A significant difficulty facing many families during deployment is often a disruption in communications. This can be especially true when it comes to personal finance. Maintaining a family financial plan can be challenging when everyone is together. However, when you add in the reduced communication and change in household dynamic that often goes hand-in-hand with deployment, the impact on your finances can be catastrophic.
When carrying out our nation's work overseas, it may be difficult or impossible to access telephone, internet, and even mail services. Without these simple communication tools, paying bills, and maintaining financial accounts can become a daunting task.
The good news is that planning can help safeguard your finances during a deployment and ensure a smoother transition when you return home. Here are five financial steps to take before your deployment begins:
Revise Your Monthly Spending Plan
Change is inevitable during a deployment, and your monthly budget is no exception. While extra pay and allowances may temporarily increase your income during deployment, many families also see an increase in expenses. When both parties work and share household duties, childcare and everyday home maintenance expenses are likely to increase.
On the other hand, there may be a decrease in the consumption of food, utilities, entertainment, and more. All of these things can affect your regular monthly budget. Prepare for these potential changes by asking four important questions:
- Is my income going up or down?
- Are my expenses going up or down?
- How long is my deployment?
- Have I created a plan to deal with these changes?
The more solid (and accurate) your spending plan, the more likely you are to manage your finances successfully during a deployment.
Take Advantage of Special Protections and Benefits
The Servicemembers Civil Relief Act (SCRA) is designed to lighten financial obligations and protect service members on active duty. You have a right to fair commerce while you're away.
In addition to protection from things like high-interest rates and aggressive collection practices, many service members enjoy exclusive discounts and perks during deployment. For example, you may be able to pause a cell phone contract, adjust a residential lease, and stop certain insurance premiums. Take time to review your rights under the SCRA, specifically around interest rate caps, non-judicial foreclosure, lease terminations, and protections against default judgments, and ask the companies you do business with about any special deployment programs they may offer.
"Contact cable, streaming, internet, cell phone, gym, and other service providers to pause or cancel services that will go unused," said Amy Lins, the senior director of learning and development at Money Management International. "You can also talk to your insurance agent about reducing coverage, such as collision and liability, on vehicles that will remain in storage during deployment."
Take Steps to Protect Your Credit
It's essential to maintain your good credit rating during a deployment, but it can be challenging to stay on top of payments and due dates while you're away. Work with your bank or credit union to set up automatic payments for regular bills such as your rent or mortgage, car payment, and utilities, to ensure they're made on time each month.
You can also minimize the risk of identity theft and fraud by placing an active duty alert on your credit reports. Active duty alerts add protection and remove you from marketing lists for pre-screened credit card offers, making it more difficult for someone to fraudulently open accounts in your name. Alerts last for one year and can be renewed if your deployment lasts longer, and while an alert must be added to all three credit bureaus, once you contact one bureau, they will notify the other two for you.
Prepare or Update Important Documents
The knowledge that your financial affairs and family are taken care of while you're away can help ease the emotional burden of deployment. Now is the time to update or prepare important legal documents to help you plan for any eventuality. Make sure a trusted individual has important passwords; update your power of attorney, medical instructions, and will; and be sure all information for designated beneficiaries is up to date.
Finally, share important details about your plans, and the whereabouts of updated documents, with a trusted relative or advisor who can help oversee things during your deployment.
Maximize Your Savings Potential
Taking advantage of deployment savings tools like the Savings Deposit Program (SDP) and the Thrift Savings Plan (TSP) can help maximize your savings potential during a deployment. The SDP is specifically designed to help service members build savings during a deployment. You can deposit up to $10,000 each time you're deployed, and earn up to 10% in interest annually. And because deposits can be made by cash, check, or through allotment, the SDP can be an easy and effective strategy to boost your savings during a deployment.
Contributing to your retirement is always a good idea, regardless of your status, but investing in your Roth TSP while in a combat zone offers unprecedented tax advantages - income earned while in a combat zone is excluded for income tax purposes, meaning you never pay taxes on it. Deployment is the only circumstance where you'll have the chance to save for your retirement completely tax-free, so maximizing your Roth TSP contributions is another great way to increase your savings and build future wealth. Consult a tax and investment advisor to make a plan for your retirement.
These five steps should help guide your financial decision making as you and your loved ones prepare for a deployment, but you should also remember to actively engage your chain of command with any financial questions you may have. Today's military offers many financial resources. Utilizing available benefits and taking action to build a sound financial plan can help ensure financial success for you and your family, particularly during a deployment.
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