Tag: finances

What is an E6 Pay worth really?

Here at CONUS Battle Drills I keep telling you about the Big Four Questions every veteran absolutely must answer before getting out.  Despite Chad’s very eloquent and convincing reasoning for asking “Why” first, I maintain that if you are not financially ready, or don’t understand the financial ramifications of your decision, it doesn’t matter if you have the best reason in the world; you can’t get out yet.

So what is your pay actually worth?

I asked an E6 friend of mine to send me an LES so I could show what the equivalent pay would be in the civilian world.  I did some analysis to make the take home bi-weekly pay as close as I could get them while still being a near apples to apples comparison.  In the civilian world, you have to pay for healthcare and retirement, so I included those in the civilian column, but only the dental in the military column.

Here is how it shakes out:

pay comparison

So this E6 is making the equivalent of almost $7,500 a month even though his base pay is only $3,719!

Here is the mistake that I made when I got out: I thought a “comparable” salary meant making the same as my base pay and I was WAY wrong about that.  For some reason, I didn’t take into account the additional expenses in health care and retirement and the loss of BAH, that’s why I’m telling you about it now.

BAH and BAS are also not taxed, which means that even the tax burden for the civilian is higher because he’s in a much higher bracket. Some of these numbers can change depending on the number of tax deductions, the state that you live in, your election of 401k, how much your health care costs, etc. but the point remains:  Your base pay is not representative of your take home pay.

There are, however, some major considerations you need to take into account…

Just because you would need to make nearly double in the civilian world to have a similar take-home pay, does not mean that’s how much you’re worth.

Sorry to tell you this, but you’re probably going to start off making similar to your base pay because that’s what your skills will translate to in the civilian world, and for those of you in senior leader positions, expect less than your base pay (hopefully you can supplement with retirement).

I’ve told you before you need to make a budget, and in the book I discuss this in even more detail, and if you look above, you should notice why that’s even more critical when you get out.

Financial struggles are usually where troubles in marriages begin.  It’s the first snowball that can lead to so many other bad decisions.  For veterans, there are even more issues because you don’t even know what to expect from a paycheck, you’ve never paid for healthcare, and you’ve never HAD to save for retirement.

It’s not all bad news, ok, but I want you to be ready for what is coming.  I want you to fully understand the ramifications of your decision.  I want you to see all the cards on the table, that’s what CONUS Battle Drills is about.  The point is to prepare you so this transition isn’t a kick in the nuts.

-LJF

Share this post, it’s possible someone you know is about to get out and make a terrible financial decision.  Let’s look out for each other.





Veteran Profile: Ed Jasper

In this first installment of Veteran Profiles, listen to Ed talk about his 20 years with the Army and more than 14 years with John Deere.

Ed Jasper
Military Experience

United States Army – 1981 – 2001 – (MOS 67N/67T/67Z)

In the early years, I was a UH-1H (Huey) Crew Chief, Section Sergeant, Instructor, and Quality Control NCOIC. In the later years, I was a Production Control NCOIC, Squadron S3 NCOIC, and Retired as a 1SG of a UH-60 (Blackhawk) Troop

Current Position and Civilian Work Experience

Manager of Program Management Office, John Deere – Cary, NC

I have worked for John Deere for 14.5 year and had multiple assignments in Factory Operations, Project Management, Quality Engineering, and Program Management

 

The Big 4 Questions:

  1. Were you financially ready to get out? What steps did you take?

No, I was not financially ready to get out!

I was a 1SG with 3 kids in High School, and one kid was getting ready to start college. I was fortunate that I found a good job with a great company and literally left the Army on Thursday, drove across country and started with John Deere on Monday.

I tried to be as debt free as possible, ensured my credit report was clean and accurate, and bought a house that was below what we were approved for to help control expenses.

Stetson 4-3 ACR

  1. Why did you want to get out?

I loved the Army, but it was time.

I loved working with soldiers and spent my entire career in Army Aviation and was still crewing helicopters occasionally as a 1SG. It may sound funny, but I was not interested in becoming a CSM and what that rank would entail at that point in my career. I had been a 1SG for 3 years, and the family was ready to have me home more. In 2001, to become a CSM, I would have had to go to the academy, spend a year at Ft. Bliss, and then be subject to an assignment worldwide. I had three kids in high school, and that level of uncertainty did not seem like the right thing to drag them through. Based on what I thought my next step in the Army was, and the needs of my family, it was time to go.

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  1. Did you know where you wanted to live?

