Reservist and National Guard familieswhose loved ones have beenactivated for duty in Iraq or otherdistant lands face not only separation butoften financial hardship as well. You oryour spouse may be leaving to take onmedical assignments helping troops, oryou may have a son or daughter leavingtheir family behind for a time as they arecalled to duty. A survey by the Departmentof Defense for Reserve Affairs found that31% of families saw a decrease in incomewhen a husband or wife was called up.
Military families can prevent or minimizefinancial difficulties through carefulmoney management and learningthe special financial rights available tothem when their loved one is summonedfor duty. If activation has not yet occurred,you can take several steps to minimizethe financial impact of a futurecall-up, including the following:
Save enough in an emergency fundto cover essential costs such as housing andfood for several months. Also consider ahome equity line of credit or a loan fromlife insurance cash values.
Prepare a realistic postactivationbudget to better prepare for cuts andmotivate you to build up savings.
Families of activated personnel areallowed to shop at any nearby militarybase stores, where goods and services areusually less expensive.
Reduce debt; credit card and otherconsumer debt can be devastating if thefamily faces a serious decline in income.
Avoid off-base payday lenders, whichcan increase family debt.
Designate someone in advance tomanage the household finances and besure they are up to speed with the financesbefore leaving. Single-parent families orfamilies where both spouses are called upwill need to rely on a relative, friend, orprofessional help.
Acts of Relief
Be aware of the many special financialrights that may be available to you.Activated reservists or deployed regularmilitary are generally covered under therecently enacted Service Member's CivilRelief Act, which strengthens the original1940 Soldiers' and Sailors' Civil Relief Act.Key rights include the following:
Prevention of eviction from rentalproperty when rent is less than $2400 amonth (indexed for inflation)
Ability to break a housing or autolease without penalties
Temporary stays of civil proceedingssuch as bankruptcy, foreclosure, or divorce
Ability to cap interest rates at 6% onpreexisting loans and mortgages
Another key law to become familiarwith is the Uniformed Services Employmentand Reemployment Rights Act of1994 (USERRA). USERRA provides certainrights to employees who must leave workbecause of a call-up, including these items:
Employees must get back the positionthey held or would have held if theyhad not been called up, though theemployer can have some legitimate reasonsfor not rehiring, such as an eliminationof the position.
The rehire right supersedes the rightof any replacement hire.
Employees' families can continuehealth coverage under the employergroup plan.
Employees can make up retirementcontributions after returning to work.
The employee is protected againstarbitrary firing after returning to work.
For additional information, physicianswith military family members shouldcontact military support offices, theirfinancial planner, or family support Websites such as www.nmfa.org.
This article has been produced by the FinancialPlanning Association (www.fpanet.org), which isthe membership organization for the financialplanning community.