How servicemembers can get the most out of their pay

Recent analysis from the Congressional Budget Office found that on average, “enlisted personnel receive cash compensation that is higher than that received by about 90% percent of civilians of the same age and education.” So what’s the best way to capitalize on that? To find out, Federal Drive with Tom Temin spoke with Trevor Nolan, the author of the new book “Military Money: How To Thrive On A Government Salary.”

Interview Transcript: 

Eric White Well, the starting question really is pretty easy for me. How do you thrive on a government salary?

Trevor Nolan It’s a great question, and it’s one that I would tell you has different answers depending on what career field you get and who your supervisors are. As you are going through the military, you’re only really going to be exposed and as smart financially as those that are surrounding you. And I had a very lucky and blessed path along that way where I had a lot of great mentors that really infused me with a lot of information. So how do you thrive on a government salary? You surround yourself with people and leaders and members cohort, whether that’s contemporaries of the same rank and grade or even folks that are junior to you that you see or that emulate positive financial decisions and that are just no place where you want to be and you surround yourself with them and then you become part of their group.

Eric White Let’s start with the big one. And it’s a frustration that I hear from veterans that I know personally and that I’ve spoken to through this job. And that is it’s kind of hard to set down roots. You’re all over the place and finding a good house for yourself where you know you’re going to be there for the next even five years or so, that can be tough to build wealth when you don’t exactly know where you’re going to be in five years. What do you have as far as suggestions for those coming out of the military and looking for just a place to call home?

Trevor Nolan That’s an absolutely great question. And this is what I get to in the book, although it seems that that is a disadvantage as you are moving from installation to installation as long as you choose to serve. I almost flip that and look at the inverse and look at the opportunity that you have to be exposed to different markets, and you’re going to get paid every two weeks with at least a cost of living adjustment of some sort on the first of every year and pretty well assured promotions on the enlisted side, at least up through, I would say, E-5, E-6, E-7. And on the officer side, O-4, O-5. And what that means is you can accept a little bit greater risk than your civilian counterparts that are honestly, they’re shopping from job to job. They don’t know what their annual salary is going to be in 12 months, because of the massive amount of turnover that we’re seeing in the civilian job force and the civilian industry. So because you have the opportunity of assured income and increased income from year to year, you have some opportunities to grow and build wealth by accepting a little bit greater risk. Now, how are some specific ways that you can do that? To your point, Eric, there are some places where you can get stationed that are less than desirable. And when you’re in that situation, some ways that you may want to look at growing some wealth would be to maybe grab an even nicer house than you would ever be able to afford for yourself and grab some roommates and celebrate it that way.

Eric White Let’s talk about the active duty folks. What is the best way to make sure that you’re financially sound if and when you are deployed overseas? What do you have to make sure is solid back home? I know there are a million variables that go into that, whether you have a family or not, but just some of the basics that you can give me.

Trevor Nolan Absolutely. Great question. I was deployed six times, all of those to the Middle East. And then I did a number of overseas short and long tour assignments. So you’re speaking right to my heart when you bring up this question. If you are single and you have no dependents, you should absolutely minimize or eliminate all liabilities that you are paying for back in the States. What do I mean by that? If you’re going to be gone longer than about 90 days, you probably need to consider, even though it’s a pain, putting your stuff in storage and pocketing all your housing allowance, that’s how I was able to pay off my student loan, for example, or move a renter in behind if you have the note in your name, you’re a homeowner getting renters in there that offset your liabilities back in the States. Same thing with vehicles. I served, I’m the 9/11 generation. I started just a few months before 9/11. And I was at war the entire time I was on active duty. So with that, there are some things that really kind of bubble to the surface as opportunities.

Eric White One other group I want to address, as you know, the folks that are getting ready to, they’ve served their time. They’re on their way out of the military. What’s the best way to shore up that you’ve got your solid financial footing once you exit the military and are looking to retire, whether you’re going to go into another opportunity or take it easy a little bit.