I have a funny story about where “we wanted to live”. We had lived all over the world, and our last duty station we were stationed at Ft. Carson, CO which is an awesome assignment. My wife and I were discussing the whole retirement plan, when a commercial for Colonial Williamsburg came on the TV. We had lived in the area previously for a few years when I was stationed at Ft. Eustis. We both thought going back to the Tidewater Area of Virginia would be a good choice if we did not stay in Colorado. The following day, I got a call from a previous commander of mine that said he had someone from John Deere where he was working in Williamsburg, VA that wanted to talk to me about a job! How is that for karma!

Honestly, I was willing to relocate to any location for the right job. I had seen a number of former coworkers in Army make what I thought was a mistake and limit themselves to a geographic region. This really limited the types of jobs they were getting interviews for.

I know moving is tough on families, but after John Deere made me job offer,  it was my kids that told me it was ok to change High Schools again, they would adjust and that Mom and I had to do what was right for our long term future. It was tough on them, but they have all made it through college and are working in their chosen career field.

PD_0407

  1. Did you know what you wanted to do?

No, I had no idea what I really wanted to do. I did have plan, I called it the “5 finger plan” and had a resume that matched each of those paths. They ran the gamut from working for a defense contractor in aviation maintenance to working in public education. The other thing I did when I was in was to finish my degree programs – so I earned an Associate’s Degree while I was still a SPC, earned my  Bachelor’s Degree by the time I was a SFC, and finished a Masters in Education the year before I retired. The degrees did not make me any smarter, but they do open doors that might not be available without them.

I knew I wanted to have a challenging job, with a firm I could grow with, and that would offer a level of pay that would improve my standard of living. So far, John Deere continues to offer me new opportunities – I have moved 6 times in 14 years and had 7 primary jobs in that time period and number of other special projects. Not everyone has to move to advance, but they have offered interesting jobs that I wanted to pursue, so it has been a good fit so far.

 

Quick Tips for Transitioning

  • If you are enlisted – get as much school as you can to include college, certifications and other training applicable to your career path.
  • Officer, Senior NCO, or Enlisted – Be willing to take an entry level job with the right company – your experience and work ethic will lead to other opportunities for promotion.
  • Be willing to relocate to take the right job – go where the work is
  • Contact others you have served with that are already out – they are a great resource
  • Practice Interviewing and using words and language that civilians understand
  • Send your resume to people not in the military to get some feedback – Don’t be offended with the feedback
  • When you get the first job, find a mentor. Most organizations have some former military in the workforce. Find out who they are, and approach them about mentoring you. They will be invaluable to you in helping to connect the dots as you transition.

 

Listen to the full interview now, or take it with you and listen on the go!

I want it on the go: Veteran_Profile_Jasper

Listen now:

 


The 4 Big Questions-Finances

  1. Are your finances in order?

Before you get out, make sure you have zeroed out major debts.  I really recommend paying off cars and having as few monthly payments as possible.  Take a look at what your monthly expenditures are and make a budget.  This will let you know exactly what you need to survive.  If that number is equivalent to what you are making in the military (including BAH), then you’re spending too much.  Chances are, your first job is going to be equivalent to your base pay, if you’re lucky, but probably not higher.  So you’re going to have to learn to survive on just your base pay.  You are going to be entering a world where salaries are negotiable, and employers are going to offer you the least they think you will accept, so you need to know exactly how much you need.  You and your family are used to living at a certain standard, you’re going to start off below that standard, and you need to know exactly what your floor is.

Also, there are taxes to consider.  If you’re like me, I kept my Florida registration so I didn’t have to pay state income tax.  Once I got out, that all changed and it was a kick in the nuts to have that extra expense.  You’re going to have to pay for health care now as well and that’s not cheap.  There are a lot of unexpected financial hits that you’re going to take, and it’s best that you’re set up to take those punches.  If you’re not ready now, take a few months, maybe extend out your ETS date if you can so you can get it together.

Here is an example of what happens with my paycheck.  Take a look at the deductions and taxes!

paycheck

This is something I certainly wasn’t prepared for.  About 40% of my paycheck is gone before I even see it.  Some of that goes to pay for my healthcare, some goes into a 401k for retirement, some goes into a dental policy, and some goes into a Health Savings Account or HSA.  So if your target salary is $72,000 a year, make sure you’re not planning for having $6,000 a month in your bank account, you’re probably only going to bring home about $48,000 of that.

For most of you while you’re in, your base pay is pretty much equivalent to what ends up in your bank account.  If you’re deployed you’re not paying taxes, and if you’re stateside, you have COLA, BAH, and BAS.  Once you get out, everything is coming out of that base pay, plus health care costs, plus you’re paying for your retirement somehow.  I didn’t realize this and accepted a lower base salary than I would have if I realized I was going to lose 40% off the top.

If you’re thinking of getting out, go make a budget right now.  You can’t even start to look at jobs and salaries until you’ve figured this out.

 

 

-LJF