Military Finance Report: December 2015

Tuesday, December 29, 2015

2016 BAH Rates Discussion

The 2016 BAH rates have been announced.  According to the Defense Travel Management Office, BAH rates will increase an average of 3.4%.  The average increase across the whole spectrum is $54 a month.  This continues to slow the growth in compensation in a “fair, responsible, sustainable way.”
As a taxpayer and a budget analyst, it’s a good thing to hear about “slowing the growth of compensation” as defense spending continues to skyrocket without any accountability.  Like all of America, the DoD has an insatiable appetite, unable to reduce any spending.  However, as a service member, and at a time where I feel like I’m working the longest hours, doing more additional duties than ever, and dealing with severe manning issues, hearing about reductions in compensation can be disheartening.  But you may ask, didn’t you just say the 2016 have increased an average of 3.4% or $54 a month?
Yes, the 2015-to-2016 rates have increased; however, in some cases it still doesn’t restore the reductions we took in the 2014-to-2015 rates.  In my zip code (71111 – near Barksdale AFB, LA), and for my pay grade (O3E), the 2016 with-dependent rate is still lower than the 2014 with-dependent rate.  The without-dependent rate is higher.
BAH Year (71111)
With Dependent
Without Dependent
Even though I’ve been grandfathered (a.k.a. individual rate protection) into the 2014 rate, it still represents a reduction to future with-dependent O3Es.  As you can see, without-dependent O3Es will make an additional $9 in 2016 compared to 2014.
Remember BAH costs consider rent and average utilities (electricity, heat, and water/sewer).  We must make sound decisions on where we choose to live off base [post, camp, or station].  As a young E-4, I chose to live in a place which my BAH afforded me.  Many E-4s chose to live above their means and it cost them a significant amount of money.  A bigger house not only costs more in rent/mortgage, but utilities generally tend to increase proportionally as well.
While reductions from 2014 may not be a good thing, I think staying within your means, and/or encouraging your subordinates to do the same, may help offset these “fair and responsible” reductions.

Sunday, December 27, 2015

2016 Financial Resolutions

2016 has the potential to offer a great financial revolution.  For the first time, in a very-long time, people are more interested in macro-events regarding their own money.  Many of the political candidates are focusing their campaigns on changing America’s economy.  2015 was one of the biggest years for me helping people with their finances, and I believe 2016 will be a greater financial year.
Unfortunately for me, it looks like I won’t be meeting most of my 2015 financial resolutions.  I took quite a large hit chasing quick money, which had a ripple effect across my other financial goals.  If you’ve never made New Year’s financial resolutions before, then consider these:

1.       I’m going to save $X,XXX in an emergency fund.  Make sure you keep this money in an account that’s not quickly accessible to prevent impulse spending.  I use CapitalOne 360; if you’re interested in setting up a CapitalOne 360 account, please let me know so we can both benefit from referrals.

2.      I’m going to reduce or eliminate X% or $X,XXX of debt.  The most concerning problem in the whole world is the overwhelming debt taken on by middle- and lower-income people.  Without getting into any conspiracies, personal and national debt is THE most critical THREAT our world is facing.

3.      I’m going to save $X,XXX in my retirement fund.  People are being forced to work longer because they failed to prepare for retirement.  In one of my most popular posts, I shared my concerns with my generation not being financially prepared.  Read it here:

4.      If you continually do these things, but still want to improve your finances, consider these:

a.      Max out your credit score for your age
b.      Eliminate ALL bank fees by changing banks
c.      Maximize rewards by getting a different credit card

I really believe 2016 can be a financial revolution for the developed countries.  We must take care of our own finances within our control before we can make fundamental changes against the conspiracy theories.

Wednesday, December 9, 2015

Guest Post: How For-Profit Colleges Hoodwink the GI Bill

Brittany Thompson has created this graphic discussing how for-profit colleges are targeting the post 9/11 GI Bill funding.  According to the research, for-profit colleges have a lower completion rate.  One of the conclusions, the graphic points out that with every $1 of military funding (GI Bill) the college receives, it can charge up to 9X that in federal and private loans, and grants.  The bottom line I got, is that for-profit colleges are targeting GI bill funding to increase their ability to raise other government funding.  I experienced a lackluster education from my for-profit college.  The one thing this graphic doesn't touch on, is that when these colleges focus on profit, the quality of educated offered decreases.  What are your thoughts?

How For-Profit Colleges Hoodwink the GI Bill