Financial Field Manual: A Personal Finance Guide for Military Families

20 Pages·2016·7.58 MB·English

p r es e n ts
THE
FINANCIAL
FIELD MANUAL
A Personal Finance Guide for Military Families
INCLUDES NEW 2018 RETIREMENT PLAN RULES!
s p o n so r e d by
Help for U.S. Military Personnel
and Their Families
embers of the military face fnancial chal- of the guide for military families would not be possible
lenges most people don’t experience. They without their generous support.
M have to move frequently—sometimes on
Kimberly Lankford, the author of the guide, has years
short notice—and may have to deploy to combat zones
of frst-hand experience with these issues. A longtime
for months or years.
columnist for Kiplinger’s Personal Finance magazine, she is
But they also have access to valuable benefts and also a military spouse. Her husband recently retired after
investing options not available to the general public, serving as an Army doctor for 21 years during which he
including special tax breaks, low-cost investments, was deployed three times to Afghanistan and Iraq.
legal protections, educational opportunities, insurance
Many of the strategies, resources and benefts discussed
programs and other resources. Learning how to make
in this guide have helped Kimberly’s family over the
the most of these opportunities can help secure your
years. Our goal is that they can help bolster your family’s
family’s fnancial future.
fnancial security, too.
To help make sure that military families make the
Thank you for all you do in the service of our nation.
most of these opportunities, we are pleased to present
the third edition of Kiplinger’s Financial Field Manual,
our popular personal fnance guide for the men and
women who serve our nation. In addition to compre-
hensive information and advice on critical issues, this
edition explores valuable new benefts. The military
retirement system will change signifcantly in 2018,
and many servicemembers will have to choose wheth-
er to remain in the current system or opt for the new
program. KNIGhT A. KIPLINGER DoN M. BLANDIN
In these pages, you will fnd practical, easy-to-under- Editor in Chief, Kiplinger’s President and CEO of the Investor Protection
Personal Finance and Kiplinger.com Trust and the Investor Protection Institute
stand information to help you make decisions about
the new retirement plan, make the most of other new
Find more information to help you manage
savings opportunities, prepare fnancially for de-
your personal fnances at Kiplinger.com and at
ployment, take advantage of special benefts and tax
InvestorProtection.org and iInvest.org.
breaks, protect yourself from scams that target service-
members, and get ready for a smooth transition to
civilian life when you leave the military. IN ThIS ISSUE
Kiplinger has been helping consumers for many 1 Investing in Your Future
years. When Kiplinger Magazine (now called Kiplinger’s
Personal Finance) launched in 1947, a driving 5 Your Military Benefts
motivation was to provide sound, unbiased personal 8 Before and After Deployment
fnance advice to military personnel returning to the
11 Buying and Selling a home
workforce after World War II.
13 Financial Fraud Watch
The Investor Protection Trust and the Investor Pro-
tection Institute are similarly committed to helping 15 Leaving the Military
military personnel. These nonproft organizations are 17 Financial Resources
devoted to innovative investor education and proudly
support several programs to help members of the mil- Copyright © 2016 by The Kiplinger Washington Editors, Inc. All rights reserved.
Published by The Kiplinger Washington Editors
itary make smart fnancial decisions. This new edition 1100 13th Street, NW, Ste. 750 | Washington, DC 20005 | 202-887-6400.
Investing in Your Future
MaKe the MoSt of Special SaviNgS plaNS aNd NeW RuleS
ts’ easy to focus only on dayt- od- ay
issues hw en your’ e in the military
I
and miss out on av lualb e eb net� s
that can imrp oev your n� ancial
situation oev r the lon g run .
