Working Overseas: Military Spouses

I’m back after a LONG break dealing with our overseas move. There is so much to talk about in the finance arena related to this move, but the focus of my post today is on military spouse employment overseas. This is a huge issue for many military families that receive overseas orders. The first question is whether the spouse is allowed to work at all (you have to check the Status of Forces Agreement- if there is one). Assuming you are allowed to work, is employment available that matches your skills? In many locations, the answer is going to be no. Much of what is available on base is limited to employment through MWR or the NEX/commissary (if there is one). You can pursue a DOD civilian job, or a job out in town.

In my situation, I had worked remotely as an engineer for 9 years, and the company did not want to continue to employ me in Southeast Asia. I have a bachelor’s degree in engineering and graduate degrees in theology and nuclear engineering. I brushed up my USAJOBS resume, and applied for a couple of jobs (for which I was not selected). I setup an account on Flexjobs.com. There, I was able to become part of a contract editor pool for a company that edits technical journal articles. I also decided to get certified as a personal trainer through ACE, and I can get clients as an MWR contractor once I finish that.

Another factor in military spouse overseas employment is the need for flexibility. School schedules may not match up with US holidays, and often the military member is gone frequently. Thus the military spouse is the one who needs to always be available for the kids. Military families often take advantage of the opportunity to travel that comes with living overseas, so starting a new job with restricted amounts of time-off might not be ideal.

I am hoping to cultivate some transferable skills (the technical editing and personal training) during this tour. They are not location specific, and both are flexible. Side note: in order to take childcare tax deductions, both spouses need to be working or in full-time school. So, having at least some part-time income is important!

A quick Google search for top jobs for military spouses overseas was underwhelming, to say the least. Most list things like “transcriptionist, virtual assistant, English teacher, babysitter, pet sitter.” Many of my friends are employed in some way here. Their jobs include: substitute teacher, cake baking, selling clothes/belongings online, teaching exercise classes, personal trainer, online tutoring, photographer, health coach, sewing, and working remotely for US-based companies.

Are you a military spouse working overseas? I’d love to hear what you do and how you got into it!

Our Path to Financial Freedom

For those of you wondering who I am and why I’m giving financial advice, this is the post for you. When I was 16 or 17 my dad sat me down and started explaining investments to me. He and my mother had saved money for me to go to college in an UGMA account, and when I turned 18 it was going to be turned over to me. I already had a full ride to college because I chose to go to a relatively inexpensive large state university to study mechanical engineering, and I had a perfect SAT score. On top of this, I had decided to join the Navy after I graduated from college, so I joined the Navy’s Nuclear Propulsion Officer Candidate program. Under this program, I was paid an E-7 salary including BAH for three years in college provided I maintained a B average or better in my technical classes, and passed the PRT every 6 months. I was able to pay for college including room and board myself, and never touched the money my parents had given me. I graduated from college with a net worth of about 50k, and headed off to Officer Candidate School. Graduating from college without debt, and with some money saved was a huge head start in life that I only appreciate 20 years later. The gift of money also motivated me to start learning about investments early in life because I wanted to be a good steward. So I picked a few mutual funds and moved on (this was before I knew about index funds).

For the next few years, my finances were fairly automated. I was not making a ton of money compared to my peers in engineering, but my expenses were very low, particularly since I spent a good portion of the next 5 years deployed. I maxed out my Roth IRA, contributed 15% to TSP, and still had money leftover that I put into a taxable investment account. Now I would advise maxing out TSP as well, but at the time I wasn’t sure I wanted to put all that money in my retirement account. Note that TSP was not matched for the military at this time. By the time I got married six years later, I had bought a condo and I had a net worth of about 200k. The condo, unfortunately, I bought in 2006 at the top of the real estate bubble. I sold it at a loss five years later, and it still has not recovered in value. I did not keep it because we moved away from the area, and I did not like being an absentee landlord. Also rent did not cover the mortgage due to the high purchase price. So it was an expensive but survivable lesson.

