Special Forces Finance
What You Can Learn About Financial Freedom from a Green Beret
(Hey everyone! I have a great success story from SGT CEO, he has a great story about how he has turned his finances around. I hope you find it as inspiring as I did)
By SGT CEO
Like most teenagers, I had no real idea of what I wanted to do when I grew up. I did not come from privilege, I was raised by a single parent, and college was not an option so I chose to join the military.
I spent the first few years following the crowd and making the same fiscal mistakes we all do. I financed a car I couldn’t afford at a ridiculous interest rate, I got credit cards for stupid things like stereos and speakers, and I spent my money on things I shouldn’t have like eating out, going to bars and buying expensive clothes and jewelry to look cool.
A few years into my career I made the decision to try out for Special Forces and after a couple more years of training, I finally earned my Green Beret and began working and deploying all around the world. I would stay gone for months at a time and return home to a bank account full of cash that I didn’t have the opportunity to spend, and you guessed it, would then spend it on more stupid things. Like most people, I thought if I just made a little more money, got promoted one more time, everything would get better. But the more money I made, the more money I spent.
This was a time when the internet was new and cell phones were not available so the only entertainment I had was to read. While awaiting a flight overseas on one particular trip, I stopped into the USO at the airport to see if they had anything for me to read on my flight. The lady behind the counter gave me a book called The Wealthy Barber by David Chilton. It is a financial book written in story format about a small town barber who lived frugally and saved his pennies becoming wealthy over his lifetime. I read the whole thing cover to cover on the flight and became both angry and excited at the same time.
Angry that I had let the first few years of my career go by with nothing to show for them except a collection of debt and excited because I had caught the fiscal bug. I spent the rest of that flight and that trip coming up with a fiscal plan for my future. I now had a mission, and like any good Green Beret, nothing was going to stop me from accomplishing my mission. I was the CEO of my own life and it was my responsibility to make sure my personal corporation was a successful one; personally, professionally, and financially.
I spent the next few months reading everything I could on fixing my fiscal situation and came to learn just how horribly I was messing up. I was running a failing personal business and as a Green Beret, that was a hard pill to swallow. For someone who was supposedly the ‘best of the best’ at my job, failing at this particular aspect of life was unacceptable and I vowed to attack it with the same vigor I did everything else.
I had to spend a few extra years in the military to reach my goal and to make up for the first few years of waste but have been able to amass enough of a nest egg to live a comfortable life for many years to come. Although the military provides certain aspects to your financial life that many civilian occupations do not have, like health insurance and a predictable promotion and pay increase structure, hopefully, you can benefit from the lessons I have learned to improve your financial future as well.
The First Step
The first step in the process was to write out my mission statement, create the plan. Putting this on paper helped me express and understand my goals clearly and helped me achieve them more easily. I knew that I was eligible for military retirement after 20 years of service, so my goal was to have enough money in investments to make up the difference of the money lost. The priority was survival, not excess, so this meant having enough to cover my basic needs. This was obviously well below my current income level so I didn’t need to keep the same income level to survive past retirement.
The Next Step
The next step was to figure out exactly where I was and then map out a plan of action to get to where I wanted to be. No corporation can succeed without good accounting practices, so I became the CFO as well as the CEO. I took a little hint from Dave Ramsey and assigned a name to every dollar I spent for a month to see where my money was going. I mapped out my expenses and also what I did with my free cash:
|Entertainment (movies, concerts, sports)||400|
As you can see, not only did I waste a considerable amount of money every month, I saved nothing. I had nothing put aside for emergencies, I lived paycheck to paycheck and if I needed more money, I would just charge it to my credit cards and pay for it later. I was doing what most young people were doing: eating at fast food places several times a week, going to the bars with my friends to meet girls on the weekends and seeing new movies and rock concerts when they came out.
Take Control and Assume Responsibility
Once I made the decision to accept my role as the CEO of my personal corporation, I looked at my balance sheet and planned my attack. I started with the free cash table and immediately cut out everything. I didn’t want to just become a hermit and sit in the house so I got creative to replace the things I liked to do with cheaper alternatives. Instead of eating out at restaurants, I bought a used grill from a garage sale and started having cookouts where other people would bring the burgers, dogs, and side dishes so all I had to supply were the condiments. I started being the designated driver for my friends and drank water at the bars when I went out. This cut my column from $500 down to under $50.
I stopped going to movies and joined Netflix, which at the time was through the mail, unlimited movie rentals for $10 a month. Instead of going to sporting events, I started playing golf so I spent a lot of time at the driving range just hitting golf balls. They usually have deals at ranges and mine had a $50 a month card for unlimited balls and it was a lighted range open till 10PM so I was there a lot. This cut that expense down from $400 to $60.