Trevor Nolan About two years out, and I’m not joking when I say that, two years out from the time that you want to separate or retire from active duty, you need to take a look at all of the benefits. And remember, you’re going to transition from the Department of Defense to the Department of Veterans Affairs. So with that, there are a lot of benefits. One of those is education. A lot of people and in my book, I even wrote Don’t give your GI Bill to your kids. But I have since backed away from that. I have gone back to school because I didn’t get my GI Bill any dependents. And it provides you a tax free housing allowance. And that can really take a lot of pressure off of the liability column as you go to retire. But let’s back up. So two years ahead of time, you want to make sure that your monthly liabilities can be 100% met by at minimum, your retirement pay, what you’re expecting out of your retirement. That puts you in the absolute best situation, meaning you can celebrate actual freedom. You don’t have to go and get a paycheck in two weeks because you know that your bills, whether that is mortgage, child care, gas, utilities, whatever that is, is covered at minimum by your retirement check or in the case of separating by the assets that you’ve accumulated while you’re on active duty. That puts you in the absolute best, because then you can really go chase your life’s fulfillment, dream, whatever that is and you can do it. And I wrote some silly ones in the book, but I mean, if you want to be a very underpaid coach of your children’s soccer team, well, you can go do that because all your basic necessities are taken care of. And it takes about two years to put those things in order. So I would say that’s probably the best thing, is minimize your liabilities to the point where whatever your asset category is, whether that is your retirement pay, VA disability or GI bill housing allowance, that all your bills are covered from those totals so that you can go do whatever you want, because ultimately the most wealth that you’re going to carry into civilian hood after the military is your health and your freedom. And if and if you can make sure that the money doesn’t become a problem, then you can really transcend it and become whatever you’re called to be on the side of the uniform. That’s really great.

Eric White All right. And final question, and it’s probably a topic that you don’t address in the book, but I just have to ask it just because basically the news on the day. With all of the shut down talk and things of that nature, troops pay is usually used as a political football to try and guilt the party that they feel like is holding out to make sure that there’s funding for our troops serving overseas and here. I just would like to get your two cents on what that would mean financially for somebody going through a potential shutdown that maybe troops aren’t getting paid when they think they are.

Trevor Nolan So it’s a great question. And I went through the shutdown in 2014 and there was a lot of pay delay. And I will tell you that it also takes a lot beyond the military service member to run the military. So I’m really talking about those Department of Defense Department, Air Force, Navy, Army, whatever, civilians. And they won’t come to work. And it takes a ton of them to make the big machine work. So we’re not just talking about the effects of, it’s catastrophic. I mean, when I was on active duty, I would do some of these war games overseas and I would be constantly worried when I see that like some non-kinetic targets, that potential adversaries would be like [Defense Finance and Accounting Service (DFAS)], for example. And I know I’m using a lot of acronyms, but so the military pay system, as you can imagine, would be a very high payoff target if you were an adversary of the United States. If you could eliminate the military’s ability to get paid, especially for our junior enlisted folks, there a paycheck away, in some cases from not eating. So I do a lot of work in my nonprofit life, specifically the foods in food insecurity and trying to eliminate food insecurity for active duty military here in the Colorado Springs region.

Trevor Nolan This is near and dear to my heart. I know how many folks are on food subsistence and how many folks don’t make a basic living wage when they have a couple of small kids in their young twenties. So this hits right at home for me. It is a terrible situation to use military pay as leverage. And I was just in Washington, D.C. last week working with members of the Colorado delegation, and they all are in, it doesn’t matter what side of the aisle they’re on. They’re all in 100% agreement that we should never, we should never and we should never use military pay as a political bargaining chip. We do so much more damage than good when we shut down our our federal government. One of the best things about the Department of Defense is that we have civilian leadership, elected leadership that serves in those roles of commander in chief, secretary of defense. But when they are given the opportunity or when the opportunity is being taken away by a very small group to do their job that they have been elected to do, when it comes to defending our nation, it’s just wrong, man. I mean, it hurts my heart. And there’s a chapter on all of the resources that are available. You if you’re a uniformed military member, you will not you should never and you will never go without pay. You just have to reach out. And there are a ton of aid organizations and nonprofits that will get put money in your hand same day in many of those in the form of a grant, some in the form of very low or no interest loans so that you don’t ever get put in a terrible situation by our nation that relies on you.

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