We Were Dumb With Our Money After College

Does the title of this post seem odd to you? I’m actually admitting that I make mistakes… but did I learn from them? Yes I have blemishes and I hope from my mistakes, you will learn.

Let me paint a picture of how this all happened. Both Melissa (my wife) and I graduated college and become officers in the U.S. Army. Starting out as Second Lieutenants wasn’t alot of money (it is now), but we had little bills and a steady income. About 18 to 24 months later we both became First Lieutenants with some nice pay jumps. Sounds good so far right?

Well we loved going out to eat, didn’t save a penny and then decided to buy a house. Not too bad, I’ll give you more details:

1. Going Out To Eat
We love food and going out to eat was easier than making it at home. No cleanup, no cooking and then enjoy the rest of the evening. We spent so much on our credit cards just for this it was amazing. If your credit card does the end of the year rollup by category on what you spent, get it. I don’t remember the dollar figure, but it was large. BUT, we could afford it. Yet it affected #2 below…

I’m not saying going out to eat is bad, we still do it, just not as much. (Sometimes I need to remember this lesson myself.) We just have to remember moderation. Sometimes the spaghetti at home is just as good or better than having it out and less expensive. One thing my mother has taught me is to make more than you need for the meal. You can use the leftovers as lunch for the next day instead of going out to eat.

2. Saving Money
At the time the military didn’t have 401k type accounts that encouraged savings. It is not the military’s fault, we were adults (by age, not by maturity). So we maybe had a few dollars in a plain jane savings account for emergencies, but little else. If you think about the compound interest on just a few dollars for later home purchases or retirement. But you say to yourself those are so far away, they come before you know it.

Start now with 1-2% savings per month into your companies 401k type account. Many companies have a matching policy that contributes more money to encourage savings. Other good accounts to contribute to are ROTH IRAs and educational savings accounts for your present or future kids. Don’t go overboard and save all your paycheck to leave nothing for today. Also don’t forget to save. Again the word is moderation. The savings could be used for a house like #3 below…

3. Buy a House
Most duty assignments we expected to stay at from three to five years. Our first year we rented an apartment (this was after four months of career specific training). So we are about one and a half to two years into our first assignment and we decided to buy a house. We had no money to buy a house… But we could do that by getting a VA backed loan (no down payment and no private mortgage insurance-PMI). Good and bad! Higher monthly payment because of no down payment and less invested.

Well we stayed in the house for about two years, probably overpaid a little bit when we bought it. When we sold the house we had to contribute about $3,000 – $5,000 just to close the deal. (Some of my figures and months are a little fuzzy.) It was just the two of us and two cats. We didn’t need the house, we wanted the house! We could have easier stayed in the apartment and saved or more wisely used that money. If you only plan to stay in the house less than three years (maybe even five years), don’t buy. Also be smart about your needs, don’t feel you have to have the appearance of success. What’s the word… Moderation!

I plan on passing on more financial tips, drop a comment if there is a specific area you would like covered.

Was I Dumb, I Hope I Learned,
Sam Carrara