I left the Navy in 2008, right before the recession. For 2.5 years, my husband and I were a DINK (dual-income no kids) family making about the same amount of money. Then, we started having babies. I switched jobs a few times, and we moved overseas. What really accelerated our savings was having very little to spend money on overseas. Amazon Prime involved delayed gratification, and there were only so many things we wanted to buy at the Navy Exchange. We didn’t travel a ton because we had a baby, and I was quickly pregnant with our 2nd child. I did continue to work, and we saved my entire salary because I had read “The Two Income Trap,” which is a phenomenal book warranting its own separate review. (I should note here that I was extremely lucky to find a job overseas, and also I didn’t have to obtain full-time childcare as I just had the one baby and I was able to do much of the work from home).  The premise is that when you live off of two incomes, you really double your risk because either person could be injured or lose his or her job. Having two incomes is great, but if at all possible, try to depend on just one.

We returned from overseas with a 2 year old and 1 year old, and I was able to negotiate a part-time remote position with my old boss. Later that year, at the end of 2013, I was pregnant with my 3rd child and doing our yearly rebalancing, and I realized that compound interest had really begun to kick in and we were set to enter 7-figure territory (at the age of 32). Also, when I looked at the monthly net worth change, I realized that we were making more from our investments than we were from my job*. We had been investing in index funds, maxing out our Roth IRAs, and contributing up to 20% to our retirement accounts (401k, TSP). My corporate jobs did match 401k contributions, typically at 5%. We did not have super high incomes. My husband is a Naval Officer, and I made around 90k full-time, 45k part-time. We were very diligent about saving, and all the creative work arrangements I’ve had in the last 8 years meant we mostly avoided the full cost of day care for three kids. We paid for preschools and babysitters, and private elementary school for two years for my eldest child, but all of that was still less than full time daycare would have been. Until recently, we had a 10-year old Camry and a newish minivan. Basically, we didn’t have debt, we automated our savings, we invested mostly in index funds, and our biggest extravagances were food (we like good food), and trips to Disney World. 

Many financial independence blogs are written by doctors or people from the finance world with super high incomes. I share our story to encourage you. We clearly had some major advantages, including graduating from college debt-free, and mostly free medical care. We do not own a house, due to moving every 2-3 years. We did make a few mistakes, and I would not say that we are frugal. We enjoy a great steak dinner, and we love date nights even though that means paying $50-100 for a babysitter. Part of military life means we have never lived close enough to family to enjoy free babysitting. So even if you are not a super-couponer, and you love Disney World, and you have 1/2/3/4 or more kids, you can achieve financial independence* on a military salary.

*I’m not using a super technical definition of financial independence here. We make more from our investments than we do from our day jobs, and we are able to buy (within reason) what we want without much deliberation. We have a large cushion that helps us deal with the ups and downs of life, and mostly frees us from worrying about money. I have not factored in military retirement here, or the fact that we both still desire to work- on our terms.

It’s Not About the Latte

Have you heard of the latte factor? Advocates for frugal living love to hate on the $5 Starbucks latte. I would suggest a more nuanced approach. It’s about value, right? If that $5 latte improves your happiness, I would say it’s totally worth it. It depends on your goals, the money you have available for “wants,” and the happiness payoff you get. When my kids were not in school yet and I was working from home, that $5 latte was the price I paid for a place to do my work out of the house. I also enjoy lattes from coffee shops more than the ones I can make for myself. I’ve been trying to 10 years to recreate a Starbucks latte at home, and I can get pretty close, but it’s never quite as good.

Here in Singapore, that $5 latte is $7 Singapore dollars, and even though Singapore dollars are worth less (thus the price is actually about the same), I can’t mentally accept spending 7 (Singapore) dollars on coffee. So the search is on for a Starbucks replacement.

Apart from coffee, the latte factor is actually a useful way to think about anything you spend money on daily. Those little bits add up. Try to think about whether you get a happiness boost from those little splurges, or whether they are just habits. It is about mindfulness. If you are choosing to spend money on things that make your life better and you can afford to spend the money, then you are making good choices.

