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Financial readiness for military service members

An American soldier takes patrol at Khanashin district in Helmand province.

Tess Vigeland: Ah, Memorial Day weekend is upon us. A time to toast the start of summer and salute the men and women of our armed forces. We often hear about military readiness, but there's also the issue of "financial readiness."

Joseph Montanaro is a certified financial planner with USAA, which provides banking and insurance services to members of the military. J.J., welcome to the show.

J.J. Montanaro: Hi Tess, it's great to be here. Thanks for having me.

Vigeland: You served on active duty for six years and served in Afghanistan in '05 and '06. Talk a little bit about how managing money in a military household is different from a civilian household.

Montanaro: Well, I think the military, in essence, is a microcosm of society as a whole, so the challenge is that all Americans face are the same for the military; they're just compounded by the unique nature of military service. And I think that unique nature can be summed up in one word and that's "mobility."

Vigeland: Yeah. So what kind of, perhaps, surprising or unexpected financial issues crop up because of that, the rest of us generally don't have to deal with?

Montanaro: Well, I would start with deployments, because most Americans aren't faced with separating from their spouse of leaving their home for 12 months or 15 or 18 months at a time. And so the challenges that bring are truly unique to the military. I was actually in the Army Reserve when I was mobilized and deployed in 2005. But up to that point, is the financial planner in the house. I always controlled the finances. I did the bills, did the investments. But when I left, I wasn't able to do that and so my wife was forced to take over. Unfortunately, when I came back -- or fortunately -- she took over and didn't let go.

Vigeland laughs

Vigeland: I would think that would be "fortunately." Less for you to have to do. So what advice do you now give to members of the military, having been through this, in terms of preparing if they are about to be deployed?

Montanaro: When I was deployed, we had a little folder and I wrote down everything in that. And that folder still sits in my desk today, even though I'm retired. But it was the benchmark that my wife could take a look at and had as a reference.

Vigeland: What kind of counseling do members of the military get in terms of their finances?

Montanaro: There are a host of resources, and I think when it comes to financial crisis or financial challenges, one of the things that folks need to be aware is they need to raise their hands and ask for help. And there are plenty of resources out there. One that I think is particularly valuable is Military One Source. And you can get things from counseling on Service members Civil Relief Act and what those provisions are to debt management.

Vigeland: We did an entire hour on members of the military and their finances a couple of years ago. And I remember at the time, the Department of Defense was saying that money issues were so bad among military personnel and their families that it was affecting service members' ability to do their jobs. Do you know if that has improved?

Montanaro: There is certainly substantially more resources being directed at that. There are campaigns for financial readiness earlier this year. The "Military saves" campaign kicked off. Now in terms of the bottom line results, I'm not sure what those are. The one number that I did see that disturbed me a little bit is the participation rate in the military's version of the 401(k), the Thrift Savings Plan, was under 40 percent.

Vigeland: And aside from not saving enough for retirement, I know that also military consumer debt is higher than civilian consumer debt. Advice on that front? Particularly because you would think that members of the military have a pretty secure paycheck.

Montanaro: Yeah, that is actually one of the exciting financial components of being in the military, you have that paycheck. And unfortunately, I think a lot of people starting in the military fairly young are relatively inexperienced when it comes to managing money. But there are plenty of folks out there who know that they have that paycheck and that makes them targets for predatory lenders, like payday lenders and that sort of thing. So I think if they leverage that paycheck to create a budget and a spending plan that they live within and that contains or involves saving for the future. That's a great resource and one that a lot of Americans, especially in today's difficult times, can't count on.

Vigeland: J.J. Montanaro is a retire lieutenant colonel with the Army Reserves, currently serving as a certified financial planner with USAA. Thank you so much for you time today.

Montanaro: Thanks for having me Tess.

Vigeland: You'll find a link to that special I mentioned here.

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