Living on Officer Pay

To quote scout from an earlier deleted post...."It's not what you make, It's what you keep"

I can only pass along what my son has done since going Active in May 2012.

Son is single, took out the USAA loan, had not debt from college.

Since he has been in he has been able to pay about 6K extra on his loan, has contributed about 9K to his TSP, maxed his ROTH contribution for two years (about 11K) and continues to add to it each month. He has about 15K plus in personal savings. He has not been living like a Pauper, he goes out, and eats out from time to time. He is stationed in Hawaii, he and is friends spend the weekend once a month in Waikiki, has traveled to the other islands and made trips back to the mainland. My point is that he has enjoyed himself while trying to be thrifty and has been able to save as well and plans on putting even more away.

So no, you won't live like a Rock Star, but you won't be pinching pennies unless you are not smart with your money, and that's the key. Just be smart, don't go into high debt on toys you don't need. Charge on your credit card only what you can pay off at the end of each month. Live within your means, and you'll be just fine. Too often you see the garage of a JO that is filled with a new jet ski, a motorcycle, and a vehicle that carries a huge monthly payment, add in a huge big screen with all the latest audio and gaming equipment and you can burn through your disposable income pretty quick. Resist the temptation to spend what you make, put together a budget and stick to it, after a while it will become second nature.
 
Let me tell you alllllll about buying a motorcycle fresh out of school. Or a sports car. Hell, we can talk about both. Jcleppe is right. It's what you keep. It took one month of being out of money and splitting an Arby's 5-for-$5 deal with my roommate (that's three meals right there, if you play it right) to realize I'd messed up.

If you must get a credit card, get an old school American Express. The balance must be paid in full monthly. Or if you can swing the $450 annual fee, get a platinum. The perks are amazing, but you should probably wait a few years for that. Credit is your friend. Credit cards are not.
 
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I have never had as much disposable income as when I was a 2LT and 1Lt and was still single. I had a used car which initially I thought was a bad choice. I wanted a new one all mine but then you realize you are off to the NTC for a month, off to Europe for 3 months or off to the mideast for xxx months and you save a lot of money when you have no place to spend it. Learn to cook, you can spend a ton of money buying takeout every day.
 
oldcorpsdad said:
Learn to cook, you can spend a ton of money buying takeout every day.
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Couldn't agree more.

Even now that my son is in Korea for 9 months, he bought a hot plate and a convection oven and pots and pans used for next to nothing and cooks most of his meals himself, save a lot and it's a lot healthier as well. Oh, and don't buy the pre packaged crap, learn to cook real food, that's much cheaper as well.
 
Scout and everybody else.

AMEX will reimburse the fee for the platinum card for military members. You pay it first, but submit the paperwork (proof) and about 2-3 months later they will credit back to you the amount.

The card is well worth it especially when it comes to traveling because you get to use their lounges in any airport, plus you get to use late check out at hotels, and many hotels will give you free upgrades.

If your AD and have college age children they will allow you to get a card under your account too.

Can't remember which poster told me, but I believe USAA now offers AMEX and also waives the fee.
 
Pima said:
Can't remember which poster told me, but I believe USAA now offers AMEX and also waives the fee.
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USAA does, but they're not "true" AMEX cards, in that you can carry a balance like any other card, and as a result you're not entitled to AMEX cardmember services.
 
Cannonball said:
... I am just asking because the parents were talking about how little military officers make and if I was ok with that so I wanted to ask what the reality was.
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Cannonball: by now, you have gotten answers to your original questions and lots of anecdotal evidence of how well junior officers and military officers do regarding pay - IF they manage their finances well.

Regarding your above quote, I want to challenge you and all your peers: If you are fortunate to become military officers you will run into a lot of uniformed civilians who have no idea about our Armed Service men and women and the lives they live. Very few Americans actually serve our country in the military. Take the time to educate people and dispel myths.
 
Pima said:
Scout and everybody else.

AMEX will reimburse the fee for the platinum card for military members. You pay it first, but submit the paperwork (proof) and about 2-3 months later they will credit back to you the amount.

The card is well worth it especially when it comes to traveling because you get to use their lounges in any airport, plus you get to use late check out at hotels, and many hotels will give you free upgrades. ...
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This is a good deal AMEX offers. I got the gold card, and within a few days of submitting the online form, they replied saying they'd waive all annual fees. If I end up traveling more, I'd consider upgrading to the platinum, but right now I don't think I'd make good use of the travel benefits, nor will I be booking many hotels from the platinum's fine hotels & resorts program.

