Long Pay Period Warning – And Some Thoughts On It

As many of you have already noticed, if you use a bank or credit union that pays military pay early, the October pay period is going to be a long one – 20 days. I have seen approximately 30 Facebook posts about this, and every single one has been followed by a long comment train with some pretty strong arguments happening. It’s a fascinating look into how people handle their money.

Important Note: Even if you’re not affected by this long pay period, you will be impacted by the one at the end of December. Prepare accordingly.

Actual Military Paydays

Because every month is not 28 days long, and because banks don’t work on weekends and holidays, military pay doesn’t always come on the 1st and 15th of the month. Any time that the 1st or the 15th falls on a weekend or holiday, the actual military payday is pushed to the previous business day. If there is a weekend and a holiday together, the actual military payday can be up to three days earlier than the 1st or the 15th. Usually, these things sort of balance themselves out over the course of the year, with military paydays usually coming 14-17 days apart. But every once in a while, the calendar falls in a crazy sort of way and the paydays come a lot closer together or a lot further apart.

Early Direct Deposit

Then, many military-friendly banks and credit unions offer early direct deposit of military pay. The number of days early and the exact details vary by bank or credit union, but a popular offering is “one business day early.” That’s what USAA offers, and it is (sort of) what Navy Federal Credit Union (NFCU) offers to members who use an Active Duty Checking account for their military pay direct deposit.

Navy Federal Credit Union’s Overnight Posting System

Separately, but totally important for this particular pay period, is how NFCU posts their deposits. I’m sure this isn’t the language that NFCU uses, but I’m trying to make this easy to understand: NFCU schedules your pay deposits to happen the night before the pay is supposed to be in your account. So, if payday is 15 February, NFCU schedules the pay deposit to happen overnight between 14 February and 15 February, so that the pay is available for use on the morning of 15 February. However, this process requires that the day on which the pay is scheduled is a business day. Therefore, when the day that your pay is supposed to be deposited (either early or on the regular day) is on the first business day of a week, then that scheduling is pushed back to previous business day (often Friday) and is available for use on the day after the business day before the day you were supposed to get paid (often Saturday).

I know that is super-confusing, so I did a little sample. Using the calendar below, the actual military payday was Monday, 15 April 2019. Anyone who got paid on the actual payday (not using an Active Duty Checking account) should have had their pay available on the morning of Monday, 15 April 2019. However, NFCU’s pay posting system doesn’t have a way to have pay be available on the morning of the first business day of the week. The scheduling of that pay occurred on the previous business day, which was Friday, 12 April 2019. That pay posted overnight and was available for use on the morning of Saturday, 13 April 2019. Those folks got paid two days early even though the didn’t use a checking account that offered early direct deposit.

Is that at all clear?

Why Is This October So Weird?

This October, what’s happening is that the “one business day early” is bumping up against the 14 October 2019 Columbus Day bank holiday. This is pushing the deposit of the 15 October 2019 mid-month military pay very early – 10 October or 11 October or 12 October, depending on your financial institution.

When you look at the calendar, you can see that the regular, October mid-month military payday is Tuesday, 15 October. So those folks who get paid on the actual military payday are not going to have a big issue, because they’ll get paid again on Friday, 1 November, giving them a fairly typical 17 day pay period. But if you get paid early, or you use a Navy Federal Credit Union account other than an Active Duty Checking account, this month is going to have a very long pay period – 19 or 20 days.

USAA

I am aware that the calendar at the USAA website shows that you will be getting paid on Monday, 14 October. I believe this is a typo. However, my friend Rob, who knows a lot, thinks that it might be right.

It is my opinion (and let’s be clear, everything at this blog is opinion): Folks who bank with USAA will have their pay credited on Friday, 11 October 2019, pending the receipt of pay information from the Defense Finance and Accounting Service (DFAS.) Their next military pay deposit will be Thursday, 31 October 2019.

NFCU – Active Duty Checking Accounts

NFCU offers early direct deposit as a benefit to members who use an Active Duty Checking account for their military pay deposit. For this pay period, pay will be scheduled (“pending”) on Thursday, 10 October 2019, to be posted overnight and available for use on Friday, 11 October 2019.

Your next military pay deposit will be scheduled on Wednesday, 30 October 2019, to be posted overnight and available for use on Thursday, 31 October 2019.

NFCU – All Other Checking Accounts

If you are a NFCU member who uses any other type of checking account (not an Active Duty Checking account,) your pay will be scheduled on Friday, 11 October 2019, to be posted overnight and available for use on Saturday, 12 October 2019.

Your next military pay deposit will be scheduled on Thursday, 31 October 2019, to be posted overnight and available for use on Friday, 1 October 2019.

What’s The Big Drama?

Situations like these tend to show who is struggling and who has a good handle on their financial situation. There are valid arguments on both sides, with some folks saying that there is no way that even good money managers can stretch a paycheck for three weeks, and with other folks saying that any issues are solely a problem with your spending. Neither side is 100% right or 100% wrong, but it can be useful to see how a long pay period impacts your finances, and use what you learn to make little improvements for the future.

From a long viewpoint, there shouldn’t be a financial problem with a long pay period. Regardless of how the paychecks fall in a year, the year is still 365 (or 366) days long and there are still 24 paychecks in those same number of days. You have the same number of rent payments, and car payments, and credit card payments whether your pay comes 10 days apart or 20 days apart. Either you have the financial capacity to make it through a 31 day month, or you don’t – when the paychecks come shouldn’t matter.

But when you drill down, there can be some individual difficulties. Let’s say your grocery budget only covers 17 days of groceries – how are you going to eat for those 3 extra days? Logically, it is easy to say that you should have some left over from the last time we had a shorter pay period. But when you’re pinching pennies, sometimes it doesn’t work out that way.

A long pay period is a great way to measure how you are doing with your finances. If you don’t even notice, you’re probably doing a good job. If it is a bother but not a big deal, you are probably doing OK but have room for improvement. If it is an emergency, you need to make some major changes.

What You Can Do For This October

If you are living paycheck-to-paycheck, start planning now to get through this October. Cut back your spending, and use the tips in 85 Ways To Get Through A Long Pay Period to ensure that you won’t be short on any essentials at the end of the month.

What You Can Do For The Future

If this month is going to be tight for you, get through the month and then start planning now to avoid problems during future long pay periods – like the one happening during the second half of this December. Christmas is a terrible time to be short of money. Build up your emergency fund, build a spending plan around a 31 day month, pay off debt, and do all the other basic things that build a solid financial foundation. Meet with the financial educators available at your installation’s family readiness center. Take a class. Read a book. I promise you that your life will be so much easier!

This December Has Another Long Pay Period

Regardless of how you get paid (early or regular,) this December end-of-month pay period is going to be 18 days long. Plan ahead now so that your December doesn’t have any additional stress – goodness knows that the holidays can be stressful enough without money troubles.