Tag: budget

Some simple but probably not so easy money saving tips

One sure fire way to increase stress and problems after your transition, or in your marriage, is to jack up your finances.  Living paycheck to paycheck and being thousands of dollars in debt is one of the worst feelings in the world.  It’s like you’re sprinting on a hamster wheel and it seems as though there’s no way out.  So here are some ways you can save big bucks, but you’re probably not going to like them all.

Pack Your Lunch- up to $200/month

Unless you’re eating at the DFAC, buying lunch is going to cost you $7-10 a pop.  If you’re doing that every day that means you’re spending somewhere around $50 a week on lunch.  Don’t get me wrong, I love a good whopper or a delicious buffet, I’ve got the pounds to prove it, but my wallet can’t take that kind of hit every day.  If there is more than one person in the house doing that, then you’re really into some big dollars.  If you pack your lunch, you can usually feed yourself for $2-3 which means you’re saving $35 a week.

Cut the Cord- $100/ month

Drop the cable bill.  Most of you already have a Netflix and Hulu account, then you’re also paying $150 a month for cable?  Let’s face it, you’ve got like 6 shows you DVR, but otherwise you’re not watching cable.  The one holdout has been sports for a long time, but now even they are moving to streaming services.  Get yourself a high-speed internet service for $50/ month and save on all those channels.  If you have that one favorite show that you just can’t get, you can always buy that show on Amazon.  You can usually get a whole season of something for like $30 which is still less than what an entire month of cable will cost.  Besides, the cable companies are assholes and I can’t wait for those fuckers to go out of business.

Quit Tobacco

If you’re a veteran, chances are you have smoked or dipped a day or two.  This one sucks, but if you are strapped for cash, you should total up how much you’re spending on chew or smokes.  Seriously, do the math, then think about what you could be doing with that money instead of spitting it into empty soda bottles.  I understand that shit is as addictive as cocaine, just writing this makes me want to drop in a plug and I can barely have two beers without needing a smoke, but I am a tightwad and that is a waste of money.  Just think about it.

Trade in your car

Oh yeah, I went there.  I once wrote an article about my Prius and how frustratingly smart of a financial choice it was.  I actually was paid to buy that car, and it reliably gets me to work every day.  I drive it for around 5 hours a week and fill up gas once a month.  It costs me $15 a month to get to work and back.  I used to drive an F-150, it was beautiful. This gorgeous black extended cab with leather seats, navigation, and XM radio.  I smiled every time I got in the driver’s seat, but I paid almost $300 a month for that thing and gas was atrocious.  So I made the decision that was right for my family and got rid of it.  I might not drive around as nice of a vehicle anymore, but I’ve taken my family to Disney several times and there are 5 digits in my savings account.  To me, it was a worthwhile trade.

Some things are easy to budget for: groceries, gas, electric, mortgage, etc. But some things catch you by surprise, like maybe your lunch bill.  Take a close look at your expenses and see where you can afford to make a cut.  If you do everything on this list, some of you can save up to $600 a month.

Being debt free is really like being released from bondage and financial security is a tremendous reward for your hard work.

-LJF

 

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Why I drive a Prius and Other Begrudgingly Smart Financial Choices

I haven’t had a car payment for almost five years and it has been awesome…except for the fact that my 2006 Honda CRV was getting a bit boorish to drive and I really wasn’t a fan of the armrest.  Those are pretty silly reasons to buy a new car, and every time I went car shopping, I came back to the same realization that I loved money more than I loved a new car.  Then in mid-August a teenager not paying attention slammed into the back of my CRV as I was waiting on someone making a left turn.  The car didn’t really have much damage, but the bill for repair was approaching the value of the car and it was declared totaled and I got an $8,000 check.

