Leaving your family and friends to deploy is never easy, but it’s a good idea to make the most of it! Deployments bring a variety of financial benefits and opportunities that you can leverage. That said, take time to set some financial goals while you’re away. Develop a plan to pay down debt, increase savings, save for retirement, or purchase big-ticket items. As you plan for the mission, be sure to plan for your finances too.
Brace for Change
Mobilize Your Finances
Know what special and incentive pays to expect by learning about different types of entitlements from the DoD.
Deploying to a combat zone offers numerous tax benefits, review IRS Publication 3 for details.
Determine how your pay and expenses will change and adjust your budget to maximize your money. If you find that you have a surplus income after completing your budget, consider using it to pay off debt, build your emergency fund, or save for retirement.
Some changes in pay could include:
- Hostile Fire/Imminent Danger Pay (HFP/IDP) — If you deploy to an area subject to enemy fire or explosions, you receive the higher of HFP or IDP. IDP is prorated daily, but you will receive no more than $225 per month. The current IDP pay amount can be found by visiting the Military Compensation page and searching for “IDP.”A list of Imminent Danger Pay areas can be found on the DFAS website.
- Family Separation Allowance (FSA) — If you are away from your family for 30 continuous days, you may qualify for FSA, which is $250 per month. FSA starts accruing from the day of departure from your home station and ends the day before arriving back at your home station. For dual-military couples, both may be eligible to receive FSA ($250 each for a total of $500) when they reside together immediately before the qualifying duty starts.
- Hardship Duty Pay (HDP) — You may be eligible for HDP if you are deployed or TDY for more than 30 days to a location where living conditions are substantially below those normally found within the continental United States. After 30 days, you will receive payment retroactively.
- Per Diem — A daily incidental expense (IE) rate of $3.50 is paid when you’re deployed outside the U.S., even if meals are provided. Although this is only a small amount, it can add up. You must file a travel claim to receive this entitlement.
Your installation legal office can help you establish, review or update important legal documents before deployment. These legal documents can include a Will, Power of Attorney, Medical Directive and Trust.
The interest on a Service member’s student loans may be capped or halted and payments may be deferred if they’re deployed to a combat zone. Reach out to your loan servicer to learn more and let them know when the deployment starts and ends.
Activated National Guard members and Reservists may qualify for an income-based reduction if their income decreases as a result of the activation. Again, talk to your loan servicer to understand the specifics of your situation.
Save Smart
Make Good Use of Extra Income
Since pay increases during deployment, it can be a good time to increase your retirement contributions. You can adjust your contributions through MyPay. Learn more about Thrift Savings Plan contribution limits and the associated tax implications.
The DoD’s Savings Deposit Program (SDP) helps Service members build savings while serving in a designated combat zone, Qualified Hazardous Duty Area (QHDA), or a designated direct support area of a combat zone.
You can sign up for SDP after 30 consecutive days in an eligible location. Accounts earn 10% annually (compounded monthly, paid quarterly) on balances up to $10,000. Interest continues to accrue 90 days post-deployment.
There are limitations on withdrawing these funds, so budget wisely to make the most of this savings opportunity.
Take Advantage of Deployments
Protect the Homefront
Secure Your Finances While You’re Gone
Protect yourself from identity theft while you’re away by contacting one of the three national consumer credit reporting agencies (Equifax, Experian, TransUnion) to put an alert in place. This makes it so that extra steps will be required if someone applies for credit in the Service member’s name. The alert lasts for a year.
You can also put a security/credit freeze in place, which restricts access to your credit report and prevents creditors from approving a new account. You must call all three agencies to put a freeze in place.
Review your insurance coverage and make sure it’s appropriate. Every Service member gets $500,000 of term life insurance coverage under the Servicemembers’ Group Life Insurance (SGLI) unless they decline or adjust the coverage.
Consider whether you need additional life insurance coverage. Our Life Insurance Calculator can help you figure it out.
Understand there are consumer protections afforded to Service members. The Servicemembers Civil Relief Act (SCRA) and the Military Lending Act (MLA) are programs that provide certain protections in lending for Service members who are called to active duty.
SCRA protections include: ability to terminate cell phone, cable and internet contracts; termination of residential and auto leases; postponement of foreclosures and evictions; installment contract protection; 6% interest rate cap on debts incurred before active duty; stay of certain civil court proceedings; delay of enforcement related to certain taxes, including personal and real property taxes; and life insurance coverage protections.
MLA limits interest rates on most consumer loans to 36% and prohibits certain requirements set by lenders.
Inform your auto insurer about the deployment and where you plan to store your vehicle. Your rate could go down while you’re gone saving more money to put towards your goals. Be cautious about reducing or canceling any coverage for your vehicle because if something happens you may still be responsible.
Review your beneficiaries on policies and accounts such as SGLI and TSP. Be sure to review your DD Form 93 and any Individual Retirement Accounts (IRA) and commercial life insurance policies, too.