tu B sr e b m e m e c i v r e s e v a h ss e c c a ot la i c e p s sg n i v a s
se i t i n u t r o p p o ta h t t ’ ne el b a lr ai a v a ot t s o m , e l p o e p os s ’ t i
tn a t r o p m i ot e k a t eg a t n a v d a fo es e h t sm a r g o r p el i h w
uo y . n a c
M yna srebmemecivres kolre v o eht ecnatropmi fo v as -
gni esuaceb yeht epoh ot e rite r mo rf eht yratilim retfa
02 srae y dna eviece r noisnep emocni rof . ,efil re v e w o H
re wef naht %81 fo srebmemecivres yat s gnol hguone ot
yfilauq rof yratilim tneme rite r . y ap ehT tse r teg . gnihton
u ekiln nailivic , sboj e reht si on laitrap gnit se v rednu eht
tne ruc met sys fi uo y ev ael e rofeb 02 . srae y e nev fi uo y No MatteR What
od dne pu gniteg eht ,noisnep ruo y tneme rite r emocni
dluoc eb sa eltil sa %05 fo ruo y esab yap e rom( fi uo y RetiReMeNt SYSteM You
yats regnol naht 02 ,)srae y gniv ael uo y ot l� ni eht
spag . flesruo y a dn rojam segnahc e ra gnimoc nos ot chooSe, it’S eSSeNtial
eht yratilim tneme rite r ,met sys hcihw liw ediv o rp wen
to Save oN YouR oWN, too.
seitinutropo rof srebmemecivres ohw t ’ nod yat s rof 02
. srae y tu B eht wen met sys dluoc osla ecude r ruo y efil -
emit emocni dna e kam ti ne v e e rom tnatropmi ot ev as
no ruo y .nw o esuaceB fo eseht , segnahc ynam ecivres - Begin with the Thrift Savings Plan
srebmem liw den ot e kam ye k snoisiced tuoba rieht eh T s ’ t n e m n r e v o gt f i r h T sg n i v a S na l P si a tae r g ec a l p
laicnan� se rutuf ni 8102 es( “What You Need to Know ot tra t s . g n i v a s M sreb m e fo eh t yr a t i l i m na c t s e v n i ni
about the New Retirement System” no egap .)3 si h t de g a t n a v d a - x a tt n e m e r i t e r sg n i v a s na l p ro f r e d e f -
la , s e e y o l p m e hc i h w si ra l i m i s ot a eta v i r p s ’ y n a p m o c
n o re t t a m h c i h tw n e m e r i t em e r t s y s u o y , e s o o h c ’ t i
( 1 0)4 k na l p tu b ht i w yl e m e r t x e w o l . s e e f uo Y na c t s e v n i
l a i t n e s s e o t e v a s n o r u o y , n w o . o o t e h T r e g n u o y u o y e r a
pu ot 00 0 , 8 1 $ ni eh t PS T ni , 6 1 0 2 dn a ne v e e r o m fi e r ’ u o y
n e h w u o y t r a t s g n i t t e s e d i s a y e n o m r o f r u o y , e r u t u f e h t
gn i v i e c e r ee r f - x a t em o c n i el i h w gn i t s o o b — d e y o l p e d eh t
r e i s a e t i l l i w e b o t d l i u b a y h t l a e h t s e n . g g e e l i h W u o y e r a
ti m i l ot 00 0 , 3 5 $ si h t . r a e y
n i , e h t y ru a o t i y l i m n a c e k a t e g a t n a v d a f o l a i c e p s t s e v n i -
g n i s m a r g o r p d n a x a t s k a e r b o t p l e h u o ey g r a h c r e p u s ehT PST sediv o rp elbaula v xat , segatna vda on retam
r un o e vy — e s g n i v a sf i u o y n a c y l n o d r o � a o t t e s e d i s a a woh hcum uo y nac d ro�a ot ,t se vni dna a wen elur se vig
e l t t i l y e n. o m w o ni s ’ t p u o t u o y o t e k a m e h t t s o m f o uo y eht noitpo ot e kat eht xat skae rb won ro dliub pu - xat
r u o y . s n o i t p o e rf emocni rof eht . e rutuf
The Personal Finance Guide for Military Families | Financial Field Manual 1
fI you choose to maek traditional contriub tions , the
money you set aside reduces your taax lb e income no w
and rg osw ta-dx eferred until retirement . For eax mlp e ,
contriub tin g 0, 01 $ cuts your taek h- ome ap y yb uj st
05, 7 $ if your’ e in the %52 federal ta x rb acek t e( ev n less
if your contriub tions also escaep state income ta .)x
lA ternatiev ly , you no w haev the otp ion to maek oR th TPS
contriub tions , hw ich dont’ rp oiv de a ta x rb ea k no w ub t
do let you iw thdra w the money taf- x ree in retirement .
