Smartest Money Moves at Any Age
From first job to retirement, we tell you how to manage a dozen events that can change your life.
From Kiplinger's Personal Finance magazine, July 2005
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My husband was deployed to Iraq -- twice
When my husband, Houman, was sent to Iraq for the first time in 2003, we were expecting our first child. Now our son is a toddler, and Houman, an Army surgeon, is back in Iraq. Financially at least, the transition is easier the second time around because I already know the drill.
The most important thing we did each time was draft a power of attorney so I could handle Houman's financial and legal affairs while he was away. The document was essential when I closed on our house, cashed checks written to him and signed our tax returns.
Having a power of attorney also helps with smaller tasks, such as paying the bills. Many of our unmarried friends automated their finances as much as possible and gave their parents authority to handle the rest.
Life insurance. Houman already had Servicemembers' Group Life Insurance through work, but we wanted additional coverage that he could keep even after leaving the military -- and we needed a policy that didn't have a war exclusion. We ended up buying a 30-year term policy from USAA, which specializes in insuring members of the armed services.
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Car insurance. If you're single and will be putting your car in storage while you're gone, tell your insurer you're being deployed. It's better to reduce your coverage than to drop the insurance entirely. If you let the policy lapse, you could lose discounts for being a long-term customer or a good driver and have a tough time getting insurance when you return.
Dropping everything but comprehensive coverage, which protects you if your car is stolen or damaged, can cut your costs by as much as 75%. In some states you'll be required to keep liability coverage.
Houman sold his car before he left the first time, and I did not need one in Washington, D.C., where we live. So I switched to a nonowner policy that covered me if I rented or borrowed a car. That lowered our premiums from $1,000 to $130 every six months, and it was easy to resume full coverage later.
One bright spot for active-duty personnel: Your income is tax-exempt while you're serving in a combat zone, and you'll probably be earning additional combat pay. As a federal employee, you can contribute more to the Thrift Savings Plan, the government equivalent of a 401(k); combat pay isn't subject to regular contribution caps. -- Kimberly Lankford