Articles by Ryan Guina

Ryan is the founder and editor of this site. He is a writer, small business owner, and entrepreneur. He served over 6 years in the USAF and also writes about money management, small business, and career topics at Cash Money Life.

You can find him around the web at, Ryan Guina on Twitter, The Military Wallet on Twitter, and on Google.

Does the SCRA Allow You to Miss Loan Payments?

I was recently contact by a new military spouse who wanted to know if the Servicemember’s Civil Relief Act allowed his wife to miss a payment on her credit card and avoid paying the associated fees and service charges. Here is the question:

Servicemembers Civil Relief Act

Q: Hey Ryan, my wife got a credit card about 2 months before she left for basic training. She is active duty Army. She was employed before even entering the Army, but left her job about two weeks before leaving for basic.  She didn’t receive pay for 45 days after leaving for basic. In that time her credit card payments were due. Well, with all other expenses she/we didn’t have the funds to make the payment so they charged her a late payments and have reported the missed payment on her credit report, even though they knew of the situation b/c I had called them to keep them up to date. We have her shipment papers showing she was gone and the bank that we have the credit card through can see where we set her direct deposit up, and when the first payment was deposited. Isn’t there something that protects her from this effecting her and her credit and the charges?

A: Thanks for contacting me.The Servicemember’s Civil Relief Act offers a wide range of protections for military members, including some that pertain to loans and interest rates. However, I don’t know if you will be able to get any late fees or interest charges waived in this situation. The SCRA doesn’t eliminate the requirement to make on-time payments for loans entered into before the service.What it does do is allow you to lower your interest rate to 6% for pre-service debt and obligations.

What this means, and what you should do. The SCRA allows you to request that your interest rate be lowered to 6% for all debts incurred before your wife entered the military. This would apply to her credit card, and any other loans she has. Note, this will only apply to loans with her name, this won’t apply to loans that you have only in your name. The lender is required to lower the interest rate to 6%.

This decreased interest rate will only apply to old charges, and will not apply to anything that was put onto the card after she joined the military. But it may help you pay off the credit card balance more quickly. You can contact your base legal department with assistance if your credit card issuer does not readily lower the interest rate. Even though it is the law, some companies push back, either out of ignorance of the law, or because they prefer to use other methods before complying. Don’t let them push you around – this is a law they must comply with!

What about the missed payment? Your best bet would be to contact the lender and ask them to waive the fee and interest charges one time as an act of good faith. Many lenders will do this one time if you otherwise have a good record. You can also offer to set up automatic payments for at least the minimum payment each month, that way he credit card issuer won’t ever have to worry about getting a late payment in the future.

Protect your credit score. You should also request they remove the late payment from your credit report if they are willing to do so. This will help keep your credit score in good standing, as missed payments will hurt your score. Keep in mind that while a missed payment will hurt your score, it won’t necessarily prevent you from opening further lines of credit. Here are tips for improving your credit score, which you may find helpful in this situation. Finally, you should periodically monitor your credit score to see how it is changing. This is good information to have if you are applying for a new credit card or loan. Here is how you can get a free score.

Consider finding a new bank or lender. Finally, you may consider joining a military-friendly bank. These financial institutions offer a wide variety of financial products and services, very competitive rates, and excellent customer service. More importantly, they know what it means to serve, and they are often more lenient with missing a credit card payment one time, or having financial difficulties due to a deployment, temporary duty assignment, or relocation. I recommend looking at your options and seeing if any of those banks meet your needs. Here are some recommended military banks.

I hope you find these tips helpful.

By the way, welcome to the military community! The military truly is a different way of life, and I’m sure there have been some challenges getting acclimated to being a military spouse. I can speak from experience. I was prior active duty Air Force, but I was also a civilian spouse for about a year after I got out of the military. There was a lot I didn’t know, even with my military experience! Thankfully, there are many websites now dedicated to military spouses. Here are a few I recommend looking at for valuable information and for a sense of community:

  • (formerly Macho Spouse) – a community dedicated to male military spouses.
  • – Tons of great information on PCSing, deployments, career tips, and more.
  • – A site with lots of great info on military life, family, new laws/policy, and more.

Remember, you can always reach out to the military and military spouse communities for help, large or small. Best of luck to you and your wife in your military journey!

Army Tuition Assistance Benefits – Updates for FY 2015

The Army recently updated their Tuition Assistance (TA) program with a focus on ensuring their Soldiers are more focused on military readiness and training as opposed to spending more time on college classes. Soldiers will still have the opportunity to use Tuition Assistance to achieve their educational goals, however, Soldiers must first meet more stringent criteria to be eligible to participate in the TA program. The most recent updates to the Army Tuition Assistance Benefits program were released in August 2014, and apply to FY 2014.

