but that's it. Excuse me. So. Okay. No, that's, that's definitely what I've seen.

Sam Zelinka:

I've seen some stuff on like federal employee message board where it's like, somebody's plan to like, apply for federal jobs again, when they're close to their minimum retirement age. Um, and then, you know, cross your minimum retirement age and then retire again.

Average Joe Finances:

Okay. Okay. So you pretty much, pretty much ended at 25 years of service. And then Hey, at 55, I'm going to go, uh, work for two more years or. Something like

Sam Zelinka:

that. I mean, that's, that's the plan. I don't know how, like, I mean, whatever. I mean, we hire, I mean, the federal government is an equal opportunity employee, employer, and we do hire people in their fifties. Like I've seen that frequently if they're qualified and. Um, if you leave federal service, you can get reinstatement rights, which makes it a little bit easier to come back. So, um, and it just needs to be any federal DOB to get your health insurance back at 8 57. So it doesn't seem completely crazy. There is some risk in that. Um, it's not like it's not something like

Average Joe Finances:

I get rehired that's yeah, that would be a so-so. Yeah. So don't plan on it that way. Don't bank on it, but now let's, let's say somebody was like a. And at a much higher pay grade, like they they're like a GS 15 or whatever, right. Like at, at 'em and they retired 25 years and then they come back in at the age of 55 as like a . Is there a high three going to be based off their GS 15 salary? Or is it gonna be based off of their most recent three years?

Sam Zelinka:

No, it's the highest. So perfect. It's still so similar to the military. Yeah. And I mean, I guess the, I mean, I guess that's kind of a steal because they're getting the like GS 15 salary year, like multiplier working these extra years, as you know, Uh, GS nine or, you know, park ranger, you know, some like some thing. So, I mean, I think that's where if, you know, you want to retire early, like in not work at all, then there's not a lot of options for you as a federal employee. But if you say like, well, you could look for a part-time job or you could look for, you know, some seasonal jobs, um, like, like a seasonal. Federal job. Yeah. There's seasonal federal jobs, like, um, they're called like 13 thirteens for some reason, like 13 pay periods on 13 pay periods off, I think, is that so a lot of those are with like the forest service or bureau of land management where you have some like national park or something that's open for, um, like different seasons and things like different seasons. Like that's very interesting. Firefighters are another one. Um, but that one's kind of hard to get into if you're an older person. Um, but those are all seasonal employees as well. Um, and that's, uh, that's, you know, there's, there's a lot of firefighters. There's a lot of wildfires in the United States. That's, uh, a kind of tough to think.

Average Joe Finances:

That's good to know. I already asked you, like one of the questions I normally ask near the end, uh, about the, like what recommendations you would have for somebody coming into this. Um, but there was something that I didn't get to ask you about that I wanted to ask you about. And I have to ask you about this before, before we end this interview. And that is, um, we, we briefly mentioned it. You paid off your house in 10 years, how'd you do that?

Sam Zelinka:

Yeah. So I think that's one of these things that it was a big motivation for us. Um, I know that we could have made more money if we invested the money that we paid down, our mortgage balance with it, wasn't a huge, like, it wasn't financially advantageous to pay off the mortgage first, but it was really, it encouraged us to save more money because we could see the balance like. And so there was kind of a couple of things that happen when we got the mortgage. I don't know a few. Well now in 2021 interest rates are super duper low, but I don't know, five years ago they dropped to some like insanely low level. That was like the lowest Everence over. We refinanced after we had owned the house for five years to a 10 year mortgage. Oh, wow. And it just, it increased our payments a little bit. Well like a moderate amount, but it cut the term down to 10 years. And then once you are on a 10 year mortgage, like the amount you pay in principle is like way, way more than the amount you're paying interest. Um, so that way, even if we didn't put another, like penny. The principle, it was going to be gone. It was going down pretty fast. Oh, that's no, that's amazing. So that was like the, that was like the big lift. But then I think it's just, it was something where if we got like a refund or a check or just any random pieces of money from anything sold some stuff on like Facebook marketplace, we'd just like log into the bank and make a mortgage principal payment like that day. Like, oh, Hey, we just sold some like stuff that we're not using. Like let's go transfer 25 bucks to the mortgage principal.