I started wearing just jeans and T-shirts, no longer concerning myself with fashion. I picked up a couple hoodies for the fall and some good ‘ol Chuck Taylors for the kicks. I didn’t see the need for trying to impress people with my clothes and to be honest; my choices at the time would probably not be considered high fashion anyway. And hey, it worked for James Dean and Fonzie. This all but illuminated my clothes expenses. Another $500 raise.
I also started paying attention to my health. I quit smoking and stopped drinking soda, replacing it with a sports bottle and tap water. I know bottled water is supposed to be better, but for someone who has drank directly out of a river in the jungle, just having water with nothing floating in it was considered a win. I did it under the guise of saving money but it also had a pretty good effect on my health, improving my run times and overall fitness level. Surprise, surprise!
So just like that, literally within 30 days of me deciding to accept the role of CEO and run my corporation to be a profitable one, I stopped wasting over $1500 every month, or $18,000/year. WOW!
To put that money to good use, I began a combined approach to both debt and savings. This may seem a little against popular fiscal culture as the norm is to remove all debt before saving, due to a higher interest rate on credit cards than the market usually gives, but I wanted to start building my nest egg immediately and with the free cash I was now saving every month, I could do both. I came up with a tiered savings plan to take me through my career that started with a fixed amount monthly and increased it by $50 every year through my retirement.
Because I was already 5 years into my career, I started with $300 a month into my brokerage account. One of the books I read during my training was The Motley Fool by David and Tom Gardner so I knew I wanted to be in stocks and not mutual funds so I just did some home study on the market at the time.
The one thing I learned is that if you try to trade stocks you will get crushed by the professionals and I already had a job so I decided to just pick something and collect it. To keep commissions down, I would just wait until I had $1000 in the account and buy as much as I could for that while I saved the next $1000. I took the Fool’s advice and just picked a stocked I liked, was part of my life and that I didn’t see going away anytime soon. I’d prefer not to divulge what I chose but to give you a hint, I bought my Kindle there.
Now I know there are many of you out there that will lecture me on being balanced, diversified, and protected, but remember I already had a retirement account with the US Government that I considered my main fund, and this was just a smaller slice of that bigger pie that I am supplementing with a slightly more aggressive approach. For a civilian job, I would max out my IRA contributions, use my 401K to its fullest, then pick one thing to be your aggressive stock and just collect the heck out of it!
I was already about $13,500 behind the plan if I had started on day one in the military so I considered that debt as well. I felt I owed it to the business and I made it a personal goal to pay it back so I added that to my debt reduction plan as well.
I also used the 50% rule. Anytime I had a windfall, like a tax return, a bonus from work, Birthday checks from Grandma, or a pay raise, I would take 50% of that money and put it directly into my brokerage account. Over my career, this alone was able to net a substantial increase in the bottom line for the business.
I chose to not buy a home and rent during my career. First off because the military moves you around every few years and buying and selling homes in fixed income communities does not net the profit margins that home values in other places provide so there is little upside. And aside from basic home maintenance like cutting the grass and leaky faucets, the homeowner is responsible for all major repairs. I have lived in several homes that needed new HVAC systems at over $5,000 and all I had to do was make a phone call to the landlord to have it repaired. That money has been saved with a goal of only buying one house, the one I want to retire in, so I chose to wait.
To help increase my income even more, I looked at my household expenses and aside from eliminating my credit cards, I chose to sell my vehicle and buy a $4,000 Honda Civic (that I still drive!), and limited my groceries to $500/month. This took about a year to accomplish but in the end, I was bringing in another $1,000/month. I applied that money to the debts I had, including my investment debt I assigned to myself and within 24 months of my accepting the role of CEO of my personal corporation, I went from a failing business that was losing money, to a successful corporation with over 50% profit margins!
And I did it without drastically changing my standard of living. I actually have improved it considerably from those days as well. I’ve rented nicer homes, I have better cookouts on a nice grill, my golf game has improved tremendously and I am still fit well into my 40’s.
So how can my story help you?
First, you HAVE to accept the role of CEO of your personal business.
The success or failure of your business lies solely on your shoulders. No excuses, no complaining, no whining. Accept that it will be difficult and do it anyway. Business is business. You don’t need a Harvard Business degree to figure out that spending $5,000/month on a $4,500/month salary is a bad business decision. Before any purchase, before you pull that card out of your wallet, ask yourself “Is this a good business decision? Does it help the business become profitable or take away from the profitability of the corporation?” You will always have your answer. This is not just a financial plan either. There were things I was doing and people I was associating with that were keeping me from being emotionally profitable as well. I did a serious life audit of all aspects of my life and made the decision to be profitable as a person, and made those changes as well.
