Category: Budget

The Net Worth Payment

Post author By Rob Moore
Post date August 4, 2026

For personal finance DIY’ers, trusting the long term effects of financial decisions can be difficult. Even when everything makes sense on paper, it isn’t always easy to know if we’re making the right call, financially. Markets can rise and fall. Investments can spoil. Dreams can change. As we progress through the long term unknown, the decisions we make in the meantime will likely shine or dim along with the changing conditions.

Despite the odds, it’s always a good idea to orient your investments and savings towards the goals we have, if at least for now. It’s also wise to check on these goals and the progress made from time to time. So long as the goal remains in place and the progress remains healthy, this can create a remarkably peaceful feeling among the uncertainty.

But what if our goals are less clear? Also, what if we are too young to galvanize long term goals? After all, it’s difficult to know exactly what we’ll want in retirement when we’re still young. Also, for those facing tough transitions in life such as illness, death, divorce, job change, suddenly the goals we had in place maybe aren’t so clear. Or at least put on hold.

The good news is, there is help.

Later in this piece, we’ll look at a very general way to measure your financial progress. Before we get there, let’s talk ratios.

Personal finance ratios can help us when our financial goals are less clear. They help answer the question, “am I saving enough?” or “am I spending too much on a house?” They operate as an answer to common concerns absent any other financial input.

Probably the most useful part of these ratios is the elimination of comparison to others. That is, when trying to decide how much house you can afford, one of the most compelling influences can be the types and values of homes owned by peers. The wonderful thing about ratios is that they can help you disregard unhelpful social comparisons and measure your financial ability and progress independently. Let’s look at a few of the most commonly referenced financial ratios.

Common Ratios

The 50/30/20 budget rule: The broadest popular financial ratio.

This idea attempts to advise, generally, how your spending should be allocated in your budget. First, it recommends that 50% of your spending should go towards needs (housing, groceries, utilities, health care, debt payments, etc). The next 30% should go towards wants (eating out, vacations, discretionary spending, etc) and the final 20% towards savings (emergency fund, retirement, general savings).

Emergency Fund Ratio: Do you have enough to weather the storm?

This ratio helps advise us how much we should have set aside for a rainy day. Unlike the 50/30/20 rule above, this ratio does not have the benchmark built into the title. The benchmark, as typically advised, is 3-6 months worth of total expenses set aside and used only for emergencies such as unemployment, large home/car repairs, or unexpected medical bills. Variations on the 3-6 month benchmark usually stretch the goal to 6-12 months for self-employed or those in volatile industries. Also, some users choose to cover only fixed mandatory expenses with the idea that discretionary spending can be paused if needed.

Savings Ratio (AKA Savings Rate): Are you saving enough every month?

This ratio suggests putting away 20% of your gross income towards savings. This can be retirement savings, general savings, or investing in a liquid brokerage. The nice thing about this goal is that it overlaps nicely with the previously mentioned ratios. Remember the “20” in the 50/30/20? Also, saving 20% of gross income can fill up your emergency fund very quickly.

Debt to Income ratio: Can you handle your debt payments?

This ratio helps you weigh whether or not too much of your income is being put towards debt payments. The calculation is relatively simple. It is your total monthly debt payments divided by your gross monthly income. Once you have your number, compare it with the benchmark of 36%. Any higher than 36% and you may have too much debt relative to your level of income. Anything below the benchmark indicates that you’re on the right path. The lower, the better.

Housing Ratio: Did I buy too much house?

Nested within the debt to income ratio, is the housing ratio. I say that because our mortgage (debt) payment is included in our total debt payments used above. However, if we isolate our mortgage debt payment and divide it by our gross monthly income, we get our housing ratio. The benchmark for this ratio is 28%. Once again, the lower the better.

If you’re meeting every benchmark above, you’re probably in great shape, or you will be before long. However, remember when I said these ratios exist minus any other financial data? That is because they intend to serve as general rules of thumb rather than curated financial advice. How you choose to apply these ratios depends on your individual circumstance and your benchmark may be wildly different.

For instance, for a young couple seeking F.I.R.E. (financially independent retire early), the savings goal of 20% may be way too low. They may push as high as 50% or higher in their pursuit of early freedom.

Likewise, young parents who find a home next door to a perfect elementary school, a few miles from grandparents, and within a desirable community, perhaps won’t be as worried about a 28% housing ratio. If they are both expecting rapid, stable income growth, maybe stretching this ratio in the short term isn’t a concern compared to the invaluable benefits.

