Rookie Money Mistakes of a Newlywed Military Couple

When my husband and I got married we combined our two separate lives into one. We were DINKs (Dual Income No Kids) with stable jobs, nice salaries, and no credit card debt. Neither of us had any financial skeletons, dirty money secrets or made any huge money mistakes in our past single lives. To me, it all looked like smooth sailing from here on out. If anything, combining our financial lives would make everything easier. After all, two salaries are better than one, right?

Looking back almost ten years on our marriage, it’s easier to see our newlywed money mistakes with the glasses of hindsight. So, I’m inviting you into the “Trust Tree”, and airing our dirty financial laundry. Please learn from our money mistakes. Here are five rookie money mistakes we made as a newlywed military couple.

Buying a Home in a Hurry

The Rookie Mistake

At our first duty station as a married couple, we excitedly rushed into buying our first home. That’s what grown-ups do, right? They buy a house.  We bought a home that was way above my husband’s BAH.  First, we told ourselves that because I was also working, we could afford it. Then we told ourselves, that because we were buying and not renting, it was extra O.K. to go above our BAH. After all, we were building equity, right?

Well, the joke happened to be on us when after living in our new home for less than two years we received our next orders early and they were to South Korea. I also had to quit my job. We couldn’t sell our home without taking a huge financial loss, so we became accidental landlords. Our downtown loft was awesome and we loved it, but it was so difficult to rent. Managing the property from 6,000 miles away wasn’t easy either. We hired a property management company and that was more money out of our pockets.

As our property sat vacant on the market for a few months, we were blowing right through all our emergency savings to keep up with mortgage payments. All of a sudden the awesome property that we could only afford on two salaries didn’t seem so great anymore.

The Takeaway

How did this real estate horror story end? We finally were able to rent the loft out (to both good and bad tenants). A few years later we were able to refinance it and that helped tremendously. But really, the saving grace was that the majority owner of the building decided he wanted to buy back all of the units in the building and turn the entire building into a commercial property. He asked me to make him an offer.

The bottom line is that by pure luck we were able to walk away from this property financially unscathed. However, that property was a financial and emotional headache for all five years we owned it. Since owing that property, we’ve purchased two more houses. One we kept a rental and one we sold. However, with the last two instances of buying real estate, we really did our research, due diligence, and we also purchased homes we knew we could afford on my husband’s salary alone since my career is less stable as a military spouse.

There’s no need to rush into a real estate deal, especially as a military family. VA loans are awesome, but they also make it very easy for servicemembers to purchase properties that they might not be prepared to own and manage. Owning a home and even becoming military landlords eventually worked out for my husband and I but I’ll admit there was some major trial and error in the beginning.

Living Way Above Our Means (and BAH)

The Rookie Mistake

Going into our fourth year as a married couple, we landed at our third duty station. At our new location, we found a great townhouse (of course in the most expensive zip code in town). It was such a great location. It was walkable to shopping, restaurants, and even my grocery store. This zip code was also the owner of one of the city’s best school districts (we didn’t have children yet). It was also about $450 over our BAH. We told ourselves (again) that didn’t matter because I had just landed a new job and was even getting a pay raise!

Sure we could afford an additional $450 in rent above my husband’s BAH. But, add in electric, gas, water, renter’s insurance, deposits, pet fees, and it all really started to add up. We also didn’t think about many of the new expenses we incurred from moving from an overseas location back to the States. Then we didn’t think about all the expenses of all the other things we wanted. We went out and bought a new vehicle and it came with a new $450 car payment. We wanted satellite TV, new phones, and trips home to see our family we hadn’t seen in a long time. Also, don’t forget all the shopping, nightlife, and going out to eat in our new awesome neighborhood. A couple months at our new location, we were really starting to feel the squeeze.

The Takeaway

There are two ways to look at BAH. What got my husband and me into a pickle as newlyweds was that we did neither of these methods. We saw the house we wanted and we neglected to think about the rest of our budget. We also neglected to think about that just because we wanted to live in a specific (and more expensive area of town) we might need to make compromises elsewhere.

The first method is that you can look at your BAH to guide you in the direction of the type and cost of the home you are supposed to occupy. Whether you agree with it or not, the BAH Primer explains how housing allowances are determined. The amount of BAH you receive is supposed to cover not only your housing but other expenses like heating, cooling, water, and sewer. The DoD previously announced that the long-term goal is to see BAH cover 95% of expected housing costs.

