This was originally published on Monday, May 25, 2015, in the Pacific Daily News. Click here to subscribe to the PDN.
Q: I am a reservist and I may be deploying soon. I have deployed before but found that it is very difficult to keep our family finances in order. Do you have any tips that could help us stay financially healthy during my deployment and maybe even save a little?
A: Thank you for your service to our country. I will say that I am not extremely familiar with military pay, so I asked a friend to assist me.
Our military members and their families constantly face many challenges. Some of these challenges could potentially place them in financial hardship. Service members move every two to three years. Spouses usually leave jobs creating less income, and of course, in defense of our nation, our military members have to deploy.
Leaving family and friends behind to defend our country in places far away in areas that may be in harm’s way is emotionally and physically stressful. Finances can become a huge stress factor. Because the service member is away, routine bills may not get paid on time. Families may have to find the balance between the deployed service member’s needs and the needs of those left behind. In the case of our reservist it could mean a loss of pay while deployed.
In certain situations, due to some special compensation, military members can actually save more money. Depending on how long and where they are deployed they could be eligible for certain special compensation.
Service members could be eligible for Family Separation Pay if they are deployed beyond a certain amount of time. In areas that are deemed unsafe they can receive Hostile Fire or Imminent Danger Pay and Hardship Duty Location Pay. Some areas can also be considered Combat Zone Tax Exclusion, which means the pay they earn while deployed is not taxed. Special compensation most of the time can be enough to increase income significantly.
Have a financial goal(s) you want to achieve while deployed. Before you start setting goals sit down with your Command Financial Specialist or administrative personnel to get a better understanding of the pay for which you are eligible. Get a rough estimate of how much you will be earning. It is good to know if you are being under- or overpaid. If you are being overpaid, put that extra money aside — you will have to pay back that extra money. Once you have an idea include any other income that you and your family will be receiving, sit down and start a budget together. Remember, this is a rough budget. Once you get your first full deployment paycheck you may need to tweak your budget. Review your Leave Earning Statement (LES) monthly to ensure your pay is correct on the MyPay website, https://mypay.dfas.mil. Your spouse can also log on if you create a spouse login.
Do you want to save for a family vacation, get out of debt or start an emergency fund? Make your goal realistic and get the whole family involved. Next lay out your plan. How much will you save every pay period? Are you opening a new account or using an existing one? Will you transfer the funds manually or through an allotment? The money should be saved in a way that it is out of sight and out and mind to resist temptation. Find a way to share your progress with each other while deployed. You can email each other, use shareable online documents, or even use budgeting software that has online access.
Here are a few quick tips to help you stay on budget:
• Live off your pre-deployment income — just because you are making more does not mean you need to spend more.
• Use your retirement plan to its fullest during deployments. You can adjust your percentage rate on your Thrift Savings Plan (TSP) at any time.
• Look into the Saving Deposit Program, http://www.dfas.mil/militarymembers/payentitlements/sdp.html
• Use the Servicemembers Civil Relief Act to help lower credit card payments, contact your nearest legal office or go to http://www.militaryonesource.mil/pfm?content_id=267394
Best of luck to you and your family and may you return home safely. Thank you to those men and women who serve to keep the many freedoms we enjoy today. On this Memorial Day, we remember those who paid the ultimate sacrifice. You will never be forgotten.
Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at email@example.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com.