This is similar to a oR th ARI ub t iw thout any income lim-
its to lb oc k contriub tions . oN( te that contriub tions from
taf- x ree ap y in a comab t oz ne iw ll neev r eb taex d).
iW th either ev rsion of the TPS , your contriub tions can
rg o w sing ic� antly oev r the years if you start early . aS y
you contriub te 03$ each ap ychec k to a traditional TPS .
oY ur taek h- ome ap y iw ll only shrin k yb 52 2 $ if you are in
the %52 ta x rb acek t . nA d if you start at aeg 52 and con-
triub te for the netx 03 years , you could end u p iw th more and sep cialiez s in helip n g military families iw th their
than 0, 09$ yb the time your’ e !5 evE n if you leaev n� ances . T“ hey are eg nerally in the loew st rb acek t they
the military at aeg 04 after 51 years of contriub tions and iw ll eev r eb in , eb cause of all of the nont- a x comep nsa-
neev r add another dime to your TPS account , you could tion” .
still end u p iw th aob ut 0, 07 $ yb aeg . 5 These eax m-
e ka Ta e g atna vd fo lc-w o tso ignit s e v n
lp es assume your inev stments return %8 ep r year , hw ich
oY u haev seev ral loc- w ost inev stin g otp ions in the TPS .
has eb en a tyip cal aev raeg for lont-g erm inev stments.
oY u can choose from ev� inde x mutual funds inev stin g in
sA mentioned aob ev , if you foreog the ta x rb ea k on your lareg comap nies , small r� ms , international r� ms , ob nds or
contriub tions no w and instead contriub te to the oR th og ev rnment securities.
ev rsion of the TPS , your iw thdraaw ls iw ll eb totally ta- x
rO you can choose a lifecycle fund c( alled the L fund ,)
free in retirement . fI your taax lb e income is loew r no w
hw ich ub ilds a diev rsie� d op rtfolio of the other funds
than it iw ll eb in the future , youl’ l come out ahead iw th
to match your time horioz n . The fund inev sts rp imarily
the oR th .
in stoc k funds at the start , hw en you haev more than a
F“ or most ep olp e relyin g rp imarily on military income , decade eb fore you lp an to ta p the money . nA d it rg adu-
the oR th is eg nerally the aw y to og ” , says Patric k eB alg e , a ally eb comes more conserav tiev as your retirement date
certie� d n� ancial lp anner in rpS ine�g ld , aV ,. hw o is also drasw near . hC oosin g the L fund is an easy aw y to inev st.
a former helicotp er ip lot hw o retired from the Marines
epxE nses for all of the funds are etx remely loa—w ob ut 92
cents a year for eev ry 0,1 $ inev stedm— aik n g the TPS
one of the loew st-cost inev stin g otp ions aav ilalb e . For a
coNtRibute to the
0, 01 $ op rtfolio , for eax mlp e , youd’ ap y uj st 92 $ a year
Roth veRSioN of in inev stment manaeg ment fees .
oY u can ek e p the money in the TPS after you leaev the
the tSp, aNd YouR
military , or you can roll it into an ARI or another emlp oy -
WithdRaWalS Will be ers’ (104 ,)k hw ere it iw ll continue to rg o w ta-dx eferred .
uJ st eb aaw re that if you taek the money from a tradi-
tax-fRee iN RetiReMeNt.
tional TPS and sep nd it , you could face an immediate ta x
ib ll . hW ats’ more , youl’ l eg nerally face a %01 ep nalty if
Continued on page 4
2 The Personal Finance Guide for Military Families | Financial Field Manual
What You Need to Know About the
New Retirement System
ou may need to make is based on 2.5% times the number of As with any TSP contributions, the
a major decision years you served times your retired base money grows tax-deferred for the future
Y pay (generally calculated by averaging (or tax-free in a Roth TSP). In addition,
about your fnancial
the highest 36 months of basic pay). you generally can’t withdraw money from
future in 2018 because the This works out to be 50% of your retired the TSP while you are still in the service,
military is introducing a new base pay if you stay for 20 years, and and will need to pay a 10% penalty for
retirement system. more if you stay longer. The payouts are withdrawals before age 59½.
adjusted each year for the cost of living.
