5 Financial Mistakes Military Families Make (and Can Avoid!)

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Thanks to Rob Aeschbach, blogger and founder of  The Military Financial Planner LLC. Rob’s both a military veteran and a current military spouse who is passionate about helping military families be financially smart. I’m so excited that Rob is on the blog sharing some financial wisdom today!

Avoid these common costly financial mistakes the military families make.


Military families face a lot of challenges. Some of those challenges are financial in nature. But some of those financial challenges are self-inflicted. Here are what I see as 5 of the biggest financial mistakes military families make.

Buying a house

One of the most costly financial mistakes military families often make is buying a house. “Renting is throwing money away,” they say.

No it’s not.

Renting is putting a roof over your head. If I spend $150 a month on electricity is that “throwing money away” because I have nothing to show for it?

Sure, you can build equity in a home that you buy, but just a little at a time. Out of a $1,600 mortgage payment — including principal, interest, taxes, and insurance, or PITI — maybe only about $400 is going toward the principal to build equity. That doesn’t look like a very efficient way to save money, especially when you consider the thousands of dollars in transaction costs when you buy or sell a house.

The nature of the military life means that you’re probably not going to live in that house for more than 3 years. It’s pretty unlikely that the house will appreciate enough in that time for you to break even, so many service members end up becoming reluctant long-distance landlords.

After paying the mortgage, maintenance, and a property manager you might not even get enough in rent to come out ahead. To make it worse, you might take a big pay cut getting transferred from a high cost of living area to a less expensive one. For example, San Diego E-6 BAH is $2,436; Jacksonville, Florida, E-6 BAH is $1,620. That’s a third less. That might make it harder to save up for repairs and vacancies.

Some people are cut out to be landlords; they go into buying a home thinking of it as a business, and it works for them. Some people are just lucky. But many military families are neither, and would be better off renting.

Buying too much car

Too many military families have too much of their monthly pay going toward transportation. They have 2 car payments that take up too much of their pay for too long. Then they don’t save anything for the future.

Try the 4/10/20 rule: don’t get a car loan for longer than 4 years; don’t spend more than 10% of your pay on car loans; and put 20% down on your car purchase so that you’re never “upside down”, meaning you owe more than the car is worth.

If you can’t pay the car off in 4 years, then you can’t afford it. It’s that simple. Find a cheaper car, whether it’s smaller, older, or uglier.

Not taking advantage of free financial education

Each service has a personal financial management program on base that provides free classes and education for military families. You can learn about the Thrift Savings Plan, managing your credit, saving for retirement, buying a car, protecting yourself from identity theft, and more – for free!

Go to your base family service center to get a list of classes and their schedules.

They also do one-on-one financial counseling – for free! You can sit down with one of the counselors to learn how to make the best financial decisions for your family.

Did you get that “free” part? If you’re not taking advantage of the personal financial management program on your base, you’re missing out.

Not using the TSP

The Thrift Savings Plan is a great way to save for retirement. It is simple, and it is easy. It has 5 widely diversified index funds where you can invest in nearly the entire U.S. stock and bond markets, and developed foreign markets.

Not sure what your allocation should be between the 5 basic funds? Not a problem. The TSP also has 5 target date funds, called Lifecycle Funds, that do the allocation for you.

The TSP has the lowest investment fees in the country. That means more of your money is working for you rather than paying the company that runs the funds (While the TSP program is administered by the government, the investment funds are managed by BlackRock, a large multinational investment management corporation).

And yes, you should be saving for retirement regardless of your age or rank. If you can’t save for retirement then you are living beyond your means, or you have in the past and you’re paying for it now.

Not tracking spending

The first step to financial freedom is controlling your spending. But you can’t do that if you don’t know how you’re spending. Track your spending with whatever works for you. A notebook, a spreadsheet, Quicken,, YNAB — there are plenty of options.

Then look back over the last 30-90 days to find the “surprise category”: there is almost always something that triggers people to say “I didn’t know we spent that much money a month on ______ !”

If it’s a surprise, then it probably doesn’t fit in with your values and priorities. The surprise may very well be the cost of a daily latte or energy drink, but it could be dining out, tobacco, cell phones, tolls or other commuting costs, or online services.

And don’t forget to examine your recurring monthly costs, especially for things you might not use as much lately. Netflix, Hulu, Pandora, satellite radio, computer gaming, fantasy sports, gym memberships — they all add up. And while you can skip Starbucks as often as you like, the recurring fees are often there whether you use the service or not.

Everyone’s situation is different, so maybe these issues don’t apply to you. But we’ve all made some kind of financial mistakes in our lives. The key thing is to bounce back and not make the same mistake twice.

Rob Aeschbach is the founder of The Military Financial Planner LLC, a fee-only Registered Investment Advisor firm in Virginia. Rob is a Navy spouse, a retired Marine, and a candidate for CFP® certification.

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