BECOMING DEBT-FREE ON DEPLOYMENT

Debt free on deployment

Deployment is a difficult time for any relationship. But as we have a wedding in the near future, kids to provide for and a household to run, adding a mountain of debt to the stress is not helpful. So we decided to take advantage of the deployment to help dig ourselves out of the financial hole we are in. We wanted to share some tips for how we have been successfully paying off debt.

    • Follow a plan. We chose the Dave Ramsey plan. We are fans of the common sense and logic behind this plan. This plan follows a debt snowball approach. Paying off the smallest debts first.  We are each doing our own debt snowball because we are not married yet.  But, we share our budgets together to be each other’s accountability partner. However, the important thing is to have a plan. Whatever one you decide works for you, follow it!
    • Get on the same page. Once we began being open and honest with our finances, we were able to set goals. We decided what was important to spend our money on, how much extra to throw at our debt every month, and manage unexpected expenses that arise. This way we can keep each other on track.
    • Set a budget. And stick to it! We track our income and expenses down to the last dollar every month. This is helpful to keeping us from overspending and running out of cash for the important things like food and mortgage. We decided to use the EveryDollar app. We can both log in and edit and see the budget. It is also free. Brian also uses Quicken for himself to help him plan and keep track of our long-term goals, like wedding savings, travel and a new car.
    • Talk about your debt. We are open and honest about our debt. Brian used to roll his eyes and get embarrassed when I would talk about it. Now, he is used to it. I tell everyone we are working toward paying it off. And amazingly, you will find most people have a mountain of debt too. We have been able to help so many people who had been struggling to figure out what to do on their own or hadn’t talked about their debt with anyone before. It is a great accountability tactic. When we tell someone what our plan is, they are more likely to call us out when we get off track.
    • Have an emergency fund. Dave Ramsey recommends $1000 emergency fund when paying off debt. Because we have the house in Indiana, Brian overseas,  kids to provide for and me in-between jobs, we decided to put aside $2000 which we both contributed equally to. If something happens, we do not have to go back to credit cards or payment plans. We have not had to use it yet, but just knowing it is there is comforting. It allows us to be more aggressive toward our debt because we have a safety net.
    • Figure out the tax-free situation. One of the things that has really helped us get a head is the tax-free portion of Brian’s income while being deployed. It seems like a small change, but this means more cash in the bank that we would’t normally see. Essentially we got a pay raise in our take-home pay. Since we don’t usually have this money, it is a painless way to pay more on debt because we are used to it being withdrawn automatically for taxes. Not every deployment station offers tax-free income, but it is definitely something to pay attention to when you get your orders. When getting this figured out, it is also a good idea to make sure your base pay is correct. Often times for reservists, this can get messed up when merging into the active duty system and takes some time to adjust. Brian’s first couple pay checks on active orders were originally at O2 pay (Officer with no prior service) rather than O2-E pay (Officer with prior enlisted service), which is a big difference!
    • Utilize your BAH. On top of your base pay, you get BAH (Basic Housing Allowance). For a reservist, it is based on where you reside as a civilian. We are getting Baltimore BAH. I opted to stay in the Midwest while Brian is deployed because it is close to my family, my friends and the cost of living is much less. The BAH covers all my monthly expenses now that we are only running one household instead of two. Since we are no longer renting an apartment in Maryland and just paying a mortgage on the house here, this BAH is a bonus. We are able to apply the monthly BAH towards debt too because it is money that normally went right out the door for rent. If you started with one household and are leaving a family in the house back home, this may not help you as much. But for those able to rent out or get rid of their place for the time of deployment, this can be a huge help.
    • Use Tricare. I know people complain about Tricare all the time. But people complain about any health insurance plan these days. Overall, Tricare is a good bang for your buck. You can get health insurance, dental and prescription coverage for less than most plans. It may not be beneficial for your family to switch if you don’t have to, but for us, it has saved us money. Also, talk to your employer when looking at switching plans. They may surprise you and pay you a bonus or give you a raise if you are not using their healthcare benefits.
    • Setup a joint account. We are not for combining finances prior to getting married. But since we are so far apart, and I do have to manage some financial decisions with Brian far away, we decided to open a joint account. This certainly takes trust and communication. We discuss all purchases that are made with this account. We also keep our emergency fund here so we can both have access to it if needed. This is the only money we store in this account so neither one can completely clean out the other person’s money (not that either of us would do that, but you hear horror stories with deployments). We also can put set amounts of money into the account for things we decide I need to pay for while he is gone. We use this mainly for car maintenance, expenses for the kids, and travel costs for R&R.
