by Thea Pitzen, Guest Contributor
Working full time to supplement your service member’s income? I’ve been there. Unemployed after a PCS and can’t find a job? Been there. Stay-a-home parent trying to make the household run on a single income? Been there too! But no matter where you currently are, there are ways to save money and achieve financial freedom for your family.
5 Ways to Save More Green and Achieve Financial Freedom
Pay Off Debt First
Before you plan a vacation, splurge on a night out, get that new car you’ve been eyeing or even upgrade your wardrobe, pay down debt. When I first got married, I had student loan debt–and plenty of it. When I was looking for work, my husband and I made the minimum payments. But as soon as I found a job, when asked what I was most excited to do with my new income, I answered: accelerate my student loan payments.
We continued to “live” off my husband’s income–renting within our BAH and paying our bills out of his salary–and my salary went almost entirely to paying my student loans. Instead of paying them off 25 years after graduation, I paid them off in 3.
And let me tell you: the day I paid off my student loans, I felt like a physical weight had been lifted off me. Mortgage debt is different in my book (that’s doing good things like building equity and a long history of timely mortgage payments can really help your credit score), but things like student loan debt and consumer debt aren’t doing you any favors.
If you find yourself with a little extra money–be it from a second income, a tax refund or a recent pay raise–consider paying extra on any debt first.
Don’t Adjust Your Standard of Living Every Time Your Income Increases
This may be the thing that has given my family the most financial freedom. When my husband and I got married, even though I was employed at the time, we decided to live off of his salary. We knew that I would soon be leaving my job and relocating to be with him and since we didn’t know how long it would take me to find work again, it made the most sense for us.
When I did find a job, we suddenly had a big boost in income. However, instead of upgrading things like our home or cars, we continued to live off his salary. We used my salary to first pay off my student loans and then to build up our savings, contribute to retirement accounts and then, yes, reward ourselves with the occasional vacation or shopping spree.
We treated my salary as a nice extra, but not as a constant.
We knew all along that another PCS was coming. When it did, I once again left my job and was without an income. Because we had never adjusted our standard of living, we did not have to panic and continued to live as comfortably as we had been.
This is a strategy that works well for us: when we find ourselves with extra income–be it from my job, a deployment, etc.–we generally put that money toward paying off any debt early or into savings or investment accounts. That way it puts us in a better financial spot for days when we don’t have that extra income.
I’m not saying you shouldn’t reward yourself. I’m a big fan of family vacations, the occasional fancy dinner or even just a pick-me-up drink at Starbucks from time to time. But while I am a military spouse whose employment status and income seems to shift with every PCS, keeping our standard of living constant based on my husband’s income has allowed us to live without much financial worry.
And all those “extra” treats are a lot easier to enjoy when you know that your family is financially stable!
Don’t Carry Credit Card Debt
This one is short and sweet: just don’t carry credit card debt. Notice that I didn’t say don’t carry credit cards; I said don’t carry credit card debt. I don’t mean that you shouldn’t use credit. I use credit. In fact, I’ve had a credit card since I was a teenager that I made very small purchases on and paid in full every month for the purpose of building credit. You need credit to get credit and there’s nothing wrong with the responsible use of credit cards.
However, when you use your credit card to buy something you really can’t afford with the mindset that you’ll just make the minimum monthly payments, you can get into trouble quickly.
Look at your credit card like you look at your debit card: you need to have the funds available and pay the bill in full every month. The interest you can be charged on credit card debt can be shocking and there is just no need to be handing all of that money over to the credit card company. If you are already in credit card debt, focus on paying that off before you do anything else. Your credit score and your bank account will thank you.
Look for the Little Ways to Save
When I first became a stay-at-home mom, I quickly noticed that our income was down and our expenses were way up (that baby stuff really adds up). So, I set about finding little ways to save my family money. Of course, shopping wisely at the commissary and the exchange can be a huge help.
Also, despite being intimidated by the “extreme couponers” of the world, I started to coupon. After a few months of clipping coupons I would get in the mail, I branched out into the world of online couponing. Some of my favorite sites are Yes We Coupon and Become A Coupon Queen.
Also, check out store loyalty programs. My family shops a lot at Target, and at first I was wary of the Target Red Card because I didn’t want another credit card. But, I did a little research and learned that we could set it up as a debit card. It was free to sign up, and now we save 5% on virtually all of our purchases there.
If you look for all the little ways to save, they really add up to big savings over time.
Make Saving a Priority
Don’t treat putting money in savings as something you do if you happen to find yourself with some extra cash one month. Make it a priority. Treat it like paying your bills. Make a budget that accounts for saving a little each month and stick with it.
Does your service member have a TSP? If you don’t know, have the conversation.
Consider speaking with a financial advisor about other accounts you might use–like Individual Retirement Accounts (IRAs) or other investment accounts–to maximize your savings for retirement. If you bank with USAA, take advantage of the opportunity to speak with a financial advisor there.
And aim to set aside enough money that you don’t have to stress about things like an unanticipated home or auto repair, or even the loss of income for several months.
Is your military family debt free? What steps are you taking toward financial freedom?
Thea Pitzen is a lawyer and a military spouse who currently spends her days as a sometimes-blogger and full-time mom of an energetic toddler. She also serves on the Board of the Military Spouse JD Network and as a Navy Family Ombudsman. Connect with her on Twitter at @TheaPitzen.