For more information about the
While the new system reduces the The new system changes the formula new system, see the Department of
guaranteed income available after 20 to fgure retirement income as 2% Defense’s Blended Retirement System
years, it provides matching contri- times the number of years served times Web page (militarypay.defense.gov/
butions to your Thrift Savings Plan, your retired base pay. This works out to BlendedRetirement). You’ll fnd
which you can keep after just two years 40% of your base pay at 20 years. (Note information and FAQs (including
of service. Your options depend on the that both systems adjust payouts for special calculations for members of the
year you entered the military. the cost of living.) Reserves) and other resources.
BEFoRE 2006. If you joined the But under the new system, you’ll also You’ll have from January 1, 2018, to
military before January 1, 2006, you’re get something if you leave before then. December 31, 2018, to opt in. If you don’t
covered under the original system. The Department of Defense will auto- do anything, you’ll remain in the current
You need to stay for at least 20 years to matically contribute 1% of your basic retirement system.
qualify for the military pension, which pay to the Thrift Savings Plan after 60
can be worth 50% (more if you stay days of service. It will also match your how do you choose?
longer) of your basic pay. See the sec- contributions up to the next 4% of your If you don’t plan to stay for 20 years,
tion below for more information about pay. That’s up to 5% each year in free then you’ll come out ahead with the
how retirement pay is calculated. money that you can keep in your plan blended retirement system. If you’re not
F
frRomoM Ja 2n0u0ar6y T1,o 2 020061,7 t.o I fD yeocue mjobineerd (palleotningg w twitho ytheea resa orfn sinegrvs)ic aef.t er com- spmuaoryens twthohl yde otinh tcehore mo mre a nitsoh tl.i ykEoesultyi’l mtl oba ebte es wtuahnyadinte gry, o tihut er
31, 2017, then you’ll need to make a You may also receive a cash bonus after old and new pension system, and fgure
big choice. You can stay with the old 12 years of service, in return for a com- out how much you’d need to save in the
system, or you can sign up for the mitment of four more years of service, TSP to make up the diference.
new “blended retirement system” that called “continuation pay.”
reduces your pension but also provides “We’re doing some analysis to under-
matching Thrift Savings Plan contri- stand the probability of retirement and
butions. (The timing for members of if they can save enough to make up for
the Reserves is based on the number of the gap,” says Josh Andrews, a certifed
retirement points.) fnancial planner and advice director for
Military Life for USAA, and former Air
AFTER 2018. If you join on January Force pilot.
1, 2018, or later, you’ll automatically
be enrolled in the blended retirement If you choose the blended system, be
system. sure to contribute at least the 5% needed
to get the full match in your Thrift
how is the system Savings Plan; otherwise, you’re giving
changing? up free money. Under either system, it
Under the current military retirement helps if you can aford to contribute even
system, you’ll receive income for life if more—the more money you contribute
you serve for 20 years or longer. Your when you’re young, the longer it has time
retirement pay, which starts right away, to grow and the less you’ll need to set
aside later to reach the same goals.
you iw thdra w the money from the oY u can contriub te u p to 05, 5 $ to a triub tion o( r a fe w days later if the t51 h
account eb fore aeg 95 ½ u( nless you oR th ARI in 6102 o( r 05, 6$ if your’ e falls on a ew eek nd .) For eax mlp e , rp A il
leaev your oj b after aeg .)5 0 5 or older ) as lon g as your modie� d , , 7 1 7 1 0 2is the deadline for 61 0 2 contri-
aduj sted rg oss income is less than ub tions .
eS e tsp.gov for more information and
00 0 , 7 1f1 $ or sinlg e l� ers , or 00 0 , 4 8 1 $
a calculator to hel p you rp oej ct your Finally , if you haev a sop use hw o doesnt’
if married l� in g oj intly . T( he oop rtu-
future account ab lance and see the earn income , you can contriub te to an
nity to maek contriub tions rg adually
op ew r of lont-g erm comop undin g of ARI on his or her eb half . nA d children
hp ases out as income rises aob ev
earninsg . hw o earn income from a oj b also can
those leev ls).