    • Get rid of one car. We were forced into this. I hit a deer and wrecked my vehicle 2 months before Brian deployed. So instead of buying a new one, I borrowed an old extra car from my sister in exchange for putting a new muffler on it, a new battery and a new serpentine belt. Though driving a ’97 Saturn with no air-conditioning in the summer was not ideal, it allowed me to keep that emergency fund in the bank. I was also able to cash out with the insurance company instead of getting my car fixed and sold my car as-is to the mechanic. We took the kids on a pre-deployment family trip to Disney World with this money rather than having to take it out of savings or put it on credit. But since then, I have been driving Brian’s car. By doing this, we got rid of the car payment for my vehicle, rid of the insurance for one car, and don’t have to worry about storing Brian’s car for a year. Additionally, I went from an SUV to a sedan so my gas budget got cut in half.
    • Drop the extra cellphone plan. With Brian being gone overseas, we dropped his cellphone plan down to an internet only option. That way we can still Facebook chat and video chat but we don’t have to pay for a plan we are not using. And because we had deployment orders, we were able to cancel things like the cell phone plan, the internet and utilities at the Maryland apartment with no penalty.
    • Use your military discounts. Some people have mixed feelings about this. I look at this as an added benefit to working for the government, just like healthcare. Remember, companies that offer discounts do it voluntarily as a thank you. So don’t feel guilty utilizing it. We use this most often when traveling to help take budget vacations, but there are other opportunities to use this benefit at other times throughout the year. Several stores and companies offer year round discounts to military families, so if you are planning to spend money from your budget on something, look to see if there is a military discount to help save a little more. There is no harm in asking.
    • Cut your grocery budget. There are hundreds of bloggers and advisors that offer advice on how to cut your grocery budget. You have to create a system that works for your family. We had a combined budget of $325/ month when Brian was home. I would make the shopping list from sales and Brian would try to beat my prices. We kind of made it into a competitive game to see who could save more money and still buy everything on the list. This covered food for both our houses, cleaning supplies, toiletries, and pet expenses (not including vet bills or board for the horses). Depending on the size of your family, you must decide what you have to spend. This can take some trial and error. We started with a target of $300, but realized with the kids and all the animals, this wasn’t quite enough. But once you set that amount, stick to it and use cash so you don’t go over. Now that we are only running one household, I have been able to cut the budget to $150/month. I do not eat poorly and neither do the animals, so it is achievable. It takes planning and thought. I create a list for my whole budget by shopping sales and shopping at Aldi. Then I coupon, and use grocery apps such as iBotta, Checkout 51 and Snap to save a little more. Unfortunately, I do not live near a Commissary to take advantage of this benefit regularly, but stock up on non-perishables once a month when I report to base for drill. Once a quarter, I challenge myself to a “no-spend” month. I give myself a fraction of my normal budget just to get things I really need to supplement what I have, and make an extra debt payment instead. I am forced to get creative and use what I already have in the freezer and cabinets.
    • Trim your living cost. This goes along with the grocery budget reduction. We are not using as much food, house hold cleaning products, bathroom products, laundry, gas money, electricity etc. with Brian gone. We only have to stock one house now, and Brian’s cost of living while deployed is minimal. We no longer have a monthly “date” budget. Instead we reassigned some of this money to cover care packages and mail and save the rest. We also are not traveling monthly between Indiana and Maryland to see each other which is a huge cost savings for us.   We have also both been able to reduce our spending budget because we are not doing things like going out to eat (one of Brian’s biggest challenges) or going to the movies as often.
    • Cut back on entertainment. We do things to help earn a little extra spending cash so we don’t have to take our fun money out of the debt payment plan. We both use SwagBucks to earn a little extra that we can use towards gift cards. Brian works an extra job on base for credits to use in the wardroom rather than spending money out of pocket for entertainment. Cutting back on the entertainment budget is a huge cost savings. Have friends over for dinner and a bottle of wine rather than going out. Find free events in your local area. Spend more time on hobbies you already have supplies for (or start one, like this blog). Take the kids to the park or find activities to do at home. When you do spend money on entertainment, use cash.
