Military Paycheck Budget
Today is the 10th of August and we (military members) have 5 more days until payday. Two different people told me last Friday that they couldn't wait for payday because they were already out of money. I couldn't believe that. I asked them why are you already out of money with a whole week to go until payday. They told me to relax, this was the big bills paycheck; next payday there's hardly any bills to pay. This is not a good way to budget. The one paycheck pays all-the bills method doesn't make sense in the military. Here is a good example of how to soften the blow of "the bills paycheck."
Our imaginary E-5 lives on base, so he doesn't have to pay rent or normal utilities. But if he did have to pay those, the same principle can be applied because the military takes all entitlements and splits them in half. Our E-5 has the following monthly bills.
$200 for car note due on the 1st.
$90 for Insurance due on the 4th.
$230 for Telecommunications due on the 8th.
$50 for credit cards due on the 28th.
That would mean that $520 ($200+$90+$230) would have to come out of the 1st paycheck and only $50 would come out of the 15th paycheck. A better way to do that is to split the bills in half saving 1/2 the non-due month and then paying the second half off with the next paycheck. That would mean out of the total $570 in bills, only $285 would come out of each paycheck.
So on the 1st you would save $100 for 1/2 of the car note, $45 for half of the Insurance bill, $115 for half of the telecommunications, and $25 for half of the credit card. Then the next paycheck you would either pay off a bill due in that period or save and carry over the other half for the bills not due until next paycheck.
Improper budgeting can make people go deeper into credit card debt. You must really look at your bills and make life as easy as possible.
Our imaginary E-5 lives on base, so he doesn't have to pay rent or normal utilities. But if he did have to pay those, the same principle can be applied because the military takes all entitlements and splits them in half. Our E-5 has the following monthly bills.
$200 for car note due on the 1st.
$90 for Insurance due on the 4th.
$230 for Telecommunications due on the 8th.
$50 for credit cards due on the 28th.
That would mean that $520 ($200+$90+$230) would have to come out of the 1st paycheck and only $50 would come out of the 15th paycheck. A better way to do that is to split the bills in half saving 1/2 the non-due month and then paying the second half off with the next paycheck. That would mean out of the total $570 in bills, only $285 would come out of each paycheck.
So on the 1st you would save $100 for 1/2 of the car note, $45 for half of the Insurance bill, $115 for half of the telecommunications, and $25 for half of the credit card. Then the next paycheck you would either pay off a bill due in that period or save and carry over the other half for the bills not due until next paycheck.
Improper budgeting can make people go deeper into credit card debt. You must really look at your bills and make life as easy as possible.
Labels: bills, budget, military budget
posted by Money for Military at 11:15 PM
7 Comments:
Or better yet, change the due dates so that they are more convenient. If you have a rent or mortgage payment, it is usually the biggest payment and has to be taken out on the first. For all the others, call the company and request to change the payment date to sometime after the 15th. This is pretty easy to do for credit and insurance companies. With USAA you can do it online.
Pfft, this is so how my hubby and I do it. Only it's the second paycheck that takes the big hit... :P We don't have that many bills, so we're not talking gobs of money gone, but the second paycheck is always a bit tighter than the first. (Working on changing that, though, after hubby gets home from his deployment and things go back to normal.)
The one thing I've noticed about the military is that most people are budget-deficit. Fact of life, I swear...
The easiest way I have found to pay my "BIG" bill is to have an allottemnt for just over my rent amount. This way I am able to have my rent paid and still get equal paychecks. With the then even paychecks I am able to easily pay my bills when they are due.
Jarhead: You bring up a good point. There is a book called, "The Automatic Millionaire" that discusses alotments for bills. I think that would also help a lot of military members with their bills.
Or maybe, let's just imagine...how about if they paid off the car payment and the credit cards and didn't have to worry about HALF their paycheck going to all these bills? We're so lucky to have a steady, dependable income, but we lose out on the dependability by misspending 9 times out of 10. It makes me sick!
Nice tip, I have used this method for the last year and it has helped me out tremendously. I will keep it in mind when i set up my Belgian bills after my PCS in 3 weeks! -SSgt Myers
This is a very common problem, not only for military personnel, but also for faculty and university staff that are paid once a month!
We have launched a new website that would be especially useful to people who are trying to budget their money, manage large monthly payments and savings goals. It's free to sign up and I think you'll find the fees to be extrememly low in comparison to the typical bank or payday loan fees that are charged.
The service is geared toward people who are paid monthly, semi-monthly or bi-weekly and would like to spread their money out more evenly through the month.
Visit www.MyPayDate.com and if you like it, please spread the word.
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