10 Biggest Financial Mistakes. Military Edition




Military families have many unique differences in our finances compared to our civilian neighbors and friends but we are also struggling with some of the same financial mistakes. If there is one thing that all of man kind has in common, it would be the ability to make mistakes.

Of this compiled list of the Biggest Financial Mistakes, my husband and I were making 8 of the 10 mistakes before we decided to turn our finances around. Today, nearly 3 years after “Our Financial Story” began, we still struggle with #10, but we have made amazing progress. Acknowledge your mistakes, and move in the direction of financial security.

Are You Making Some of these Biggest Financial Mistakes?


  1. No Emergency Fund

    In my experience, it is even more important for military families to have an emergency fund, than civilians. We often move every 2-3 years and if one of these moves happens to be an overseas move you will need $5000-$10,000 to have a successful PCS without the accumulation of debt.

    Also, with the current downsizing of military personnel there are not “guaranteed paychecks” although you or your spouse hope to continue serving our country there are multiple reasons this dream may be cut short. More military families are single income homes than civilian families, meaning if the military member for some reason stopped receiving his/her paycheck this family could possibly have no income. The “government shutdown” was less than a year ago, do you remember all of those government employees who were without pay for several weeks???

    How to Fix: Pay yourself first and get on a written plan, AKA Budget. Even if you can only save $50/month at first, something is better than nothing. Sell some things around the house you no longer use. The goal is to have 3-6 months of expenses saved in an emergency fund. This money is ONLY for true emergencies!

  2. Buying New Cars

    A new car depreciates nearly 20% the moment it is driven off the lot and will depreciate 40-60% in the first 5 years of ownership. Plus paying 3-6% (much higher if you have poor credit) interest on the loan.

    I see many young military members driving around $30,000+ new cars and the more popular (and expensive) pick-up trucks. After 5 years, this $30,000 vehicle is now worth $12,000 and you have paid $2300-$4800 in interest. Can someone with an income of $25,000-$30,000/year “afford” to throw away $14,000-$17,000???

    This would be like throwing out a $100 bill every week of those 5 years. Suppose you are a family with two vehicles and a higher income. But don’t the numbers just double? So is it really any better?

    In 2013, the average car payment was $471/month. What would $471/month become if it was invested between the ages of 16 years and 65 years with 8% investment returns? How does $3,386,000 sound??? Your car payment is STEALING your retirement.

    How to Fix: If you are “car poor” meaning your car payments are using too much of your income, for you to get ahead financially. You need to consider selling the car. A good rule of thumb is your transportation expenses (fuel, maintenance/repair, payments) should be around 10% of your income. Meaning a $600/month payment for two cars doesn’t make sense if your take home pay is $6000/month. Purchase reliable, used cars for CASH!

  3. Purchasing a Home

    Often purchasing a home for an active duty military family is a poor financial decision. Financial experts recommend only buying a home if you plan on living in the home for a minimum of 3-5 years. The reason being, this gives the home value a chance to appreciate to cover the closing costs associated with selling a home. Unfortunately, military families rarely live in the same location for more than 3-5 years. Homes near military installations also appreciate much slower than homes in other areas, because there is always a surplus of homes on the market in these areas. It is not rare to see a home being sold for LESS than what it was purchased for a few years prior, near a military installation.

    Purchasing too much of a home can also be a financial mistake. In order to set your self up financially, you should be  debt free and have a 10-20% down payment. You should get a 15-year fixed rate mortgage. If your mortgage payment +insurance + property taxes is more than 25% of your take home pay. You have too much house, and you will be “house poor.” This will make achieving other financial goals difficult.

    How to Fix: If you have already purchased a home, chances are the damage (if any) has already been done. If you cannot “afford” the home you are currently living in or renting from across the country (or world), you need to consider selling it. Yes, you may take a $10,000+ loss but between continual maintenance and repairs you may lose this and perhaps more by holding onto the property hoping the property value will increase.

  4. No Retirement Funds

    Neglecting to save even a minimal amount for retirement, could end up costing you millions of dollars and possibly a comfortable retirement. Just $200/month invested into a Roth IRA or TSP/401K (assuming 8% investment returns) between ages 18 years and 65 years, ends up being $1.1 MILLION! If you wait until you are 38, you would have to invest $800/month to catch up by the age of 65 years.

    The “8th Amazing Wonder”… compound interest! The sooner you start investing, the more time compound interest will work in your favor. Start investing for retirement, NOW!

    How to Fix: Start investing something. Even if you can only pull together an extra $20 or $50 each paycheck, set up an automatic deposit into your retirement accounts. When you receive a pay increase, continue living on your current income and send your raise to your retirement accounts. Continue trying to increase your retirement investments until your contribution is 15% of your gross income.

