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Understanding that Mumbo Jumbo on the LES (the paycheck)!

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Life Lessons of a Military Wife (overseas in Europe!): Understanding that Mumbo Jumbo on the LES (the paycheck)!

Life Lessons of a Military Wife (overseas in Europe!)

My goal here is to make your life easier, especially those who are in the unique situation of being a military spouse. Yes...I've been around...but in a good way...and hopefully can share those tips, tricks and shortcuts with you too. I've been on this military bus for over 40 years now. My goals in life are to have a well-run home, few money worries, well adjusted children, money socked away and whatever happiness I can scoop out of life.

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After life as an Army brat, being in the Army myself and marrying a soldier, I can honestly say I have a bucket full of life lessons I can share to help you make your everyday life easier and enlightening. Don't waste your time making unnecessary mistakes and benefit from others who have come before you on your journey through life.

Friday, July 6, 2007

Understanding that Mumbo Jumbo on the LES (the paycheck)!

First things first...let's see where the money is coming from. You've probably already seen the Leaves and Earnings (LES) statement that your spouse brings home. Actually...you probably haven't seen it, because most soldiers access the LES through the Defense Finance and Accounting Service (DFAS) MyPay website. When your soldier first entered the military, he signed up to get his paycheck deposited electronically into the bank account of his choice. Click here to see a screenshot of the actual form. Let's go over some of the more important things you are looking at.

  • GRADE – your spouse’s rank, which will determine what his pay will be
  • PAYDATE – this is the date your spouse entered active duty (this date is important as it shows cumulative years your spouse has been in; more years=more pay; this figure is used in conjunction with his rank to determine exact pay
  • YRS SVS – the years your husband has been in the service (for officers you’ll see a bunch of 8s as there is no expiration of term of service
  • ETS – Expiration Term of Service; when your spouse’s active duty obligation is up
  • ENTITLEMENTS – your spouse’s base pay is listed here, which is determined by his grade/rank and pay date; you will also find additional bonus money that your spouse may be receiving that alone could total to a few thousand dollars, such as:
    • Basic Allowance for Subsistence BAS (offset for cost of meals; not that much really)Basic Allowance for Housing
    • BAH (to offset housing costs at your duty station)FLPP (language pay if your spouse has tested in a language and gotten a rating)
    • Parachute Pay (yep, for keeping up on a regular jump schedule)
    • SAVE PAY (hardship duty pay when they are stationed out in the sticks somewhere)
    • FSA (Family Separation Allowance if you are separated from your family more than 30 days)
    • You can find more Entitlements HERE

  • DEDUCTIONS – Includes any money that was taken out of the paycheck, this will include items such as:
    • Federal and State taxes
    • Social Security
    • SGLI (life insurance for him)
    • Family SGLI (life insurance for you)
    • Mid Month Pay (since the military pays you twice a month, the amount paid out at mid-month is listed here)
  • ALLOTMENTS – this is where money is taken out for your family member dental plan, any allotments that you have going to your retirement or savings accounts, as well as any donations to the Combined Federal Campaign (CFC), where your husband is asked to donate to worthy causes during annual fund drives. These amounts are all then totaled at the bottom of each column and repeated again in summary on the top right of the LES. His EOM (End of Month) is the pay received at the end of the month. Add that to the mid-month pay to get the gross (total amount before taxes) pay amount for the month. If you see a DIEMS and a RETPLAN under the EOM Pay on the top right, that is showing you the date the military is using to calculate your spouse’s retirement date and also under which retirement plan he falls under. Here you can calculate what he will be getting in retirement.
There is now a lot of gibberish at the bottom of the LES. Mostly things that your spouse needs to concern himself with. Let's skip over those items, so I can go get the laundry done. Before I go though, I will highlight two other areas that I always check. One is LEAVE, the first block of small squares. If you want to know how much leave time or vacation days your husband has saved up, check the Cr Bal block. This means that he can request to go on leave from his commanding officer, and once it is approved, he can go on vacation...hopefully, with you and the family in tow!

The other important area is the Thrift Savings Plan (TSP). The easiest way to explain this, is that it is the Department of Defense’s answer to the civilian 401(k) tax deferred civilian retirement plan. This means the money is invested in designated mutual funds and grows tax-free until your retirement. If you decide to do no other saving and take nothing else away from this blog, please consider signing up for this, as the money is taken out of your paycheck before you even see it. Even if you only contribute a modest sum, it will grow exponentially, and you'll have a little pot of gold at the end of your rainbow. Your husband can even access MyPay right now and sign up for it online. I’ll momentarily wait here while you go call him and get him to check it out and hopefully sign up...better yet, you go get his user name and password (promise him "happy time" later), and check it out yourself.

That about wraps up the LES. Stay tuned next as I talk about how to get your financial house in order or at least get it moving where it needs to be!

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1 Comments:

Blogger Financially Broke said...

Also with the TSP... yes, it is tax deferred savings... which means that not only does it come out BEFORE you pay taxes, it lowers your total tax liability at the end of the year. For those young or junior ranking service members, this can really help them out a lot.

Also, when you sign up for the TSP, everything will automatically go into the "G" Fund... which is the government fund. This fund has no liability... you will always have the money you put into it... however, becuase there is no risk, there is basically no return, if that makes any sense.

The TSP has the "C" "S" and "I" funds as well, where you can spread out your investment money into higher risk categories. The funds are explained on www.tsp.gov, and through the TSP you can also get L funds, which depending on your age, automatically diversifies your money throughout all the funds available.

There used to be a limit on how much of a percentage you placed into the TSP, but if I am still accurate about this, I believe now there is no percentage limit. It is not like an IRA or a ROTH where you can only put so much in during a year, either.

THere is no company match as there may be in the civilian world, but it is a decent investing system for what it is, and definitely something that all military members should subscribe to in my estimation.

December 6, 2007 at 8:38 PM  

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