    • Pick up extra shifts at work. Because Brian isn’t home, and we do not have the kids on the normal visitation schedule, I have more free time to work more. I definitely do not work every day while he is gone. Don’t burn yourself out. However, picking up some extra shifts helps make a big difference in our plan. These extra shifts are not planned income so they can all go right to the debt. My life style isn’t impacted at all and I’m able to make a little traction. This is not always an option if you have arrange and pay for childcare, but if you have the ability to do this, you will see the most impact in paying off the debt by increasing your income. Besides, I can’t go spend money if I am at work.
    • Buy used, borrow or go without. I’m a big thrift store shopper. Almost all our furniture is second-hand or given to us. I almost always buy jeans used because I tear through them so fast. And if you have little kids, this is really helpful to save money every season while they are growing. Most bases have a thrift store for uniform items, which is worth checking out if you need to get new items on the cheap. Instead of buying new books, hit up the library or borrow from a friend.   And the most important tip is to learn how to decide what is a necessity and what is a want. Is it something you really need right now?
    • Include your kids. When you get on a strict budget and suddenly change the way you shop or what you do for entertainment, the kids will notice. Talk to them about what you are doing and why. We learned the hard way that we needed to define “being on a budget” to get out of debt is different than being “poor” (living below poverty level). Our kids saw us not spending money and saying no to things, and without explanation, they began to worry we were not able to properly provide things for them like clothing and food. Our kids are a little older so we can talk about the bigger plan of why we are doing this. When they understand the goals, they don’t ask for frivolous things, understand we can actually provide for them, and it helps teach them how to be responsible with money at a young age. We have found ways to make memories with them without spending a lot of money. Instead of eating out, we spend less and cook a gourmet dinner together- which one of them now wants to be a chef. Instead of going to the movies, we RedBox one and make sundaes. We have game nights, hit up places like the zoo when they have discount days, or go places that we can use our military discount. We have had some of the best memories with them since we began this plan.
    • Give Generously. This seems counter-intuitive when talking about paying off debt. We are focused on saving every penny to put towards our debt and reducing out living expenses. However, we still give to others. What goes around comes around. We have found that when we give to others, people give us back two-fold. When people know what our plan is, they are willing to help us in return. We don’t always give monetarily, sometimes it’s our time or a service like shoveling out a neighbor’s car or driving a friend to the grocery store. We have had friends help out with plumbing work, putting up the fence in the backyard, pet-sit, or bring us vegetables from their gardens which have saved us money along the way. Besides this sets a good example for our children.
    • Stay motivated. It can be a challenge when facing such a huge task as becoming debt-free. We sometimes have to refocus each other on our goals and help motivate each other. We both frequently listen to the Dave Ramsey podcast. Listening to others who have already been through this process is very encouraging. But keeping your goals at the forefront helps keep you driven through all the hard work.
    • Don’t forget to enjoy life. During our process, we have decided that we do not want to miss out on making memories with our kids and each other. We are already missing almost a year together with our kids with the deployment and they are only young once. It is important to us to still enjoy the little time we have together, and we love to travel. So before Brian deployed, we went on a family trip to Disney World and Sea World with the kids, our parents and our siblings’ families. We are planning a 96-hr R&R in Paris next month, and are making plans for another family trip when Brian returns. Spending money on travel is important to us because we are not getting to spend the quality time together throughout the year and this gives us a chance to experience new things together. Though now we plan for it, budget for it, and keep it economical by doing research on the cost before we go somewhere. Check out the opportunities from the Navy MWR for discounts on travel if this something that is important to you. Investigate ways to save money, like camping instead of staying in a hotel, stay with family or friends when you go somewhere, or bring your own food on the trip. But whatever you decide is important to your family, make an effort to continue doing that, even on a scaled back budget.

 

 

With some hard work and planning, a deployment can really help accelerate your debt repayment. We are using this year to put our family in a better place financially, just in time for our wedding so we can have a fresh, clean start to our marriage. I recently started a new job, so we anticipate this process to go even faster if we can stick to these tips. For others facing a mountain of debt, it is possible to get through it with a little creativity and dedication. Make debt payoff a silver lining to deployment.

What are some things you have done to help get out of debt?

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