And finally, what about those who saved aggressively and find that their dream retirement is already funded, along with a healthy emergency fund? Should they still worry about saving 20% until they eventually retire?

Asset to Liability Ratio

If you find yourself reasonably questioning how one or more of these ratios apply to you, then perhaps taking a step back and viewing the larger picture may help.

This is where your asset to liability ratio comes in. This ratio simply measures how much you own compared to how much you owe. It is calculated by dividing your assets by your liabilities. In layman’s terms, take everything you own and divide by all of your debt. Your assets include your savings, investments, home value, car value, jewelry, and anything else you possess. Yes, even if you have debt taken out against them (mortgage, etc). The debt is simple. The balance of everything you owe.

An asset to liability ratio of 1 indicates that you have just as many assets as liabilities. This may sound good, but it is a tipping point in either direction. You can quickly slide below 1 or compound your way higher. The standard benchmark for this ratio is 2 and beyond.

Your Net Worth

Your asset to liability ratio strongly correlates to your net worth. Since your net worth is your assets minus liabilities, an asset to liability ratio of 1 indicates that you have a net worth of $0. See? Not so good. Even worse, an asset to liability ratio of less than one indicates a negative net worth and possible trouble ahead.

Tracking your net worth

The great thing about net worth is that it can be very valuable in a few different ways. Primarily it acts as a snapshot of wealth. It is value of everything you actually own. Or as I put it in “Principles of Prosperity” what you would have left should you sell everything and live under a bridge.

What I like about tracking net worth is that it can be an indicator of financial growth independent of financial ratios. Even if you aren’t meeting the benchmarks above, you can find comfort in consistent net worth growth. In other words, even if you aren’t doing everything right, you’re likely doing something right.

The net worth payment

As we assess the bigger picture far above the ratios, you can measure your progress in a few ways. Of course, monitoring your net worth every month or so is a good start.

However, as we decide from month to month on savings, debt payments, and so on, there is another unique way to perceive how your decisions impact your overall wealth. That is to factor your net worth payment.

In the simplest form, your net worth payment is every dollar saved (doesn’t matter if it’s savings, 401k, IRA, etc) plus the amount of debt payment that is applied towards principal.

Savings + Debt Payments Applied to Principal = Net Worth Payment

Admittedly, “debt payments applied to principal” doesn’t sound like a fun chore. Don’t let it scare you. On your mortgage statement, you can usually find it under the payment breakdown. For other loans, you might have to do a little math. If you divide the interest rate by 12 and multiply it by your outstanding principal, then you have the amount paid to interest. From there, just subtract it from your payment and you’ll have the payment applied to principal! (For mortgages, make sure to exclude any escrow amounts)

Let’s say Joey wants to find his net worth payment. Here are his monthly details

$1,237 paid towards mortgage principal as reported on his mortgage statement.
$400 saved in high yield savings
$100 saved in an HSA account
$550 saved in a 401K
$223.75 ($250 payment made on a 5.25% car loan with a $6,000 principal balance)
$63.92 ($75 payment made on a 13.99% credit card with a $950 principal balance)

Added together, Joey has a net worth payment of $2,574.67. This is the immediate effect of these payments on Joey’s net worth. Absent any change in investments or home value, Joey’s net worth will immediately improve by over $2,500 from these payments.

Notice we didn’t say anything about ratios? He can certainly check ratios, but if some or any don’t apply to his situation, at least knows the power of his net worth payment

Extra Credit

If you want to be even more accurate, feel free to add interest and dividends earned from savings and investments. After all, if reinvested, those are payments that immediately impact net worth as well.

Still want more? If you decide to add payments on top of minimum debt payments, you can calculate the extra interest saved and a present value of all future saved interest payments. Now we’re talking. Reach out to ask how.

By adding these advanced ideas, you can begin to play around with how putting more money towards different savings and debts can affect your overall net worth. Is money best spent towards a low interest rate mortgage or a high yield savings? These advanced steps can help.

Need a Benchmark?

Figuring your net worth payment and tracking your net worth is a great way to capture a comprehensive snapshot and your progress. For those wanting a benchmark regarding net worth growth, there are a few ideas out there.

