Retired Marine Corps Lt. Col. Dave Armstrong is the host of Moments in Leadership, a podcast dedicated to the unique stories of senior military leaders. His recent guests include Admiral James “Sandy” Winnefeld, Major General Dale Alford, and Sergeant Major Troy Black. Dave is the President & Co-Founder of Monument Wealth Management and a Board Member of PB Abbate and the Marine Corps Heritage Foundation.
Before you earned an MBA and co-founded Monument Wealth Management, you were a self-taught investor. Tell us about your experience learning to manage money and invest while deployed.
Anyone who has been deployed on a ship before can tell you there’s not a lot to spend your money on while you are underway. So as I started saving paychecks, my father encouraged me to start investing money and suggested some mutual funds for me to use that he had been using. Since it was the early 90s, the market was doing well, and I was making money on those mutual funds. As the Internet started to take shape, I quickly discovered some Internet chat groups associated with the old America Online that eventually became The Motley Fool.
I became immersed in research and commentary on popular publicly traded company names in the mid to late 90s. I discovered that I had a real passion for wanting to manage money in the equity markets. That’s when I decided I wanted to make it a full-time career. I left active duty to return to graduate school and learn the academic side of securities analysis through an MBA program and the pursuit of a Chartered Financial Analyst (CFA) designation.
What was your most significant or memorable financial decision during active duty? Is there anything you would have done differently?
There is more than just one memorable decision; it was more of a string of them. My first decision was determining that I wanted to learn more about how to invest in securities. On active duty, I became disciplined about taking a percentage of each paycheck, putting it into cash savings, and then transferring that money into an investment portfolio. This was all pre-TSP. Until then, no one had ever taught me to do that, which is ridiculous because I had four years of college under my belt. If it were not for my father’s interest in helping me create a savings and investment strategy, I’m not sure I would have done it.
The next memorable decision was learning when to sell securities that I had a profit in. My first experience deciding when to take profits in my investments was based on my need to buy a new car and pay for graduate school rather than any good decision-making, but it proved to be formative. Converting profits into other things I needed was the basis for my fundamental philosophy of always knowing the answer to, “What’s the money for?” The lesson was important because it was the first time I learned the importance of not becoming over-concentrated and taking your chips off the table when you need money. I was lucky because I paid for Graduate School and bought a new car before the tech downturn in early 2000.
In January, Congress published a report that stated that junior enlisted “experience lower levels of financial well-being and stability than officers” and are more likely to have “low or zero emergency savings, missed credit card payments, and/or bank overdraft fees.” Although the DoD has continuously developed and implemented economic security programs, what role can officers and NCOs play in supporting financial education for junior enlisted?
I come back to the education I received from my father. I hope it is different now, but even through four years of college, I didn’t have one class that taught me how to manage my finances. It was a function of just watching both the good and bad examples set by others. One of the things that created a foundation of fiscal discipline early on in my career was the absolute fear associated with bouncing a check or having any financial difficulty as an officer. It was simply not tolerated, so that was all the incentive I needed.
One of the best roles a leader of any rank can take is setting good examples for younger men and women. It sounds cliche, but it is the epitome of leading by example. The minute any junior enlisted sees one of their leaders exercising fiscal irresponsibility, it can create an environment where they feel it’s OK to take irresponsible risks as well.
We all know the saying hurry up and wait. Since there is plenty of waiting that we all do, there is an opportunity for leaders who have experience and knowledge to share should do so at any opportunity. A simple class on the power of compounding and tax-advantaged savings from an early age can be a great class to teach, especially if it includes some math to show how much $100 can grow over time. Leaders must be just as interested in the financial well-being of the men and women they lead as they are in their health and welfare.
Sergeant Major Michael Grinston recently faced backlash when he suggested that soldiers with food insecurity and economic hardship should apply for the Supplemental Nutrition Assistance Program (SNAP). A few weeks later, Secretary of Defense Lloyd J. Austin III announced a temporary increase in Basic Allowance for Housing (BAH) and a 4.6% pay increase for all service members starting January 1, 2023. We’d like to know what conversations are happening in your circle regarding service members’ conditions in this economy.
While any pay increase of that magnitude is helpful for everyone, it remains a fact that inflation is high. Housing costs are skyrocketing to a point where very few military members can afford the same level of housing that was available 20 years ago. Most conversations I hear are about housing affordability in areas like San Diego. Many service members in these high-growth areas are forced to account for the high cost of living outstripping their housing allowances, so they have to cut back elsewhere to afford a suitable place to live.
What are your top daily budgeting, money management, and financial well-being tips?
I know everyone wants to get a tip that no one else knows about, but those tips don’t exist outside the world of either wild speculation or taking incredibly unnecessary risks. So while this tip may come off as basic, it’s the real silver bullet. First, military members have almost zero “layoff risk,” so this advice is slightly different than for civilians, who should generally focus on saving six months of living expenses as a starting point in case they get laid off. I’d focus on balancing a savings plan that splits between an emergency fund and tax-advantaged savings. The sooner a service member can contribute to their TSP, the more they can lower their taxes TODAY while giving them the maximum time to compound growth before they reach the minimum penalty-free withdrawal age of 59 ½.
Second, use debt responsibly. Avoid financing expensive depreciating assets like purchasing a really expensive car with a loan. Most people need a car, and I get that but focus on the vehicle’s utility rather than the vehicle’s status. Conversely, focus on using debt to buy appreciating assets with utility, like a home. Homes have an excellent track record of appreciating over time and carry a fantastic tax benefit because a huge amount of any gain in a home can usually be tax-free. (DISCLAIMER: there are a lot of rules to follow, so be sure to understand them all before purchasing a home).
Finally, don’t run up credit cards. I prefer a basic American Express card because it has to be paid off every month, forcing me to think about each purchase and if I can pay for it at the end of the month. It’s easy to let a credit card balance roll over to the next month, so that slippery slope is a real risk. Default on a credit card can lead to serious credit score problems, which impact a person’s ability to use credit in the future. Don’t get caught in that trap.
The Moments in Leadership Podcast is available on Spotify, Apple Podcasts, Audible, and more. This interview was facilitated by Freelance Corporal, a veteran-founded start-up aimed at improving financial literacy for Marines.