HOW TO CONTROL YOUR BUDGET WHEN YOUR SPOUSE IS DEPLOYED
Your spouse's deployment doesn't need to throw your finances off track. Understand what you're working with first. Go to MyPay to check your spouse's leave and earnings statement to help you create a budget and stick to it.
DEPLOYMENT ENTITLEMENTS MAY INCLUDE:
- • Family Separation Allowance
- • Combat Zone Tax Exclusion
- • Hostile Fire/Imminent Danger Pays
- • Hardship Duty Location Pay
- Consider saving those extra funds instead of spending them. The Savings Deposit Program is available during combat deployments to help you stay in control of your finances.
HOW TO STAY IN CONTROL OF YOUR FINANCES DURING DEPLOYMENT
- Here are some great ways to keep your bills in check:
- • Discuss the bills before your spouse leaves. Make a list of all your combined bills and when they're due.
- • Don't overspend before the deployment. Make a budget for deployment spending. Don't go overboard with electronics and equipment that you don't need.
- • Always keep some extra money in savings. Make sure you keep some extra savings for emergencies, even if it's just a few dollars from each paycheck. Through Military Saves, ( militarysaves.org) you can find out how to set savings goals, put them in writing and stick to them.
- • Live off your predeployment income. Sometimes extra pay can tempt you to spend more. Instead, try to live off your usual predeployment income and use any extra income to pay down debt or put more into savings
- • Take advantage of extra savings during deployment. Extra deployment pay is a great way to build your savings or invest in your future. Take advantage of these unique savings plans during deployment:
- • Thrift Savings Plan. If you don't already invest regularly in the Thrift Savings Plan ( tsp.gov/index.shtml), start during deployment. You're not likely to miss the money coming out every month and you'll enjoy the benefits later on
- • Roth TSP investments. You can invest your after-tax dollars into your Thrift Savings Plan account too. With Roth contributions, you have already paid taxes on the money, so you can withdraw it tax-free, along with any earnings it has accrued, as long as you meet certain requirements.
- •Check out our article on Roth TSP investments ( military- onesource.mil/military-life-cycle/new-to-the-military/getting-connected/thrift-sav- ings-plan-options-making-your-retirement-dollars-work-for-you) for more information.
- • Savings Deposit Program. At the very high rate of 10 percent interest, the Savings Deposit Program ( dfas.mil/mili- tarymembers/payentitlements/sdp.html) is an excellent way to grow your savings. The program is only available during deployment.
- • Military Star Card. Your Military Star Card offers special lower interest rates during deployment. If you have other credit cards with a very high interest rate, look at the Servicemembers Civil Relief Act ( militaryone- source.mil/family-relationships/relationships/relationship-challenges- and-divorce/servicemembers-civil-relief-act) to get them reduced. Contact the legal assistance office on your installation for more information.
HOMECOMING AND OVERSPENDING
- It's the moment you've been waiting for, so it can be tempting to overspend when you celebrate. Here are some ways to keep your homecoming debt free:
- • During the deployment, set some of your savings aside for a special occasion. Even $50 a month adds up.
- • Visit installation travel office for special postdeployment deals. If you're going to a family resort, be sure to ask whether special rates are available for service members returning from deployment and their families.
- • Shop at your installation exchange and commissary for postdeployment celebrations. The tax break and special sales can save you a bundle. Sticking to a spending plan and saving even small amounts can make a huge difference.
- To learn more, contact free financial counseling ( militaryone- source.mil/confidential-help/interactive-tools-services/financial-counseling) through Military OneSource. OCONUS/International.
GOOD DEBT VERSUS BAD DEBT
Managing debt is a crucial part of your financial responsibilities. Good debt can be used smartly to achieve your financial goals. Bad debt is what you get when you buy things you may not need with money you don't have. Commit to financial freedom by knowing the difference between good debt and bad debt – and how to manage both.
WHAT IS GOOD DEBT?
Good debt is that which translates into an investment with long-term growth potential. You usually take on good debt after careful consideration and with a clear plan for repaying it. Here are a few examples:
- • Buying a house. Mortgage debt is good debt, and buying a home can be a good long-term investment, depending on how its value appreciates. Interest rates on home loans are generally low, and mortgage interest is tax-deductible.
- • Paying for college. A college degree increases your earning potential, so student loans are typically considered to be good debt. Student loans generally have low interest rates and a grace period on repayments until after graduation.
- • Buying a car. This one can be good or bad debt, depending on what type of car you buy. Cars rarely maintain long-term value (it's almost always the opposite), but they can still be a good investment based on your need for a car and the reliability of the one you buy.
WHAT IS BAD DEBT?
Bad debt can pile up when you buy things that quickly lose their value and don't have any long-term growth potential. You risk having to pay back significantly more money than you borrowed in the first place. Even worse, bad debt can negatively affect your credit score, especially if you've maxed out several credit cards or have bills you can't afford to pay. Here are some examples of bad debt:
- • Goods and services. Things that decrease in value or get consumed – like clothing, food, gas or vacations – end up costing you more in the long run because the interest keeps adding up.
- • Credit cards. Interest makes a big difference here, too. If you carry credit card balances instead of paying them off in full each month, you'll pay way more than what the items actually cost. Credit card companies often lure customers in with low or zero interest rates for the first year, then charge a higher-than-average interest rate at the end of the promotional period.
- • Payday loans or cash advance loans. Avoid these loans at all costs. You'll likely pay a fee to get the loan upfront, and the interest rates can be as sky-high as 300 percent.
- • Furniture, appliances and home remodeling. It's tempting to borrow money for these big-ticket items. A better plan is to save for these things and avoid going into debt at all. Knowing the difference here can help you gain control over your finances to build toward a debt-free future. Free financial guidance is available to service members through Military OneSource where you can connect with a counselor to make a plan.
GET SMART FINANCIAL ADVICE : FOR FREE
- Contact Military OneSource to speak with a financial counselor. Call: 800-342-9647
- Overseas? See OCONUS calling options at militaryonesource.mil/international-calling-options
- Prefer to live chat? Start now at livechat.militaryonesourceconnect.org/chat