Financial independence is a worthy goal, and totally possible on a military salary, but it does not require true frugality. What we are after here is better decision making in large and small purchases.

Beating the latte factor: One money nerd’s quest for the best cheap coffee

Overseas PCS Bits and Pieces

It’s been a few months since I last posted. I’ve been busy moving my family to Singapore! We have lived in Italy before, but this move was a little bigger. We sold and got rid of a bunch of stuff because we were worried about our weight limit, and we also sold both cars. Cars are driven on the left side of the street in Singapore, and the driver sits on the right. For this and other reasons, we were not permitted to ship a car to Singapore. After running the numbers, I determined that we would be better-off financially selling our 5-year old minivan, rather than storing it and having it depreciate.

We are currently still in temporary housing, and we haven’t seen our stuff since early July. We are eagerly looking forward to moving into more permanent housing and getting our household goods delivered.

Although the military paid for the movers and the flight, I have been reminded of the importance of a healthy emergency/cash fund several times during this move. A few examples: we were using budget billing with Baltimore Gas and Electric, so our final bill was over $700 (since we were coming from a temperate climate where the highest bills were in summer and winter). It took our landlord over a month to send us our rental deposit. We paid cash for a used vehicle from another military member, and then we had to pay upfront for the year of insurance, road tax, and registration. Living temporarily in a hotel is expensive too, both for the lodging and the meal expenses. This does get reimbursed – eventually – but you have to be prepared to front at least a month of these expenses.

Especially during a PCS, it is important to regularly check your LES since it often takes a while for BAH and entitlements to catch up. We were overpaid in BAH our final month in the U.S., which was immediately deducted from the next pay period.

Finally, I worked from home as an energy engineer for the last five years, and my company decided not to continue my employment in Singapore due to concern about legal and tax issues. As a military spouse, even one working from home, losing your job or having to quit is a risk with any PCS. So in the middle of all the financial changes, I’m also no longer employed! I’ve been wanting to shift gears professionally for a while, so I’m hoping to use this opportunity to do a lot of brainstorming and trying new things.

What Exercise and Investments Have in Common: Paying Yourself First

It is often said that putting money into savings is paying yourself first. I put this into practice a long time ago, having my retirement savings contributions automatically deducted from my paycheck or bank account and invested. Living without that money in the present, as well as maintaining the automatic contributions, requires some fiscal discipline. Exercising is another way of paying yourself first because it makes you happy (endorphins) and positively affects your health.

When it comes to exercise, all too often I let how I’m feeling that day determine whether I exercise.

With three kids, it’s not hard to convince myself that I’m too tired or too busy to spend time exercising. Unfortunately, that’s as short-sighted as spending all my money today and telling myself that I’ll catch up on my savings later when I have more money and fewer expenses. I’m not paying myself first.

So how do we make exercise more like automatic retirement contributions, removing the emotional component and the need to make daily decisions? I suspect the answer lies in thinking through what is required for the exercise and trying to make as many decisions in advance as possible.

I typically exercise by running 3-5 miles, or by completing a Beachbody video. I ran the New York City marathon in 2009. What allowed me to successfully complete it was the training schedule I setup for myself. Each day, I didn’t have to decide how far to run since that was already part of the schedule. I allowed some wiggle room on daily runs, but mileage on my weekend long runs was non-negotiable. And guess what? I didn’t have any problem running my first marathon.

Going forward, I’m going to make a workout plan, put it in my Google calendar, and remind myself daily to pay myself first when it comes to my health and happiness.

What about you? Are you good about “paying yourself first” when it comes to money and wellness, or does one area tend to slip?

What I Will Tell My Daughters About Saving Money In Their 20’s

This is the first in a series of posts about what I plan to teach my children about money. It includes calculations using 2018 military salaries and typical rank advancement dates.

