Each year, the military pays out huge amounts of money to individuals who enlist and re-enlist. These bonuses can be as much is $90,000, depending on your specialty and the length of your commitment.
For many people, a military bonus is one of the few times in their lives when they have a check in their hands which is equal to a year or more of salary. This is a very big deal and one to be handled with great caution.
To start, it may be that some of the bonus money is taxable by either the federal government or a state. There may well be a difference between the gross size of your bonus and the net amount that you actually receive. For this reason, when considering a bonus, always ask how much you will actually get after taxes.
But let's say you do get a very large check. What should you do with the money?
No doubt there will be will many temptations, but it's best for recipients to think of bonus money in the same way they would think of an inheritance — a one-time deal where the money should be used in a way that will create a long-term benefit.
One use of bonus money could be to pay off credit card bills. Credit card interest rates are notoriously steep, and at some point such debt must be repaid. However, credit card debt is a danger that repayment cannot cure unless individuals also develop a budget and never get an advance which cannot be repaid within a month.
Bonus money can also be used with real estate. For instance:
VA loans allow Veterans to have a co-borrower on the loan. Here we break down co-borrower requirements and provide common scenarios around co-borrowing and joint VA loans.
Your Certificate of Eligibility (COE) verifies you meet the military service requirements for a VA loan. However, not everyone knows there are multiple ways to obtain your COE – some easier than others.