A Plan For Success
I’m Staff Sergeant Robert Zuniga and I have been an active duty Air Force medic for eight years. I plan on staying in long enough so that I can retire at 20 years. I have always been interested in personal finance and would like to share how it IS possible for me and my stay-at-home wife and two kids to not only save and invest a ton of money but also have a lot of responsible fun as well on 'low' enlisted pay. You CAN do it too!
First off, we write down our goals and separate wants from needs.
Want: A $40,000 truck (would be cool)
Need: Financial independence (invest that money instead of paying a high car note)
Monthly game plan to drive down costs and increase profits: first, we have an excel spreadsheet budget which changes monthly for different circumstances that arise. For example, more money may be needed in the budget for 'stuff' during December/Christmas time than in the boring month of March. We also tithe 10% of our monthly gross to church/charities. We have a 3-6 month liquid emergency fund in a money market account. It's there to reach-out-and-touch when an emergency arises, not to make a lot of interest. Somebody once told me since I'm in the military that I only needed a few thousand dollars of an emergency fund because of our steady paycheck. I disagreed with him and stuck with our 3-6 month emergency fund and I'm glad we did. We bought a house in North Dakota back in 2008 that was flooded badly in 2011. Thankfully, we had our emergency fund. We would have been in a really deep hole without it.
I max out our Roth IRAs (she stays at home but qualifies for spousal Roth IRA) every year by automatically allotting $833 a month to the account. We've paid down the principal on our house (at least $100 a month) since purchasing it with a VA loan back in 2008. We bought within our means: a $125K house with a $972 monthly mortgage (escrow/taxes all rolled into it). We are now refinancing from a 5.875% rate to a 3.75% rate. The difference in the monthly mortgage payment will go back into paying down the principal on the mortgage. Our goal is to turn it from a 30 year mortgage into a 12 year mortgage by paying down principal monthly through automatic allotments and writing a check to principal every year from our tax refund. We have our taxes set to four exemptions so we get a little more money every month instead of getting a big return at the end of the year. No point in giving Uncle Sam an interest-free loan that will depreciate throughout the year with inflation.
Weathering the Storm (literally.) We went through a bad flood, but because we researched and capitalized every resource available, we were able to move back in only nine months after the flood. We lived on base in the meantime and lost our BAH but still had to pay the monthly mortgage. Since we have no debt except for our mortgage, we were still able to not only make the monthly mortgage from our base pay but also still continued to pay down principal from money that was saved by living on base. Our need for gas money was less because we didn't have to drive to work as far and we were able to shut down all the utilities in our house off base. Combined, that saved us hundreds of dollars a month.
Education! I hustled my behind off by parlaying every opportunity into a bigger one. I got my associates degree and then parlayed that into a bachelor’s degree in 15 months. I'm currently working on my master’s degree right now while the tuition assistance rate is still 100%. I've already got our budget planned in anticipation of them changing the tuition assistance to 75%. I will still march on and get the degree even if I have to pay the difference in tuition and books. The minimal amount of money I paid out of pocket for my bachelors/masters will be made back quickly by a higher paying post-military job. I also helped my wife get her bachelor’s degree through the military spouse MyCAA program when it was available. She turned her associate’s degree into a bachelor’s degree within a year.
The key to all of the above is our lack of spending on unnecessary 'stuff'.
- Because of our emergency fund, we were able to raise our home insurance deductible to the highest limit possible, which saves us hundreds of dollars a year.
- We have two vehicles which are 100% paid for.
- We also raised our auto insurance deductibles to the highest limit possible, which saves us money.
- We have a cheap cell phone without the bells and whistles. No smart phone/internet/texting, just a regular old school flip cellphone. It gets the job done.
- We watch our utility usage by turning things off/unplugging them when not in use.
- My wife makes breakfast, lunch, and dinner for me so that we don't have to waste money eating out every day.
- She makes our laundry detergent, shampoo, toothpaste, and deodorant. There's a ton of free resources online on how to do it. It's not hard to do and we get more product for less price per unit that way.
- We don't have cable/satellite TV.
- We prefer to play outside and exercise because it's good for bonding/health and it's free.
- We use Netflix for 2 DVDs/monthly free streaming and check out free videos/DVDs from the library.
- Yes, we still have a tube TV. It gets the job done. Not only do I want to wait for flat screen TV costs to go down, I also want to wait until our children get older and less likely to break it.
- We rarely buy books. We either borrow them from friends who buy the latest and greatest or check them out for free at the library.
- We also shy away from videogames and gadgets.
- Our children were breast fed (cheaper and healthier than formula). We qualified for WIC and utilized it for food and drinks for them.
- They've always worn hand-me-downs and thrift store clothes.
- We give them ONE used gift for birthdays/holidays. At this age, they more often than not are more enamored of the cheap wrapping paper than the actual gift itself, anyway.
Mind you, we're not misers; we're just frugal with our money. Because of all of the above things we do, my wife and I still wear name brand clothing, go out to eat at restaurants, go out to movies/concerts/theatre/sporting events, paid cash for vacations we go on all over the country, buy her massages/manicures/pedicures, buy good quality appliances/decorations for the house, etc. With that being said, we always check to see if they offer a military discount. We do all of same the things that normal American people do; we just do it in moderation and with a plan.