I'd also agree with the general consensus that you can live quite well as a single O-1. What I actually see in pay after taxes, is about $1250 mid-month and $1450 end-of-month. This includes base pay, BAS, and $125 in flight pay. BAH is automatically deducted since I'm living the UPT dorm life. I did take the USAA loan, so about $620/month is due each month for that though I generally pay $750-$800, since I would like to pay that off a little earlier. I realize there's an opportunity cost of paying more per month than is due if I could otherwise earn more than the 0.75% interest I'm paying, but I don't enjoy seeing the debt. What's leftover is plenty to eat, have some fun, build an emergency fund, contribute to the IRA and a taxable investment account, etc. It's definitely not a bad gig, and I'm looking forward to the O-2 pay raise coming in a couple months.
 
Sorry to sidetrack.

What is this USAA loan posters keep referring to?

Getting situated money? Conversion of student loans to a lower %? Getting a motorcycle money?
 
cb7893 said:
Sorry to sidetrack.

What is this USAA loan posters keep referring to?

Getting situated money? Conversion of student loans to a lower %? Getting a motorcycle money?
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The USAA Career Starter Loan. It's up to $25,000, low interest, and can be taken a year before or after commissioning.
 
cb7893 said:
What is this USAA loan posters keep referring to?
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The amount and interest rate vary some each year. Our son got $35,000 at 1/2% interest and the payment on that is a shade under $600 for 5 years. It can be used for anything you want. It is called the Career Starter Loan and when our son got it there was a choice between USAA or Navy Federal as the loan processor. Both require your paycheck to be direct deposited to one of their accounts in order to get the loan. Our son put his all into investments and got a pretty good return on it so he was able to put a large chunk down on a house at his first duty station, which he now rents out for more income.

Stealth_81
 
There are bits and pieces about the career loans offered to Academy and ROTC on various threads.

Some bullets:
- not mandatory, not part of govt benefits, offered by various Banks and credit unions, most widely by USAA and NFCU
- amount and loan rate may vary due to the cost of money, but recently $25,000 -$32,000 at .50% to 2.99%.
- some take it, some don't, depends on your financial management philosophy
- USAA offered very low interest car loans to mids and cadets for years, then phased in the Career Starter Loan, a signature, no-collateral loan, as being more universally useful.
- USAA Career Starter Loan and NFCU Career Kickstarter loan have mostly identical contract terms
- made available to 2/c or contracted ROTC, also OCS/OTC/direct commission
- ideally used to pay off consumer debt, pay off student loans (those who came from civilian college), eliminate credit card debt, establish an emergency fund, set up and fully fund an IRA if eligible based on earned income, set up mid and long-term investments for future purchases such as a house, or other retirement savings, buy a good used car, set aside a chunk for Marine required uniform purchase. The hope is to use money borrowed at an extraordinarily low rate to set up finances in a solid way. Most signature loans, even for established adults with shining credit scores, cannot get these rates.
- can take all or portion of loan
- available up to a year after commissioning date
- required to have a checking account, Direct Deposit of military pay to that account, and automatic withdrawal of loan payments starting a few months after commissioning
- as with any personal financial decision, all the risks and rewards should be evaluated and all the fine print read


Ok, enough from me as a wiki note on the sub-topic of "Officer Pay." Full disclosure, I work for USAA, am a long-time member of both USAA and NFCU, only organizations I have ever used except for mortgages on occasion.
 
This probably is more important info for AF commissioned than other branches due to the fact that in the past few years they have reduced their personnel numbers.
1. AFROTC allowed cadets to walk away as seniors or prior to reporting. No commitment owed. No payback if scholarship. Just goodbye papers. They placed the threat that if not enough left they would be forced to hold a RIF board and separate them.

There is very fine print on that loan, at least for AFOTC. IF you separate before your time commitment is up for the AF. USAA has the right to change the rate to something like APR + 9%. Cant recall it exactly, but in essence if their APR is 9% than the balance of the loan is now going to be 18%+
- Thus, for those AFROTC cadets in that year group, it could have big consequences if they took the loan before commissioning and decided to walk.

2. If you want to go rated, than look into this deeper. In the AF if you bust UPT they will send you to a Flight Evaluation Board (FEB) They may decide that they are overmanned and separate you from the AF. That means USAA can change the rate since you are no longer in the military.

Just saying read the very fine print regarding the payback.
 
buffalo said:
This is a good deal AMEX offers. I got the gold card, and within a few days of submitting the online form, they replied saying they'd waive all annual fees. If I end up traveling more, I'd consider upgrading to the platinum, but right now I don't think I'd make good use of the travel benefits, nor will I be booking many hotels from the platinum's fine hotels & resorts program.