Keep pace with inflation: This is a baseline goal, ensuring your net worth isn’t shrinking as compared to overall price inflation
Pick your index benchmark: If you’re more investment-minded, picking a stock index and attempting to match annual returns to your personal growth might be a good idea. This idea also provides some grace in down market years. If much of your wealth is invested, watching your net worth decline despite significant net worth payments can be frustrating. Comparing to stock returns can paint a more reasonable picture.
10% annual: If you’re a generalist, 10% annual (or ~ 0.83%/mo) growth may be a reasonable goal. Just remember that this may be too low early in life. Likewise, in later years when your net worth is high, matching this goal may be unreasonable.

Progress is Progress

The ratios I mentioned above are just a glimpse of the financial rules of thumb out there. Using these (and others) to see how you measure up is a great way to spot deficiencies or something you’ve been neglecting. However, don’t forget to step back from time to time and acknowledge the growth you have achieved. After all, enjoying our success from time to time may be the encouragement we need, even if our housing ratio isn’t perfect. The net worth payment is here to help.

Working with a financial planner who understands the unique challenges and benefits of military families can prove invaluable. The financial planners at Military Financial Advisors Association understand your life and can help you develop a personalized financial plan, navigate complex financial decisions, and stay on track toward your family’s goals.

Budget Insurance

Why Insurance Companies Are Totaling More Cars (And What You Can Do)

Post author By Liz Plot, CFP®, AFC®, EA
Post date May 19, 2026

We were at a high school band fundraiser and came out to a fun surprise: someone had backed into our passenger door and left a dent. What we thought would be a minor repair ended up being declared a total loss by our insurance company. My husband was surprised, but as a financial planner, I’d seen many clients come back with the same unexpected verdict from insurance adjusters.

The damage didn’t look catastrophic, and the vehicle was drivable, but the insurance company was not swayed by our pleas of, “Please kind sir, this was going to be the old car we were going to give our teenage driver next month.”

This isn’t just anecdotal. Across the insurance industry, the share of vehicles declared total losses after accidents has been steadily rising. Understanding why reveals a lot about how cars and the economics of repairing them have changed.

The Economics Behind a Totaled Car

Insurance companies don’t total cars arbitrarily; their decision is usually based on a simple calculation: if repair costs approach or exceed a certain percentage of the vehicle’s value, the insurer will declare it a total loss.

Traditionally, this threshold has been around 70–80% of the car’s pre-accident value, though it can vary by state and insurer.

For example:

Vehicle value: $12,000
Estimated repairs: $9,000

Even if the car is technically repairable, it may be cheaper for the insurer to pay the vehicle’s value and sell the damaged car at a salvage auction. In some markets, insurers are applying lower thresholds (sometimes 50–60% of the car’s value for older vehicles) making total-loss decisions more common.

Modern Cars Are Much More Expensive to Repair

Age plays a significant role in total-loss decisions. Since insurance payouts are based on actual cash value, older vehicles are worth less, which means even minor damage can exceed the total-loss threshold. You might think that this would make modern cars less likely to be totaled, but unfortunately, that’s not the case.

One of the biggest drivers of this trend is technology. Today’s vehicles contain a growing number of electronic systems designed to improve safety and convenience, such as:

Radar sensors
Cameras for lane-keeping and driver assistance
Adaptive cruise control modules
Parking sensors
Sensor-equipped windshields and mirrors

These advanced driver-assistance systems (ADAS) can make even minor collisions costly to repair. Many repairs now require diagnostic scans and sensor recalibration, with specialized components, like adaptive headlights, costing over $1,000 each.

As vehicles become more complex, even a low-speed crash can generate a repair bill that pushes a car close to the total-loss threshold.

Parts Shortages and Repair Delays

Repair costs aren’t the only factor. Time is also money in insurance claims. If a repair takes weeks or months due to parts shortages, insurers often have to cover costs for:

Rental vehicles
Storage fees
Administrative costs

Supply chain disruptions have made certain parts harder to obtain, meaning repairs that once took two weeks can now take two months or more, dramatically increasing claim costs. Adding these extra expenses to the repair estimate can make totaling the vehicle the cheaper option.

The Role of the Salvage Market

When insurers total a vehicle, they usually sell it through salvage auctions. These cars are often repaired and resold domestically or exported overseas. Strong demand for used parts and repairable vehicles means salvage values have risen, making totaling a car financially attractive for insurers.

In effect, the insurance company may recover part of its payout by selling the damaged vehicle.

