When To Make Big Purchases as a Military Member

Being a member of the military gives you access to special financial benefits. These include low-interest loans, state tax breaks, inexpensive life insurance, free college tuition, retirement savings, and military discounts at hundreds of stores, many of which are available all year long.

Not only that, but as a young recruit, your military paycheck may be larger than any you have ever received in your life. With all this money suddenly at your fingertips, it can be easy to overextend yourself. This can lead to deep financial trouble from which it can take years to extricate yourself. It is best to plan your spending wisely, especially for big purchases.

Car

The purchase of a car may be a necessity, especially if you live off-post. You may think that it is a simple matter of watching your military pay chart and waiting until you have enough to make a down payment. However, there are other important considerations to make.

Before you start shopping for a car, you may want to shop around for an auto loan to ensure you are getting the best interest rate. Also, be careful not to purchase more car than you need. You can stay on solid footing financially with the purchase of a sensible used car or, if you must have a new one, an economy model.

House

Civilians often need to save for a down payment before they buy a house. However, a VA home loan allows you to purchase a residence with no money down. With a VA loan, you can also access lower interest rates and gain acceptance even with a lower credit score.

You may wonder if you should buy a home as an active service member or wait until you retire. There is certainly no harm in waiting until you become a veteran to buy your first home. However, if you think your family would be well-served with a home purchase now, it is certainly something to consider. Think about how long you are likely to stay in the same location before being reassigned. If it is only a matter of a couple years, a home purchase now may not be worthwhile. Also, take a look at which direction home prices are trending in the area. If they are trending down, you may have a short sale on your hands when it comes time to move again. Also, be sure that you are careful to factor in all expenses, including maintenance, when calculating the monthly payment you can afford.

Some service members decide to buy a house that they can rent out for extra income once they are reassigned. Before you make this decision, calculate carefully how much you stand to profit from renting out your home. Factor in the costs to hire a management company to take care of landlord responsibilities if you are sent too far away to handle it yourself.

Home Furnishings

These include tables, chairs, appliances, window dressings, etc. Though you may want to have these ready for when you move into your new home, if you are taking out a mortgage, you should not make any major purchases until after closing. The reason is that the mortgage lender may do a final credit check, and a big purchase could negatively impact your score. It may be enough for the lender to withdraw approval. A purchase of home furnishings is not certain to derail your home ownership plans, but why chance it? You can buy what you need after closing and not run the risk.

Other Essentials

Many stores that sell things like clothing, hardware, and electronics offer discounts to current and former military members. Many are available at all times of the year, while others are only available seasonally, e.g., on Veterans Day or during Memorial Day weekend. There are lists published online of stores that offer military discounts and when they are available. However, even if the store does not advertise a military discount, it never hurts to ask. The worst they can say is no.

Don't be afraid to ask if you need help with financial planning. There are both military and civilian resources available.