  5. No Spending Plan

    Living paycheck to paycheck is often the result of not having a plan. Nearly half of all Americans live paycheck to paycheck. Some of these families are living under the poverty level, but many of these families have an income of 6-figures. If you do not tell your money where to go, you will be wondering where it all went.

    Every month, before the month begins sit down and write down your expected income and expenses. Every dollar needs to be placed in a category. There is no room for “extra” or “deficits,” you work out the budget until every dollar is spent on paper. Income – Expenses (Giving, Saving, Spending) = ZERO.

    How to Fix: Sit down NOW with your spouse and write out your income, expenses, and debt. Devise a plan that will work. This plan is the blue print to how you are going to become financially secure. HERE is a link to Dave Ramsey’s FREE budgeting worksheets. Check out this post “The Dreaded B Word… Budget” for further tips and tricks to establish a budget in your household.

  6. Too Much Debt

    Often times, families desperately want to make a difference in the finances and are busting their rears. They are doing everything in their power to tackle debt or establish an emergency fund and the wheels are just turning with no traction. Some families simply have too much debt and can’t seem to make much headway.

    A general rule of thumb is if you have a debt to income ratio higher than 30%, you have “too much” debt. For example if your take home pay is $3000/month and your total debt payments are more than $900/month , you simply have too much debt.

    How to Fix: First step is to immediately stop borrowing. Take those credit cards out of your wallet and no more new debt. Tackle your smallest debt with a vengeance. Have a yard sale, sell a few things on craigslist, get a couple of side hustle jobs (babysit, walk dogs, etc.) to get your first few hundred dollars to pay off your smallest debt. By paying this smallest debt off, it should free up $20-$50 in monthly payments and this can be put towards paying off the next debt. Snowball your debt!

  7. Eating Your Paycheck

    Quite literally sometimes. Do you eat out at restaurants often, don’t brown bag your lunch? You may be guilty of eating your paycheck. Have you ever totaled your monthly expenses for restaurants?

    We were guilty of this! We went out to dinner 2-3 times a week and out to lunch 1-2 times a week. Assuming each lunch was ~$7 and our average bill for dinner was ~$40.  We were spending $370-$600 at restaurants in a month! This does not even include groceries. Yikes! I know this is quite “average” and there are many families who eat at restaurants more.

    How to Fix: Slowly change your habits. If you eat out at lunch 3 days a week, set a goal of only twice a week. If you eat dinner out 4 times a week, set a goal of three times a week. Once the new habit is comfortable, lower your goal by another meal. My husband and I now eat at restaurants 2-3 times a month. Yes, we went from 3-5 times a week, to 2-3 times a month. This transition did take over two years and you don’t need to be as extreme as us. But remember, each meal at home is going to save you a considerable amount of money, so consider it a win!

  8. Not Working Together

    Typically in a marriage there is one person who is the “finance person” who pays all the bills and is responsible for keeping an eye on all the accounts. I’m here to tell you there is a much better option!

    Both spouses need to have an active role in establishing financial goals, setting a budget, paying bills/buying household items, etc. This is especially important in a military family because of the frequent separations secondary to deployment, TDY, training, etc. Each spouse needs to have ownership and responsibility of holding up their end of the agreement to the financial “game plan.”

    If you do not have team work in your finances, chances are one spouse is sabotaging the other’s goals/plans, possibly without even being aware of how their actions are effecting the family’s financial security. Working together is going to relieve a lot of stress for both spouses and remember the old saying “two heads is better than one.” I promise you, financial teamwork is going to get you to financial goals much faster than you ever dreamed possible.

    How to Fix: Set up a financial “date night.” Remember “finance person” this is NOT going to be fun for the non-finance person. Get your spouse up to date on your current finances (income, expenses, debt, investments, etc.). Remember just the basics, no details or spreadsheet after spreadsheet. Then talk and dream about your financial goals. Set up your next budget meeting “date.”

  9. Not Planning for Military Separation/Retirement

    Your military separation/retirement is going to be a HUGE transition in your life. Not only for your career and family life, but also for your finances.

    You may be thinking I have only served 5 years or 10 years, I have a lot of time before retirement. However, less than 20% off all military members serve a 20 year career. Meaning there is a high chance that your military career will be cut short, whether voluntarily or not.

    Even among those who do serve 20+ years, I hear time and time again how they have no “game plan.” No emergency fund. No extra training or education. No plan on how to obtain civilian employment.

    How to Fix: Whether you are just starting your military career or nearing 20 years, you need to start planning for the day you leave the military. Set yourself up financially to be able to “survive” 6+ months of employment searching and to be employable in a civilian career field. Read this post, “Military Retirement” for further details.

  10. Not Taking Advantage of FREE/Discounted Services

    There are many FREE services on a military installation to help you with your finances. If you are unaware of these services stop by or make an appointment with your installation’s family readiness center/group to inquire about these services.

