What financial issues do service members struggle with most and why?

2021-11-22T10:46:11-05:00

I’d like to understand the specific financial struggles veterans and active duty deal with on a daily basis. Additionally, I’d like to hear about assumptions as to why those struggles exist? Also, are there any ways the DoD, financial institutions or non-profits could help improve the situation?

Given the consistency of pay and job security, you’d think financial management would be relatively easy.

But does lower pay or deployments/PCS make managing ones finances more difficult? Or maybe it’s navigating complex VA retirement systems?

Id love to your hear your thoughts on this since financial problems continue to plague those who serve/have served at a higher rate than our civilian counterparts. Any first hand experience is also greatly appreciated too. Thanks!

Response by PFC David Foster made Nov 22 at 2021 10:54 AM

2021-11-22T10:54:57-05:00

I'm practically ashamed to say, I live with my mom and pop and mom gave me a credit card, I can buy whatever I want. If it were not for them, I'm sure I could get a government check, but I never needed it, so I never applied for it. I'm sure there are a lot of vets out there that need it.

Response by SFC Kelly Fuerhoff made Nov 22 at 2021 11:08 AM

2021-11-22T11:08:21-05:00

In my experience, the soldiers who have struggles is because they don't do any financial planning. Not just the brand new privates that go out and buy expensive cars either.

Within my first 4 1/2 years I deployed twice and reenlisted twice. I got a bonus each time. I had about $40K saved up due to deployments and the bonuses - and not having many bills. I had a car payment and my cell phone. I had internet after the second deployment. That's it since I lived in the barracks til I made SSG.

I would have probably a hell of a lot more if not for my ex husband. I've been able to start saving again and have almost 20K after paying off credit card that he racked up and only have a car payment left (I traded in my last car when it was about paid off and got the one I have).

Prior to him I also would not charge too much on a card and would pay off immediately.

I do kick myself that I never did a TSP though.

I know that things do happen and sometimes shit hits the fan and unforeseen things happen that cause people to lose everything at times. But some people just don't know how to manage money. They have a spouse who can't manage money. Things like that.

Response by SrA John Monette made Nov 22 at 2021 12:10 PM

2021-11-22T12:10:24-05:00

Brand new service members see a steady paycheck and a steady way to buy what they want. Speaking from experience, I lived paycheck to paycheck, even with living in the dorm and eating at the dining facility. I was broke when I got out after my 4 years. Some type of financial planning should be required, for new enlisted and new officers.

Response by Lt Col Jim Coe made Nov 22 at 2021 12:16 PM

2021-11-22T12:16:29-05:00

I believe the main reason Service Members have financial problems is lack of personal financial management training. My kids are mature adults now, but I know they didn't get any training in high school on how to manage money. They had to rely on our family for what little knowledge they gained about financial basics such as managing a checking account. We were challenged ourselves and did a poor job teaching our kids. Our saving grace was automated personal finance programs. We started with a simple checkbook program on an Apple IIe (yes, I'm that old) and moved on to using Quicken on our PC. These programs greatly simplified keeping track of income and expenses and budgeting for the family. I highly recommend personal financial management software.

In the current economy, inflation will take an increasingly bigger bite out of paychecks. The DoD may give a cost-of-living pay raise, but that's based on history, not predictions of future inflation pressures. Consequently, military members will always lag behind the cost of living under current administration economic policies. Fortunately for the Service Members, this may be a temporary situation because it's likely, IMO, that the Democrats will be voted out of Congressional majority in 2022 and the Administration's poor economic policies will be moderated or reversed.

Lack of investment was a major shortfall in my military experience. We didn't invest any of our pay during my 22 years of service. We only had minimal savings. The expenses of raising 3 kids were a major factor along with lack of money management education. The DoD has helped this situation by introducing TSP. This at least gives all Service Members an opportunity to invest some part of their pay for their future. If I had started investing only a small part of my pay when I was a 2LT and kept up systematic investment for the next 40+ years of my working life, I would be a lot better off financially than I am now. Again, it's all about understanding money.

Start early, finish early. We were married at 18 years old. We had our first child on my 19th birthday. We had three kids by the time we were 25. When I commissioned we had one child and one on the way. The increase in salary from poor college student working part-time to full time 2LT was great. We thought we were rich. We weren't smart enough to save any of the "excess" money, but spent it on improving our standard of living. Then came multiple TDYs and a PCS after pilot training. The Government covered a lot of our expenses for these moves, but not all. We arrived at our first duty station nearly broke. We rented an inexpensive apartment off base. After a year we climbed far enough up the housing list to get a three-bedroom duplex on base--one of the best deals ever! We lived paycheck to paycheck as our kids grew. We were fortunate enough to have enough money so my wife could choose to be a stay-at-home mom. This was a great benefit to our kids--a fact they frequently acknowledge. Our youngest kid finished high school the year I retired from the Air Force. As all of the kids became self-sufficient, we had some discretionary funds. My civilian job offered a 401k and we invested for the first time. Over the next 30 years we invested in a 401k and TSP so we have a small retirement savings account.

