Getting Started

Good morning, my name is LCDR Andy Sheep, I’m a doctor in the Navy, and will be joining the Saverocity team, giving advice and tips that are military specific (you can read more about me in the About Me section). I’m very excited to be joining the Saverocity team! On to my first post:

So you just got out of bootcamp, and received your first paycheck (or bonus)…

Congratulations! Now is the start of your quest to become financially independent, over whatever time horizon makes most sense for you based on how much you make and how much you spend (ie your lifestyle). Or perhaps you’ve been in for a while, but never really thought about personal finance. What I want to accomplish in this post is give you advice on some practical easy steps to help you along your way to become and remain financially comfortable.

Step 1: Find a bank

I assume in boot camp that you’ve already had to set up a bank to receive your direct deposits. You can start with either a military bank, civilian bank, or have both. I’ve personally had many banks, military and civilian, including USAA and NFCU, and can say without hesitation that USAA is far and away the best bank I’ve ever used; it is super convenient (use any ATM and get reimbursed, up to $15/month, and deposit checks with your cell phone), has great rates on auto insurance, and their customer service is without peer. Their biggest downside is that they have no branches, although given their phone and online options, I struggle to find a reason why you would consistently need one. (One quick tip: I would get their USAA credit card, not necessarily to use (there are better cards), but to link it as an overdraft option, just in case you accidentally overdraw on your checking account; that way there is no overdraft penalty).

If you decide to go with another bank, make sure it has free checking, good customer service, and either a large ATM network or reimburses you for ATM withdrawals. You can type in your bank’s name to generate bank ratings (USAA is 5/5 stars).

Step 2: Monitor your transactions online

Sign up at Mint, and enter all your bank, credit card, and loan information, and it will track all that information and can keep tabs so you don’t have to. It is completely free, is very safe, and can help you find a transaction that you have forgotten about. Most importantly though, it can give you an idea of how much money you’re earning vs how much you’re spending, ie it can help you make a budget.

Step 3: Sign up for free credit monitoring and score

You can sign up for free credit reports, and can often get an actual credit score, but it will usually cost you money, or at most give you a 7 day free trial where you can cancel your account before the 7 days are up. I’ve done this before, and always forget to cancel it in time. One way to see your credit score at anytime for free though, it to sign up at Credit Karma, where they estimate your score every time you visit the site (called a FAKO instead of a FICO score), without negatively affecting your score. Another way to get free scores continually is through certain credit cards, where a condition of being a cardmember is that they give you your credit score. I’ll tell you about those in an upcoming post.

Step 4: Are you being deployed?

Here are some good tips. Also, if you are being deployed to a combat zone, make SURE you do the savings deposit program. It is the easiest return on investment you’ve ever found. This is another topic about which I’ll go over in great detail in a future post.

Step 5: Apply for a credit card

If you don’t have a credit card, it can be a good thing to get one and use it, assuming you are responsible and don’t carry a balance. If you don’t think you’ll be able to responsibly pay off the full balance of your credit card every month, I would just stick with a debit card from your bank. However, if you can be responsible and pay it off in full every month, the benefits to using a credit card include building your credit score and getting rewards or cash back. Many of you will be applying for a government credit card to use for your command, but this cannot be used for everyday purchases. For those without much of an established credit history, two cards that I recommend applying for are the Chase Freedom, and the American Express Blue Cash Everyday. Neither has an annual fee, which is huge, you don’t need excellent credit for either, and both have small but significant signup bonuses.

The Chase Freedom offers 10,000 Ultimate Rewards points, which can be very valuable for free travel, and offers 5% bonus points for rotating categories on a quarterly basis throughout the year (for instance it offers 5% back on gas stations, movie theaters, and Starbucks from Jan – March, up to $1500 spent), and 1% back on all other purchases.  As a bonus, it offers a 0% APR for 15 months for purchases and balance transfers, although there are better balance transfer options (in an upcoming post).

The Amex Blue Cash Everyday offers 3% cashback on purchases at grocery stores, which includes base commissaries, 2% cash back at gas stations, including on-base, and select department stores, and 1% on everything else. The cash back takes the form of a statement credit, and you can make that on up to $6000 of spending per year, or $360 cash back if you just spent it only on grocery stores.

There are other excellent credit cards, with every better signup bonuses and benefits, but you need excellent credit and need to pay off your monthly balance in full to reap any sort of financial benefits. We’ll go over credit cards exhaustively in future posts, as they can offer incredible rewards if used wisely, and have special benefits for military members.

Step 6: Sign up for frequent flyer and rewards accounts.

During your time in the military, you will undoubtedly be travelling quite a bit, more so than most civilians. Whether or not you like travelling, why not reap some benefits from it, since you will be doing it anyways. Signing up for frequent flyer programs and other businesses rewards programs is almost always free, and does not take much time. No matter which airline, rental car, hotel, train, or store you use, make sure to sign up for their rewards program. You don’t have to sign up for every one, but the major ones that I recommend are listed below

Airlines

United Mileageplus

American Airlines AAdvantage

Delta Skymiles

US Airways Dividend Miles

Hotels

Marriott Rewards

Hilton HHonors

Starwood Preferred Guest, which includes Sheraton, Westin, and others

Hyatt Gold Passport

Rental Cars

Hertz Gold Plus Rewards

Enterprise Plus

Avis MyAvis/Wizard Program

Train

Amtrak Guest Rewards

Sign up for these 12 programs, and you’ll be started on slowly but steadily accumulating miles and rewards every time you travel. Also make sure to sign up for a companies’ rewards program every time you use them.

But there are so many programs – how can I keep them all straight? Sign up for Awardwallet, which is a free service, and tracks all the major rewards programs, and auto-logs you into their websites. I use this constantly to keep all my loyalty programs straight, and to auto-log me in.

Step 7: Get rewarded for spending money

Use shopping portals (link to an article on shopping portals) to increase the amount of rewards you earn. When you’re in the portal, you click through to the site from which you want to shop, and it will generate a cookie to track how much you spent, and how many rewards you received. A great website to find the best shopping portal is Cashbackmonitor, which I use every time I buy something online.

Should you go a buy a new car or truck?

No! Please, if I can teach you nothing else, please do not go out and blow your whole paycheck or bonus on a brand new vehicle! I’ve seen this happen so many times, and it just blows my mind, because it is such poor starting point for financial stability and growth. There is the fact that your brand new vehicle will lose a substantial amount of value the moment that it is driven off the lot and that it is a depreciating asset, meaning it will lose money every year. Our goal with financial growth is to move assets into something that appreciates, or compounds, or gains money every year. Do not buy a brand new car or truck unless you’ve done the research and it makes sense for your situation.

That being said, if you need transportation, I’m not saying don’t buy a car or truck. Used, or even certified pre-owned (CPO), can be great deals, and in a future post, we’ll go over that.

Or, even better, why not commute on a bike? Since starting my military career in 2006, at bases as varied as Bethesda, MD, Groton, CT, Panama City, FL, Portsmouth, VA, Bahrain, and Guam, I have never needed a car to make my daily commute. I have ridden a bike unless the weather dictated against it, and I have saved so much money because of it, and, bonus, it’s kept me in much better shape than if I’d driver a car or truck.

What about starting to save money?

We’ll go over this in a future post, but rest assured being in the military gives you many advantages over civilians in terms of saving money and less of the money you do have going towards taxes.