One of the hardest parts about being a financial coach is seeing families struggle with the most common money mistakes. Because they are so common, I feel like they should be known, and that people should be able to avoid them. I know that sometimes I sound a little mean when I harp on certain subjects, because my frustration is significant.
If I had to pull together all the most frequent bad choices I see families make and try to give them a theme, it would be this: don't make choices that put your money in control of your life. This applies to all families, everywhere, but military life brings special challenges and requires a different way of looking at common financial decisions.
What do I mean by this?
Let's use car buying as an example. It is always sad when a family buys a car whose total costs are going to infringe on other parts of their budget. Military or civilian, car payments and gas and insurance and registration and maintenance shouldn't mean that you can't go to the movies or save for retirement or that you're rationing your grocery bill. When transportation costs are driving the rest of your spending, then you've let the money be in charge. That's never a good feeling.
But when it comes to military families, there is so much more to consider.
First, are you going to PCS soon? Where are you going to go? Might you head overseas? Are you sure you might not go overseas? Would your car(s) be able to go? What would you do if you couldn't take a car, or both cars? Might the service member deploy, or do an individual augmentee assignment, or be sent on an unaccompanied tour?
Every day, I hear from military families who are "surprised" by overseas or unusual orders and are facing the prospect of paying a big car loan on a vehicle in storage, or selling their car at a significant loss, or freaking out when it takes time to ship a car from one continent to another. These "stuck" situations are invariably created by the presence of a large car loan. People who own their cars outright have more options than people with car loans, and options are particularly good with the vagaries of military life.
Second, are you basing your ability to buy this car off of a second income that might not continue? Spouses frequently stop working due to PCS or even deployment, and goodness knows that active duty folks can never depend on their ability to keep a part-time job. There's nothing wrong with using extra money to buy a car, but do it strategically: earn the money, save it, and then buy the car. Don't buy the car with a loan and commit yourself to that extra expense that will continue regardless of whether the extra income continues.
Third, is the car going to continue to be suitable in three or five or ten years? Yes, sometimes cars have to be replaced more frequently, but you need to be thinking long-term. That snazzy little convertible might be super-fun in Hawaii, but when happens when you get orders to Alaska? Or when your family grows? Or when life changes in some other way? Because life does change, all the time. (I have been guilty of this - we purchased a new car just before the birth of our first child. Four years later, when we were expecting our fourth, we had to sell and upsize. Not our wisest financial move ever. We always hoped to have three or four children, so we should have purchased the bigger car from the beginning.)
And this is just the car example. In my day-to-day life, I run into people dealing with similar problems with houses (we're broke because our house at our last duty station won't rent or sell,) household goods (we can't move to Japan, we have too much stuff and I don't want to put it into storage,) pets (we just got orders to England and we can't afford to ship our dog,) and basically any type of possession. It's also true of debt. Even if the debt came from something great, like education or travel, debt can control you.
It is not fun to living a life where everything has to be decided based upon how it impacts the money. Don't make decisions that give the money the power.