How to Prepare Yourself Financially

Maintain a Strong Emergency Fund

While it may be tempting to invest all your money in the stock market, it’s crucial to maintain an emergency fund with three to six months of living expenses in cash or cash-equivalent accounts. A totaled vehicle is a prime example of an expense that an emergency fund is designed to cover, including the need for a down payment on a new vehicle and possible rental costs.

Your emergency fund should be held in safer, liquid options such as high-yield savings accounts or money market funds. This money should not be invested in the stock market, where its value could drop when you need it most.

Understand Your Insurance Coverage

Not all insurance policies have the same coverage limits, which can significantly impact your financial protection in a total-loss situation. Review your coverage:

Liability Limits: These define the maximum amount your insurer will pay for damages to others in an accident you cause. If your liability limits are too low, you could be responsible for covering the difference out of pocket.
Collision and Comprehensive Limits: These coverages determine how much your insurer will pay for damage to your vehicle. Ensure your limits are adequate to cover potential repair or replacement costs, especially as vehicle values rise.

Reviewing and understanding your coverage limits can help you make informed decisions and better prepare for the financial implications after an accident.

Keep Records of Your Vehicle’s Condition

If your car is declared a total loss, insurers rely heavily on market comparisons to determine value. You can sometimes improve the valuation by documenting:

Recent maintenance and repairs
New tires or upgrades
Low mileage relative to similar vehicles

Keeping receipts and service records can help demonstrate that your vehicle was in above-average condition, which can influence the payout.

Avoid Being “Upside Down” on a Car Loan

One of the worst scenarios after a total loss is owing more on a loan than the insurance company pays. To reduce this risk:

Make a larger down payment when purchasing a vehicle
Avoid extremely long loan terms (such as 72–84 months)
Pay down the loan faster if possible

These steps can reduce the chance that depreciation leaves you with negative equity.

The Bottom Line

Modern vehicles are safer and more technologically advanced than ever before. But that same complexity combined with rising labor costs and parts shortages means cars are increasingly likely to be totaled instead of repaired after accidents.

For drivers, the key is preparation. Maintaining a strong emergency fund, understanding your insurance coverage, and avoiding excessive auto debt can make the difference between a manageable inconvenience and a serious financial setback if your vehicle is suddenly written off.

Working with a financial planner who understands the unique challenges of military families can prove invaluable. The financial planners at Military Financial Advisors Association understand your life and can help you develop a personalized financial plan, navigate complex financial decisions, and stay on track toward your family’s goals.

Budget Military Pay Savings

Financial Freedom! A 4 Step Guide for Women Servicemembers to Build Financial Resilience

Post author By Pam Bergeson, CFP®, MQFP®
Post date April 15, 2026

Every day, women servicemembers balance mission demands, family responsibilities, and personal goals. But building financial resilience for women servicemembers is what ultimately creates the freedom to navigate military life with confidence and choice

For many women, the hamster wheel of responsibility is begins to take a toll. And over time, a quiet question may begin to surface:

Is this pace sustainable, for me? For my family?
Not just professionally, but personally, emotionally, and financially.

At some point, that question may evolve from “Can I keep doing this?” to something more honest: “Do I want to keep doing this?”

And when it does, the real question becomes: Do I have the financial resources to choose a different path?

Decision Space Equals Freedom

That question, whether to stay in the military or step into something new, is often framed as a career decision. In reality, it’s much bigger.

It’s a life decision, one that is either supported or constrained by your finances.

You may have clarity about what you want and even a vision for what comes next. But without a strong financial foundation, that vision can feel just out of reach.

To truly have freedom of choice in your life and career, you need financial resilience to support it. Financial resilience creates decision space, the ability to weather both the expected and the unexpected, while also building a reserve to fund what comes next.

And decision space is powerful.

It allows you to make choices from a position of strength, not pressure. It’s the difference between staying in the military because it aligns with your goals… and staying because it feels like your only option.

That kind of freedom doesn’t happen by accident. It’s built, intentionally, step by step, over time. Let’s walk through the key steps to building the financial resilience to support your decisions.

Step 1: Build a Solid Foundation

Everything begins with understanding your cash flow. Get clear on what’s coming in, what’s going out, and where your money is actually going, not in a restrictive way, but in a way that creates awareness and control.

First clarify:

What percentage of your income covers essential expenses, housing, utilities, groceries, transportation?
What percentage is going toward savings, near term and long term goals?
What percentage supports your lifestyle, travel, shopping, experiences?

