Military families should consider finances

Each week, more troops ship out to the Middle East for a possible war in Iraq.

They leave behind families and friends who must deal not only with concerns about their loved ones, but also with managing their money while they're away.

In many ways, the financial steps a military family should take are similar to those any family needs to consider when there's an unexpected event such as the loss of a job, experts say.

The key -- whether the military man or woman is on active duty, in the Reserves or part of the National Guard -- is to be prepared for the worst.

"Procrastination can really mess these families up," said Karen Schaeffer, a certified financial planner in Washington, D.C., who works with federal government employees. "They need to be doing basically what we all need to be doing -- but they need to be a step ahead" because the timing for military deployments is generally out of their control.

Stephanie Valenzuela, 24, knows the burdens that can go with the overseas deployment of a family member.

Her husband Robert, a staff sergeant in the Air Force, left for "outprocessing" in November, two days before their daughter Mariah was born. He's now in the Gulf, and she and their children, including 4-year-old Alex, are staying with her parents in Tucson, Ariz.

No distractions

Valenzuela, a preschool teacher, said the couple has worked hard to keep their financial affairs in order. They have a joint checking account, and she has a separate account that she funds with money from her job. They have a joint savings account, too.

When he's at a base overseas, they communicate by e-mail and occasional phone calls. When he's on combat duty, she's on her own.

"He can trust me that I'm not going to mess anything up and that he doesn't have to worry," she said. "He should have no distractions about home life while he's over there. He should worry only about the military mission."

Jim Moon, a military affairs program manager for USAA, an association that provides insurance and financial services to U.S. troops and their families, said it's important to have a financial plan that allows for extreme flexibility.

"There are situations where, say, the National Guard activates a doctor," he said. "He goes from earning $300,000 a year to earning $60,000 a year. Even a teacher might go from $45,000 a year to $21,000 a year in basic pay. That's a dramatic financial change."

Soldiers and their spouses -- or whomever they put in charge of their money while they're away -- need to make sure "they're playing the same sheet of music," Moon said.

"You don't want a home situation distracting from the military mission," he said. "You don't want a guy in Afghanistan or in Iraq thinking about a bounced check back home and not about the military threat across the hill."

USAA has checklists for members on its site at www.usaa.com to help ensure they have all bases covered. It also runs a phone center at (877) 233-7569 and does face-to-face counseling.

Moon said some of the issues troops need to deal with before they leave include:

Does the family have an adequate emergency fund to cover three to six months of expenses?

Have they opened joint accounts so that the person left behind has access to needed funds? Is there overdraft protection?

Do they have adequate life insurance, and are the beneficiaries current?

Does someone have power of attorney to handle the military person's affairs?

Is there a will?

"We especially like to hear from the callers who say, 'I've been told to prepare for deployment, so I'm starting to prepare,'" Moon said. "That way we can identify steps they might need to take to overcome shortcomings, even to helping them get an emergency loan."

Jon Meyer, a certified financial planner in Bloomington, Minn., said reservists and National Guard members who don't have financial plans in place might need to find quick sources of cash for their families.

"Maybe there's home equity they can tap, or accounts they had to save for other things, like a new car," he said.

Meyer also said some military clients are using the Internet to help manage their money.

E-mail allows Meyer to keep in touch with one of his overseas clients: "I tell him changes I want to make in his portfolio, and he OKs it."