contriub te to a oR th ARI , hw ich can eb
an extra incentive to save: fI your’ e
oY u can oep n a oR th ARI iw th a rb o - a rg eat aw y to eg t them started saiv n g
haiv n g a touhg time up ttin g aside
ek raeg r� m , mutual fund comap ny , for the future .
money for retirement , consider that
credit union or ab n .k hW en selectin g
your contriub tions can also earn you Guaranteed return on savings
an ARI administrator , loo k for lo w
an etx ra ta x rb ea .k The eR tirement tI sounds almost too og od to eb true—
fees and a raneg of inev stment choic -
aS iv nsg oC ntriub tion rC edit is ow rth %0 1 interest ug aranteed . uB t in this
es . fI you haev 02 or 03 years until
%01 to %05 of the r� st 0, 2 $ you case its’ no scam : The militarys’ aS iv nsg
retirement , its’ usually eb st to inev st
contriub te for the year to the TPS , an eD op sit Prorg am lets seriv cememeb rs
the money in a diev rsie� d op rtfolio
ARI or another retirement saiv nsg inev st u p to 0 0 , 0 1 $ in the rp org am each
of mutual funds . eS( e the nI ev stor
lp an . The loew r your income , the time they are delp oyed .oY u receiev %0 1
Protection Trusts’ series of inev stor ed-
hihg er your credit. annual interest , comop unded uq arterly ,
ucation ob olk ets at investorprotection.org
and can ek e p the money in the account
tI s’ ow rth 0,1 $ ep r ep rson at for more information aob ut creatin g
hw ile your’ e delp oyed and u p to three
the loew st income leev ls . uB t it a op rtfolio).
months after you return .
drosp to 02 $ if you are near the
oN te that you can inev st the max -
cuto 05, 03$— � for sinlg e l� ers ; For more information , see the PDS ap eg
imum in ob th a oR th AR I and the
057 , 54 $ for l� in g head of household ; at the eD fense Finance and cA countin g
Thrift aS iv nsg Plan in the same year .
or 0,16$ if married l� in g oj intly . eW b site ( www.dfas.mil/militarymembers/
nA d you haev until rp A il 51 of the
These limits are ab sed on aduj sted payentitlements/sdp.html.)
é
folloiw n g year to maek an AR I con-
rg oss income , hw ich doesnt’ include
your taf- x ree housin g alloaw nce or
any taf- x ree ap y receiev d hw ile in a
comab t oz ne .
Tax-free earnings
from a Roth IRA
A oR th ARI can eb a rg eat aw y for
anyone to sulp ement their retire -
ment saiv nsg y— ou eg nerally dont’
eg t a ta x rb ea k for oR th contriub -
tions , ub t you can iw thdra w your
earninsg taf- x ree in retirement a( nd
can iw thdra w contriub tions at any
time iw thout taex s or ep nalties .) nA d
delp oyed seriv cememeb rs eg t an ex -
tra ep r :k fI your’ e receiiv n g taf- x ree
ap y in a comab t oz ne , your money
og es into the oR th taf- x ree , and your
contriub tions as ew ll as your earn-
insg come out taf- x ree in retirement .
4 The Personal Finance Guide for Military Families | Financial Field Manual
Your Military Benefits
diScoveR all the advaNtageS aNd pRotectioNS
to Which You’Re eNtitled
emeb rs of the military haev
access to sep cial eb net� s
M and leag l rp otections that can
maek a hueg die� rence in your familys’
ep rsonal n� ances . eL arn ho w to maek
the most of them .
F ee r e g e lo c ro f uo y ro ruo y y lima f
One of the most exciting benefts for servicemembers
and their families is the expansion of the GI Bill. This can
provide valuable benefts for you, your spouse and even
your children.
The Post 9/11 GI Bill covers the full cost of in-state tuition
and fees at public colleges for up to 36 months (four
academic years). Alternatively, it covers up to $21,970 for
the 2016-17 school year for private colleges and foreign
schools. You can also receive a housing stipend and mon-
ey for books and tutoring. And you can use the money
for undergraduate or graduate programs at college and
universities, or for certain programs at vocational, trade
and distance-learning schools.
Eligibility is based on the length of time you serve in the military. Children aren’t subject to the 15-year limit, but
military. For maximum benefts, you must serve at least they must use the transferred benefts by age 26.
