Author Topic: Mustachian Active Duty/Deployment Dos and Don'ts - Advice please!  (Read 2317 times)

Paradise

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Son-in-law is soon to go Active Duty.

Any MMM folks want to weigh in with their best before/during/just after deployment financial advice? This is all so new and they don't want to miss a single opportunity/program to grow the 'stache. Thanks for helping!
« Last Edit: May 06, 2016, 06:31:33 AM by Paradise »

TrMama

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Re: Mustachian Active Duty/Deployment Dos and Don'ts - Advice please!
« Reply #1 on: May 02, 2016, 04:02:57 PM »
How long will he be gone for?

The best advice I have is for them/her to downsize their living expenses as much as possible so they can make the most of their earnings. If he's going to be gone for 6+ months and they're renting they should strongly consider moving her into the cheapest place she can handle. That includes moving in with one set of parents. As long as everyone gets along, that will also give her built in company while he's away.

If that's not possible, she could look into taking on a roommate while he's gone.

She may also want to consider working overtime, or taking on a 2nd job. This will both boost their stash and keep her busy. As a military wife, the hardest part of deployment is the sudden increase in free time when DH goes away. It's not so bad now that we have kids (becoming a single parent keeps me occupied), but the loneliness was brutal when it was just he and I.

Paradise

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Re: Mustachian Active Duty/Deployment Dos and Don'ts - Advice please!
« Reply #2 on: May 02, 2016, 04:41:51 PM »
Thanks for the reply and your candor! (And your sacrifices!)

He's expected to be gone for nine months (but we wouldn't be surprised to see it creep up to 12).

Keep the tips and helpful info coming!
« Last Edit: May 06, 2016, 06:32:05 AM by Paradise »

Sailor Sam

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Re: Mustachian Active Duty/Deployment Dos and Don'ts - Advice please!
« Reply #3 on: May 02, 2016, 04:52:54 PM »
If he's deploying to a combat zone, his income will be excluded from income tax. He should put 18,000 into a ROTH TSP.

If there's any money left over, maximize a ROTH IRA

If there's any money left over, maximize a spousal ROTH IRA (but check the tax math first, to make sure it actually has an advantage for married filing jointly)

If there's any money left over, maximize  a Tradtional TSP.

And everyone in the family should read the TSP Contribution Limits literature, to make sure nothing illegal happens.

frooglepoodle

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Re: Mustachian Active Duty/Deployment Dos and Don'ts - Advice please!
« Reply #4 on: May 02, 2016, 05:02:24 PM »
Have they read Nord's book, The Military Guide to Financial Independence? I haven't yet finished my copy, but I highly recommend it.

+1 to Sailor Sam's post.

bear88

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Re: Mustachian Active Duty/Deployment Dos and Don'ts - Advice please!
« Reply #5 on: May 02, 2016, 08:03:50 PM »
Don't forget about the Savings Deposit Program! You can earn 10% interest on up to $10,000. Finance isn't supposed to let you deposit more than what you make per pay check. My first deployment to Kuwait they were strict and it took me three deposits to reach the 10K but in Africa they let me deposit it all in one go. So it would be good if he could have that 10k ready to deposit after he hits 30 days boots on ground in order to accumulate the most interest.

http://www.dfas.mil/militarymembers/payentitlements/sdp.html

Paradise

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Re: Mustachian Active Duty/Deployment Dos and Don'ts - Advice please!
« Reply #6 on: May 03, 2016, 05:46:17 AM »
Thanks - the MMM gang is the best!

Sailor Sam - great info/great post. Hitting the contribution limits probably won't be an issue, as they are trying to strike a balance between saving for a house down payment and retirement, but making sure they stay under is a hugely important point to remember.

frooglepoodle - book just ordered for them and on its way. Love Nord's posts, but missed that there is a book - greatly appreciate your suggestion.

bear88 - fabulous tip! 10%- wow! He can check into the logistics, but I'm confident through one method or another he'll make sure the deposit cash will max right after day 30.

Nords

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Re: Mustachian Active Duty/Deployment Dos and Don'ts - Advice please!
« Reply #7 on: May 07, 2016, 11:23:58 AM »
frooglepoodle - book just ordered for them and on its way. Love Nord's posts, but missed that there is a book - greatly appreciate your suggestion.
Thanks for buying the book-- all royalties go to military-friendly charities!

I have a couple of additional bits of advice.  First, when he's in the combat zone, he's eligible to donate not just $18K to the Roth TSP but also another $35K to the traditional TSP for a grand total of $53K in 2016.  If he gets really competitive then when 1 January 2017 rolls around he can contribute yet another $18K to the Roth TSP and yet another $35K to the traditional TSP. 

I realize that not everyone can donate $106K to their retirement accounts within a nine-month period, but I'd borrow money to pay my living expenses if I could make all of my compensation tax-free and put it into the TSP.

However the day after he leaves the combat zone then the TSP limits revert to the strict $18K.  If he's already contributed more than that in 2016 or 2017 then the pay people (DFAS) and the TSP will cut him off. 

Second, if I understand you correctly, he's mobilizing for active duty.  In that case the Servicemembers Civil Relief Act provisions kick in for any debts incurred prior to mobilization.  This means he can have the interest on all of those debts reduced to 6%.  (Especially private student loans and credit-card debt.)  If he's renting an apartment then he can break the lease with no penalty (but he has to follow the provisions of the SCRA's federal law in order to override the state/local laws).  He can cancel a cell phone contract if he wants, and again no penalty.

Some credit-card companies have jumped on the patriotism bandwagon and started implementing the SCRA provisions even when SCRA does not technically apply.  It's not that the companies don't understand the SCRA, and he wouldn't be misleading them.  It's just their way of thanking him for his service while getting some great publicity.  Here's more details on the card companies and their rebates:
http://the-military-guide.com/credit-card-companies-support-scra/

Other unsolicited advice:  care packages may have different contents depending on his service and his location.  A Navy deployment on a submarine is much different than a Marine's special ops tasking, and the Air Force is generally a whole 'nother habitability world.  Letters are always good but let him tell you what he wants in the care package.

If mail and bandwidth are a concern, check out Sandboxx.  (https://www.sandboxx.us/-- note that's .us, not the usual domain.)  You pay a couple bucks for a smartphone app that turns your electronic text/photos into a paper letter sent through the U.S. mail to an FPO/APO address.  It saves you a lot of stamp/address hassle  while making it painless for him to reply (on paper) when he doesn't have his own bandwidth.  I know the founder (a Marine veteran) and he's a good guy with a great startup.