Finance plan is military necessity

Your Money

October 15, 2006|By McClatchy-Tribune

DALLAS -- One of the goals of financial planning is to be prepared as much as possible for the uncertainties of the future.

For most people, that's challenging enough. But for members of the military, the question marks loom larger.

You can be sent to a new posting or ordered into a combat zone at a moment's notice, complicating your ability to manage your finances. With the conflicts in Iraq and Afghanistan, some troop deployments have been longer than expected.

"The relative uncertainty is the key thing that does make it critical to plan," said Joseph Montanaro, a certified financial planner at USAA Financial Planning Services and a lieutenant colonel in the Army Reserve. "In the military, we say, `Let's get our house in order before the order comes.'"

Worse, the career of a soldier, airman, sailor or Marine can end in injury or death.

"You've got to go into a mobilization with that mindset - just in case, how do I take care of my family to the best of my ability in case I don't come back or in case I don't come back whole?" said Jeff Pugh, an Arlington, Texas, police officer and a major in the Army Reserve.

A credit check

Even if you're just considering a military career, it's important to take good care of your finances. Many people see the military as a way to make a fresh start, but that may not be the case if debt is a big problem. The armed forces will run a credit check on you, and too much debt can keep you out.

"We don't want to take in someone who has too many financial problems to begin with," said Lt. Col. Michael J. Stephens, commander of the 344th Air Force Recruiting Squadron in Arlington. "We're inheriting a problem that's not solvable, because they're not going to make enough money."

The military doesn't want recruits distracted by financial problems once they put on the uniform.

"We don't want you to bring significant debt that, once you join the Air Force and become an airman, then you're going to keep spiraling further and further into debt," said Stephens. "When you put on that blue suit and join the Air Force, we want you to be responsible in all aspects of your life."

As a practical matter, financial problems may affect a soldier's security clearance.

"In the military, many people lose their security clearance if they have credit situations," said Al Duarte, executive editor of Military Money magazine. "They're more likely to be desperate for money and perhaps do some things they shouldn't do."

To comply with the rules, Staff Sgt. John Bowerman made sure he patched any financial holes in his record.

"I ran a credit report," said Bowerman, an Air Force recruiter who's in Colonel Stephens' squadron. "I fixed whatever I needed to get fixed."

Get used to making electronic transactions with your bank.

"Direct deposit is mandatory," said David Hollands, a colonel in the Army Reserve and a certified financial planner in Plano, Texas, who specializes in military clients. "Automate bill payments, as you won't have much time to worry about such things."

And if you haven't already done so, open a savings account.

Some advice

"Don't blow all your money on beer," Hollands said.

Families need to have a financial plan well ahead of the time of any deployment.

"Avoid a crisis later by sitting down now with your partner to create a deployment action plan for your finances," said Carl Surran, managing editor of Military Money.

"It all starts with understanding your family's financial situation, including monthly bills, how much debt you owe and how much you have for emergencies."

When he was deployed, Bowerman, a single dad with a 5-year-old son, had money automatically deposited in an account for his sister-in-law, who cared for his son.

"I sent her money for day care, for food," he said.

Pugh, the Arlington police officer who is an Army Reserve major, and his wife, Connie, have two teenage sons.

Communication helped them navigate the uncertainties of military life.

"It was going through the process and making sure we had everything we're supposed to have and making sure we were keeping up with things we were supposed to keep track of," he said.

It's a matter of respect for your partner, Pugh said.

"If something goes wrong, that's not a good way for that spouse to find out that there's another account out there that they didn't know about that they're responsible for," he said. Here are some particulars:

Make sure your bank and credit accounts are joint accounts.

"When the service member is away on a deployment, the spouse - the wife about 93 percent of the time - must maintain control of the household and must have access to the deployed spouse's financial accounts, assets and belongings," Surran said.

Draw up important documents, such as your will, durable power of attorney, medical power of attorney and living will.

Bowerman gave his friend power of attorney over his financial affairs and his sister-in-law medical and legal power of attorney for his son.

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