36 months or serve on active duty for at least 30 continu-
If you have more than one child or want your spouse to
ous days and be discharged because of a service-connect-
have the option to use the benefts, you can transfer 35
ed disability. You’ll earn partial benefts if you serve at
months of benefts to your children and one month to
least 90 days on active duty.
your spouse. You can always adjust the allocation later
And the Post 9/11 GI Bill ofers valuable fexibility: After on, but you can’t add new benefciaries after leaving the
serving for several years, you may be able to transfer your military.
benefts to your spouse or children. To make the transfer,
For more information about transferring benefts, see
you generally need to have served for at least six years
the GI Bill transfer page at benefits.va.gov/gibill/post911_
on active duty or selected reserve and agree to serve four
transfer.asp.
more years. Spouses can use the transferred benefts right
away; children must wait until you’ve served at least 10 If you (or your spouse or children) are attending a
years. Servicemembers and veterans (and their spouses) private college, going to graduate school or paying out-
must use the benefts within 15 years after leaving the of-state tuition at a public college, your benefts may
The Personal Finance Guide for Military Families | Financial Field Manual 5
not coev r the entire ib ll . uB t you
may uq alify for etx ra hel p from the LoW-CoST LIFE INSURANCE
eY llo w iR ob n rp org am . uH ndreds
Life insurance is always important if someone is depending on you
of colleeg s rp oiv de scholarshisp for
fnancially, and it’s particularly important if you’re heading to a combat
a sep cie� d numeb r of students each
zone. Active-duty members of the military have access to special low-cost
year , and the eD ap rtment of eV terans
term life insurance. Servicemembers’ Group Life Insurance (SGLI) costs
a�A irs matches the schools’ contri-
only 7 cents per $1,000 of coverage per month, or $336 per year for the
ub tion .
maximum $400,000. And it is available regardless of your age, health or
To uq alify for the eY llo w iR ob n
likelihood of being deployed.
scholarshi , p you must eb eliig lb e for
the maix mum G I iB ll eb net� s c( hil- Servicemembers can also get $100,000 in coverage for a spouse for as
dren or sop uses usin g transferred little as $60 a year if the spouse is under age 35 (coverage costs more for
eb net� s may also uq alify .)eY llo w rib - older husbands and wives). See benefts.va.gov/insurance for details.
ob n fundin g av ries iw dely yb school
What’s more, there’s now an extra beneft for SGLI benefciaries. The
and rp org am , and you alp y for these
HEART Act, enacted in 2008, permits surviving spouses who receive
scholarshisp directly throuhg the
colleeg . SGLI death benefts to invest some or all of that money into a Roth IRA,
without being subject to the standard $5,500 limit.
aH rav rd nU iev rsity , for eax mlp e ,
rp oiv des u p to 0 , 5 $ for an unlimit - If a spouse receives the maximum $400,000 death beneft, plus a
ed numeb r of underrg aduate students $100,000 death gratuity, he or she can contribute up to $500,000 to a
and u p to 0 , 8 1 $ for ub siness school Roth IRA, where it can grow tax-free for the future. Surviving spouses have
students for the 71 6 - 1 0 2 school year . one year after receiving the death benefts to roll them into a Roth.
lC emson nU iev rsity rp oiv des 005 , 3 $
“We wish younger surviving spouses knew that they could let the money
scholarshisp for u p to 54 under -
grow in a ROTH because they may not need the money right away,” says
rg aduates , and u p to 0 , 5 $ for ev�
rg aduate students . eS e thes ’ A V eY llo w Bonnie Humphrey, chief fduciary ofcer for AAFMAA Wealth Management
iR ob n Prorg am ap eg ( b e n e f i t s . and Trust, which manages money for military families.
av . g g o iv b/ i l l y/ e l l o w _ r i b b o n . a s p ) for
more information aob ut each schools’
military sep cial leag l rihg ts and n� an-
oe� rinsg .
cial rp otections if they haev to moev
YelloW RibboN
For more information aob ut the Post
uneepx ctedly or are delp oyed . tI eev n
1/1 9 G I iB ll and the earlier Montog m-
alp ies if they must leaev a ciiv lian oj b ScholaRShipS
ery G I iB ll , og to the eV terans a�A irs
to og on actiev duty iw th the eR serev s
G I iB ll ap eg ( g i b i avl l . . g o v .) eS e the vaRY WidelY bY
or aN tional Guard.
