The following is a guest entry, written by one of PTY’s readers, Matt. If you have a personal finance story to share like Matt’s, please feel free to email it to me.
Hi, my name’s Matt. I was briefly venting to Stephanie (your regular author) that I was about to take my first plunge into the stock market game tonight, and she invited me to write a guest entry, so here I am.
First, a little bit about myself. I’m a service member currently deployed to Iraq. I’ve got my wife who, like Stephanie, is a full-time student, and my young daughter at home waiting for me. Perhaps the best deal about being in Iraq is that my pay is increased by effectively 33% due to my tax-free status in addition to my “special incentive” pay that I receive while over here.
We just finished paying off our debt snowball in June, and have been studiously dumping money into high-yield savings accounts: first EmigrantDirect, then E*Trade after ED lowered their APY to 4.75%. It’s a proud time for me. For the first time in a very long time our checking account is looking pretty thin because we’re saving every last penny we can.
To get where we are today, my wife and I have adapted a few of Dave Ramsey’s rules to fit our military family mind-set.
- Establish your strategic reserve ? Sun Tzu said something like, “Keeping a force in reserve to support the main effort can be the decisive factor in winning a battle.” As a military family who rents our home, our chances of encountering catastrophic expenses due to medical bills are statistically insignificant. Often the only “surprise attack” we’ll get is having to take one of the cars to the auto shop. However, I know the debilitating effect even a small doctor’s visit can have on the uninsured. For this reason, having a “react force” that can pay the hundreds of dollars for an office visit or a trip to the mechanic means you won’t have to wear out that plastic and build up your principal again.
- Attack your debt ? You’ve got to hate your debt. Yeah, it has some nice things to teach you, but if you’ve gotten to the point where you want to get it out of your life, you’ve already learned the painful lessons. Gear up with the weapons of personal finance war: a budget, a disciplined mind-set, and a strong will to win. You’ve got to relentlessly slice expenditures out of your life. We had to cut cable, and skip vacations and buying nice things. Our tax return last year went to paying off one of our cars. We could’ve used a new dining room table, but we made do in order to get out from under our lenders.
- Defend your budget ? This one can be tough, especially if your significant other or child(ren) want new things. On one hand, you want to keep your family happy and not become an overbearing miser who can’t let a penny go. On the other, you know what your financial objectives are, and every dollar you can keep out of the gas pump, restaurant or mall is a dollar that can go toward debt reduction. In my experience, it’s best to adopt a flexible, “bend but don’t break” philosophy. If you have a controlled splurge once a month, buying a new outfit or eating out at a nice restaurant for no reason, you can maintain domestic tranquility without wrecking your budget.
- Don’t be afraid to call in supporting fire ? In the Marine Corps, we have our big guns: artillery and tanks. In the world of my personal finance, I’ve had to start calling in my family for backup. When I make my trip home, I don’t let pride stop me from letting my family pay for dinner or driving us to a far-off location (gas costs money!). On the same token, however, don’t get carried away. A loan is a loan is a loan. Borrowing money from family carries its own set of dangers you have to be on the lookout for. Also in this category, talk to the experts! Dave Ramsey turned our financial life around. I also subscribe to numerous personal finance blogs, like PTY, Consumerist, Get Rich Slowly, and My Money Blog.
There’s probably nothing new here for most of the PTY readers. The bottom line is still spend less than you earn. No matter how much you make, minimum wage or a six-figure salary, anyone can spend themselves into debt. There are so many personal finance generals out there, like Dave Ramsey (I love that guy, can you tell?), who have fought this battle and won decisively. Listen to your generals. Whether it’s Dave, your grandparents living well because of decisions they made about retirement 40 years ago, or even our girl Stephanie (who honestly I suppose might be a major, if we’re going to stretch this metaphor), listen to people who have turned their lives around! And focus! Victory is within reach!