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Advice For Reservists And Families

March 23,2003

Financial tactics for military personnel

By Chris Winston Business Editor

Jim Moon spends his days helping young soldiers prepare for war. The retired military officer doesn't teach war tactics or complicated flight maneuvers.

Instead, he shares personal finance wisdom with some of the nation's bravest citizens. Moon, program manager for deployment assistance at USAA, said the U.S. military doesn't take a lot of time to explain the financial consequences of leaving your family and loved ones behind and heading off to war.

He said there is no "Business 101 for Deployment." Maybe there should be. Members of the Reserves or National Guard are often called suddenly to active duty. They are sometimes the primary wage-earner in the home. They often leave family and children behind. And too many times, they are not financially prepared for such an absence.

"They are prepared for deployment from professional standpoint," Moon said. "They may not be so prepared from a business or financial standpoint." USAA, a financial services association tailored to suit the needs of military personnel, offers financial advice for members of the Reserves, National Guard or armed services in case of deployment. Moon said USAA has developed different checklists for military personnel, depending on their status, ranging from pre-deployment to re-employment.

Financial planning for military personnel, both active and on standby, is best when it's undertaken early. But sometimes, people wait until the last minute. "A lot of people have their heads in the sand and don't think about it until they have to report in two days," Moon said. In rapid-deployment cases, where personnel are getting ready to report in a matter of days, Moon suggests reservists quickly handle the following chores first:

. Identify someone in your life that you trust and assign them a power of attorney. This allows them to act on your behalf when dealing with banks, insurance companies, creditors, utilities, and other financial institutions. It also helps to have someone making healthcare decisions.

. Set up automatic payment plans for all bills. You don't want important insurance coverage, utilities or credit cards to go unpaid. You may want to look at cutting coverage for one of your automobiles if it's going to be in storage.

. Make sure your landlord, insurance companies, banks, credit card companies and utilities know how to get in touch with your designee.

. Send a copy of the power of attorney with contact information to all of these companies to make sure they understand that a new person can handle your affairs.

Also, if at all possible, let them know how to get in touch with you. Leave a phone number at the military base you will be stationed or an email address you might be able to check. Moon said soldiers in Kuwait recently made several financial decisions via email. But that's going to be tougher with an Iraqi invasion, as most communications devices will be saved for the war effort instead of communicating with the homeland. Notifying your creditors about your situation will also be important for another reason.

The Soliders' and Sailors' Civil Relief Act, first passed in 1918, helps those serving the U.S. military. It suspends many civil legal proceedings -- including bankruptcy, divorce cases and civil suits -- until a service person returns home. It also allows for a temporary 6 percent interest rate on credit cards, auto loans, mortgages, equity lines and other installment loans. This only covers accounts carried jointly, not debt held separately by a spouse. And the lower rate is only good for charges before your call-up, not during active duty.

See a financial professional. Moon said a local financial advisor might be necessary, especially if your family is going to see a cut in income. Looking where expenditures from everyday bills to investments can be cut will be an important step. Noel Swain, a certified financial professional with ProVest Wealth Advisors in Spartanburg, recommends updating insurance policies with correct beneficiary information and attending to your will.

Both will make things easier on your loved ones in a worst-case scenario. "You have to have everything set up," Swain said. "If you're going out there to get in harm's way, you may not come back." Many types of insurance, Swain said, will allow you to quick paying premiums while you're serving, and then pick them back up when you return.

And Swain echoed other financial experts, saying you should those on standby should take care of most financial decisions before they are notified for activation. "Once you get called up, you're in a hurry," he said. After the call-up, those families and loved ones left behind face different challenges, according to financial experts.

If your household income is going to drop drastically during the activation, you're going to need to look at cutting costs. Swain suggested looking at retirement accounts and education savings accounts as costs you can cut on a "temporary" basis. And, of course, Swain said it always helps to have "a little bit of an emergency fund."

Howard Dvorkin of Consolidated Credit Counseling Services Inc. said deployment could mean a hit in the wallet for many families.

"If spending patterns aren't changed, many families who are getting along OK now could find themselves hurting financially," said Dvorkin, president of the 11-year-old not-for-profit organization that assists families through financial hardships.

While family finances are the last things many families want to consider when a loved one is being shipped across the country or to foreign lands, Dvorkin said it's a necessary planning step.

"As emotionally wrenching as leaving loved ones behind is, some practical considerations still need to be faced for the reservists, their families, colleagues and employers," he said.

Dvorkin offered the following advice for families sending loved ones into military duty:

All accounts should be in both spouses' names with "or" between the names so only one name is required to cash or deposit checks.

Savings and checking accounts should be maintained either in the hometown or at each permanent station, so checks can be cashed.

To prevent accounts from being overdrawn, a second checking account could be established in the military spouse's name, so he or she will know how much is available for them to spend.