Average Joe Finances:

Um, 20, $25, you know? Hey, it's it's, it's something it's it's, it's just chipping it down.

Sam Zelinka:

So yeah. So you do enough of those $25 payments and you adds up to a mortgage payment. Yeah. It adds up to a mortgage payment and yeah. Put them into the tax return in there, put some, you know, whatever in there. And it, uh, that was how we did it. And it was like I said, it was real motivational to see that go down. Like, you know, if we were throwing the money and like are like investment account, taxable investment account, like, well, it's going up like, and these are big numbers. So twenty-five bucks doesn't, doesn't really seem like a big deal. But if you're like, you know, no that it's cutting off. Eventually it cuts off another month. I had a spreadsheet where I was kind of tracking it so I can say, I go, yeah, well, next month I'm going to be that much lower. So

Average Joe Finances:

no, that's great. So was, was that more of like a, cause you said it was kind of like a motivational thing, as, you know, as you were paying down the balance of your mortgage. Was that like a, cause you know, you already mentioned it too. Like you could have been investing that money, uh, you know, into your, your investment accounts and. You know, give you a better return than, than paying down the mortgage early, but was it more of like a, like a mental thing? Like, Hey, you know, we're going to have our house paid and no mortgage payment. Uh, was that kind of like the reasoning behind it? Just like that, that comfort level?

Sam Zelinka:

Yeah, I think it was, it was comfort and it was, yeah. And then it was like, well, we own our house and like, okay, well, if things hit the fan, um, well we own the house and we can live for a lot, lot less. And. That just believe. Yeah, this is a great peace of mind. Once we reached that goal and kind of working towards it, we could see that we could live on one income if we needed to, or we could do all these other things. And so it just felt like a lot of freedom and that's like something we do. Don't need to worry about. And yeah, like our kids don't need to worry about where are we going to live or, I mean, it's a lot of,

Average Joe Finances:

yeah. I mean, cost of living is a lot better when there is no housing costs, so that's awesome. Well, okay. Uh, Sam, this has been absolutely amazing. Um, you know, the, your journey, uh, just in itself and what you share on your blog is just some fantastic. Not only for federal employees and government workers, but, uh, just in general for somebody that's looking for some type of, uh, financial knowledge to, uh, invest, get themselves set up to where they can retire early, pay off their house early, just so many different benefits to checking out a blog like yours. So it's not just limited to. You know, federal employees. So, um, if you could, uh, we've already mentioned a couple of times, but if you could, could you share where people can find more information about you, you know, your website, any social media profiles that they can follow and, and things like that.

Sam Zelinka:

Yeah. Mike, um, I had a really great time talking with you as well. It was a lot of fun. I love talking about this kind of stuff. Um, so yeah, if people want to find me, my website is a government worker Phi, so that's government procure F i.com. My Twitter handle. Just gov worker fi and I'm pretty active on there and there's a government worker, five Facebook, um, account profile page, all that stuff as well. So, um, that's, that's where I am mostly, so people can find me there and, um, yeah, just tweet at me or send me a DM and be happy to, to.

Average Joe Finances:

Awesome. And that's how Sam and I got connected. It's it's pretty awesome. Uh, again, absolute pleasure having you on, uh, we'll make sure we have all of those links in the show notes. Uh, for those of you that are listening. If you're driving right now, don't sit here and try to write that down or visit the website. Wait till you're in a safe place. Uh, but it'll be in the show notes there waiting for. Make it easy for everybody to, to find your stuff. Uh, and again, Sam, thank you so much for taking some time to talk with me today.

Sam Zelinka:

Hey, thank you, Mike. It was, it was great. My pleasure. All

Average Joe Finances:

right. We're out of here. Thank you for making it to the end of this episode. Greatly appreciate you being here with me today on the average Joe finances podcast. If you haven't done so yet, make this the episode that you go, leave us a five star rating or subscribe to our YouTube channel.