In your 20’s, you need to be saving like crazy. I know, because I’m a woman in my 30’s who saved hundreds of thousands of dollars in her 20’s. I started saving money at 18 because I had a full scholarship to college and I was also getting paid to go to school by the military through the NUPOC (Nuclear Propulsion Officer Candidate) program. Why am I talking to you and not your brother? The answer is simple: because the gender pay gap is really the motherhood pay gap. (In reality, I will of course encourage my son to save money early just like his sisters).

Here’s why saving early is so important:

Compound interest is on your side. Time is your friend. The more you save now, the less you need to save later. You can get a major headstart by starting to save money in your early 20’s.

You may find that you want to have children. When those children are born, a few things may happen. You may take time off for maternity leave. If you work for the military, this is paid. At almost any other company in the United States, it is not paid. At most you will get short term disability, which is nowhere near full-time pay. At this point you will either go back full-time, find a different more flexible job, or stop working for pay. The point of saving early is to give you the financial flexibility to make the choice that is best for your family without stressing as much about the financial ramifications.

I’m going to walk you though a few case studies so you can see exactly what I’m talking about. We are going to assume a timeline of 8 years, and a conservative average return on investment rate of 6%. We will also assume all of these women were 22 at commissioning and started with a net worth of 0 (thanks to ROTC/Academies). They do not have school loans. The charts that follow use the actual 2018 pay tables and account for changes in base pay (and therefore dollars saved) due to rank change and time in service. I assumed each woman would make O-2 after 2 years, O-3 after 4 years, and O-4 after 8 years.

Case A: Jennifer is a newly commissioned Ensign making O-1 pay. She elects to put 30% of her pay into TSP because she read somewhere that was a good idea. At age 30 after 8 years in the military, Jennifer is an O-4, and assuming she did not save any other money, she has $167,253.47 dollars.

Age 30% Savings Rate
CY FV PS Total saved
23 $11,500.57 $11,500.57
24 $11,500.57 $12,190.60 $23,691.17
25 $15,090.96 $25,112.64 $40,203.60
26 $17,379.08 $42,615.81 $59,994.89
27 $20,456.56 $63,594.59 $84,051.14
28 $20,456.56 $89,094.21 $109,550.77
29 $21,437.97 $116,123.82 $137,561.79
30 $21,437.97 $145,815.50 $167,253.47
31 $24,428.85 $177,288.68 $201,717.53
32 $24,428.85 $213,820.58 $238,249.44

 

Case B: Elizabeth is a newly commissioned Second Lieutenant. She knows that she should save money, but retirement is a long way off and she doesn’t make that much to begin with right now. She decides to put 5% in TSP. After 8 years, she has $27,875.58.

Age 5% Savings Rate
CY FV PS Total Saved
23 $1,916.76 $1,916.76
24 $1,916.76 $2,031.77 $3,948.53
25 $2,515.16 $4,185.44 $6,700.60
26 $2,896.51 $7,102.64 $9,999.15
27 $3,409.43 $10,599.10 $14,008.52
28 $3,409.43 $14,849.04 $18,258.46
29 $3,573.00 $19,353.97 $22,926.96
30 $3,573.00 $24,302.58 $27,875.58
31 $4,071.48 $29,548.11 $33,619.59
32 $4,071.48 $35,636.76 $39,708.24

Case C: Jamie is a newly commissioned Second Lieutenant. She does not elect to put money in TSP, and instead uses the career starter loan to buy a new car. At age 30, she no longer has the car, but has a net worth of $2000 in cash. She visits a financial advisor who gets her contributing 20% to TSP in an effort to get caught up.

At age 30 (after just 8 years) who has more choices? One of the things about investing consistently over time is that at some point, you make more on your investments than you do on your day job. At that point, you have a considerable amount of financial freedom. Want to quit your job and stay home with munchkins for a few years? Great! Want to continue to work full-time? Great (you can afford the childcare)! Want to be an artist/musician/blogger/preschool teacher? Great!