From there, begin to optimize your cash flow by keeping the proportion of these three categories of expenses in alignment. Your target allocation should be:

50% essential expenses
20% savings
30% lifestyle spending.

“Pay yourself first” is timeless advice and it’s this 20% savings margin that allows you to begin creating financial freedom.

Quick Tip: Leverage tech to track your spending. Check your bank’s app for a cash flow tool or try budgeting app like Monarch or YNAB.

Next, build a small emergency fund, about one month of essential expenses. This creates breathing room and should be kept in an account separate from your checking account, with just enough friction to avoid casual use.

At the same time, make sure you’re contributing at least 5% to your TSP to capture the full government match. That match is part of your compensation, walking away from it is leaving money on the table. If you’re not yet saving 5% to TSP, gradually increase your contribution by 1% each year until you are.

For most servicemembers, a Roth TSP contribution invested in a Lifecycle fund aligned to your retirement timeline offers a simple, effective starting point.

And if you’re carrying high-interest credit card debt, prioritize eliminating it. High-interest debt limits your flexibility and reduces your ability to make future choices. Eliminating it and avoiding taking on more is one of the most important steps you can take.

If you have credit card debt, your first step may be to reduce the portion of your income that is spent on lifestyle expenses until you’ve paid off the debt and built your initial emergency fund.

Step 2: Layer on Stability

Once your foundation is in place, it’s time to strengthen your safety net.

Expand your emergency fund to three months of essential expenses. This reduces financial stress and helps ensure that life’s inevitable bumps don’t derail your plan.

At the same time, begin planning for predictable one-off expenses that aren’t emergencies, creating essential savings that will prevent you from taking on credit card debt. Things like replacing tires, travelling to an important family event, or covering out of pocket PCS-related costs aren’t surprises, they’re expected. They just don’t happen on a fixed schedule.

When you plan for them intentionally, they stop disrupting your financial goals.

List anticipated expenses over the next 12–18 months
Estimate the total cost
Divide by 12 and automate monthly savings into a high-yield savings account

Short-term goals (under one year) can be saved in a high yield savings account, while slightly longer goals (1–3 years) may be better suited for CDs.

Quick Tip: High yield savings accounts at many online banks pay significantly higher interest rates than your mainstream bank.

Step 3: Start Building Wealth

With stability in place, you can begin leaning into growth.

This is where you start creating long-term flexibility, beginning with a Roth IRA. Start small if needed, $100 per month is enough to build the habit. Set up an automatic savings directly from your checking to your Roth IRA, then increase contributions over time until you’re maxing out your contributions.

Investing in a low-cost, index-based target date fund keeps things simple while allowing your money to grow tax-free. If your income eventually exceeds Roth IRA limits, a backdoor Roth strategy can be pursued.

Another simple strategy: increase your TSP contribution by 1% each year. It’s a small adjustment that builds powerful momentum over time.

From there, begin investing for mid-term goals, those 5–10 years out, including a potential down payment for a home purchase or that bucket-list trip you’ve been dreaming about.

Adding a monthly automatic savings to your brokerage account allows you to invest toward these goals in a structured way. Low-cost, diversified ETFs help keeps your investments efficient and simple. As a general guideline, if your timeline is under 10 years, keep your equity exposure below 60% to help balance growth with stability.

This is where your financial plan starts to connect directly to your life, not just your retirement.

Step 4: Build Your “Next Egg”

Your “Next Egg” sits on top of your emergency fund and is intended to fund whatever “Next” looks like to you. It gives you flexibility and the choice in how you live your life.

It’s what allows you to dream big and imagine what you want to do next without financial pressure dictating your decision. You can:

Step away from the military
Take time for your family
Pause or pivot careers

Typically, this means saving an additional 4–6 months of essential expenses in a separate account. Like your emergency fund, this money should be saved at safe distance from your everyday spending by saving in a high yield savings account or CDs. Automating contributions keeps your savings consistent and workload manageable.

Quick Tip: If your plan is to step away from the military, be sure to save for additional housing expenses when you no longer have a tax free basic allowance for housing.

Finally, Financial Freedom

When you build financial resilience in this layered way, the impact goes far beyond your day-to-day dollars. You begin to feel the freedom it affords.

There’s less pressure and more clarity.

More decision space and confidence.