Army Tuition Assistance Benefits

Big changes are coming to Army TA benefits.

While not everyone will be happy with these changes, the Army was compelled to make these changes to meet readiness goals and to help stretch the ever shrinking budget. Let’s dive in and take a look at what the Army TA program offers, who is eligible, which educational programs are covered, and how to take advantage of this valuable benefit.

FY 2015 Army Tuition Assistance Benefits Updates

The following rates are effective immediately, and are in place from October 1, 2014, through September 30, 2015. (There were no changes to the rates from FY 2014).

2015 Tuition Assistance Rates: Effective January 1, 2014, the Army will fund 100% of the tuition for up to 16 hours of credit, not to exceed $250 per credit hour (for a total of up to $4,000 per fiscal year). This replaces the previous limit of 18 semester hours of credit with a cap of $4,500 per fiscal year (FY 2013 rates).

Starting October 1, 2014, the Army will no longer pay certain fees, including laboratory and course fees. This is in accordance with Department of Defense Instruction 1322.25 (PDF).

Army Tuition Assistance Eligibility

Perhaps the biggest change to the Army Tuition Assistance program pertains to eligibility requirements. The following is applicable to all Soldiers, regardless of component, who apply for Tuition Assistance.

Army Tuition Assistance Benefits Program Eligibility (source):

  • Soldiers will be eligible for TA upon successfully completing one year of service following graduation from Advanced Individual Training (AIT).
  • Soldiers can use TA for a second, higher level degree (post Bachelor’s) once they have 10 years of service, if any portion of the undergraduate degree was funded with TA. There is no 10 year requirement if TA did not fund any portion of undergraduate work. (Beginning January 1, 2015).
  • Soldiers may take up to 16 semester hours (SH) per fiscal year at the rate of $250/SH each year.
  • Soldiers can use TA for 130 SH for a bachelor’s degree and for 39 SH for a master’s degree.
  • This level of funding permits soldiers to complete one degree at each level as part of an approved degree plan.
  • As other fully funded programs are available for first professional degrees (PHD, MD, JD), TA is not designed for this purpose.
  • To be eligible for TA, Soldiers must meet army physical fitness test (APFT) and height/weight standards and not have a DA adverse action flag.
  • TA requests must be submitted and approved prior to the first class date, without exception.
  • Beginning September 6, 2014, reimbursement will be required from the servicemember if a successful course completion is not obtained.
  • The procedures will remain in effect until superseded or rescinded.

As you can see, the focus is on ensuring Army Soldiers first meet Army training standards before they can participate in Tuition Assistance benefits. There are a couple points worth highlighting:

Soldiers must complete one year of service after completing AIT. This doesn’t mean you have to complete AIT and have 1 year of service. You must serve one year after completing AIT. This ensures Soldiers are focused on upgrade training and proficiency before focusing on college.

The 10 year rule is also new, and worth noting. This doesn’t mean you have to wait 10 years after completing your Bachelor’s Degree before the Army will help pay for your Master’s Degree. This simply means you need to reach the 10 year mark in service. This is when the Army considers Soldiers as Career Soldiers. The Army knows they will get a better return on their investment with this rule. This also may not affect many soldiers who started their college courses later in their careers. (No word if there will be exceptions to this rule for prior-enlisted officers who used TA to achieve their Bachelors and receive a commission).

Eligible Study Programs: Tuition Assistance is available programs offered by accredited schools that are registered with GoArmyEd. Professional degrees such as a PHD, MD, or JD were listed as ineligible for the Army Tuition Assistance program. However, these degrees are required for hard to fill billets, and are almost always in high-demand. There are special programs to help Soldiers achieve these degrees.  See your Education and Training Office for more information regarding eligible study programs and schools.

Why the Army Changed The Tuition Assistance Program

Budgets are being crunched from all directions, and each branch of the service has been tasked with doing more with less. The Army TA program was briefly halted last year due to the automatic spending cuts that were part of the Sequestration. After the programs were reinstated, each branch took a long look at how they could reduce the budget while still offering their troops education benefits. Each branch altered their TA program to some degree, with the Air Force making many changes similar to the Army TA Program. The Coast Guard had the most drastic changes, in which they reduced the benefit to a 75% tuition payment with the member paying the remaining 25%. The Coast Guard also reduced the total number of credit hours per year.

Alternative Ways to Pay for College

Army Soldiers who aren’t eligible for the Tuition Assistance program still have options to continue their education while they are serving. For example, the DoD offers military members the opportunity to take credit by examination tests, including the CLEP and DANTES tests. Passing these test gives students college credits at a variety of colleges and universities. They can be a great way to reduce the amount of time needed to achieve a degree. I used these extensively while taking classes on active duty. Many colleges and universities also offer credits for military service.