Response by SGM Bill Frazer made Nov 22 at 2021 12:24 PM

2021-11-22T12:24:53-05:00

Come on Sir- you have teenagers, 18-25, with no financial management classes, getting steady pay checks and often large bonuses, knowing damn little about taxes and often getting married as soon as possible. They go thru the money incurring large payments/debts and the family continues to grow. BY the time they hit 25= they often have 2-4 kids and big debts. As for Vets- if lucky you maybe on 1/2 pay, trying to show no nothing civilians how your career mates to their job opening. Accepting a lower paying position- which often leads to divorces, lost homes, re-po, etc.

Response by CPT Private RallyPoint Member made Nov 22 at 2021 3:37 PM

2021-11-22T15:37:40-05:00

1) I don’t think service members have any more or less or different financial struggles than anyone else in America. It’s just better documented and tracked. These problems persist everywhere with those with no fiscal education.

2) I think service members by their very nature of having cash flow security (we know how to reach you wherever you run off to) are targets for creditors and excessive consumerism.

3) I think there is a subset of young service members who all the sudden come into financial security (they never remotely had prior to their service) that gets taken advantage of by creditors and consumerism.

4) The moment they enter the service into the training system they are earning money. That money is not usable, in that while in training SM’s are fed, housed, and clothed. They don’t have any freedom to even use that money. Then all the sudden, once let out of the gate they have accumulated a nice fat down payment for whatever crazy thing that comes to mind. This can be compounded even further when they continue to be cared for if they live in the barracks.
a. This also applies to service members that get put on deployments who accumulate significant savings while in a position unable to spend it until they finally get home with a fat savings account.

5) Examples of predatory lenders or sellers.
a. Why on earth was there vehicle sales kiosks in a WAR ZONE!!!!!!!!!!!!!!! How is it there was a BRAND NEW Harley Davidson in f-ing BAF on display for service members to be tempted by?????
b. I’ve gone to a few “Veteran” job fairs, and more than half the vendors there were education institutions ready to pounce on that GI Bill money. So more were there to TAKE than to GIVE.

The final cumulation of my rant:

Young adults need to be able to exit high school with the ability to make informed consumer purchasing decisions in life. At the very least, they need to be able UNDERSTAND the entirety of the financial decision when buying a home, financing a car, or saving for the future.

I am a CFA/MBA and it took me over half an hour to build the Excel model to back into the actual financing costs of a ZERO PERCENT INTEREST LOAN for a car, and make it so I could change the variables to apply to any loan and price terms. A loan is NOT ZERO percent if the price of the car is not the same if you were to pay full in cash right there. That there kids is why word problems in math are so important to understand.

That is what’s wrong with our society. Financial consequences are hidden in highly complex financial terms and not disclosed in a manner a layman can understand. We all face this. Service members are merely looked under the microscope a little closer.

Response by GySgt Kenneth Pepper made Nov 22 at 2021 4:36 PM

2021-11-22T16:36:13-05:00

It is the same everywhere. I have a much more mature work force than when i was in, but i still see the same behaviors.
The only thing that makes it easier is that I don't have to take them to see the General Manager to get counseled.
Civilian companies don't give a damn if your credit card bill is late or you bounced checks to the pizza guy.

Response by Sgt Private RallyPoint Member made Nov 22 at 2021 4:39 PM

2021-11-22T16:39:33-05:00

Capt John Tippetts The military instills Discipline. That same discipline can be used to manage money. Keep track of every dollar spent to find out where your money is going and if any waste can be eliminated. Live beneath your means so that you save money. Enroll in a 401K, IRA's, Roth IRAs, etc. Learn the basics of investing so that your money grows. Money management is a lifetime learning event. Being frugal with money is a good thing.

https://www.investor.gov/introduction-investing

Introduction to Investing | Investor.gov

Many people just like you turn to the markets to help buy a home, send children to college, or build a retirement nest egg. But unlike the banking world, where deposits are guaranteed by federal deposit insurance, the value of stocks, bonds, and other securities fluctuates with market conditions.

Response by Sgt Jim Belanus made Nov 22 at 2021 6:37 PM

2021-11-22T18:37:55-05:00

The one thing my father left me was "don't spend more than you make and put some aside for a rainy day". I have followed that thought, my kids call me tight because of it, being raised in hard time didn't hurt anything either

Response by C/SSgt Private RallyPoint Member made Nov 23 at 2021 12:58 AM

2021-11-23T00:58:00-05:00

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Response by SP5 Private RallyPoint Member made Nov 23 at 2021 8:14 AM

2021-11-23T08:14:37-05:00

Capt John Tippetts Lots of problems id'd by RP members. One proposed solution could be creating a block of instruction (none presented after lunch) that is given late in the BCT cycle, and repeated during AIT, that addresses a degree of financial management appropriate to the audience.

