Furthermore, in addition to their base pay, the servicemember will also receive Imminent Danger Pay, which is also commonly referred to as Combat Pay. Those who have dependents will receive a Family Separation Allowance (or Family Separation Pay as it's commonly referred to). Additionally, the servicemember will receive Hardship Duty Pay; a Food Allowance; and a Housing Allowance.
Now that you have a basic understanding about deployment pay, you'll want to decide what to do with the extra income.
Discuss How You Will Use the Money
Although there's a lot to do before the deployment, it's a good idea for you and your spouse to discuss how to utilize the extra money. By coming to a mutual agreement beforehand, you'll reduce the chance of arguing about this topic at a later date. Besides, there's enough post-deployment transitions that take place and the last thing you want to do is bicker over how the extra funds were utilized during the deployment.
Ways to Put the Money To Good Use
There are numerous ways that you can put this additional monthly income to good use. However, keep in mind that you and your spouse know your finances better than anyone. The following material is presented as ideas and suggestions. If you would like more in-depth information that's tailored to your unique financial situation, you can find information about free financial counseling at the end of this article.
1. Increase your savings. The added monthly income that you're receiving presents an excellent opportunity to build up your savings account. Whether you're setting money aside for a major purchase, a birth, or you simply want to increase your savings so that you have funds available in the event of an emergency, the additional income from the deployment can help move you closer to your savings goal.
Some couples prefer not to spend the additional money and opt to put 100% of the pay increase into their savings account; whereas other couples commit to depositing a certain percentage or specific dollar amount. How much you save is an individual decision, one that varies for each couple. Essentially, there is no right or wrong amount, the important thing is that you are steadily increasing your savings account balance.
If building your savings is something that you're interested in doing, you may want to look into the DoD Savings Deposit Program. Basically, this program pays 10% interest and you can deposit up to $10,000 during a deployment. After the deployment is over, the account will be closed and the funds will be released to the servicemember via a direct deposit. If you'd like to learn more about the SDP, the Defense Finance and Accounting Services (DFAS) Web site has complete details about the Savings Deposit Program.
2. Pay off bills. Utilizing some of the extra income to pay off small bills, especially if the debts are credit card accounts with high interest rates, is an excellent use of the money. Besides having fewer bills to pay each month, which can go a long way in reducing your stress and anxiety, you'll inadvertently save money because you will no longer be paying large amounts of interest on revolving debt.
3. Pay down debt. Applying extra money to the principle balance of a vehicle loan or home mortgage serves several purposes. Besides reducing the balance on the account, which means you'll pay off the loan sooner than expected, you'll also lessen the amount of interest you would've normally paid over the life of the loan.
Similarly, if you have large balances on high interest credit cards, it's in your best interest (no pun intended) to pay down that particular debt.
4. Start a college fund. Whether your kids are infants or attending high school, it's never too early to begin saving for their college education. If you'd like to learn more about how to save for your child's post high-school education, there's an abundance of material related to this topic at Saving For College.
Free Financial Counseling
If you'd like to discuss your finances with a professional, most military installations offer financial counseling services that are free of charge. Furthermore, active duty servicemembers, to include those in the Reserve and Guard component, can receive free financial counseling through Military OneSource. To utilize this service please visit their Web site or phone them at 1-800-342-9647.
If you haven't already done so, it's in your best interest to create a myPay account. By doing so you will be able to log-in and view your Leave and Earnings Statement (LES) along with other pertinent information. Additionally, a myPay account also gives you the option of printing your W-2s at the end of the year for income tax purposes.