Leaving your family for significant amounts of time is inevitable when you serve your country for a living. A military deployment can create a significant strain on every member of a family, and it could even pose financial difficulties. To avoid those challenges, there are proactive steps you and your family can take to prepare for your departure. Doing so, you will be able to focus on serving your country while also saving money and earning entitlements during your deployment, helping to improve your family’s finances.
Here are some actions to take before, during, and after deployment to help ensure your finances remain strong:
Before Deployment
The first thing you’ll want to understand is which financial benefits you qualify for as a deployed servicemember. This assessment will help you guide any extra money you receive in an appropriate direction — whether that’s savings, investments, or daily expenses. Once you know what will be coming in, consider doing the following:
Stash cash in the DOD’s Savings Deposit Program (SDP). The Department of Defense established the SDP specifically to provide servicemembers serving in designated combat zones the opportunity to build their savings. Servicemembers may deposit up to $10,000, and the money earns 10% interest annually.
Take advantage of the opportunity to make additional contributions to your Thrift Savings Plan (TSP) account while in certain combat zones. These contributions will not be pre-tax like your other TSP contributions but they will be tax-deferred, meaning the contributions and their earnings can be withdrawn tax-free as qualified distributions.
Designate someone to assist with your finances. A spouse, parent, or well-trusted friend should know your personal finances to assist with receiving your mail, paying your bills, or taking other actions on your behalf. Provide that person with a list of any necessary account numbers, passwords, and routine payments. Get a special power of attorney (POA) to permit that person to act on your behalf, should they need to follow up on any issues while you’re away.
Contact financial institutions, credit card, and insurance companies. Inform them that you are deploying and provide them with authorization for your designated person to act on your behalf. Check your contact information for all of these organizations to be sure you or someone you trust will be able to monitor your transactions and communications.
Check your credit and consider putting a freeze on your credit during deployment.
Consolidate your accounts. Prior to deployment, close any unnecessary accounts and consolidate your payments to minimize financial transactions. Each open account increases the possibility of identity theft or fraud, which would be particularly difficult to counter while you’re deployed.
Pay recurring bills well in advance if you can, so you don’t need to worry about them while you’re deployed.
Lower the interest rate on your debt. If you have debts that were incurred prior to active duty or activation and the interest rate is greater than 6%, contact the creditor and have the interest rate reduced to 6% under the Servicemembers Civil Relief Act (SCRA).
Deal with your taxes. If you are deployed on April 15, you can defer filing taxes for the previous year until 180 days after you return home — without penalty or interest. However, especially if you are owed a refund, it is probably best to file before you deploy, if you are able. Check with the IRS for the latest information about filing extensions.
Eliminate ongoing expenses that you won’t need or use while you are deployed. For example, most cell phone companies will suspend your contract upon receipt of deployment orders and reinstate it when you return. Some car insurers will change your insurance status and charge you less, especially if your car is not being driven. Ending or suspending any gym or club memberships while you are gone will also help you save on those costs.
Automate payments for any remaining bills and financial transactions. Most credit cards and other bills can be paid automatically from a checking account. Other bills can be paid through your bank’s bill pay service, which enable transactions to be made from any internet connection.
During Deployment
Once you’ve left for your deployment, you’ll want to have a way of tracking any expenses that are continuing back home. Take a checkbook and a listing of accounts and credit cards with you so that if you need to manage finances while deployed, you have the information necessary to do so.
Be sure to monitor your leave and earnings statements so that you know what money is coming in and going out.
Monitor your email communications from your financial institutions, if you can. These organizations will let you know if payments are missed or if there are irregularities.
After Deployment
When your deployment has concluded, follow up by submitting your travel vouchers and ensuring you’ve received your entitlements. You will likely have to play “catch up” on your regular financial activities. File your taxes and continue to pay off any debt as quickly as you can to ensure you’re in a strong financial position.
AAFMAA Can Help
If you have any questions about how a military deployment may affect your finances, contact AAFMAA Member Benefits at 800-522-5221 or [email protected]. We’ll be happy to assist you.
This article was originally published January 19, 2015.