 

I like to take my time making big financial choices, so I was a bit disappointed that I had less than a week to decide on a car.  I had three options as I saw it:

  1. Buy a similar vehicle to the one I had and stay on the savings plan to purchase a newer car in the next few years
  2. Spring a few extra thousand dollars and get a slightly nicer used car
  3. Put the $8,000 towards a new car and take on a car payment

After spending a weekend with every used car salesman in a 20 mile radius, I ended up settling on option #1 and purchased a Prius with similar mileage and a similar year to the car I was already driving, except now I have more than doubled my gas mileage and will probably only fill up the tank once a month (I’ve spent $14 on gas since mid September).

So now my household has a Prius and a Minivan.  I’ve thought about putting a Ranger bumper sticker on my Prius, then supplementing that with a “my other car is a minivan” sticker, because that’s just the kind of guy I am.

Look, it’s not sexy, and not a “fun” car to drive, but it’s comfortable and it gets me to work every day.  It’s a reliable vehicle and it protects me financially, and as I have told you in the past, strong finances also protect your marriage.  So by making this choice, some of you “manly-men” might make fun of me, but the most important relationship in my life is protected, so insult away bitches.

Other Frustratingly Smart Choices

I recently took a promotion within my company, moved my family back to North Carolina, and drove 45 minutes one way for nearly a year because I had a rental property that I couldn’t sell.  I know many of you have gone through this same pain in the ass problem.  We moved my big ass five person family into a small 3 bedroom 1600 square foot house for months because it was the smart financial choice.  When we finally sold it, we upgraded some, but stayed well below 20% of my salary in the new home and cut my drive to 20 minutes.  We could have afforded much more house, but we both know this isn’t our final living place, and our ability to save money is more important.  It also gives us greater financial flexibility.

I only learned these lessons because I made the mistakes before.  Less than a decade ago I was living in a house far more expensive than I needed to be and I had a $500 a month car payment.  We lived almost paycheck to paycheck, and whenever I got an overtime check, we would spend that too.  It wasn’t until I had to take a pay cut that all our bad habits cost us.  We argued, she cried, the stress was terrible, and I had to get rid of my beautiful truck and buy the minivan then drive the CRV.

We made, and still make, sacrifices financially, but we don’t have any debt.  We stay on a strict budget that fits our needs that includes entertainment, and going out, and new clothes for everyone regularly.  We take vacations, and now we never feel like we don’t have money, and folks let me tell you that feeling is so much greater than the new car smell or a great big house you don’t know how you’re going to pay for.  Those things aren’t going to bring you joy like being able to buy your kids the present they’ve been wanting without batting an eye. We’ve also become much more generous givers able to donate significantly to charity.

Being debt free means to have complete ownership of all the money you earn, and sadly very few people have EVER felt that.

Imagine not owing anyone.  Imagine not having to pay credit cards, student loans, car loans, etc.  Imagine getting a check and not being a slave to anyone else.  I strongly recommend Dave Ramsey’s Financial Peace University, you can scroll down and find a class near you.  In Proverbs it says “the borrower is slave to the lender”, becoming debt free is releasing your own shackles.

Having debt is like a constant weight that you have to carry around hanging off every single paycheck.  No matter how hard you work, or what promotion you take, it never feels like enough.  We live in a culture that thrives on materialism where status is given by your belongings…but it’s all fake.  Some things are worth more than a fancy car or a really big house, and being financially secure is one of them.

Set yourself free!

-LJF

 

 

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What is an E6 Pay worth really?

Here at CONUS Battle Drills I keep telling you about the Big Four Questions every veteran absolutely must answer before getting out.  Despite Chad’s very eloquent and convincing reasoning for asking “Why” first, I maintain that if you are not financially ready, or don’t understand the financial ramifications of your decision, it doesn’t matter if you have the best reason in the world; you can’t get out yet.

So what is your pay actually worth?

I asked an E6 friend of mine to send me an LES so I could show what the equivalent pay would be in the civilian world.  I did some analysis to make the take home bi-weekly pay as close as I could get them while still being a near apples to apples comparison.  In the civilian world, you have to pay for healthcare and retirement, so I included those in the civilian column, but only the dental in the military column.

