Preparing for Life Events

Reservists called up face financial pinch

By Associate Press

March 4, 2003 NASHVILLE

The call to active duty puts a financial strain on many Army Reservists and their families, who often are left to manage the household budget with a reduced income.

Thompson's Station resident Chuck Horvath and his wife, Lisa, a homemaker, face a 50 percent decline in income - the difference between his military pay and what he earns on his civilian job as the information technology director at Universal Music Group in Nashville.

"It's a huge adjustment," said Horvath, who is waiting to see whether his employer will pay him his full salary, the difference between what he is paid and his military pay, or nothing at all. "We're trying to establish some type of budget for my wife to live off over the next possible year." So far, about 3,300 reservists and National Guard members in Tennessee have been called to active duty for a possible war with Iraq.

Nationwide, more than 168,000 of a planned 265,000 reserve group have been activated.

Members of the National Guard and Reserves are paid for training and other requirements they fulfill, but the bulk of their income comes from civilian jobs.

Employers are not required to pay employees while they are away on active duty, though many do.

"Most of the reservists, quite frankly, never thought they were going to get called," said Howard Dvorkin, president of Consolidated Credit Counseling Services, a Florida-based nonprofit organization. "It's a sacrifice for the families and even in their careers."

Gov. Phil Bredesen recently said the state would continue to pay its employees called to duty, as have companies like Kroger, Nissan, Dell Computer, Bridgestone, BellSouth, Saturn Corp. and HCA Inc. Dvorkin views those who offer to pay as exceptions.

"In a down economy, everybody's watching the nickel," he said. "Let's face it, you've got to pay somebody to do that job." The Uniformed Services Employment and Re-employment Rights Act of 1994 assures soldiers a similar-paying job upon return from active duty.

Families that face a military call-up need to take extra care to make sure they don't wind up in debt.

Currently, 176,553 of the nation's reservists are now on active duty, but if war with Iraq is declared, the Pentagon plans to activate as many as 265,000 of America's so-called weekend warriors. Families across the country must prepare.

Once the reservist is on active duty, they receive roughly the same pay and benefits as active members of the armed forces. For many Americans that means a hit to their wallet. There can be a big difference between civilian and military pay. If spending patterns aren't changed, many families who are getting along okay now could find themselves hurting financially.

For families with a high-earning executive, the loss of income could force a spouse back to work. There are many families that can be defined as `house poor' - living beyond their means. If someone who could be earning a six-figure income gets called up, the situation could force more drastic changes in spending.

Someone who is overextended will have some very real and tough decisions to make. All members of the National Guard and the Reserves are volunteers. They are typically activated to cope with disasters, riots and other emergencies and to replace active troops reassigned to combat. Many reservists probably join never expecting to fight, but they know they can be mobilized at any time.

As emotionally wrenching as leaving loved ones behind is, some practical considerations still need to be faced: Being fiscally equipped is a big part of overall Family Readiness. There are unexpected exercises, schools, training, and other temporary assignments that may not only change your military pay, but may interfere with your civilian employment pay. Being mobilized can also present unique financial challenges.