Allotments are a good way for troops to schedule a payment directly through Defense Finance and Accounting Service (DFAS), the service directly responsible for paying servicemembers. An allotment sets aside a portion of future paychecks and automatically sends the money elsewhere. If used properly, it can schedule payments on necessities or move funds to savings accounts. An allotment can be cancelled when the debt is paid or the savings goal is reached and troops can enjoy their full pay check again.
But young boots don't see it that way. They may see it as an easy "IOU" and let Uncle Sam worry about the rest. They waste their money on useless crap and end up paying much more in the end — especially if they forget to cancel the allotment. Without research, they fall victim to very unsexy interest rates.
That's not to say that vendors of everything on this list are hunting down dumb E-1's in predatory manner. Some things on this list are beneficial and are encouraged, if taken care of properly. But you know, boots will be dumb and waste their when given the chance — are here's the proof:
Not only do boots get the dumbest tattoos ever, but they often forget that
good tattoos cost money, so instead of doing some research, they walk into the sketchy tattoo parlor outside the main gate.
Instead of paying the $500
even if the quality of the tattoo should have only cost $250 for an EGA tattoo, boots will set up a five month allotment giving the tattoo parlor $150 each month (if you're not into math in public, that's $750).
2. Gaming computers
The boot finally got out of momma's basement and finally ready to become the bad ass they always played in video games!
Living in the barracks rent-free and using a meal card for food means boots have discretionary income for the first time ever...which they put right into an overpriced gaming computer that will be obsolete by the time they finish paying it off.
Kind of similar to the gaming computers, but when someone sets up an allotment for a TV it's usually more costly and takes up their entire barracks room.
If you need a giant ass TV so you can view every last pixel of whatever you're watching, cool; but if you're still straining your eyes while sitting at the other end of your barracks room, you kind of wasted your money.
Everyone should be able to own a weapon. It's their right. The problem comes when someone pays for a beautiful hunting rifle and then they learn they can't keep it in the barracks.
Nearly every military installation has a policy on firearms being stored in lower enlisted housing. So to comply with the policy, firearms are to be held in the unit's arms room. Think of how much of a pain in the ass it is getting your designated firearm out of the arms room on training days when the armorer is actually there — it's even worse when you want to go to the range on their day off.
5. "Pay Day" loans
If you need money fast, there are countless other ways of going about it. Each branch has variations on an emergency relief funds to aid their troops in need of quick cash. And yes, your commander does need to sign off on it. And yes, it is still a loan you need to eventually pay back.
The problem with "Pay Day" loans is with the afore-mentioned interest rates.
Let's say you borrow $100. If you go through the headache of getting your commander's signature and the approval for the money, it's interest free. You just slowly pay the $100 back. If you go through a "Pay Day" loan office off-base, they'll charge interest, so now you've got to pay that loan off as soon as you can or you end up paying nearly quadruple the original amount.
6. Star Cards
This falls into the "good if done properly" category. Military Star Cards are essentially credit cards that you can only use on military installations. They can be a great way for a young E-1 to help build credit to balance out the "credit inexperience" that shows up on everyone's credit score early on. They can also be a great "Oh sh*t!" account if you need something that you can buy on-base. As a bonus, the rates are usually less aggressive than most credit card companies.
But if you're a dumb boot who doesn't understand that credit cards are not free money, well, the Star Card is a program of The Exchange and they're far more knowledgeable in the military's finance system than you.
7. Used cars
Two general rules of thumb when buying a used car outside a military installation: Bring a mechanic from your unit's motor pool with you to help negotiate the price (for a case of beer and they'll be a show-of-force to intimidate predatory car salesmen), and never ever EVER buy from a place that advertises "E-1 and above approved!" more than the actual cars.
Respectable car lots will sell you a car based on it's Kelley Blue Book price and an interest rate befitting of your credit score, regardless of your pay grade or whether you're in the military or not. Since your military service is an excellent "proof of income," you shouldn't have a hard time getting approved at a respectable car lot. So yes, setting up an allotment to them for your vehicle is a good example of how to properly set up an allotment.
But watch out for the sharks at places that give all used car salesmen their bad reputation. They prey on an E-1's doubts about getting a beautiful Ford Mustang from anywhere else. They'll say something like "If you set up an allotment, it'll be fine!" They know the system and they'll use it against you.
So congratulations! You may have driven off with that Mustang, but you're going to be paying for it at a 31% interest rate for the next six years for 800% more than what Kelley Blue Book says it's worth.