by David R. Chase

Created on: July 16, 2008   Last Updated: February 23, 2010

The only solid truth about military pay is that it's steady.

Some Servicemembers are sitting in the poorhouse, while others drive brand new Escalades with massive rims and top-of-the-line stereo systems - so how does it all work?

When you're in the military, your pay follows a set scale; a new recruit earns a significantly smaller paycheck than a Sergeant Major with twenty-three years in. There are variations for each Servicemember, too - it all depends on how long you've been in, where you live, and if you have civilian dependents.

BASE PAY
There's a rank structure in the United States Military, and your base pay is a direct reflection of your rank. When you're dealing with money, the military calls your rank "pay grade." If you've been in the same pay grade for a set amount of time (measured in years), your base pay increases. Additionally, you earn a raise every time you earn a promotion.

COST OF LIVING
Sometimes the cost of living where you're stationed is a bit higher than what you can afford on your base pay - and the military helps make up for this by giving you a Cost of Living Allowance (COLA). If you have dependents (a spouse, children, or other person that depends on you for support), you'll receive additional COLA.

BAS
You've got to eat, right? The military doles out Basic Allowance for Sustenance (BAS) - and those who qualify get to keep it. If you're living off post or in family housing, you'll receive (and keep) your BAS. If you live in the barracks and eat at the dining facility provided to you, the military will give you the BAS allowable by your pay grade, but they'll turn around and take most of it away. In essence, you're paying to eat at the dining facility that they provide - even though the food would probably make Emeril cringe.

BAH
When you're married or have children or other dependents, the military will give you Basic Allowance for Housing (BAH). You can't bring your dependents to live in the barracks, and they know you've got to live somewhere - so they give you a certain amount of money based on your pay grade, number of dependents, and the area in which you live. There will be a vast difference between Schofield Barracks, Hawaii (one of the highest BAH rates in the military) and Fort Campbell, Kentucky (which is at the lower end of the spectrum).

The trick with BAH? If the military gives you $1000 a month as a housing allowance, find a place that costs $600 and pocket the extra dough.

NOTHING BUT THE TRUTH
With the right financial management skills, it's possible to live comfortably on what the military pays. (Comfort is a relative term, of course.) You should always live a pay grade below - which simply means that if you're an E5, live like you only make the money that an E4 does.

Overtime? Yes, you'll work it. Overtime pay? Naw, not for the military. The amount you'll make isn't extraordinary, but you'll be above the poverty level and they pay like clockwork on the first and fifteenth of every month.

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