Setting up a spending plan is one of the smartest things you can do prior to a deployment or any time. A spending plan allows you to see where your money is going and to make adjustments as needed to meet your financial goals. If you have a spouse or partner, it is a idea good to do a plan together so both understand and agree to how finances will be handled during the deployment.
A spending plan, or budget, can be as simple as documenting income and expenses or much more elaborate. When setting up or updating your spending plan prior to deployment look at possible changes to income:
- Will there be any additional income for family separation allowance, combat duty pay, sea pay, etc.?
- Is there a chance for a promotion during deployment?
- Will a reenlistment bonus be received during deployment?
- Will you lose income due to loss of a second job or your spouse not working or gain income because your spouse moves in with family during deployment?
- Will some pay be tax exempt?
Before deployment ensure:
- Pay distribution is set up appropriately. Are direct deposits, any allotments or automatic check drafts established?
- How will ongoing bills be paid, and by whom?
- If in a relationship, are you using joint or separate checking accounts? If joint, have you discussed how you will manage the account?
- Do you have overdraft protection for your checking accounts — just in case?
- Are you prepared for recurring, but not monthly expenses, such as tuition payments, car and home insurance?
- What are the expectations for using credit during deployment?
- Do you have money saved in case of financial emergency? A pre-authorization form with Navy-Marine Corps Relief Society can be signed before deployment if savings are minimal.
- Who is/are authorized users of the Defense Finance and Accounting System My Pay account?
- Will you be deployed during tax season? If you file jointly you’ll need to get a Special Power of Attorney for filing taxes or depositing a refund.
- Do you need an extension of the filing deadline?
- Do you need to file state income tax returns?
Contact the Internal Revenue Service for more information
Many find deployments provide a good opportunity to save money. What are your financial goals? Are you saving for emergencies, a new car, a house, a vacation? Are you enrolled in the Thrift Savings Plan? If you have credit card balances are you working to pay them off?
Servicemembers’ Civil Relief Act
The Service Members’ Civil Relief Act (SCRA) is a law that protects service members on active duty. Major provisions include:
- Termination of Residential Leases. Allows individuals to break a lease when they go onto active duty, if the lease was entered into before going onto active duty. Additionally, the act allows a service member to terminate a residential lease entered into while in the military, if the member receives permanent change of station (PCS) orders, or orders to deploy for a period of not less than 90 days.
- Automobile Leases. If a member enters into an automobile lease before going on active duty, the member may request termination of the lease when he/she goes onto active duty. However, for this to apply, the active duty must be for at least 180 continuous days. Military members making a permanent change of station (PCS) move, or who deploy for 180 days or longer may terminate such leases.
- Evictions from Leased Housing. Service members may seek protection from eviction under SCRA. The rented/leased property must be occupied by the service member or his/her dependents and the rent cannot exceed a certain amount that is adjusted each year. The service member or dependent who has received notice of an eviction must submit a request to the court for protection under the SCRA. If the court finds that the service member’s military duties have materially affected his ability to pay his rent timely, the judge may order a stay, postponement, of the eviction proceeding for up to three months or make any other “just” order.
- Installment Contracts. The SCRA gives certain protections against repossessions for installment contracts. If the contract was entered into before going on active duty and at least one payment was made before that time, the creditor cannot repossess the property, while the member is on active duty, nor can they terminate the contract for breach, without a court order.
- 6% Interest Rate. If a service member’s military obligation has affected his/her ability to pay on financial obligations such as credit cards, loans, mortgages, etc., the service member can have his/her interest rate capped at 6% for the duration of the service member’s military obligation. Qualifying debts are debts that were incurred by the service member, or the service member and their spouse, jointly, before coming on active duty. Debts entered into after going on active duty are not so protected.
- Court Proceedings. If a service member is a defendant in a civil court proceeding, the court may grant a 90-day delay in the proceedings. The provision applies to civil lawsuits, suits for paternity, child custody suits, and bankruptcy debtor/creditor meetings, and administrative proceedings.
- Enforcement of Obligations, Liabilities, Taxes. A service member or dependent may, at any time during his/her military service, or within 6 months thereafter, apply to a court for relief of any obligation or liability incurred by the service member or dependent prior to active duty or in respect to any tax or assessment whether falling during or prior to the service member’s active military service. The court may grant stays of enforcement during which time no fine or penalty can accrue.
Additionally, the act prevents service members from a form of double taxation that can occur when they have a spouse who works and is taxed in a state other than the state in which they maintain their permanent legal residence. The law prevents states from using the income earned by a service member in determining the spouse’s tax rate when they do not maintain their permanent legal residence in that state.