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Fixing your expenses

In his book “Cashing in on the American Dream” Paul Terhorst recommends simplifying your life and living on a fixed amount of money per day. His target is about $90 per day (adjusted for inflation since the book was published) per person. So, with that target in mind, how can a military retiree fix their expenses? Here are a few thoughts.

  1. Buy a home. Military member should consider purchasing a home after 5-years of service and pays the home off using a 15-year loan. In this way the new-retiree has a paid-for home to live in or to sell in order to finance their retirement home. Since housing amounts to between 25-35% of the typical family’s budget costs, reducing this fixed cost to taxes, insurance, and utilities will dramatically reduce their daily expense for housing, usually to single-digits depending on the property taxes where you live. (Savings: 15-20% of your budget)
  2. Conserve energy. You can save money by upgrading appliances to more efficient models. When you installing Energy Star rated appliances you can save 20% or more on your energy bills according to the US Government’s Energy Star web site. Homeowner can also receive tax credits for energy saving upgrades, especially ones that integrate renewable energy sources such as wind, solar, and geothermal. By reducing your dependence on your local utility to provide energy to your home, you protect your monthly budget from fluctuations. (Savings: 20% or more of your utility budget)
  3. Shop at the Commissary with a list. If you’ve been stationed overseas anytime in the last 20-years you’ve heard the AFN “infomercials” for how to shop at the commissary. The spots are over the top, but the messages are real. If you buy your groceries at a Commissary and plan your purchases wisely, a military family can save more than $3,000 each year ( (Savings: 30% or more of your grocery budget)
  4. Drive a low-cost-of-ownership vehicle. Paul Terhorst advises retirees to sell their cars and use alternate means of mobility, but this isn’t very practical for many in the United States today. If however, you buy a car with a low-cost vehicle, you will save every day that you drive it. Intellichoice provides a list each year of the lowest total-cost-of-ownership vehicles by class. (Savings: 10-15% of your transportation budget)
  5. Buy the government sponsored long-term-care insurance. If you end up in a long-term-care facility, your Tricare benefits will eventually stop paying the bill. With a healthy military lifestyle, you’re actually more likely to need long-term care that those who live sedentary ones. With daily costs already in the hundreds-of-dollars-per-day range, you’ve got to plan ahead to keep you in the lifetime range of $90/day. A great option is the Federal Long Term Care Insurance Program (FLTCIP). At age 60, for about $8 per day, you can have an inflation-adjusted benefit for 3 years. That gives you (and especially your spouse if married) a good level of protection as you get older. (Savings: varies with life expectancy)
  6. Shop wisely. We live in an information-rich world, and with personal computers and smart-phones, we have an incredible ability to comparison shop. (There’s an application for your iPhone that let’s you scan a bar code on an item in a store and compare it to prices in the area.) The key is to minimize impulse purchases and stay informed of price changes and sales on items you’re looking for. (Savings: 5-10% on discretionary spending for clothing, entertainment, dining, and recreation)
  7. Bank smartly. If you’re paying a fee for banking services you might be able to do better. USAA offers superior rates on banking products and insurance. Also, you can go to to compare rates on savings, certificates of deposit, and loans. (Savings: 1-3% of total budget)
  8. Maximize your fun. By traveling off season, taking advantage of Military Recreation Centers, and space-available flights, you can stretch your recreation budget. (Savings: 40% off your recreation budget)

(Note: Use this inflation calculator to see how inflation reduces buying power over time.)


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