The second method is to ignore what the BAH Primer and allowance says and just tally the BAH allowance up with all your other allowances, base pay, and other income. When you budget for your monthly expenses you look at bird’s eye view of your total income and you go from there. Maybe you are going to spend more on your housing than what your BAH suggests because you want a specific school district, commute, number of bedrooms or area of town. The beauty of BAH is that you get to make your own decisions, but you better be able to adjust fire in other areas of your budget to stay on track.

Not Making Big Financial Decisions As a Couple

The Rookie Mistake

When we first landed at our second duty station in South Korea, I wasn’t working. About six months into our tour, I found a job! My new paycheck went into our joint account. I wanted to do something with the additional income, so I decided to invest in the market. Each month I started to move about $1,000 into our joint brokerage account. I enjoyed researching stock picks and with the market behaving so nicely, it made me look like I knew what I was doing.

About a year and a half into my side-hustle as the Wolf of Wall Street, I showed my husband our account balance. He seemed confused, where did all that money come from? I explained that every month I was moving money over into an investment account and I was buying stock. He hadn’t even noticed, he just thought I was paying bills or doing a little more shopping than normal.

The Takeaway

So what am I complaining about here? I invested a bunch of money in the stock market and received some great returns. This example has a happy ending, but would my husband have been as thrilled if I had lost our money instead? The bigger problem is that I neglected to talk to my husband about my plan because I thought that I didn’t need any help from him.

In a relationship, there’s usually one person who is stronger with finances or enjoys managing them more than the other person in the relationship. I think that’s totally normal. However, what I’ve learned is that both he and I need to be part of our marriage’s financial conversations. Even if I think I can do it on my own. Even if he says I can do it on my own. What I’ve found out is that he might not be as interested in me, but he does care and he should be involved regardless. I would be pretty upset or hurt if he made a big decision without me, so I learned to extend the same courtesy and respect to him.

Ignoring the Retirement Conversation

The Rookie Mistake

During our first year of marriage, one day I lovingly turned to my husband and said, “hey, at my work I have a 401(k). Do you have a 401(k) with the Army?”. My husband replied, “no, but we have this thing called the TSP“. I said, “great, you’re signed-up, right?”. “No”, replied my husband.

Long story short, he signed up for the TSP. Happy ending, right? Kinda. Although my husband signed himself up for the TSP, both of us neglected to talk about how much we should each contribute to our own retirement plans. I just assumed everyone would at least start with a 15% contribution. I had been working for a few years and was increased my percentage every year. My husband thought 5% sounded like a good number and he went with that. A few years later, he was showing me his annual TSP statement and I about choked on my coffee. I had just assumed he would have been contributing the same as me.

The Takeaway

The reality is, we never discussed specifics. We had both finally agreed that is was important to invest for retirement and save for future goals, but we never got down to the nitty-gritty. Yes, we opened a joint bank account but we weren’t managing our money overall as a team. We were still thinking in terms of  “me and I” instead of “us and we”.

We each had different standards for what we thought was an acceptable amount to invest. Ten years later, I’m sure my husband still doesn’t find the same amount of glee as I do when we talk about retirement savings, but at least we are talking about it. Not only do we set annual goals together, but we also talk about our investment strategy and risk tolerance. Our rookie mistake was about retirement savings. However, this same conversation could apply to charitable donations, savings, investments, and spending…and that’s called a budget. Something we didn’t have.

Not Having a Financial Gameplan

The Rookie Mistake

As newlyweds, we never really had a budget. My husband wasn’t really interested in our finances and having a budget would mean I might be held accountable for my spending habits. Instead, we took our proverbial financial finger to the wind and eyeballed our income vs. expenses. We paid our bills on time, did little saving, did a little investing, we thought we were doing great.

The truth is that without a budget we found ourselves going nowhere fast. We didn’t get ourselves into financial trouble, but as we progressed in our careers and were making more money, we felt like we didn’t have anything to show for it. Where was our money going each month?

The Takeaway

We learned that when we created a budget and used our dollars in the way we said we would, there wasn’t much really to worry or fight about (financially). Creating a budget together is like having a mediator for your marriage. Number don’t lie. Once when we were car shopping I fell in love with a great vehicle, one that was way out of our price range. I was in love with a car and it was clouding my financial judgment. My husband didn’t have to tell me no, our budget told me no instead.