Saving Money in the Military
Saving money in the military can be a challenge. When I started my career in the military many years ago, my net gain every two weeks as an E4 was $430. I received no BAH or additional pay until I was deployed and received dive pay and hazardous duty pay. Since then, the pay has changed dramatically and for the better. When you add up BAH, which everybody now gets along with ancillary duty pay, FSA, combat pay, etc., then when you’re deployed in most areas, it is not taxed. You can actually earn decent money while in the military. While deployed, you’re not paying for rent or electric bills, and you should not be paying for a personal cell phone unless you like to spend money on international calls, which doesn’t make sense with Facetime, Skype, and the free phone calls available at phone centers. Of course, nobody can go without internet anymore, so the internet is paid for while overseas. You’re even provided with free uniforms when you deploy, so you’re usually not spending money on uniforms.
I have deployed several times now over the last ten years, and I can easily see who is new to deployment. When you get to MOB, you see the PX bandits; the ones who are at the PX shopping, spending their paycheck on fatty cakes, cases of mountain dew or monsters, or just junk every time you need them! They run off the bus and their first question isn’t “when is our formation?” Or “where is the gym?” It is “where is the PX or fast food restaurants?” When they aren’t there, they are on their phone shopping on the internet, spending more than they make. Ok, it is their money. However, the best time to save money is while you are in the military, especially when you are deployed. As leaders, we should help our soldiers save money. It is ridiculous to see soldiers spending all their money and come back from a deployment with nothing to show for it or live on.
Let’s say you now have purchased a car and decided on a motorcycle. Now you have a lot of liability and debt. I don’t just mean the car payment or motorcycle payment, but also the insurance bill and other expenses that come with them. It should be obvious that due to your age, your monthly insurance payment for both is going to be as much as the payments. An even worse decision is buying a sports car, which will cost you even more, and you might start racking up the speeding tickets. I don’t mean to be negative, and I was young once too. I did the same thing, so I am only trying to teach from experience, which is what leaders are supposed to do. Once you start paying all this debt, you’re going to realize that you’re spending more than you make because you live with mommy and daddy or granny, and you are going to expect them to help you while you spend the rest of your money (or even their money) on gas, partying, shopping etc.
When to Save Money and When to Buy
There comes a time when it is time to save money versus buying. When you are deciding whether to buy that car or other large purchases, you should first make sure that you can afford them. Then make sure you know that if something happens, you can pay the bills for months if you lose your job or even get hurt when you wreck that motorcycle. When you decide to buy something like a motorcycle, make sure that it is going to last until it is paid for and that you’re going to enjoy it. Many people buy a bike, put it in their garage after riding it a few times, and then two years down the road it is still sitting there. At that point, you don’t have a motorcycle license, and now you have to decide to sell it and lose money on it.
You should keep at least one year of debt money in savings at all times. What I mean by this is if your debt is $1,000 a month, you should keep $12,000 in savings. People get laid off every day and companies go out of business. It’s also possible to get deployed and lose income because your military pay is less than your normal pay. Here is what I suggest, and this is a great place to start:
52-Week Challenge: Start by saving one dollar the first week then two dollars the next week. Keep adding a dollar the amount you save each week until the end of a year. By then you will have saved $1,378. It might not seem like much, but I bet this is probably more than most of you have in savings now or have ever had in the past. If you make good enough money, then try doubling or tripling that.
I am sure most of you will want to purchase a home at some point (and I don’t mean a Winnebago to take to the game). I’m talking about real estate and having a mortgage payment. This comes as a large expense for many years, and it is going to most likely be the single largest investment most of you ever have. You should plan and save for this for years, and this starts with protecting your credit. This will ensure that you get a good rate and term.
Best Time to Buy a House
The best time to buy a home and take out a mortgage loan is when you have been in your job for at least 3 to 5 years. Make sure that you are secure enough in your job and have money saved up. You will be able get a VA loan with a great rate and term. You should try to put down at least 20 percent and still have at least 12 months’ worth of debt in savings, including for your new mortgage payment and insurance. Click here for a VA loan calculator If you have ever owned a home, you know this is a daily expense, and if your home isn’t a new build, your first year it is going to cost you lots of money in repairs, painting, and making changes that you want and need to make it the home you truly want. When selecting a mortgage company, select one with a great reputation. Yes, Low VA Rates! You’re a veteran and you should work with a company that not only caters to veterans, but one that knows all about VA loans and programs. We are veterans and we care.
Take Control and Be Your Own Leader
As leaders, it is our responsibility to pass on knowledge and experience to our soldiers so that they can be just as successful or more successful than we are. The military should have a mandatory yearly credit report check and savings class to make sure that soldiers are setting goals and meeting them. You should keep in mind as a leader that your soldier may need to get a security clearance, and if their credit is bad with collections or if they have bad debt, they will be denied and you may lose a great soldier. It never hurts to ask them about their finances and job. You should counsel your soldiers from day one at MOB or prior to deploying on how to save money, and then follow up with them during the deployment. Then set savings goals for them and especially follow up with the PX bandits that are spending their pay checks on video games and Twinkies or ordering pizza every day at MOB. Be sure these goals are obtainable and realistic. Be sure to understand their whole financial picture to better help them.