I'd also agree with the general consensus that you can live quite well as a single O-1. What I actually see in pay after taxes, is about $1250 mid-month and $1450 end-of-month. This includes base pay, BAS, and $125 in flight pay. BAH is automatically deducted since I'm living the UPT dorm life. I did take the USAA loan, so about $620/month is due each month for that though I generally pay $750-$800, since I would like to pay that off a little earlier. I realize there's an opportunity cost of paying more per month than is due if I could otherwise earn more than the 0.75% interest I'm paying, but I don't enjoy seeing the debt. What's leftover is plenty to eat, have some fun, build an emergency fund, contribute to the IRA and a taxable investment account, etc. It's definitely not a bad gig, and I'm looking forward to the O-2 pay raise coming in a couple months.
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Buffalo

We have had the green, gold and platinum. Platinum also gives you more bonus points for members. IE use it on gas or participating grocery stores you get more points that you can use later on to purchase items from their overpriced catalog!
-- If you don't intend to travel you can still use the points for presents, be it the holidays or birthdays.

we took the platinum for that reason. If they are willing to waive the cost for whatever card than impo take the one that gives you the very best return.
- Granted we used the AMEX like most people use their debit card. Every time we used it we deducted that amount from our checking account.
-- We used it to pay down payments on our new car instead of taking from our checking account. Cell phone bills, electric bills, college books ROTC repaid) etc. gathering points every time.

Food for thought.
 
Pima said:
There is very fine print on that loan, at least for AFOTC. IF you separate before your time commitment is up for the AF. USAA has the right to change the rate to something like APR + 9%. Cant recall it exactly, but in essence if their APR is 9% than the balance of the loan is now going to be 18%+
- Thus, for those AFROTC cadets in that year group, it could have big consequences if they took the loan before commissioning and decided to walk.
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I don't remember the number (it's been 11 years) but that sounds familiar too, from my CGA experience with my USAA loan.
 
Cannonball said:
I have been thinking about the pay as an officer in the Air Force after graduation. I have some questions and I hope they don't sound too dumb. I have looked in other threads and there is some information but it is not exactly what I am looking for. What is the real pay for a new officer in the air force? I see the pay charts and it shows about $35K in pay but I know you get housing paid for and stuff. How hard is it to make a living with that pay? Can you afford to get married and have kids? I know you can do it, but is it really difficult? I want to be an officer but I am also deciding on some civilian colleges and wondering if it is a better choice. Is there any difference in income for officers from AFROTC verse ones from AFA? Does your job in the air force make any difference in pay? Sorry if these are dumb but I want to know as much as I can before deciding.
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Just remember,
Jcleppe said:
Be aware that your total compensation before taxes will vary depending on where your stationed as a new 2LT. Your total in Alabama will be far less then your total in Hawaii, but it'a all relative to the cost of living. While the amount may be 74K in Hawaii, it will be more like 46K in Alabama.

Learn to live on your base pay, anything left over from BAH and BAS is a bonus.
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Just remember, you will not be a 2LT forever!
 
Pima said:
This probably is more important info for AF commissioned than other branches due to the fact that in the past few years they have reduced their personnel numbers.
1. AFROTC allowed cadets to walk away as seniors or prior to reporting. No commitment owed. No payback if scholarship. Just goodbye papers. They placed the threat that if not enough left they would be forced to hold a RIF board and separate them.

There is very fine print on that loan, at least for AFOTC. IF you separate before your time commitment is up for the AF. USAA has the right to change the rate to something like APR + 9%. Cant recall it exactly, but in essence if their APR is 9% than the balance of the loan is now going to be 18%+
- Thus, for those AFROTC cadets in that year group, it could have big consequences if they took the loan before commissioning and decided to walk.

2. If you want to go rated, than look into this deeper. In the AF if you bust UPT they will send you to a Flight Evaluation Board (FEB) They may decide that they are overmanned and separate you from the AF. That means USAA can change the rate since you are no longer in the military.

Just saying read the very fine print regarding the payback.
Click to expand...

My son took out a $ 35K loan before his final year at USAFA 2014, He spent 1/2 on buying my Honda Accord, which he still drives, his ring, a really nice month in Europe after graduation including a 1 week cruise with a bunch of his buddies from school, they chartered a yacht and lived the life.

three years later, he has invested wisely and has more than the original principal. He still drives the Accord which he loves. He is a bit frugal, but with me as a teacher, he easily could have gone the other way and spent it as he earned it.

Now for Pima's comment. He had 2 very close friends that did not make it past UPT. They were facing a separation from the Air force. They both were moved into the intelligence world, where both are happy. i do not think either of them are going to stay past their 5 year commitment, but it could be a blessing in disguise. I have not heard him say that anyone who has not made it in UPT were separated, he would know since he is an instructor, I will ask him.
 
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