How to Save Money While Deployed
Let’s say you just received your orders for a 180 or 365 deployment to some undisclosed location in Southwest Asia. This can mean a lot of things for you, your family, and your career, but let’s narrow our focus to just the financial side of things. How can you save money and make serving your country as rewarding to your bank account as it is to your sense of patriotic duty?
First, you should figure out what things at home you’re still going to need to spend money while you’re away. Do you have a mortgage? A car payment? A family? Credit cards? Insurance? Write it all down and add up the total of your payments. This is likely the bare minimum of what you’ll need to spend each month while you’re deployed. However, some of these don’t have to cut into your savings if you play things right.
If you own your home and it will be vacant during your deployment, try to get it on the rental market ASAP. If you have a friend who is looking for a place to live, make sure they know your place is available. If you don’t know of anyone, work with a property manager to have them find you a qualified renter. Make sure all the terms of the lease are in writing. If you are doing it yourself, consult with a lawyer or base legal to make sure the lease is legal and covers all your bases. If you rent, you can cancel the lease thanks to the SCRA. If you have a family, the situation becomes more complicated. Your spouse and children may be able to move back with your or their parents. If not, continuing to rent or own your home may be your only option.
I mentioned it in passing in the last paragraph, but the SCRA is one of the most important benefits for military members, especially before a deployment. SCRA stands for Servicemembers Civil Relief Act and it is the law that provides all the financial protections for active duty and deployed military members. If you have credit cards, make sure to call them and ask for their SCRA department to see what kind of programs they have available if you haven’t already. Often, these companies will go above and beyond the requirements of the law to honor the military. Do this with all of your financial obligations. For instance, my car loan was dropped from 4% to 0% interest when I called about the SCRA.
As you’re aware, your unit is going to provide you with pretty much everything you need for your deployment. You may want to bring along a few extra items to make the experience a bit better, though. Ensure that you budget for these things carefully and don’t go wild packing cool tactical or workout gear. You can usually only bring two checked bags anyway. On a side note, most supplements are a scam. Don’t waste $200 a month on fat burners and testosterone boosters. That’s a surefire way to come home without anything to show for your 6 months away.
Now that you know how much money you need to spend each month, you can figure out how much will be left over each month, too. You may have heard of tax-free zones, but not all taxes are waived in tax-free zones. You will not be paying federal income tax, but no matter what, Uncle Sam will get his cut for payroll taxes, aka FICA/Social Security. That means you can take your total paycheck and subtract 8%. The 92% leftover is what you’ll actually have to work with. Now subtract the things you have to spend money on each month from that 92% and you have your budget for saving.
Of course, you should allow for a small budget for spending while you’re deployed. You probably won’t be able to go the entire time without spending anything. I think $100 per month or less is a fair amount of money to spend. The rest of your pay, however, should be going into savings. If you have money in a savings account already, you should consider the Savings Deposit Program (SDP). It is a savings account that is only available to deployers that pays 10% annual interest, guaranteed. You can deposit up to $10,000 into the account over the course of your deployment. You won’t end up with a total of $1,000 in interest, though. Your deposits will be limited to your pay each pay period minus withholdings. I recommend using it as a way to move money from a low interest savings account at a bank that you don’t think you’ll need in the coming year into a high interest savings vehicle for a short time. Then, simply move it back to your bank after your deployment.
The next piece of the savings puzzle is one I’ve mentioned many times. The Thrift Savings Plan (TSP) is the government employee version of the civilian 401(k) account. While deployed, you can deposit up to $54,000 per year into the TSP. Unless you have quite a few years in service, that is likely all of your disposable income and you can just deposit the max allowed by finance each month. Roth deposits will stay tax free forever regardless of where you deposit them, but while you’re overseas you get the added benefit of your traditional deposits receiving what’s called exempt status. That means that upon withdrawal, they will remain tax free! You’ll still have your BAH and BAS since you can’t put them into the TSP, though, so let’s decide what to do with those.
Assuming you aren’t supporting a family back home, you may still have a couple thousand dollars coming in each month from BAH and BAS depending on your home station. The next place you should be putting this money is into your IRA. I recommend Roth deposits while in the tax free zone because you will capture the 0% tax rate on those deposits forever! Once your $5,500 annual limit for IRA deposits is complete, look into opening a taxable brokerage investment account. I use Betterment for my taxable account, but there are many low cost brokerages that can provide you a relatively safe and cheap place to invest your money. You might choose to save for a downpayment on an investment property instead, but wait until you’re home to actually buy the property.
Of course, if you have high interest debts looming over your head, you should be paying those off first, long before even investing in your TSP or IRA. However, if you have low interest accounts, they may be another place you might look after maxing SDP, TSP, and IRA each month.
I hope this rough guide to deployment finances helps. If you have any questions or deployment finance stories, please post them in the comments below!