Budget Rehab: A Debt-Free Couple Plans for a Wedding, House and Baby (Plus: Inside Disaster Betting Markets)

NerdWallet's Smart Money Podcast

A debt-free military couple, Jack and Lauren, share their financial strategy for managing a $20,500 monthly income while planning for a wedd

Key takeaways

• Military benefits such as tax-free housing and food allowances significantly boost effective income despite high living costs in D.C.

Main topics

• Budgeting for major life milestones (wedding, home, baby)
• Military pay and benefits impact on disposable income

Notable quotes

"We're pretty scientific about it, I think. We're definitely better than what we were like a year ago in Japan, just having fun all the time." – Jack

Conclusion

Jack and Lauren demonstrate how high income paired with disciplined budgeti

Transcript preview

Speaker 5 (0:00) Today's episode is brought to you by Vinted. Sean, Speaker 1 (0:02) do you have clothes in your trunk that you've worn but have no idea what to do with? Speaker 5 (0:07) You know what? I do not because my car is super clean right now. But I'm betting that you do, Elizabeth. I Speaker 1 (0:13) sure do, Sean, unfortunately. And I've been wondering what to do with these clothes. And then I found out about Vinted. So they're like this secondhand marketplace app. And their mission is to make secondhand your first choice. Speaker 5 (0:26) Yeah, Vinted helps their members find great deals and easily sell the clothes they no longer wear. And that helps give quality items a second life again and again. Speaker 1 (0:35) And it helps the planet too. And we care about the planet, don't we, Sean? We Speaker 5 (0:38) do. Well, Elizabeth, whether you're clearing out a bag of clothes in your trunk that's been sitting there for months and months, or you just have pieces in your closet you don't want anymore, Vinted makes it super simple to refresh your wardrobe, earn extra cash, and give your clothes a second life. Plus, there are no seller fees, so you keep what you earn from every sale. And Speaker 1 (0:56) also, the app is free to download. I think that's a great perk. Speaker 5 (1:00) Vinted makes listing items quick and simple. And once an item sells, Vinted creates a prepaid shipping label for you, which takes out a lot of the burden of sending your items. See Speaker 1 (1:08) what's hiding in your closet or like me, your trunk. And you might be surprised how much you can earn with Vinted. Download the Vinted app for free to start listing with absolutely no seller fees. This couple brings in over $20,000 a month, has zero debt and expensive medium term goals. Today we dissect their budget to see how we can help them achieve their goals of getting married, planning for kids, and buying a house. Speaker 5 (1:36) Welcome to NerdWallet's Smart Money Podcast, where you send us your money questions and we answer them with the help of our genius nerds. I'm Sean Piles. And Speaker 1 (1:43) I'm Elizabeth Ayola. One of you, yes, I'm going to say your name, Hannah, called us out and said that we haven't done a budget rehab in a while. So guess what? We have one for you today. And be sure to stay with us later on the show because we have the latest money news coming today. Jack and Lauren are here today to talk through their budget and financial goals live. Speaker 5 (2:03) Jack, Lauren, welcome to Smart Money. Speaker 4 (2:04) Hey, thanks for having us. Before Speaker 1 (2:06) we jump in to your budget, Jack and Lauren, and getting to know you, for anyone out there listening or watching who's unfamiliar with budget rehab, we essentially go through your budget and see how we can improve it to help you achieve whatever your financial goals are. So if you would like to come on, like Jack and Lauren, and have your budget rehabbed, we have a form that you can fill out in the episode description. Speaker 5 (2:28) So, Jack and Lauren, I want to hear a little bit more about your life. I heard that you guys just moved from Japan to Washington, D.C. What was living in Japan like? I'm a huge fan of the country. Speaker 2 (2:38) So we were in Japan for about a year and a half, both active duty naval officers. So 18 months. But we also spent a lot of that out at sea. But we definitely capitalized as much as we could. We were in Japan. We did a lot of traveling. We ate a lot of food. We ate Speaker 4 (2:53) a lot of food. The best food. Speaker 2 (2:56) Yes, the best food. And since being in D.C., there's good food here, too. But we are we are missing our time in Japan a lot. Yeah, Speaker 5 (3:03) the price point for really good food is a little different in Japan than in D.C. It's so cheap to get just the freshest sushi in Japan. We Speaker 4 (3:09) miss walking into a 7-Eleven and having it feel like a small Whole Foods at a quarter of Speaker 5 (3:14) the Speaker 4 (3:14) cost every day. Speaker 1 (3:15) Wow. I have a question for you guys. Tell us a little bit about your relationship. So you're together. How long have you been together? Tell us about that. Speaker 4 (3:24) Early 2024 is when we went on our first date. Am I right? Is that right? Speaker 2 (3:30) Yeah, 24. Yeah, Speaker 4 (3:31) that's right. I knew that. And then we spent about a good part of a year in San Diego doing Navy schools that we had to do. And then both of our ships were out in Japan. So moved out to Japan together. We had a lovely little house. We had a lovely little Japanese car that we drove around. Like Lauren said, most of the time in Japan, one of us was out. on the ocean and the other one would be in port. And we got married when we were out there. So we are a little over one year married at this point. But like I'm sure we'll talk about later, we didn't throw our wedding party yet because we were in Japan where most of our family was not. Speaker 5 (4:05) Right. And Speaker 4 (4:05) how old are you guys? I am 29. Speaker 2 (4:08) I'm 27. Speaker 5 (4:09) Got it. Okay. So you're still in some early earning and career years, but you're beginning to establish your lives together, put down some roots. And what are you doing in D.C. work-wise? Speaker 2 (4:20) We're both still active duty. So I'm working as an admiral aide here in Navy Yard. And then Jack is working at Navy Yard as well, just at a different office down the street. We both have about three years left in the Navy if we want to. We did just both hit our minimum service length, I think, this year. Yeah, this year we hit that. So that's another conversation we're having because at any point right now we could. technically drop papers and enter the civilian world, but that would change a lot of things financially for us. What would be the biggest shift if you did that? I Speaker 4 (4:54) don't know if a lot of people know this about military benefits and pay. So, I mean, there's the obvious, the health care is very nice in the military. You're not paying any health care costs at all. And then you do have a decent amount of income that is non-taxed. So you get a housing allowance, you get a... a smaller food allowance, you're getting money on the side that is a sizable portion of your income that is not taxed. So we fall into a lower tax bracket than what we actually earn. So that's a major benefit. Speaker 1 (5:19) Yeah, I would love to get a portion of my money that wasn't taxed. Well, guys, how are you managing your finances as a couple before we go into your budget? Speaker 4 (5:27) Building up from various budget pages that we've seen before, including the one that we... worked on and sent to you guys. So we're at a point now where using some kind of like fancy AI software coding, because we don't know how to do that ourselves, created a budget that pretty accurately reflects our necessary payments that we have to make every month, the wants that we, you know, the fun stuff that you enjoy about life. And we're pretty big on savings and investing and making sure that all gets tracked as well. So we're pretty scientific about it, I think. We're definitely better than what we were like a year ago in Japan, just having fun all the time. Speaker 5 (6:00) But that's probably just part of growing up. I imagine it's also partly out of necessity since D.C. is so much more expensive. Speaker 2 (6:07) Yes, D.C. is a lot more expensive. And then, like you mentioned earlier, over this next year, we probably have a wedding party in October, which is a small wedding party, but in D.C., so financially large. Yeah, Speaker 5 (6:20) not inexpensive. Speaker 4 (6:21) How much are you planning to spend on that? I think it's close to $25,000 to $30,000. That's still a fair amount for a wedding. Speaker 5 (6:29) It's a pretty Speaker 4 (6:30) reasonable celebration. My wedding was about in that range too. Good job keeping it affordable. Speaker 5 (6:35) Lauren and Jack, let's get into some specifics here. You filled out our budget spreadsheet, which we're sharing in the video and folks should check out on YouTube if they aren't watching us. And I see here that you're bringing in about $20,500 a month, which is a great number. How does that feel for you income wise? I Speaker 4 (6:53) mean, it feels pretty comfortable for the most part. It's Speaker 5 (6:55) a Speaker 4 (6:55) big shift from Japan. Benefits change a lot when you go from overseas to back to the States. So that number in Japan was probably closer to about $13,000 or $14,000. And then it gets hiked up when you take into account the higher cost of living and you get additional housing benefits. So it's a bigger number than what we're used to, certainly. But there are so many additional costs with coming back home that it kind of led to some initial nervousness of, hey, we might get more in, but we might be putting a lot more out. And Speaker 5 (7:24) on an annual basis, you're earning just under... $250,000. But it's very telling about DC that that still feels a little tight sometimes. Speaker 1 (7:33) Well, let's go into your needs. Speaking of things feeling tight. So here you are spending $5,400 on housing. Tell us about that. Are you renting? Do you own your home? So we're renting. And that's Speaker 2 (7:44) a conversation we had coming back to the States because there's always the dream of owning. But renting definitely made a lot more sense when we got here. So we're in about, I think it's a year lease. And we're talking about probably renting for at least the next couple of years before having that purchasing Speaker 1 (8:00) or owning conversation again. And then how many rooms is that out of curiosity? So Speaker 2 (8:05) we're in a townhouse in D.C. and we're right in Navy Yard. And we did that because we're walking to work, which is awesome. So no car payments. I'm sure we'll get to that later. But our townhouse is three bedrooms, which is really awesome because probably also talking about later, but family expansion. in the near future. So the townhouse is definitely a good spot for the foreseeable future. Speaker 1 (8:26) Looking here, you guys seem to spend a reasonable amount on food. So $600 a month. The average for a single adult is $340. So you guys are in a good range here. What is this $300 in transportation cost since you all are not using a car? Speaker 4 (8:40) Some of these costs, I think if I ran back through, I would have to inflate some of these numbers. The little budgeting application we made, we have a feature where we tossed our credit card information on it for one month to see what we were actually doing. Speaker 5 (8:53) I thought that was eye-opening. Speaker 4 (8:54) A sobering moment to be sure. So actually our food costs for groceries probably went up to closer to like $708-ish, $800. The transportation costs, that's primarily... Ubers. So we didn't think we were going to be Ubering very much. DC has an awesome metro system, but we had enough things popping