When you think about deployment, financial opportunities may be the last thing on your mind. But ignoring money matters at this busy time could be a costly mistake. Start with the fact that your paychecks grow when you receive tax-free income in a combat zone, and you have access to extra savings programs that help you stretch your money even further. It’s also important to protect your money from identity thieves while you’re gone and to be ready for unexpected bills you can’t control. The better you prepare, the better you’ll be able to protect your family and your finances.
Lt. Col. Greg Nowak, 39, is a security forces officer and squadron commander in his 17th year in the Air Force. He’s usually stationed at the U.S. Southern Command in Miami, but has been deployed to Saudi Arabia and Iraq, and is currently in Southwest Asia. He and his wife, Amy, have plenty of experience preparing for deployment. You can learn from the steps they took to prepare their family finances.
Before he left for his latest deployment, Nowak had the base legal affairs office draw up a power of attorney that gives Amy authority to handle his finances while he’s gone. This is one of the most important legal documents to execute because you never know what financial issues will crop up while you’re away. You can grant a general power of attorney, which gives your representative broad powers over financial transactions. Or you can use a power of attorney for specific transactions, such as buying a house or car while you’re deployed. Since this document hands off control of your finances, be very careful about who you name. A power of attorney document generally has a time limit, so make sure yours is still up to date if you’re about to be deployed again.
The Nowaks also updated their wills, which, Greg admits, “was long overdue since the birth of our youngest child.” With three daughters, ages 2 to 7, having a will and naming guardians for the children is a must. “While we were at it, we updated all of our beneficiary information on our life insurance, Thrift Savings Plan and IRAs.” Such designations legally supersede a will. So, even if a will directs all of your property to a spouse, if a parent is named as the beneficiary on an IRA, the money goes to the parent. (See http://legalassistance.law.af.mil to find a legal assistance office near you.)
“In preparation for this deployment, we did a number of things to maximize our saving,” says Nowak. “For starters, we garaged my vehicle to save on insurance costs.” You can lower premiums by about 75% while deployed by eliminating liability and collision coverage on the stored car, says June Walbert of USAA, Nowak’s insurance company. You’ll want to keep comprehensive coverage, which will pay if your car is damaged or stolen. Liability and collision coverage can be restored without a rate hike when Nowak is home for a 15-day R&R. Ask your insurance company about specific rules or other potential breaks in your state.
Nowak also suspended his cell-phone service. The Servicemembers Civil Relief Act requires cellphone companies to let you terminate your contract, without penalty, if you receive militarorders to relocate for more than 90 days to an area that is not supported by the contract. (Go to www.servicemembers.gov for more information about the SCRA.)
The Nowaks also came up with a nifty bill-paying strategy. Amy took over the family finances fully (they usually share responsibility) before Greg left, so they could talk about any issues that came up face to face. “Although we’ve had to discuss some things, mostly over e-mail, it’s generally been pretty smooth,” he says.
If you don’t have a spouse or family member at home to pay your bills, make things as easy as possible by signing up to have bills paid automatically from your checking account or to pay them online. Find out how to access your bank or credit-union account and credit-card records, so you can catch any errors or suspicious activity.
It’s also a good idea to put together a “brain book”—a compilation of key information that might be needed in your abonly give it to a very trusted family member or friend. For help getting your information together, see the “Organize Yourself” worksheet on this website.
And be sure to notify your bank, credit union, credit-card companies and other financial institutions about your deployment. Fraud departments have become proactive about presence, recommends Patrick Beagle, a former Marine helicopter pilot and now a financial planner. Inventory your financial accounts and how to access them. Include a copy of your will, power of attorney, medical directive and a letter of instruction should anything happen to you. Since this book has such sensitive financial information, venting theft by spotting and denying unusual charges. It’s better to give them a heads up about your deployment rather than run the risk that your account could be frozen temporarily if the card issuer is unable to reach you with questions about charges from an unexpected location.
It’s always important to have an emergency fund so unexpected expenses don’t drive your family into debt. But it’s particularly crucial if you are about to deploy. Try to build up enough cash in an accessible account to cover at least six months’ worth of expenses. Also think about extra costs your family may have while you’re gone. “Try to set aside some extra money to help out the spouse left at home with things such as yardwork and cleaning, or a babysitter to give the spouse a break from parenting,” says Nowak. “My family doesn’t live in a traditional military community with all of the typical support systems in place, so we budgeted some money for all of those things. It doesn’t make being a single parent easy, but it does help.”
More financial tips for military servicemembers and their families is available by downloading the Financial Field Manual: The Personal Finance Guide for Military Families .