And with that confidence comes the ability to dream bigger, because you know you’re prepared for whatever comes next.

Start Where You Are

Whether you’re at the beginning of your career or nearing retirement eligibility, start where you are.

Get clear on your cash flow
Build your emergency fund and eliminate high-interest debt
Capture your full TSP match and increase contributions over time
Create financial resiliency by establishing your “Next Egg” savings.

Because in the end, this isn’t just about money. It’s about having the freedom to live life on your terms.

This blog is provided for educational purposes and is not intended as individual investment advice. Everyone’s financial situation and goals are different.

Budget Financial Planning

Paying the “Neglect Tax”

Post author By Derek Merkler
Post date March 9, 2026

We live in an age that glorifies replacement and undervalues maintenance. If something breaks, we don’t fix it, we replace it. A car starts making noise? Trade it in. A house feels tight? Move to a bigger one, even if that means a higher mortgage, bigger property-tax bill, and another 30 years of payments.

But behind all those “upgrades” lies a deeper financial truth: we’ve forgotten the art of maintenance.

The Forgotten Line Item

Most households budget for visible obligations: mortgage or rent, groceries, insurance, and subscriptions.

Almost no one budgets for maintenance.

And yet, maintenance is as predictable as the seasons. Roof shingles age. Tires wear down. Gutters clog. But because maintenance doesn’t have a due date, it gets ignored until the problem demands attention. By then, the bill is usually 10× higher.

Maintenance Always Wins the Math

The math is brutally simple: small, regular investments prevent massive, unpredictable costs.

$75 oil changes every 5,000 miles prevent $7,500 engine replacements.
$200 HVAC tune-ups each spring prevent $10,000 system replacements.
Gutter and roof cleaning prevent $15,000 water leaks and drywall repairs.
Annual water heater flushes can double lifespan and delay $2,000 replacements.
Maintaining proper water runoff: grading soil, cleaning downspouts, and maintaining French drains, can prevent foundation cracks or basement flooding that cost $20,000–$50,000.
Driveway sealing every few years prevents full replacements costing 10x more.

Multiply those across your entire life – homes, vehicles, equipment, even your health – and the pattern becomes clear: Maintenance builds margin. Replacement drains it.

Maintenance as a Habit, Not a Task

Maintenance only works when it’s habitual. It’s not something you do once a year and forget; it’s a rhythm built into your life.

The homeowner who replaces air filters every quarter, checks grading after heavy rains, and budgets 1–2% of the home’s value each year for repairs never gets blindsided. The driver who schedules maintenance instead of waiting for warning lights rarely faces major breakdowns. The family that maintains rather than reacts doesn’t panic when something inevitably wears out.

This is more than discipline; it’s resilience. And resilience compounds just like investment returns.

How I Track My Own Maintenance

I practice what I preach. For my own vehicles, I keep a spreadsheet in Google Sheets listing every common maintenance item: oil changes, filters, transmission fluid, brakes, belts, tires, and more.

Each item has columns for:

Date completed
Mileage at service
Next service due (by mileage or time)

Because it’s in Google Sheets, it’s stored in the cloud and synced across all my devices. I’ve bookmarked it in my browser so I can pull it up instantly.

It’s simple, but powerful. That one sheet helps me stay ahead of maintenance rather than react to breakdowns. I can see at a glance what’s coming due in the next month or 1,000 miles. That habit has saved me thousands of dollars and countless headaches by catching issues before they become major repairs.

Deferred Maintenance on a National Scale

The neglect of maintenance isn’t just a personal problem. It’s a national one.

For decades, the United States had the world’s finest infrastructure. Our highways, bridges, railways, and power grids were symbols of American reliability and ingenuity. Maintenance wasn’t optional; it was part of national pride.

But over time, priorities shifted. Funds once earmarked for upkeep were diverted to more politically attractive spending, pension obligations, welfare expansions, and short-term projects with visible headlines. The roads still looked fine, the lights still worked, so maintenance was deferred “just one more year.”

Now, the bill has arrived.

We’re facing collapsing bridges, widespread power outages, contaminated water systems, and outdated transmission lines vulnerable to heat and storms. Engineers and economists have been warning about deferred maintenance for decades… that every dollar postponed today becomes five dollars in future repair. But deferred maintenance is invisible until it becomes a crisis.

The same logic that destroys a roof or an engine is now eroding our infrastructure — slow neglect, justified by convenience, paid for later at a budget-busting cost.