    Many families are financially devastated when the “bread winner” of the family unexpectedly passes away. Did you know military members and spouses are automatically enrolled in life insurance policies? Look into your policy and make sure it would be enough for your family if the unthinkable happens. Along those same lines, military members can receive free legal counsel. Make sure you have a Will in place just in case the unthinkable happens.

    Military members and dependent family members can also receive FREE financial counseling, pre-employment services, and transitioning counseling. Please take advantage of these FREE services.

    How to Fix: Educate yourself about the available services. Inquire at your local readiness center/group, ask fellow military members about available services. Read the emails and newsletters that are sent to you that typically have further information. Attend a class or two.


There are many things you can do to place yourself and family in a better financial situation. Remember to stay focused by conquering just one or two goals at a time. Prioritize your financial goals and remember one step, one day, one dollar at a time. YOU CAN DO THIS!


Don’t miss another post, be sure to follow Budget Loving Military Wife!     twitterbutton  pinterest button facebook
If you have enjoyed this post, please share with your friends using the social media share buttons below!


What have been some of your financial mistakes? Do you have financial tips for military families?


Optimized-DEBT    Optimized-militaryhome   Optimized-Key Habits

Shared on: Create it Thursday, Thrifty Thursday, Thrifty Couple

25 thoughts to “10 Biggest Financial Mistakes. Military Edition”

  1. We are new to the military and for sure living paycheck to paycheck. He isn’t being paid correctly either. I just want some ideas to not be so stressed and get into fights all the time. Our one year anniversary is coming up and we are already in a fight everyday. I love all these ideas I just need a little more

    1. Meagen, there are so many of us that can understand your situation. We’ve been there! Military life and newlywed life is TOUGH! There is no doubt about that!

      My suggestion, would be to start with trying to establish a united front with your husband. Sit down to a home cooked meal or a good cup of coffee without any other distractions and DREAM. Talk with your husband about what the two of you want out of your finances, what are your goals ($500 rainy day fund, pay off debt, vacation, contribute to retirement, etc.)? What would it mean to you to be financially secure? How important is it to you and how would it make you feel to not have to stress over finances? All judgment and past mistakes are not invited to this “financial date.” Try to establish 1 or 2 common short-term goals, that you can work towards, together.

      Living on a new military paycheck can be extremely tight. Therefore it is even more important to live on a written plan and know where every single dollar is going. I know it is tempting to be as strict as possible, but be realistic. Remember it is okay, and you should adjust your budget throughout the month for unexpected expenses.

      Please feel free to email me at budgetlovingmilitarywife@gmail.com I would be more than happy to answer any questions and provide more tips! 🙂 (I’ve emailed you! 🙂 )

  2. Great article!! I’m excited to get our plans in place. What do the pre-employment services offer? My husband doesn’t know what that is. I’m applying for jobs now, should I go to this service?

    1. Thank you so much Amanda! I’m excited for you and your husband as well! 😀

      Yes, definitely! The pre-employment services that I know about include: help with your resume, tips on how to land a government job, interview tips, and they may have some leads on certain jobs around the area too! I’m sure the services vary between installations and branches, but it’s FREE, and it couldn’t hurt your job search, right? Best wishes!

  3. I love that you included the tip about not buying new cars. We’ve tried to talk family members out of buying brand-new cars because of the fact that you can get a nice, couple years old car for much, much less. My husband and I have a rule of only paying cash for cars (and we don’t drive the best, my husband just sold his car for $600 haha, but it got us everywhere we needed to go!)

    1. I absolutely agree Rachel! 🙂 As long as it gets us from point A to point B it’s good enough for us to drive! We currently drive one of the cheapest cars we’ve ever owned. Probably only worth $1000-$1500. LOL! Thanks so much for reading and leaving a comment! Best wishes!

  4. Great post! Before my husband, I was absolutely horrible with money. By 21, I had 5 credit cards! FIVE! Luckily we got them all paid off and as a team, we’re really good with our money. We do have a newer truck (2011), but it’s our only car payment. We also have our main credit card that we’ve used for larger purchases such as our washer and dryer (which we always pay off quickly). We also have our joint savings for emergencies. Overall, we do really well. I have one friend who’s living paycheck to paycheck (on two full time incomes) so I asked her about her and her husband’s spending habits and they just purchased a $500 Christmas tree from QVC over the holidays…and they wonder why they barely have enough money to get by. It’s crazy to me.

    1. Thank you so much for stopping by and sharing your story! I’m thrilled for you and your husband that you are doing well with your finances! I LOVE hearing about other military families who are succeeding with managing their finances! 🙂 It is so difficult to see family and friends who continue to struggle with their finances. We’ve learned that it is just best to lead by example and manage our finances the best we can. Over the past few years we’ve had family and friends ask for tips once they were ready to change their finances around! People will only change when they are good and ready to do so. Best wishes to you!

Comments are closed.