. S. UeD ap rtment of eV terans a�A irs
nO e of the most av lualb e ARC S eb net� s School aNd
up lb ication , F“ actors to oC nsider
is the interestr- ate ca . p nI some situ-
hW en hC oosin g a cS hool : A Guide
pRogRaM . . .
ations , the rate on a mortag eg , credit
eB fore sU in g the G I iB ll ” at be n e f i t s .
card , car loan or other detb can eb
av . g g o iv b/ i l l , and the Federal Trade aNd You applY
reduced to %6 if military seriv ce ae� cts
oC mmissions’ hC“ oosin g a oV cational
your aib lity to ap ya— s it may if you taek diRectlY
cS hool ” at ftc . g o v .
a ap y cut hw en actiav ted to the eR serev
Interest-rate reductions or aN tional Guard . oN te that this rule thRough
and other special rights alp ies only to detb s incurred rp ior to
the college.
The eS riv cememeb rs iC iv l eR lief military seriv ce or actiav tion , not to
cA t ) AR C S ( ig ev s memeb rs of the detb s taek n on hw ile on actiev duty .
6 The Personal Finance Guide for Military Families | Financial Field Manual
oY u usually need to send the lender a rw itten reuq est oY u also receiev taf- x ree ap y hw ile in a comab t oz ne and
for the rate reduction and rp oev that your income has can contriub te more money to a Thrift aS iv nsg Plan hw ile
eb en reduced .oY u may eb asek d to sumb it coip es of your delp oyedob— ostin g the limit from 0, 8 1 $ to 0 , 3 5 $ in
military orders , earninsg statements and ta x returns . eB . 6 1 0 2 For more information aob ut federal ta x rules for
aaw re that hel p is aav ilalb e from an rA med Forces eL ag l memeb rs of the military , see SRI Pulb ication , 3 rA med
sA sistance c�O e ; og to le g a l a s s i s t a n c e . . l a aw . f m i l to n� d an Forces Ta x Guide at ir s . g o v .
oc� e near you.
oY u may also eb net� from sep cial rules for state income
ARCS rp oiv sions can also hel p seriv cememeb rs terminate taex s . iC iv lians eg nerally haev to ap y state income taex s
contracts . epS cic� ally , you haev the rihg t to terminate in the state hw ere they liev . uB t seriv cememeb rs and their
an aap rtment lease if you haev orders for a ep rmanent sop uses are alloew d to maintain leag l residence c( alled d“ o -
chaneg of station or are delp oyed to a ne w location for 09 micile )” in one state eev n if they are stationed in another .
days or more .oY u can terminate a car lease iw thout an This can simlp ify your ta x situation and mayeb eev n saev
earlyt- ermination fee if you are delp oyed for 081 days or you money . For eax mlp e , if you estalb ish residency hw ile
loneg r . nA d you can terminate your cellhp- one contract stationed in Florida or Teax s , hw ich dont’ haev a state
iw thout ep nalty if you receiev orders to relocate for more income ta ,x you can maintain that domicile hw ile your’ e
than 09 days to an area that is not suop rted yb your on actiev duty , eev n if you moev to another state that does
contract. haev an income ta.x
eS e the . S. UeD ap rtment of uJ stices’ eS riv cememeb rs and oY ur domicile eb ig ns as your home state hw en you oj in the
eV terans nI itiatiev s ap eg ( s e r v i c e m e m b e r s . g o v ) for more military and can remain the same , reag rdless of hw ere you
information aob ut ARC S rp otections. are stationed . rO if you are transferred to another state and
decide to maek it your home , you can estalb ish that state as
Special tax breaks
your leag l residence .oY ul’ l aw nt to reig ster to ov te in that
Memeb rs of the military and their families eg t a lot of
state , reig ster your car and eg t your driev rs’ license there ,
ta x rb eask that can hel p them stretch their ap ychecsk .
and lp an to return once your seriv ce is comlp eted.
fI you dont’ liev in ab se housin ,g your ap y iw ll include
eK e p in mind that after you leaev the military , youl’ l haev
a aB sic lA loaw nce for oH usin g )HA B ( that rp oiv des a
to ap y taex s in the state hw ere you liev . Factor this in hw en
taf- x ree housin g alloaw nce to hel p coev r your rent or
calculatin g ho w much money youl’ l need to earn as a ciiv l-
mortag eg . oL o k u p the amounts yb ran k and iz p code at
ian to end u p iw th comap ralb e taek h- ome ap y . é
defe n s e t var e l d. o d . m i l s / i t e / b a h c. f m .
active-dutY
SeRviceMeMbeRS
caN MaiNtaiN
legal ReSideNce
iN oNe State
eveN if theY aRe
StatioNed iN
aNotheR.