Response by Cpl Vic Burk made Nov 23 at 2021 10:23 AM

2021-11-23T10:23:52-05:00

There are a few reasons for the financial struggles of our military personnel however I respectfully disagree that it is worse for them than their civilian counterparts. Most young folks just never learned the basic principles of money management and don't understand what saving for a rainy day means.
They, like I, lived for today with little regard for tomorrow. The school of hard knocks fixed that problem for me! This combined with being able to obtain credit way to easily has sunk many into the depth of near or having to file bankruptcy and destroying their credit ratings. What I saw as a big problem was wanting to buy new vehicles they really couldn't afford. They might be able to make the payment but by time they also added the insurance there was little left for anything else. We have classes in high school (required in Tennessee) for personal finance but very few take it seriously in my opinion.

Response by CPT Lawrence Cable made Nov 23 at 2021 1:04 PM

2021-11-23T13:04:53-05:00

Buying an overpriced and expensive car from one of the offpost dealer that sells car payments that put you underwater as soon as you sign your name and marrying a stripper.
That's only partially a joke, happens too damn often in the Army. Most of the kids joining the service, worse now than when I was CO, have little or no experience dealing with their own finances and certainly don't know how to buy major purchased.

Response by SFC Michael Hasbun made Nov 23 at 2021 1:35 PM

2021-11-23T13:35:02-05:00

Mostly? Financial illiteracy coupled with poor spending habits and alcohol dependancy.

Response by SSG Ralph Watkins made Nov 25 at 2021 11:19 AM

2021-11-25T11:19:26-05:00

The military used to hold financing & budgeting classes about every year to teach the troops to keep their funds adequate. In the Cold War days, a soldier who was financially strapped was considered a major security risk. We have a new Cold War now with China & Russia. We also have issues with political & ideological domestic & foreign terrorists as well as criminal gangs. It still falls on the command to push economic responsibility onto the troops. Enough of the mindless, repetitive PC craze. Yes, there will always be those who never pay attention. We have all known those people. But to say that so many troops are in financial dire straits is a sign the command is not doing it's job.

Response by 1SG Bill Farmerie made Nov 25 at 2021 11:20 AM

2021-11-25T11:20:02-05:00

Growing up, my parents taught me how to balance a checkbook. They taught me if I wanted something, I had to earn it. I wanted Addias superstars when I was in HS, but my parents gave me the money they would have paid for shoes at the discount shoe store they bought our shoes at and told me, it I wanted Addias, I had to earn the rest of the money. My parents taught me about being financially responsible. When I got to BT, I noticed solders didn't know any of the things I knew. They thought they had checks so they had money even though there was nothing in their accounts. I would see soldiers buy a car after deployment (which they could not afford the payments), put an expensive stereo and rims on the care and a few months later get it repossessed.

Response by PO1 Randy Horelica made Nov 25 at 2021 1:02 PM

2021-11-25T13:02:09-05:00

The military now pays quite well today, I do know their retirement pay requires the members to pay into it. Just think an E6 with 16 years makes close to 70k when you add baq, bha and seapay. I know many in the private sector that would like 70k a year.

Response by SPC Eileen Keller made Nov 26 at 2021 12:16 PM

2021-11-26T12:16:42-05:00

Check out Ramsey Solutions - on-line, books, podcasts and more - great advice that has worked for millions, including many military members and their families. The lower pay question is kind of a no-brainer but you are right it's not all about the money. It is about personal habits, knowledge and follow through.

Response by SMSgt Bob W. made Nov 26 at 2021 12:52 PM

2021-11-26T12:52:34-05:00

Trying to life a "...Champaign life on a Pepsi Cola income..." Many military members want a new car, a nice apartment and party. RECOMMEND: Buy a used [good] car, get an affordable apartment and forget about partying. As you progress in rank, you can progress in "social" status. My first car was a VW Bug with I drove for 10 years [my air-conditioning was two windows down at 40 mph]. I owned three cars during my 26 years in service. Eat in regularly. Dine out twice a month. Boring life [?], maybe, but in the end it kept us out of debt and be never bounced a check at the exchange or commissary.

Response by SMSgt Bob W. made Dec 6 at 2021 7:52 PM

2021-12-06T19:52:54-05:00

Trying to live a "Champaign life on a Pepsi Cola income". Live within your means.

Response by LCpl Waliq Knolle made Jan 31 at 2022 2:10 AM

2022-01-31T02:10:13-05:00

I’ve noticed a lot of senior enlisted and officers say lack of financial management/knowledge but let’s be realistic service members are paid pretty poorly as a whole. As a civilian with 4 years experience in my field(which isn’t relevant to how I’m paid) I make about as much a month as an 0-6 with 16 years TIS in terms of direct compensation.