First, I want to say that my paycheck has come a long way since June 1999. I remember getting my first paycheck and it was like $400. Over the years, the government has attempted to close the gap between the civilian sector and the military. Let’s take a look at my total compensation page and then I will break down the different components.
Direct Compensation is the actual money that makes it into my pocket.
Basic Pay is the combination of your Pay Grade (for me E-9) and Years of service (for me 21). You can Google 2020 Military Pay Chart to see for yourself.
BAH is the basic allowance for housing. If you live off base you will receive this allowance. It goes by the zip code of your base.
BAS is the Basic Allowance for Subsistence. It is my food allowance.
Federal Tax advantage is the amount of money I save because I do not pay taxes on BAH. It adds up very quickly.
Expense Allowance is also known as my clothing allowance. It is for uniform upkeep, paid annually.
For Indirect allowance, a lot of military people do not consider this as pay. This statement basically says I would need a job in Florida to pay me $123,043 to live at the same standard I am now. First off, there are not many jobs in my part of Florida that pay this kind of money. This is doctor, lawyer, and dentist money over here. Also, I believe they underestimated the cost of healthcare. Let’s review:
Retirement is the amount of money I would be paying to earn my pension after I retire. For example, my buddy now works in a California school district. He has to pay 7% of his actual pay and when he retires, he will draw a monthly pension from California. The military does not pay this money upfront. This is a very good deal.
Medical care is grossly underestimated. When my wife was working on the base, her job offered her family health care. The premium was upwards of $900 with co-pays. I believe this number could easily be $1600 a month. Plus you are savings co-pays. This is also an amazing deal.
Death and Survivor programs are our life insurance and death gratuity money. It ends up being over $500,000 coverage for like $8 a month. You cannot beat that.
Federal Insurance Contributions are something all employers pay. When you pay into social security and medicare programs, your employer is required to match your contributions.
I think that this salary is amazing. It was difficult to make E-9, however, it was not something that took anything special to attain. It just requires hard work and to stay on course for 20 years. I believe the work was well worth it, and my pay will only go up from here.
Also remember, that I am living in a lower cost of living area. If I were in the following areas my pay would be this:
- San Francisco, CA: $163,147
- Brooklyn, NY: $155,983
- San Diego, CA: $143,563
As always, we believe in multiple streams of income. Having a $123,043 income is super awesome, however, it is even better when you leverage real estate, businesses, and investment income to save and invest more.
Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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