What is up Broke-Millionaire family? It is an honor to dedicate today’s blog to the men and women of our Armed Forces. This is their special military edition. As we all continue on our journey for financial success, I am going to dedicate certain posts to our military members. For their sacrifice, it is only fair if I provide them with the absolute best tips and information, so they can remain focused on protecting this great Nation. I cannot thank you enough for the sacrifice you make every day. I know many of you are separated from your significant other, but again, thank you for protecting this beautiful Nation. Hopefully, today’s topic doesn’t seem like a classic DoD/DHS online training.
For real though, it amazes me how certain service members handle Basic Housing Allowance (BAH). Trust me, as an active duty military member myself, I know none of us here are millionaires. We did not join the Armed Forces for the money, it is not our motivation. However, we all can agree that the benefits are quite nice, which includes the BAH monthly stipend.
What is Basic Allowance for Housing?
Alright enough beating around the bush, lets get right into it! As a service member you are entitled to Basic Housing Allowance (BAH), which is a monthly stipend to help you cover your living expenses. By expenses, I mean your monthly rent, mortgage, or if you have any left over (which you will) then it can also cover your utilities. I expect you all to take full advantage of this. Yes, regardless of what rank you are, you will get paid a set amount. This amount is calculated based off your rank, if you have dependents, and your geographical location. Locations like Washington D.C., Honolulu, HI, and San Diego, CA are higher than areas like Mobile, AL, Savanah, GA, or San Antonio, TX. This is because the Cost of living is higher in those specific areas. Again, you can look at each individual area with defense travel.
Why BAH matters to Broke-Millionaires? This monthly stipend offers military members a phenomenal opportunity, especially if you are single or are a Geo-Bach. If you just graduated from a Federal Service Academy, ROTC, or Boot Camp, then this is your secret weapon to earning additional money on top of your bi-weekly pay.
Find A Roomate
Regardless of where you end up getting stationed, you need to engage with your future community. Why? You need to find a roommate! You two will room together and will split the monthly rent evenly. Whatever BAH you have left over you get to pocket it. Now that is bad ass. But here is the thing. This additional monthly income is completely tax free. Yeah, I know. This is hard to come by, considering we get taxed on nearly everything. But for once, Uncle Sam will not be snooping around your bank account asking for this additional income back.
Real World Examples
Just last week, I ran into 4 Broke-Millionaire subscribers who shared their story with me. These 4 freshly minted Coast Guard Ensigns are in flight school and friends from the Academy. Together, they split the rent on a 4 bed/3 bath home in Pensacola, FL. Between the four of them, they each only pay $348. Guess what they do with the extra $800 – $900 leftover from their BAH monthly stipend? They save and invest it, so their net worth is constantly growing. Again, each one these members are making an additional $10,000 per year in just BAH allowance.
One Broke-Millionaire subscriber is fortunate enough to serve right near his hometown. Guess what they do? They live at home and pocket the entire BAH stipend because their parents are not charging them for monthly rent. Mind you, this is in Washington D.C. Yeah…this Broke-Millionaire is pocketing close to an extra $24,000 per year in BAH. Just like the flight school students, this military bad ass invests 100% of their BAH into low cost index funds, which is yielding close to a 7% return on investment.
Understanding Basic Allowance for Housing
I hope you are getting the point by now. Here at Broke-Millionaire we get creative with our personal finances. Aside from investing your leftover BAH, you can use it to pay off any outstanding loans or student debt! Let me tell you one thing though, I do not want to see your BAH just sitting in your savings account. You need to let your hard-earned money work for you. Having your money just sit in a savings account loses value over time because of inflation, so if you want to lose money then go right on ahead, let it sit there.
I get it, our men and women in the military do not earn enough for how hard they work. But the BAH is a phenomenal way for us to pocket an extra hundred or more dollars a month. The more creative you are with your living situation, then the more you will be able to save. I guarantee you can take home close to 50% – 70% of your BAH if you just sit down, brainstorm, think, and reach out to other military professionals in your geographical location. I challenge you to save as much of your BAH as possible. If you think you can out save our Broke-Millionaire flight school students or our Broke-Millionaire stationed in Washington D.C. then please comment, like, and share your story.