Personal Finance Lessons from Public Failure

Our national neglect mirrors how most people handle their own finances.

We overextend on what’s new, the bigger home, the nicer vehicle, the upgraded phone, and under-invest in what keeps those things functional. We assume future income will cover future costs. We borrow to replace instead of saving to maintain.

When I build financial plans for veterans, I don’t just ask what they own, I ask what it costs to keep. A $600,000 house isn’t just a mortgage; it’s $6,000–$12,000 a year in expected upkeep.
A $60,000 truck isn’t just a payment; it’s fuel, maintenance, tires, and repairs that might average $1,500–$2,000 annually. Ignoring those costs doesn’t make them disappear. It just ensures they’ll feel like emergencies when they arrive.

Deferred maintenance is a silent form of debt, one that accrues quietly until it collapses all at once.

The Virtue of Maintenance

Maintenance is more than upkeep; it’s stewardship. It’s the discipline of caring for what you already have before chasing something new. It’s not glamorous, but it’s one of the most powerful wealth-building habits you can develop.

A well-maintained home holds its value.
A well-maintained car keeps your cash flow predictable.
A well-maintained business runs more smoothly and costs less.
A well-maintained community (or country) thrives longer.

Maintenance is the compound interest of responsibility.

The Takeaway

In a culture obsessed with upgrades, maintenance is a form of rebellion. It’s a quiet, patient act that says: I’ll take care of what I have before I demand more.

That mindset keeps engines running, roofs solid, bridges standing, and budgets balanced. It’s not glamorous. It’s not fast. But it’s the foundation of lasting prosperity for families and for nations.

Whether it’s your car, your home, or your country’s infrastructure, one truth never changes:

Neglect is expensive. Maintenance pays.

Bonus: Top 5 Maintenance Habits That Save Thousands

Schedule Home Tune-Ups
Have a professional inspect HVAC systems, gutters, roofing, and drainage every spring and fall. Catching small issues early saves major repair costs later.
Maintain Water Runoff Systems
Ensure soil slopes away from the house, extend downspouts 6–10 feet, and clear French drains regularly. Preventing water intrusion is one of the most cost-effective home defenses there is.
Follow Vehicle Maintenance Intervals
Oil, brakes, and tires aren’t optional. Set reminders or use a spreadsheet. Maintenance today avoids massive repair or replacement costs tomorrow.
Budget 1–2% of Home Value Annually for Upkeep
For a $400,000 home, that’s $4,000–$8,000 per year. Treat it as a “maintenance reserve” rather than a surprise expense.
Treat Maintenance Like a Bill, Not a Choice
Put it on autopilot. Whether it’s a sinking fund in your bank account or a line item in your financial plan, maintenance should be scheduled, not left to chance.

Have questions about how to implement maintenance into your routine cash flow? A MFAA advisor can help!

Budget Goals Military Pay

Divide and Conquer – How to Create an Electronic Envelope System

Post author By Sam Lewis
Post date June 17, 2024

Have you ever felt that no matter how hard you try, sticking to a budget is like trying to hold water in your hands? Do you struggle with mental math at the cash register wondering if your new jacket exceeds the 7.37% of monthly income line item you have on your spreadsheet budget? Enter the (electronic) envelope system – a method that’s as tactile as practical, ensuring that every dollar is corralled for a specific purpose. Let’s dive into why the envelope system might just be your budgeting breakthrough!

What is the Envelope System?

The genesis of the envelope system was a straightforward way to manage your monthly budget by using physical envelopes to represent different categories of your spending. It’s as simple as labeling each envelope with a category like groceries, entertainment, or utilities and only spending the cash you’ve allocated for each. Many also believe that handing over physical cash increases the friction of transactions and prevents frivolous spending. In today’s technological environment, you may find it impractical to visit a brick-and-mortar bank to withdraw large sums of greenbacks when DFAS thanks you for your service on the 1st and 15th of each month. Enter the Electronic Envelope system.

What is the Electronic Envelope System?

Many of the large banks and credit unions now have user-friendly mobile banking apps that bring the bank teller to you. Customers can view balances and transfer funds between accounts in the palms of their hands. By establishing multiple individual and joint accounts, you can create “envelopes” to shuffle your funds into purpose-specific accounts. I use USAA for most of my banking, and there is no charge for opening new accounts. Between my own accounts and the ones I share with my wife, I have 11 accounts. I also have a 12th account with a High Yield Savings Account where we park our emergency funds (out of sight, out of mind, and a 5.00% APY!).

