When Ensign Zachery Christensen asked to participate in Military Times' annual financial review for troops, he wrote, "Money is TIGHT right now!"


The 26-year-old wanted "some advice on keeping my financial ship afloat – especially as I'm just getting started in the service." Christensen joined the Navy's Civil Engineer Corps in September 2015 and has been adjusting to life at his first duty station, Naval Facilities Engineering Command Washington. But adjusting to the cost of living near Washington, D.C., has not been exciting, especially compared

with their former home, Utah.

Christensen is one of four service members who volunteered for this year's special report on Troops And Their Money. Military Times put out a call for troops to have their finances reviewed by financial professionals. A variety of service members of different ranks, and in different financial circumstances, responded.


He and his wife, Jessica, are seeking ways to ease their financial situation, especially with another baby due next May. Jessica is a full-time mom to Roman, who turns 2 in January.

Zachery’s gross income is $6,300 a month, including his housing allowance; of that, he brings home a net of $5,200.


With monthly expenses of $5,149, the family has precious little extra. Some setbacks and financial missteps mean they're paying about $980 a month toward debt, including a car loan. They are trying not to add debt, managing money by keeping a budget worksheet that tracks expenses. They each get $25 a week for miscellaneous spending.


Zachery isn't contributing to his Thrift Savings Plan because money is tight, but the account has about $3,800 from prior contributions. They are putting $100 a month into a low-risk mutual fund that they intend to use for retirement.


Part of the reason money is tight comes from lower-than-expected reimbursements after a recent permanent change-of-station move. Another issue: An "impulse buy" two years ago of a new car for their growing family, which landed them a reliable automobile, but a $580 monthly payment. 

"We went to the dealership with zero experience or expectations," and without any pre-financing, Christensen said.

Then they had to buy a second car when they moved and found out Zachery would split time between two bases and couldn’t use mass transit. A co-worker helped them find a reliable vehicle, but after putting $1,250 toward it from the emergency fund, they were down to $50.


For the last few months, they've been making minimum payments on their credit card, at an annual percentage rate of 12 percent. If they carry their $5,000 debt for a year, that's $600 in interest.


They also took out a $15,000 personal loan to consolidate debt. Although the interest rate is lower than a credit card, that monthly payment is $313.


"This hurts the bottom line, but at least we will be guaranteed to pay it off within the next couple years," Zachery said. The balance is down to $13,000.


In addition, auto insurance premiums are double what they paid in Utah, plus they've added a car. Higher gas, maintenance, and registration fees added to a burden they weren't expecting.

A financial snapshot: 

  • Consumer debt: $5,000 credit card debt; $13,000 personal loan; $34,000 car loan
  • Emergency fund: $50
  • Education fund: $2,500
  • Other assets: Mutual fund, $4,000
  • Retirement assets: $3,800 in TSP


THE REVIEW


Financial advisers Nancy Matteson and Linda French of Navy Federal Financial Group said the top priority should be to build the emergency fund.


"They understand with the small amount they have available to save each month, it is very important to have any savings accessible in the event of an emergency," the advisers reported.


Paying off high-interest debt is a priority over saving in an account earning a low rate of interest, the advisers said.


Once they get that emergency fund beefed up, the Christensens can think about longer-term investing. They might consider a mix of stocks and bonds, available through mutual funds and exchange traded funds. That also holds true for Zachery's TSP investments.


One good thing about investing in the TSP, the advisers noted, is that the money is pulled directly from his pay. It should be his first choice for long-term investing.


WHAT'S NEXT

The Christensens have started using any extra cash to paying off credit card debt and loans. They had been making the minimum payments on their credit card debt, "but after the meeting, we want to get rid of that debt first," Jessica said.


Their goal is to pay it off by February, then go back to their saving routine. They'll stop investing in the mutual fund outside of retirement accounts, and Zachery will restart TSP contributions.


They'll leave the money they have in an education fund intact for now, and once they're able to start saving again for the children, they'll use Ionger-term savings vehicles rather than low-interest accounts.


They also plan to use military legal assistance to draw up a will and to establish guardianship for their children, as the advisers suggested.


Zachery said he thinks sitting down with a financial adviser should be mandatory for all new service members.


"We're more informed than we were before," Jessica said after the review. "We learned some things we could do better. This was a great experience."

Karen has covered military families, quality of life and consumer issues for Military Times for more than 30 years, and is co-author of a chapter on media coverage of military families in the book "A Battle Plan for Supporting Military Families." She previously worked for newspapers in Guam, Norfolk, Jacksonville, Fla., and Athens, Ga.

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