Here is how it shakes out:

pay comparison

So this E6 is making the equivalent of almost $7,500 a month even though his base pay is only $3,719!

Here is the mistake that I made when I got out: I thought a “comparable” salary meant making the same as my base pay and I was WAY wrong about that.  For some reason, I didn’t take into account the additional expenses in health care and retirement and the loss of BAH, that’s why I’m telling you about it now.

BAH and BAS are also not taxed, which means that even the tax burden for the civilian is higher because he’s in a much higher bracket. Some of these numbers can change depending on the number of tax deductions, the state that you live in, your election of 401k, how much your health care costs, etc. but the point remains:  Your base pay is not representative of your take home pay.

There are, however, some major considerations you need to take into account…

Just because you would need to make nearly double in the civilian world to have a similar take-home pay, does not mean that’s how much you’re worth.

Sorry to tell you this, but you’re probably going to start off making similar to your base pay because that’s what your skills will translate to in the civilian world, and for those of you in senior leader positions, expect less than your base pay (hopefully you can supplement with retirement).

I’ve told you before you need to make a budget, and in the book I discuss this in even more detail, and if you look above, you should notice why that’s even more critical when you get out.

Financial struggles are usually where troubles in marriages begin.  It’s the first snowball that can lead to so many other bad decisions.  For veterans, there are even more issues because you don’t even know what to expect from a paycheck, you’ve never paid for healthcare, and you’ve never HAD to save for retirement.

It’s not all bad news, ok, but I want you to be ready for what is coming.  I want you to fully understand the ramifications of your decision.  I want you to see all the cards on the table, that’s what CONUS Battle Drills is about.  The point is to prepare you so this transition isn’t a kick in the nuts.

-LJF

Share this post, it’s possible someone you know is about to get out and make a terrible financial decision.  Let’s look out for each other.





The 4 Big Questions-Finances

  1. Are your finances in order?

Before you get out, make sure you have zeroed out major debts.  I really recommend paying off cars and having as few monthly payments as possible.  Take a look at what your monthly expenditures are and make a budget.  This will let you know exactly what you need to survive.  If that number is equivalent to what you are making in the military (including BAH), then you’re spending too much.  Chances are, your first job is going to be equivalent to your base pay, if you’re lucky, but probably not higher.  So you’re going to have to learn to survive on just your base pay.  You are going to be entering a world where salaries are negotiable, and employers are going to offer you the least they think you will accept, so you need to know exactly how much you need.  You and your family are used to living at a certain standard, you’re going to start off below that standard, and you need to know exactly what your floor is.

Also, there are taxes to consider.  If you’re like me, I kept my Florida registration so I didn’t have to pay state income tax.  Once I got out, that all changed and it was a kick in the nuts to have that extra expense.  You’re going to have to pay for health care now as well and that’s not cheap.  There are a lot of unexpected financial hits that you’re going to take, and it’s best that you’re set up to take those punches.  If you’re not ready now, take a few months, maybe extend out your ETS date if you can so you can get it together.

Here is an example of what happens with my paycheck.  Take a look at the deductions and taxes!

paycheck

This is something I certainly wasn’t prepared for.  About 40% of my paycheck is gone before I even see it.  Some of that goes to pay for my healthcare, some goes into a 401k for retirement, some goes into a dental policy, and some goes into a Health Savings Account or HSA.  So if your target salary is $72,000 a year, make sure you’re not planning for having $6,000 a month in your bank account, you’re probably only going to bring home about $48,000 of that.

For most of you while you’re in, your base pay is pretty much equivalent to what ends up in your bank account.  If you’re deployed you’re not paying taxes, and if you’re stateside, you have COLA, BAH, and BAS.  Once you get out, everything is coming out of that base pay, plus health care costs, plus you’re paying for your retirement somehow.  I didn’t realize this and accepted a lower base salary than I would have if I realized I was going to lose 40% off the top.

If you’re thinking of getting out, go make a budget right now.  You can’t even start to look at jobs and salaries until you’ve figured this out.

 

 

-LJF