Map out your plan.
Where you stand now, where you want to be, and where you would like to be in your future. Download a budget from the Google machine and fill it out. See where you can make up savings, what is realistic and what is ridiculous. What can be replaced with a cheaper alternative? If you do not write it out and see where your money is going, you cannot plan for where it should be going! Like Dave Ramsey says, a budget is you telling your money where to go instead of wondering where it went.
Live below your means!
Part of your budget should be the survival column, the bare minimum things you need to pay to live. Rent, electricity, food, transportation. Everything else is a luxury. I chose not to give up cable TV or the internet because I like what they provided. If you feel you can switch one off and get your entertainment via digital, then cable can easily be removed for more savings. If you do not make enough at your job to cover these things, get another job! There is no excuse anymore to not make enough money to survive. Buy stuff at garage sales and sell it on eBay. Sell bracelets you make out of macaroni in the Church parking lot. Walk your neighbor’s dog and cut their grass. There are 15 year old kids in the inner cities and 67 year old ladies in nursing homes making apps right now! The world has changed; you have to go get it.
Are there people out there born into privilege? Yes. But here’s a little secret, that doesn’t give them the key to being a successful CEO of a personal business. There are plenty of rich kids who squandered daddy’s money and are now looking for work holding a Stop sign at a construction site. If you were not born into privilege, welcome to the club. Some people can wake up every day and eat Twinkies for breakfast and not gain a pound. If I look at a Twinkie I gain 10 pounds! So I just have to work harder to stay fit, it’s that simple. It’s harder for some people, but that’s just life. It’s not supposed to be fair; it’s just supposed to be.
Attack your debt like it is the enemy!
Knowing I owe somebody money and they are charging me a fee, usually a hefty one, makes me physically ill. I look at creditors as the scourge of the land, preying on the weak, and I refuse to be weak! After all, I am a Green Beret. You don’t need credit for anything. Anyone who tells you that you need debt to establish a credit score is just ignorant on the system. The only thing you would ever need credit for is a home purchase, and if you show up to a bank with a job, no debt, and a hefty down payment they will work with you. You are a unicorn in their world and they will probably take your picture and display it in their office!
Start saving now!
Make your savings a bill, as important as rent and food. Increase it every year as you age and it will grow considerably. Even if you are 40 years old, but the time you are 60 you will have an incredible amount saved. The power of compounding interest is magical. There isn’t a person out there that cannot come up with $50 or $100 right now that they can start with. Find ways to adjust your lifestyle annually to increase that amount every year by whatever you choose. You would be surprised at how easily I added $50 annually to my savings. And many times I went far above that number to see just how far I could take it. If you walk down the beach and put pebbles into a bucket, sooner or later you will need another bucket.
Even someone on welfare or Social Security can find $100 they can save by making life changes. $100 monthly for 40 years will get you almost $500,000 at normal market returns. Leave that to your kids and teach them the plan at 18 of just $100 a month, and they will have almost 23 million dollars after 40 years. So in just one generation, you have created a legacy. They can now be the 1% everyone complains about.
Learn all you can!
Just because you are out of school doesn’t mean there is nothing more to learn. Start reading! Keep a book on the nightstand and read for 30 minutes before you go to bed. Get audio books to listen to in the car as you drive. Download podcasts about money, investing, debt, and personal growth. There are unlimited resources for you to grow as a CEO of your personal business. Take a cooking class, learn how to landscape, how to fix your own car, play a new sport, learn photography. Wisdom comes from experience, go get some!
Live your life; have fun, make memories.
When you are old and look back on your life, you won’t remember going to the bars or seeing a movie, but you may remember seeing fireworks with your family, hitting the winning home run in the softball tournament, catching that trophy fish or hitting a hole in one. And it doesn’t always take money to create a memory. There are unlimited sources on the internet to help you find things to do that don’t cost a thing. A simple search of what is happening in your community can give you lots of ideas; there are always festivals, free concerts in the park, sports leagues, and community organization events happening. You can get involved in a cause to help others and just give your time, always a great thing to do!
I am the CEO of my personal corporation and it is a profitable one, personally, professionally and financially. I have no debt, a substantial amount in investments that continue to grow, and I live a healthy and active lifestyle that doesn’t eat into my wallet. But most of all I am happy. By making some small changes in your life, you too can become a successful corporation. With a mix of smart planning and strategic savings, you, too, can experience the financial freedom I have experienced, and maybe make some good memories along the way.
Follow me on twitter @SGT_CEO and on Facebook at facebook.com/SGTCEO/
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