I want to point out a few things to really drive the message home. Jennifer saved $135,472 and earned $31,781 in interest. Elizabeth saved $22,579 and earned $5297 in interest. The amount Jennifer earned in interest was more than the amount Elizabeth contributed and earned in interest combined. At the end of the charts, the net worth change from 31 to 32 really illustrates the point since Jennifer’s increases by about $36,500 and Elizabeth’s increases by about $6000.

I don’t know about you, but I’m not super interested in what my net worth will be at 90. I do care what my net worth will be at 40 and at 50 because those numbers have a direct correlation with my quality of life, and the quality of life I can enjoy with my family.

Did you save money in your 20’s? A lot,  a little? Tell me about it!

Top 10 Tips for Hosting (or Attending) a Child’s Birthday Party

** Factors to consider include money, your mental health, and the mental health of other parents.

  1. Limit the number of guests to the age the child is turning. For instance, a child turning three gets invite three friends. I do not include siblings or cousins in this number.
  2. If the child is young enough to not really have friends, host the party at your house, and invite friends or family. Super low key is the way to go. You will have plenty of future opportunities to go all out.
  3. Do not feel obligated to supply party/favor bags. No one needs more plastic junk made in China. Things I have given out in lieu of favor bags: balloons, a nice playground ball, a self-decorated apron, self-decorated gingerbread cookies (at a Nutcracker birthday), tutus, coloring books, and water guns.
  4. If the child has a summer birthday, count your blessings and host a backyard party revolving around water play.
  5. Remember that your stress level and time outlay are factors. Definitely outsource the cake or cupcakes if that is a source of stress for you. Whole foods and local grocery stores often have great options that aren’t too expensive.
  6. Once kids are old enough to be dropped off, make that an option for parents.
  7. On a similar note, be sure to note on the invitation if siblings are included or not. I usually try to just take the kid that was invited, but with an active duty husband that’s not always possible. I do always ask and offer to pay for the extra kids if I’m bringing siblings.
  8. Don’t buy a card– have your child make one for the birthday child. I usually look to spend $10-15 on a present, so spending $5 on a store-bought card seems silly to me unless it’s for a close friend or cousin.
  9. Save the bags in which your kids get presents. I haven’t bought present bags in years since I just reuse the ones that we’ve been given.
  10. And my number one tips is: try to talk your kid into enjoying an experience in lieu of a party. Last year we went to Busch Gardens as a family and stayed overnight in a hotel in the area. Since my son loves staying in hotels and amusement parks, he thought it was great. This has the added benefit of fewer presents ==> fewer toys in your house.

What am I missing? I’m always looking to optimize this process since I have to do it several times a year.

Selling Our Cars to Move Overseas

We are preparing for an overseas move to Singapore in the next few months. For many overseas moves, the government will pay to ship one of your vehicles to your new duty station. We took advantage of that when we moved to Italy a few years ago. However, for this move, we are not authorized to ship a vehicle. Our options are:

-put one vehicle in government storage

-store one vehicle with my parents

-sell both vehicles

We own a 2008 Toyota Camry that I bought used in 2010, and a 2013 Honda Odyssey that I bought new. Both are paid for. We are definitely selling the Camry because it’s 10 years old, and while it’s a reliable vehicle, it doesn’t look great because apparently it was repainted before I bought it, and the paint is peeling. That’s another story, but it was a Certified Used Vehicle from a Toyota dealer, and had apparently been in an undisclosed accident (not on the CARFAX report). After a few years, the paint started peeling. Anyway, my husband will sell it at CarMax right before he leaves, and we’ll bank the money and use it to buy a used vehicle at our next location.

The disposition of our second vehicle, the Odyssey, requires a little more analysis. We do not want to leave it in government storage for three years, because it is not good for the car to be sitting for that long. Storing it at my parents’ house is a more appealing option. They would drive it a bit and take car of it. The outright cost would be minimal, probably $100/year (or less) for storage insurance. We use USAA for insurance, and they are great at dealing with all the moves. Considerations associated with storage:

  • depreciation*
  • work for my parents to take care of the car
  • our car would take up room in their garage
  • as with any vehicle, some inherent liability associated with continuing to own it
  • uncertainty of return timing
  • possibly useful during a visit home to the U.S.

