Military
Call-Up Requires A Financial Plan
Activated reservists must adjust family budget for income cut
Friday, February 21, 2003
Marian Accardi
The Huntsville Times
Federal law protects the jobs of reservists and National Guardsmen while they're away from home in military service. But families shifting from a civilian to military salary may have less income to cover their bills.
"It'll be hard, but it won't be impossible (to survive financially) if people budget properly," said Howard Dvorkin, founder and president of Consolidated Credit Counseling Services, a nonprofit financial counseling agency. "You need to budget and make sure you're living on what they're "If families don't plan in advance and have savings or resources to get them through the next few months, it's going to be tough." Howard Dvorkin, financial counselor going to give you and, if you can't, make drastic changes." The problem is, if the main breadwinner of a family is activated and the family, used to a certain lifestyle, finds its income cut in half or more, Dvorkin said, "that can throw people into a financial tornado.
"If families don't plan in advance and have savings or resources to get them through the next few months, it's going to be tough."
Dvorkin suggested that if a reservist has any chance of being called, "start living on the (military) salary you're going to make now. Don't wait. Most reservists don't think they'll ever be called, then they get plucked out of their life, and their careers are put on hold."
The Plantation, Fla.-based counseling service is already getting lots of frantic calls from reservists about to leave for military service or the families of those who have already left.
Dvorkin said reservist families should consider setting up electronic fund transfer between accounts and automatic bill payment - even if the spouse who's staying at home generally handles those matters.
Reservists should be familiar with the provisions of the federal Soldiers' and Sailors' Civil Relief Act, which allows active duty military and reservists and National Guardsmen in active service to suspend or postpone some civil obligations.
One provision puts a cap of 6 percent on interest rates for credit cards, mortgages and even some student loans (except for Activated reservists must adjust family budget for income cut Call-up Continued from page C1 federal guaranteed student loans). Dvorkin said the reservist must send creditors a letter requesting the cap and include a copy of his or her military orders.
"There are some pretty good benefits for people," said Dvorkin. "Unfortunately people don't know what they are."
Some credit card companies even make concessions of their own, said Ronda Williams, the manager of the Consumer Credit Counseling Service of the Tennessee River Valley. "Some companies have plans with zero percent interest," for active duty reservists and Guardsmen, she said. "If someone has credit card debt, they should contact each creditor and ask what kind of program they have." Before Guardsmen or reservists are deployed, there are other matters that need to be taken care of. The family should consider assigning power of attorney so the person they're leaving behind can conduct business on that person's behalf, said Shari Moxley Burnum, a certified financial planner with Raymond James Financial Services in Madison.
She also recommended organizing financial and legal documents - lists of all insurance policies and information on credit cards and brokerage and bank accounts, a will, a power of attorney and health care directives.
