Deployment brings a unique set of financial challenges that are unique to military families. When your spouse or relative deploys from the Reserve, it may be up to you to manage their finances. There are steps you can take before, during and after deployment to ensure stability.
The information below specifically applies to financial management for a deployed Reservist. These tips can also help military families with anyone deployed on active-duty. FLMFA adds new resources to this site periodically. We plan to have pre- and post- deployment checklist for all active-duty Service Members soon. Sign up for email alerts from FLMFA so you can know when new resources become available.
Pay allotments and account management
Any Military Reservist deployed on Extended Active Duty (EAD) is eligible to use pay allotments. Service Members use pay allotments during deployment to cover bills like rent or mortgage payments and child support. Pay allotments allow the Service Member to take care of financial obligations easily while they focus on the mission. The military deploys your Reservist on EAD then they become eligible for these as well.
If you set up Power of Financial Attorney during a loved one’s deployment, you can make pay allotments on the Reservist’s behalf. Special Power of Attorney also allows you to change existing allotments, as needed. You can also handle most other financial matters that may come up, making decisions on your Reservist’s best interest. They focus on the mission, you handle the finances.
Power of Attorney is usually only necessary for non-spouse relatives. If you are married to the Reservist and you have joint accounts, you may not need it. You should already have the authority to make financial decisions for your family in most cases.
For other relatives it may be helpful to set up a special checking account where you and your Reservist are both authorized users. The Reservist then sets up a pay allotment to go into that account before they deploy. You can use those funds to pay bills and address any other costs that may come up.
SCRA interest rate caps
According to the Servicemembers Civil Relief Act (SCRA), creditors and lenders must limit interest rates during a active-duty deployment. The law caps interest rates at 6% on any credit lines taken out prior to deployment.
- If you have a loan where the interest rate is already lower than 6%, you don’t need to do anything
- Caps on loans backed by the government, such as federal student loans, apply automatically
- However, for things like credit cards and car loans, the Reservist must contact the creditor to apply for the 6% cap
Review all loans and credit lines prior to your loved one’s deployment. Talk to each creditor and lender to make sure caps are in place. The cap applies from the first day of active-duty service and expire at the end of service. In most cases, the creditor will request a copy of the active duty orders to ensure the Reservist qualifies for the cap.
This does not apply to any new loans taken out during deployment. So, if you take out a loan during a spouse’s deployment, this SCRA provision does not apply.
Other SCRA protections you should know
The SCRA should protect the Reservist from any foreclosure, eviction or repossession actions. However, that doesn’t mean notices won’t show up in the mail during your Reservist’s deployment. Make sure to check the mail carefully for notices that you may need to address.
If any notice arrives, move promptly to provide proof of your Reservist’s active-duty deployment. This should stop any further notices or actions. If it doesn’t, contact a military legal assistance attorney. You can find resources for legal assistance through the Resources section of the website.
Addressing unexpected expenses deployment
Unexpected expenses can happen. If one comes up during deployment, you have a few options. First, if you have Power of Attorney, you can set up a pay allotment to cover the new expense.
If not there are no available pay allotments, if the Reservist has an SDP set up, you can stop that allotment to divert it elsewhere. A Reservist qualifies for an Savings Deposit Program (SDP) when they receive Hostile Fire Pay/Imminent Danger Pay (HFP/IDP).
If you can’t use pay allotments to cover an unexpected expense, consider your options carefully. You may be able to ask the company requesting the payment for forbearance until your Reservist returns. This would delay repayment without penalties.
For a spouse spearheading the family finances, if forbearance won’t work, explore cost-minimizing ways to cover the expense. See if you can set up a repayment plan that works for your budget. Consider a low-interest personal loan to cover costs you can’t afford in your budget. Whatever you do, avoid high interest rate solutions, such as credit cards and payday loans.