We don’t know if or when we will be returning to the mainland United States. It is entirely possibly that after three years, we will end up moving to Japan, Hawaii, or somewhere else overseas. So there is a great deal of uncertainty about resuming custody of the vehicle. We also do not know if or how many times we will return home for a visit. It is a 26 hour flight home to the States, and we have three little kids. We probably won’t be making that trip many times if we can help it.

Let’s take a minute to look at the depreciation. Depreciation is the single biggest cost involved in owning a vehicle. It is the reason I bought the Camry used—I was trying to avoid the huge depreciation cost in the first two years.

To ascertain the current value of our 2013 Honda Odyssey EX-L, I ran the details through Kelley Blue Book, Edmund’s, and CARFAX. Our minivan is 5 years old, and it turns out that cars depreciate 40-60% in the first 5 years.

  • Kelley Blue Book Instant Cash Offer: $17,286, and the trade-in value is $16,708 – $18,547.
  • Edumund’s True Market Value: $14,934 for trade-in
  • CARFAX: Trade-in $16,950 (assuming good condition)

Then I used the calculator below to estimate what the minivan’s value will be in three more years to figure out the depreciation.

https://goodcalculators.com/car-depreciation-calculator/

This calculator used a depreciation rate of 15.6%, and said that the car’s value after 3 years would be $10,521.20 for a total depreciation of $6978.80. So there is a cost of about $7000 of continuing to own the minivan. Despite that cost, we will need a vehicle when we do return to the U.S., and I love my Honda Odyssey, and would probably get the same vehicle again.

Bottom line: We are going to sell both cars.

If you need to sell a car (and don’t want to sell privately), follow this process:

  1. Make sure you have an updated POA or a special POA for automobiles if you will be selling a car for your spouse. Dealerships in non-military areas may give you a hard time even with a POA. I tried to use a POA to buy a car in my husband’s name in New York and ended up just buying it in my name because they had a lot of objections.
  2. Check Kelley Blue Book, Edmund’s, and CARFAX for estimated values.
  3. Take the car to two local dealerships (one that’s the same make and one that’s different) for their offers.
  4. Take the car to the Carmax. If Carmax is the highest, then sell there. Otherwise go back to one of the previous dealerships.
  5. Decide what to do with the proceeds.

Have you ever had to sell (or buy) two cars in a short period of time? What did you do with the cash?

Another depreciation calculator:

Confessions of a Budget Hater or How to Hack a Budget Without Hating Mint.com

Personal Finance 101 always includes the instruction to make a budget. Know how much is coming in… and how much is going out. The engineer in me wants to draw a black box and add arrows pointing in and out. Not an engineer? Oh…probably not as funny, then.

So I have to confess…

I hate tracking my spending.

I mean, who wants to spend hours tagging their credit card expenses on mint.com? Not this gal. Or trying to get the software to realize that money transferred to savings is not gone? No thanks. So there’s a little hack that I have adopted/borrowed from Elizabeth Warren and Amelia Warren Tyagi’s book “All Your Worth: The Ultimate Lifetime Money Plan.” They call it the “Balanced Money Formula.” I only do this occasionally, because I automate my needs and savings, so there’s only so much money to spend on wants. I should mention this is how I personally implement the 50-30-20 plan. In the book, they advocate figuring savings last.

Step 1: Figure out how much you have to work with (salaries, other income). For the sake of this example, we’ll use $100,000/12 = $8333.33 per month. This is net or after taxes.

Step 2: Use the Balanced Money Formula to calculate Needs (50%), Wants (30%), and Savings (20%). Obviously, you can tweak it, but treat these guidelines as a minimum for savings, and a maximum for wants and needs.

Step 3: Calculate needs. We’re talking big needs: rent/mortgage, food, utilities, insurance, school/childcare, minimum payments on debt, possibly cell phones/internet. This is where most people go awry because their needs are simply too high for their earnings, so they are always one month away from disaster. In high cost of living locations the 50% limit may need to be adjusted, but it’s best to stick close to it. Stop here if you find you are over 50% and figure out what you can cut.

