Military Saves Week: Taking Advantage of the Financial Benefits of Deployment

By Carol Church

As every member of the military knows, being deployed can be stressful, intense, and difficult. However, it also comes with one advantage: increased pay. In some cases, service members may also experience a significant decrease in living expenses.

Extra money from deployment can get service members out of debt, dramatically bump up savings, and create financial security where there was none. However, handled imprudently, extra earnings from deployment can also set up a financial house of cards or disappear into unwise purchases. Here are some tips to help service members max out the financial advantages of deployment while also staying financially on track.

First, decrease expenses as much as possible:

–Cancel, suspend, or reduce car insurance on any vehicles (including motorcycles) that will not be used during a deployment. You will need to consider storage options; if the car will be exposed to the elements, there are special policies you can switch to that cover weather damage only (available through USAA).

— Cancel or suspend cell phone service, cable TV, and home phone (if applicable). Under the terms of the SCRA, service members who are deploying must be given a penalty-free exit from contracts like these. Of course, if you have a family at home using these, this may not apply!

–Reduce the interest on your mortgage and any outstanding credit card loans to 6% under the SCRA. Typically, the credit card debt must have been incurred or the mortgage initiated before entering service for this to work. Also, be aware that this does not happen automatically-you must file paperwork. To learn more, visit SCRA Questions and Answers.

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Second, put that money away:

–Save in SDP

One of the most amazing benefits available to deployed service members is the Savings Deposit Program. Service members deployed to eligible designated combat zones can put up to $10,000 per deployment in this account, tax-free, and it will earn 10% interest annually as long as you are in the combat zone. Funds will be returned to the service member after he or she returns (or before in cases of emergency). This is an incredible rate of return that no one should pass by.

–Save in the TSP or Roth IRA

When the new blended retirement system comes online, many service members will already be automatically contributing to and getting matched funds for TSP. However, it will still be possible for most to increase the percentage they contribute during this time period. Be aware that there is an annual limit for both TSP and Roth IRAs.

Third, don’t overspend:

A common but very dangerous error is to readjust the family discretionary spending upwards around the temporary additional pay, or to do something like building an addition, buying a brand-new truck, etc. The USAA recommends that service members put away a full two-thirds of their additional deployment pay, and strongly cautions service members against incorporating past earned deployment pay into new budgets when they return.

Deployment can be a difficult time for service members and their families, but it does come with the benefit of increased income. With care and forethought, service members should be able to make progress towards their financial goals during this time.

The Last Transition…or Not

 

Reflections on Todd & Peggy Podcast #3
By Karen Shirer, Associate Dean

 The audio recording below is the third part of a conversation with Todd, a lieutenant commander in the United States Navy Nurse Corps, and his wife Peggy, an elementary school teacher. Peggy and Todd generously shared some of their experiences as a military family, to help those of us serving military families have a better understanding of what they go through. Below the recording you’ll find a blog post reflecting on this part of Todd and Peggy’s story. This is part 3 – The Last Transition…or Not

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 Listen to Todd & Peggy Podcast #2
Listen to Todd & Peggy Podcast #1

The Last Transition … or Not

“When one parent in a family serves in the military, the whole family serves. Military life requires great commitment and sacrifice not only for the service member but also the spouse, children and other family members.”

The above thought occurred to me as I listened to podcast #3 where Todd and Peggy reflect back on their experiences as a couple and a family with children as he pursued his military career. Military service with its deployments, weekend trainings and other demands impact the whole family and not just the service member.

In this podcast, Todd and Peggy discuss their next transition – retirement from the military. Their experience shows how important it is for couples to discuss not only the timing of this transition but also what it means for their relationship and their family.

As a couple, Todd and Peggy agreed that he will retire from the military either in 5 years or if he is deployed again. They decided that as a family they did not want to go through the experience of another deployment.  However, both Todd and Peggy recognized that after retirement, the military will remain an important part of their everyday lives.

Military service itself is not so difficult – military members train for it – but separation from family can be very difficult. It takes a toll on the children who tend to become more connected with the stay-at-home parent. Peggy talks about being a single parent during deployments and Todd described feeling that his relationship with his children at times was not as “tight” as Peggy’s.

Long deployments also can negatively impact a couple’s marriage. Todd notes that many marriages do not survive the separations of military service. Couples not only need to spend time preparing for the financial aspects of deployment but also for the relational and emotional aspects.  Todd believes that the military could do more to prepare service members for these latter challenges.

Todd and Peggy were the fortunate ones; the podcast interview shows that they weathered those difficult transitions and developed an even stronger marriage. However, significant numbers of military marriages do not survive.

When asked to give one word to describe his military service, Todd said “service” to country and that he dedicated his life to the military. Peggy responded with the word “pride,” saying that she was proud of everything Todd has done. Despite the hardships, both Todd and Peggy were proud of his accomplishments and felt that the sacrifice was more than worth it.

In your work with military members and their families, consider how you might help young service members who are just marrying and beginning their families to prepare for the impacts of military service. What steps can they take now to ensure that they are like Todd and Peggy as they approach retirement with pride and meaning?

Karen Shirer is a member of the Military Families Learning Network Family Transitions Team and the Associate Dean with the University of Minnesota, Extension Center for Family Development. Karen is also the parent of two adult daughters, a grandmother, a spouse, and a cancer survivor.