Far And Away
By J.J. Montanaro
Winter 2008-09
Anne-Marie and David Tosh always had split bill-paying and other financial chores. When her husband was deployed to
“Anne-Marie handled everything,” Capt. Tosh says.
Luckily, the two had set themselves up for success. “The accounts were all in both of our names,” says Mrs. Tosh, who lives with her husband, now back from
Many deployed servicemembers leave somewhat more confusion in their wakes, says Meredith Leyva, wife of a Navy officer and founder of www.CinCHouse.com, a website offering ideas for managing deployment and other events for military families.
“In my husband’s first deployment, he had forgotten to pay a credit card bill,” Mrs. Leyva recalls. “It wasn’t clear on the statement how much money was owed, but when I called the financial institution it refused to give me any information because it was not a joint account. And that hurt his credit rating.”
Military members who are single face different challenges. Navy Lt. Cmdr. John Baehr had an eviction scare when rent on his stateside apartment was paid a week late while he was in
Deployment may result in a bit of a financial windfall for servicemembers – and an opportunity to rethink your approach to the family finances. With the possibility of combat zone tax-free income and a host of allowances (separation pay, hazardous duty, etc.) added to the monthly bottom line, you may be able to use the additional income to pay off pesky credit cards, build your emergency fund and even start or increase your automatic savings into a Roth IRA, Thrift Savings Plan, or College Savings Plan for the kids.
Smart Solutions
The first line of financial defense is an emergency savings fund. Experts typically recommend that you work toward maintaining three to six months of living expenses in such a fund. But Leyva says if you’re facing deployment you should set aside at least $2,000 extra to deal with car repairs, plumbing leaks and other unexpected bills. She also suggests padding the fund for routine chores the deployed family member usually completes, from lawn care to household cleaning.
If unused cars or trucks are to be stored, investigate savings on insurance that may be available. If you’re single, you may be able to place all possessions left behind into storage, eliminating rent and utilities. If that’s the case, you should maintain rental insurance to protect your belongings.
The Servicemembers Civil Relief Act of 2004 may qualify you to receive a lower interest rate on mortgages and credit card debts and protection from eviction for late rent payments. Plus, you may be able to delay civil legal actions including bankruptcy, foreclosure and divorce. You can sign a power of attorney to designate a trusted friend or family member to handle your financial transactions.
“If you don’t have a significant other or family member who can regularly take care of your small issues, make sure you take the time to list your account numbers and customer service phone numbers, and give that information to whomever you are giving power of attorney,” Lt. Cmdr. Baehr urges.
Finally, look to stateside organizations such as the Financial Industry Regulatory Authority, via its www.saveandinvest.org website, and services such as Leyva’s CinCHouse.com for guidance and support. Work with your military aid organization, such as Navy-Marine Corps Relief, to develop a new budget.
The good news is that deployment can lead to better overall financial management. “When I deployed, Anne-Marie completely took over, and it worked so well we left it that way,” Capt. Tosh says.
Savings Deposit Program
Servicemembers deployed in combat zones, qualified hazardous duty areas or certain contingency operations can earn 10 percent interest annually (compounded quarterly) on money deposited into the military’s Savings Deposit Program (SDP).
- You may deposit up to $10,000 of your unallotted pay and allowances.
- Deposits may begin on your 31st consecutive day in your deployment region and must end on your date of departure.
- More than one deposit may be made in a month, but the total cannot exceed your monthly unallotted pay and allowances.
- The account stops accruing interest 90 days after returning from your deployment region.
- Withdrawal during deployment is authorized for medical emergencies only.
- Interest accrued on earnings deposited into the SDP is taxable for federal income tax purposes.
Contact your installation’s finance office for more information.
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Joseph "J.J." Montanaro is a CERTIFIED FINANCIAL PANNERTM practitioner with USAA Financial Planning Services, one of the USAA family of companies. Montanaro has served in the
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A Financial Checklist
Waiting until you get orders to deploy may be too late to start building a solid financial plan, so start preparing today. If you need help, refer to the following checklist:
1. Build an emergency savings fund. The fund should contain three to six months of living expenses. Include at least $2,000 extra to deal with car repairs, plumbing leaks and other unexpected bills.
2. Deputize a trusted friend or family member. Ask someone back home to handle paying bills and other tasks. A power of attorney may be required.
3. Create a record of accounts. Take a copy with you when you deploy. If you’re married, make sure both spouses’ names are on all accounts. If you’re single, provide the information to a responsible friend or family member entrusted with power of attorney.
4. Eliminate rent and utilities. If you’re single, you may be able to put all the possessions you leave behind into storage, eliminating rent and utilities. If that’s the case, you should consider maintaining rental insurance to protect your belongings.
5. Set up automatic deposit, investments and bill payment. For bills that can’t be auto-paid, investigate a bill payment service that will allow you to pay them online from anywhere you have Internet access.
6. Pre-arrange any loans your family might need. Don’t be afraid to ask for lower interest rates that recognize your service to your country. The Servicemembers Civil Relief Act of 2004 may qualify you to receive a lower interest rate on mortgages and credit card debts and protection from eviction for late rent payments. Plus, you may be able to delay civil legal actions including bankruptcy, foreclosure and divorce.
7. Save receipts. Set up a folder to hold receipts and financial and legal documents in your absence.
8. Update life insurance, beneficiaries and wills. This may include investigating special dismemberment benefits available on your life insurance policy and reducing or eliminating coverage on autos that won’t be driven while you are deployed.
9. Remember traumatic injury protection. Servicemembers Group Life Insurance now includes coverage called traumatic injury protection, which can help you and your family if you suffer a traumatic injury.
10. Notify creditors and other financial institutions that you are being deployed. Provide them, as well as your stateside deputy, a way to contact you with problems.