A lot goes into managing your military career. Whether it’s meeting physical fitness standards or testing to make rank, you’re responsible for keeping everything on track. One area that’s necessary for a successful military career but doesn’t receive as much attention are your finances. When your finances are running smoothly, they don’t play a part in your military career, but when they’re not, then it is a problem for your job.
Knowing these four things about money and the military can keep your military career on track and help you avoid future financial problems.
1. Security Clearances & Your Finances
Many service members are required to have a security clearance for their job in the military. The Department of Defense uses a set of guidelines to determine a person’s eligibility for clearance. One of the 13 guidelines covers finances. It’s Guideline F, and it says, “An individual who is financially overextended is at risk of having to engage in illegal acts to generate funds. Unexplained affluence is often linked to proceeds from financially profitable criminal acts.”
The guideline is saying when you’re in debt, you may be tempted to compromise information or technology you have access to in exchange for money. Guideline F doesn’t just apply to an initial application for clearance. It also applies to individuals being reinvestigated. This is where people serving can run into problems with their military career.
Reinvestigation can be at 5, 10 or 15 years after your initial clearance is obtained depending on if it’s top secret, secret or confidential. Losing your clearance can mean losing your job or being separated from the military if your job requires a security clearance. The F guideline says “a history of not meeting financial obligations” may be a disqualifying factor in obtaining a security clearance. If you’re in the habit of not paying your bills and have debt in collections you may be putting your military career in jeopardy. It’s important to pay your bills on time to keep your credit report and therefore your security clearance in good standing.
2. Government Travel Credit Card (GTCC)
In the course of your military service, you may be required to use a GTCC during a temporary duty for official expenses you incur for travel. The credit card is provided through the Government Travel Charge Card Program and has detailed regulations on its use. (To qualify you must have a qualifying credit score of at least 660. You can check two of your credit scores for free with Credit.com.) Making a poor choice with this credit card can lead to serious problems in your military career.
Service members are required to sign a Statement of Understanding to ensure they know all directions from the DOD for the use of the credit card. One direction that gets military members in the most trouble is the requirement to file a travel voucher within five business days after completing their trip. By not submitting a travel voucher on time, your reimbursement will be late, and you will not have the funds you need to make the payment on your GTCC. If there are any unauthorized charges, they’ll be the cardholder’s responsibility, which will increase the amount of money you personally owe. It may be a credit card you can only use for official expenses, but it’s still in your name. The repercussions of a late payment start with notification to your leadership that you have not paid your bill. Once nonpayment hits 61 days, the card will be suspended. Not paying your GTCC can affect your personal credit or worse could cause you to be separated from the military. Use your GTCC for official expenses and pay the bill on time to avoid the GTCC affecting your credit or military career negatively.
3. The Thrift Savings Plan (TSP)
The TSP is similar to an employer 401K but for military personnel and government employees. It’s available to help them save money for retirement at a relatively low cost. One common mistake that can become a financial problem is if a person signed up for the TSP before Sept. 5, 2015, the money they contributed to the TSP was automatically invested into the Government Securities Investment Fund (G Fund), unless they selected otherwise. Many people never go back into their TSP account and change their investments.
The problem with that is, over a person’s 20-year military career the G Fund is at risk to earn less than inflation.To have a TSP account balance with low or no return comes as a shock to many nearing retirement. To avoid this mistake, review your TSP investment allocation to ensure you have investments selected that align with your risk tolerance.
4. The Savings Deposit Program (SDP)
Being in the military has its financial perks, and one of them is the SDP. This program allows members of the armed forces serving in a combat zone to save up to $10,000 on each deployment. The SDP earns up to 10% annually. It’s not a requirement to use, but it’s a great resource to help service members get ahead on their savings and improve their finances.
Once you’re in the combat zone 30 days, you can start the SDP with your finance office via cash, check or direct deposit. The limit you can deposit at one time is equivalent to the amount you earn in basic pay. For example, if you make $1,000 per month in basic pay, that is the max you can deposit at on time. If you earn $7,000 basic pay in a month, you can write a check to begin your SDP with $7,000 and then set up allotments each month to continuing saving until you return or reach $10,000. Building a surplus in savings prepares you for financial problems that may pop up in the future.
Image: Catherine Lane
This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its partners.