When you return from deployment, catching up with family and friends, seeing firsthand how your kids have grown, enjoying some home cooking and sleeping in your own bed again are among the highlights. There’s no doubt that resetting and reenergizing is important to your state of mind. But it’s just as important to the state of your finances. Don’t worry: This guide can help you adjust to the new fiscal realities of being home while preparing yourself for a secure financial future.
REVIEW YOUR BUDGET
When you’re deployed, it’s easy to get used to all the specialty pays and tax benefits that provided extra income. Hopefully, you used most of that money to build up savings or pay down debt while maintaining spending at pre-deployment levels. Perhaps you didn’t save. Either way, these tips can help.
Did You Save?
If you saved, you should be in a position to withstand the reduced pay you will receive. Even so, you should review your debt to see what obligations you can pay off in full. Depending on your cash flow needs, pay down either the debt with the highest interest rate (so you’ll pay the least interest), or the debt with the highest monthly payment (giving you extra money each month). Then check your savings allocations to see if you have a solid emergency fund. If you do, divert some of that money over to a longer-term savings option, such as the Thrift Savings Plan.
Did you spend?
If you weren’t able to save while you were deployed, you may find yourself struggling to pay your bills without the extra funds you came to expect. To get a handle on your finances, first review all of the things you spend money on. Then, develop a spending and savings plan to organize your debt. This will help you get a grasp of where you stand today, and how to best get yourself into a better financial position tomorrow. It may include consolidating debt, reducing discretionary spending and even getting rid of unnecessary services (such as cable or satellite TV). Remember, a few sacrifices now can pay huge dividends later.
Note: If you’re married, make sure to do this step as a couple. It will help not only your finances, but also your relationship as you get back into “normal” life and resume working as a two-person, husband-and-wife team who share the same goals.
Savings Deposit Program (SDP)
If you took advantage of this program, remember that withdrawals can begin once you return home from the designated combat zone or to your permanent duty station, but interest will stop accruing 90 days after you've been home. It’s best to wait until that 90-day window is nearly over before withdrawing the money so you can maximize your accrued interest.
Power of Attorney
If you set up a Power of Attorney of any kind, check the effective dates of these documents, including when (or even if) they end. Make any necessary changes to reflect the fact you are home if there is still a need for you to keep the documents in force. If you don't have a need, be sure the documents are properly terminated, which may require legal assistance (offered for free on almost all military installations).
Service members Civil Relief Act (SCRA)
If you are a member of the National Guard or reserves and were called to active duty, you may have used the SCRA to reduce interest to six percent on credit cards and/or loans opened prior to being called to active service. Once you return home, those reductions in rates will end, so be prepared for that — along with the increases in the monthly bills they will bring.
Prepare for the next time
Deployments are part of military life, and just because this one ended doesn’t mean another one isn’t on the horizon. Take a look at what worked this time with your finances, what didn’t, and make changes where necessary. Whether you need to save a bit more or pay down some debt before leaving, make a note of it and keep it somewhere safe where you’ll remember it. A little thought up front will make the next deployment much easier on your finances.
Meet with a financial advisor
Many military installations and even a few financial services companies offer some sort of free financial advice to military families. Use your homecoming as an opportunity to sit down and reassess where you are financially and where you want to be in the future.
Do something nice
Although going on a reckless spending spree is not recommended, go ahead and take a look at your family budget to see if there is any money to do a little something special. A trip to see family, or even just a night out for you and your spouse at a nice restaurant may be in order. This may seem like strange financial advice, but as important as it is to save, it’s equally important to enjoy yourself now and then. And you can’t do that if you feel as though you’re so constrained financially that you can’t have fun. In fact, that approach may cause you to resent money, budgeting and planning.
Instead, strike a balance between having fun and overdoing it. Remember, emotions can run high during this time. Unfortunately, many families go overboard trying to make up for lost time, only to realize they’ve buried themselves in debt. The key is to compromise, stick with the budget and just enjoy being home.