The Personal Finance Guide for Military Families | Financial Field Manual 7
Before and After Deployment
taKe SMaRt StepS to pRotect YouR faMilY
aNd YouR fiNaNceS
ou and your family already haev
enouhg on your mind hw en you
Y are rp eap rin g for delp oyment .
Y ou don’t aw nt to ow rry aob ut n� ancial
issues , too . Fortunately , you do haev
access to some sep cial rp org ams hw ile
delp oyed that can hel p your n� ances
lon g after you return .
ruo Y skcehc y ap wo rg nehw uo y eviece r e rf - xat emocni
ni a tabmoc , enoz dna uo y nac e kat egatna vda fo laiceps
sma rgo rp taht pleh uo y hcte rt s ruo y yenom ne v e ruf -
. reht i s ’t osla tnatropmi ot tceto rp flesruo y mo rf ytitnedi
se v eiht elihw e r ’uo y enog dna eb ydae r rof detcepx enu
. slib ehT e rom uo y , e rape rp eht reteb l’uo y eb elba ot
tceto rp ruo y ylimaf dna ruo y . secnan�
nae S M leahci ,nosrae P a de�itrec laicnan� renalp htiw
a esirpirem ni c ,ne kcohohsno ,.a P sah neb ni eht -ne P
aina vlys a ri n lanoita d rau G rof 91 . srae y e H sdnemoce r
gniod a cidoirep laicnan� “ ” , esic re x e ralimis ot a yratilim
, esic re x e ot e kam e rus uo y dna ruo y ylimaf e ra de rape rp
ylaicnan� rof .tnemy olped tahT ya w uo y t ’ nod ev ah ot
elbma rcs fi uo y teg a etunim- t sal lac ot sa— y olped eh did
nehw eh tne w ot i qa r ni . 302
e re H e ra emos spet s uo y nac e kat le w ni ecna vda fo
,tnemy olped dna a wef yletaidemi :e rofeb yenrota rof c�iceps , snoitcasna rt hcus sa gniyub a esuoh
ro rac elihw e r ’uo y .de y olped a - yenrota- fo re w op cod -
1 organize legal documents tnemu yla reneg sah a emit ,timil os e kam e rus sruo y si
ehT lagel ecnat sisa ec�o ta ruo y esab nac pleh uo y lit s pu ot etad fi e r ’uo y tuoba ot eb de y olped .niaga
etae rc a ,liw sa le w sa a re w op fo yenrota dna -htlaeh
a , osl kcehc ruo y yraic�eneb snoitangised no ruo y efil -ni
e rac , yx o rp hcihw tel enoemos eldnah ruo y secnan� dna
, ecna rus iaR ,s tfirhT sgniv a S nalP dna rehto tneme rite r
e rachtlaeh snoisiced fi uo y e ra elbanu ot od os . flesruo y
sgniv as esuaceb eseht snoitce rid edesrepus yna -amrofni
ehT re w op fo yenrota nac eb ylralucitrap tnatropmi noit ni ruo y .liw i f uo y detangised a yraic�eneb nehw
elihw e r ’uo y .de y olped uo Y nac tna rg a la reneg re w op fo uo y tsr� denioj eht ecivres dna t ’ ne v ah degnahc ti ecnis
, yenrota hcihw se vig ruo y evitatnese rpe r dao rb sre w op uo y tog ,deiram rof , elpma x e ruo y lanigiro yraic�eneb
re v o laicnan� . snoitcasna rt rO uo y nac esu a re w op fo dluoc tirehni ruo y .tnuoca
8 The Personal Finance Guide for Military Families | Financial Field Manual