How to Save When You're in a War Zone

By Sterling Raskie

NEW YORK (AdviceIQ) -- If you or your loved one serve in the military and are about to deploy in a dangerous area overseas, know your savings options. They are generous.

The Department of Defenses savings deposit program allows combat-zone service members to allocate fractions of -- and in some cases, all -- their combat pay to a savings account up to $10,000 per deployment.

The interest rate: a hefty 10% annually, compared with a national average of about 1% on savings from most commercial banks.

Current designated combat zones are Afghanistan, Bahrain, Bosnia, Croatia, Iraq, Kuwait, Kyrgyztan, Macedonia, Montenegro, Oman, Pakistan, the Philippines, Qatar, Saudi Arabia, Serbia (including Kosovo), Tajikistan, Turkey (in some cases), the United Arab Emirates, Uzbekistan and Yemen.

Sea areas also designated combat zones are the Persian Gulf, the Red Sea, the Gulf of Oman, the Gulf of Aden and the Arabian Sea north of 10 degrees north and west of 68 degrees east.

Military service outside a combat zone counts as performed in a zone if the Department of Defense designates the service as directly supporting military operations in it.

Your draw extra pay for duty subject to hostile fire or imminent danger.

Army soldiers usually deploy more than members of any other service branch. The standard Army deployment to Iraq and Afghanistan now lasts 12 months. HFP/IDP maxes out at about $225 monthly beyond regular pay.

You qualify for the SDP savings plan if:

  • You serve in the regular armed forces or as an activated National Guard or U.S. armed forces Reserve member.
  • You deploy to an area directly involved with or in support of Operation Enduring Freedom/Operation Iraqi Freedom or other contingency operations where you get HFP/IDP.
  • You serve in the combat zone or in direct support of a designated combat zone for more than 30 consecutive days.
  • Generally, as a service member, you can begin saving to the account after 30 consecutive days or at least one day in each of three consecutive months of combat-zone deployment and pay.
  • You serve in the zone for at least one day for three consecutive months. Thats more than likely to occur if you serve in a special operations unit such as the U.S. Army Rangers or a SEAL team.

Among other conditions:

  • You cannot close your account until you leave the combat zone. All funds return to you 120 days after you leave the area.
  • You make deposits in cash, by check or through allotment; you can increase or decrease the amounts as your financial situation changes. Your allotment stops when you leave the combat zone.
  • Once your account reaches $10,000, you may withdraw funds quarterly.
  • Only your commanding officer can approve emergency withdrawals. The commander must determine it necessary for the health and welfare of you or your family.
  • Your spouse can start or stop allotments with an authorizing power of attorney.
  • Once you return home, can allow the money to grow in the account for an additional 90 days.

You go through enough tough times when serving your nation in a combat zone. Take advantage of at least this one undeniable benefit.

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-- By Sterling Raskie, MSFS, MBA, CFP, an independent, fee-only financial planner at Blankenship Financial Planning in New Berlin, Ill. He is an adjunct professor teaching courses in math, finance, insurance and investments. His blog is Getting Your Financial Ducks in a Row, where he writes about investments, retirement savings and financial planning.

AdviceIQ is a network of financial advisers that writes insightful articles for the public about investing and wealth management. All articles are edited by AdviceIQ's editor in chief, Larry Light. AdviceIQ certifies that all its advisers have no regulatory infractions.

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AdviceIQ is a network of financial advisors that writes insightful articles for the public about investing and wealth management. All articles are edited by AdviceIQ's editor in chief, Larry Light. AdviceIQ certifies that all its advisors have no regulatory infractions.