Why so many accounts?

Each account has a purpose. My LES is directly deposited into the main account each payday. From there, I transfer funds according to the Cash Flow Plan I developed with my wife. Your unique budgeting needs and goals dictate the number of accounts and amounts to fund them with – but that is a wholly different topic. I will share my basic structure.

Types of Accounts

Our Joint Checking account is funded to cover our fixed, recurring shared bills such as mortgage payments, electricity, insurance, etc. There are a total of 15 expenses that we pay out of that account each month. Over time, we learned how much we need to allocate for those categories and generally adjust the amounts each year in January. We leave a small buffer of funds in that account just in case a bill is larger than anticipated.

Another account is our Miscellaneous Spending account, which is for variable spending, such as groceries and the odd expenses that pop up for our children. We tracked our grocery bills for a period to help set a baseline for how much to contribute to this account, and now we use that limit as guardrails to control our shopping.

Next, we have a checking account titled Rental Checking into which we mobile deposit the rent checks from our tenants. We use these funds to pay the mortgage and any expenses related to the rental property, which makes filling out Schedule E much easier during tax season.

We use separate savings accounts for separate goals. Foremost is our emergency fund, which is held outside of USAA. It is funded with several months’ worth of expenses, and given the larger balance, we wanted to take advantage of the highest APY. Having this account largely out of sight also reduces our temptation to spend the money on non-emergencies.

We have a short-term Joint Savings account and contribute a small amount to each paycheck to handle unexpected expenses. Finally, we have a Sinking Fund account to make small contributions throughout the year for larger planned purchases (mainly summer camps for our daughters).

After Set Up

Once the framework is set up it requires just 2 minutes each payday to make the established transfers. I have complete autonomy to spend the remaining funds without guilt as I have already:

Funded my retirement goals under my TSP and Roth IRA contributions first (alongside my wife’s 403(b) and IRA contributions).
Funded our necessary savings and emergency funds.
Set aside the funds to cover my liabilities and expenses.

Why Use This System?

Disciplined Spending: Once your primary/remainder account is empty, your discretionary spending is done until your next paycheck, which forces you to stick to your budget with clear limits.

Immediate Feedback: You get a real-time visual representation of your remaining budget, helping you adjust your spending habits on the fly. You won’t have to factor in upcoming bills with your spending habits as you will have already sequestered that money aside during your transfers.

Savings Incentive: Any money left over in an account can be redirected to savings/investments, debt repayment, or rolled over to the next period. This is an immediate reward for frugal spending.

How to Implement the Envelope System

Determine Your Categories: Start by listing your regular expenses such as rent, food, gas, and entertainment are common categories, but tailor to your lifestyle. Determine the categories you need and contact your bank to open those accounts. If you share expenses with a partner, make sure they have access to deposit and withdraw.
Set Your Budget: Consider your income and expenses to decide how much to allocate to each account. Be realistic and adjust as needed, or at least annually. Divide the annual amount into 24 (or 26 civilian) pay periods.
Fill Your Accounts: After each paycheck, fill your various accounts with budgeted amounts.
Spend Like You Have a Plan: Stick to the limits you have set for each category and fund. It can be as simple as using a dedicated credit card to transfer funds out of the appropriate category. Then park them in a short-term savings account until the bill is due. Bonus: you can accrue credit card reward points but avoid finance charges by paying in full each month!

Wrapping Up

The envelope/transfer system isn’t just about controlling spending; it’s about taking charge of your financial future. It reminds you of your goals and the path you’re taking to achieve them. It takes the guesswork and pressure out of discretionary spending and paying bills while working towards other financial goals.

Remember, financial freedom isn’t an overnight achievement. It’s the result of consistent, mindful decisions. Having a plan for each dollar may seem small at the moment but can build into tremendous savings over time.

How Do I Optimize This Strategy to Meet My Goals?

Hopefully, this article has given you ideas for what kinds of accounts you want to establish and how to divvy up those DFAS deposits. At the end of the day, the system is just a framework for you to apply your unique situation.

If you need help figuring out how your goals, expenses, and petty funds should be configured, it may be time to tag in a trusted Financial Planner. Reach out and connect with an advisor at the Military Financial Advisors Association!