If you’re a member of the military gearing up for a deployment, you’re probably scrambling to tie up loose ends before you head overseas. Part of the process is making sure your finances are in order — a task that leaves a lot of folks feeling overwhelmed.
Luckily, the Nerds are here to help. Take a look at the details below for the five essential money moves you should make to prepare for your deployment:
1. Analyze your budget – and how it will change
You probably already have a budget in place for your civilian income, but you may need to make adjustments for the money you’ll be earning while you’re deployed. In many cases, members of the military see an uptick in pay while they’re serving, so it’s important to decide before you’re away from home how the extra funds will be used.
If you have a family, you should consider allocating some of your excess pay to the homefront. This will help ease the burden that managing additional household tasks will place on your spouse. For instance, if you’re usually in charge of mowing the yard, using some of your hazard pay to hire a lawn care service will go a long way toward making your partner’s life at home a little smoother.
The important thing is to figure out how your income and expenses will change while you’re deployed and put a plan in place. Doing so will mean one less thing to worry about when you’re thousands of miles from home.
2. Make a plan for how every bill will get paid
Our financial lives are complex – there are so many bills to pay. Before you’re out of your usual routine, make a list of every monthly bill you have and make a plan for how it will get paid.
One option is to automate your payments. But if this isn’t possible, create detailed payment instructions for someone else to follow and discuss it while you’re still at home. This person should be someone you really, really trust and have given certain legal power to (see No. 5).
Even if you expect to manage your bills online while you’re gone, writing out payment directions and handing them off to someone you trust is a good idea. This way, if you find yourself without an Internet connection, you won’t have to worry about missing a payment.
3. Start allocating extra to savings
Unfortunately, many members of the military experience a stretch of unemployment when they return home from a deployment. If you find yourself in this situation, it’s helpful to have some extra funds in the bank to tide you over.
One way to make this happen is to start allocating extra to savings before you’re deployed. As you rethink your monthly budget (see No. 1), bump up your savings a bit so that you and your family will be protected if you have a hard time finding work when you get home.
4. Know (and exercise) your rights under the Servicemembers Civil Relief Act
If you’re dealing with debt, it pays to exercise your rights under a piece of legislation known as the Servicemembers Civil Relief Act (SCRA). According to Curtis Sheldon, president and lead planner at C.L. Sheldon and Co., a financial planning agency in Alexandria, Virginia:
“If a reservist is called to Active Duty, contact your creditors and apply for relief under the Servicemembers Civil Relief Act. The act limits the interest charged on debt entered into prior to entering active duty to 6%.”
The provisions of the SCRA can make your payments much more manageable while you’re serving overseas. Reduced interest rates are also a good opportunity to work on paying debts off for good, which will make the financial transition to civilian life easier.
5. Get your legal affairs in order
A deployment means you’ll be away from your safe, regular home life for quite a while. As a result, having your legal affairs in order before you head out will put your mind at ease.
At bare minimum, you should have a will and power of attorney in place. Most people are familiar with wills, but power of attorney is commonly overlooked. This legal document gives someone else the authority to make certain decisions for you for a specified period of time; financial decisions are included here, so choosing someone who will act in your best interest is essential.
If you’re having a hard time with the logistics of getting your legal affairs squared away, reach out to resources available on your base. Help is out there if you know where to look.
Military image via Shutterstock.