In our example above, we have $4166.67 to spend on our needs.

Step 4: Calculate how much should be going into savings at a minimum. 20% of $8333.33 is $1666.66. If you are maxing out your Roth IRA (which you are probably eligible for if you are a military family- there are income limits), that’s $458.33 into EACH Roth IRA. Don’t forget that even if one spouse doesn’t draw a paycheck, you can contribute to a Roth IRA for each spouse, provided that one spouse has earned income. And you should do so, because earnings on your Roth contributions grow tax-free.

$1666.66-458.33*2 = $749.99.

After maxing out your Roth contributions, contribute to TSP and your spouse’s 401K if available, making sure you are taking advantage of any 401k matching. Automate these contributions. We automate college savings as well, contributing to three 529 accounts each month.

If you are making extra payments toward debt, that would fall in the savings category as well.

Step 5: The rest is wants. 30% of $8333.33 = $2499.99

The beauty of this method is that since you’ve already covered needs and savings, you don’t really have to worry too much about which wants you are spending on- provided you pay off your credit card every month!

With this method of budgeting, I typically revisit our budget once or twice a year. Moves and changes in   school or BAH would require a look at the budget too. Your personality and that of your spouse may require a little more engagement, depending on how prone you are to overspending. No one likes to get the credit card bill and find there is not enough to cover it in her checking account. We’ve gotten a little lax about this lately, but we used to make sure to tell each other about purchases over $100.

Two final thoughts.

If you can get used to living on a budget of this sort, you are freeing yourself from “The Two-Income Trap”— a term also coined by Elizabeth Warren and Amelia Warren Tyagi in their book by the same name. The concept warrants a post of its own because I attribute a considerable amount of the financial freedom that my family now enjoys to my desire to avoid the trap. That, and you know, compound interest.

A frequently overlooked feature of living well within your means and saving as much as you can early on is that at some point, you will be making enough money on your investments that your continued contributions do not make a huge difference. At this point, you have a financial cushion that is priceless for minimizing marital conflict. I don’t think my husband and I have ever argued about money. We argue about plenty of other topics, but we really stay out of each other’s purchasing decisions as much as possible. Also, he lets me manage all the investments 😊.

Do you have a different method for budgeting? Do you hate budgeting as much as I do? Tell me about it!

PCS Season and Decision Fatigue

It is May, which means it’s PCS (Permanent Change of Station) season. That means that many military families (including my own) are getting ready to move to a new duty station. Cut down on decision fatigue by automating your finances and beefing up your emergency fund so that you can deal with uncertainty– and have some brain power left to decide where to enroll your kids in school.

Money matters that should be automatic:

  • TSP or 401K investments
  • Roth IRA investments (to the max of 5500 per person, per year)
  • College savings (529 or UGMA)
  • Rent or mortgage payments

The rule of thumb for emergency funds is that you should have 3-6 months of expenses. As a military family, you are not typically worried about unemployment, but in the face of a PCS you will most likely be dealing with moving expenses and a change in BAH which may or may not occur when you want it to. Moving from a high cost location to a low cost location will likely involve you getting overpaid in BAH, and the government will usually take it back out of your pay within a few months. You will get to elect whether to receive advance DLA (dislocation allowance) or advance pay (or neither). My recommendation is to take advance DLA if you need it, but not advance pay. Pay always gets messed up during a PCS, and your best bet is to take as little advance pay as possible, have a cushion to cover expenses, and wait for DFAS to straighten everything out.

In our specific situation, we may end up paying rent on two homes for a month or two during the transition since I have to travel before my husband. In addition, we will be selling both of our cars in the next few months, and living in a hotel for a while. So a cushion is good.

We haven’t had too many surprising expenses during a PCS, but this is our first one with school-aged kids so we are not able to be quite as flexible with timing.

Do you feel money-related stress as you approach a PCS?