Other ways to pay for college include using the Montgomery GI Bill, the Post-9/11 GI Bill, military scholarships, federal grants, grants and scholarships from schools, and other tuition assistance programs.

With a little planning, it may be possible to achieve a Bachelor’s Degree with little to no out of pocket expense, without using the Army TA program. This would allow enlisted members to complete a Bachelor’s Degree, then begin working on a post-bachelor’s degree without having to wait to reach the 10 year service mark.

I Joined the Air National Guard – My Long Journey to Serving Again

I separated from active duty eight and a half years ago. Last week I joined the Illinois Air National Guard. After eight and a half years as a civilian, I am back in the armed forces. And I couldn’t be more excited! I know such a long break in service isn’t the normal situation, so I’ll be happy to share why I made the decision, why it took so long for me to decide to serve again, and why in the long run, it looks like it could be a great move for my family and I.

Join Air National Guard

I joined the Air National Guard!

Why I didn’t join the Guard/Reserves right away. I’ll start with my active duty time (1999-2006). I had an amazing first tour, and I hit every benchmark and goal I set for myself, and then some. I was stationed overseas at RAF Lakenheath in the UK, I had the opportunity to participate in a year-long special duty assignment that took me literally around the world, I deployed 5 times, I hit every promotion the first time, and I completed my college degree while on active duty. The only goal I had in mind that I didn’t accomplish was becoming an officer. But I had my degree and would have been able to put together a competitive officer package. I am confident that had I stayed on active duty, I would have been able to achieve that goal as well.

My first enlistment was for a six year term, and I extended six months to deploy one more time to help our squadron’s manning situation (they needed me for one more deployment and I didn’t have immediate post-military plans, so it worked out well for both sides). After the six month extension I had to decide on reenlisting in a job I didn’t want to continue working in (aircraft maintenance with a high deployment rate), or cross-train into a new career field, which would delay the time it would take to put together an officer package. At that point I had served 6.5 years in a high ops tempo environment, and I was ready for a break. I wanted to slow things down, start a family, and move on to the next phase of my career. I did those things.

I separated from the military in 2006, got married, found a job with a federal contractor (working on Air Force logistics projects at Wright-Patterson AFB), and slowed down to enjoy life as a civilian. I was still around the military mission—I just wasn’t wearing a military uniform any longer. Eventually, that too passed. I became an entrepreneur, started a business, and for the last 4.5 years, I have been self-employed and working from home. For many people that would be “the life.” And it is great. I get to spend a lot of time with my family and I get to watch my two young daughters grow up. I wouldn’t trade it for the world! But something has been missing.

I miss being around other professional peers. I miss wearing the uniform and being part of something larger than myself. I miss the mission and the camaraderie. The people. All of it. Well, maybe not all of it! But I missed the military enough to consider serving again, at least on a part-time basis.

I Didn’t Think I Was Eligible for the Guard or Reserves

There are several reasons I didn’t pursue the Guard or Reserves sooner. The first is that I was just plain burnt out from the time I served. I knew that if I joined the Guard or Reserves I would likely deploy again. I needed that break from service and from deployments. But I also thought I was ineligible to join because I had received a VA service-connected disability rating due to some injuries I had while I was on active duty (I had two knee surgeries). I thought that receiving disability compensation pay made me ineligible to serve again in the Guard or Reserves.

I later discovered this was not the case – you can serve in the Guard or Reserves if you have a VA service-connected disability rating, provided you can get medical clearance. But there are some stipulations. For example, you can’t receive concurrent pay for the same period. In other words, you can’t earn disability compensation pay on the same day you earn a military paycheck. You can still remain on the payroll for both, you just have to waive the pay for the period you served concurrently. Most people choose to receive their military pay and waive the VA disability pay. So if you receive pay for a total of 60 days in the Guard/Reserves, you fill out a form at the end of the year to waive the VA pay and the VA will stop your pay for the next 60 days, then your VA pay resumes. Click on the link above for a full explanation and links to the relevant laws. And don’t let a VA disability rating stop you from serving in the Guard or Reserves if you think it might be a good fit for you!

My First Attempt to Join Didn’t Go So Well

deniedTwo years ago, after several lengthy discussions with my wife, I started the process of joining the Air National Guard. I even wrote about it here. But it was not to be. At least, not on my terms or on my timeline. It turns out I needed to get some waivers to rejoin the military. And this isn’t a topic that you can easily navigate on your own unless you know what you are doing, or you know what to look for. I didn’t have a clue at the time. But I learned!

The first recruiter I spoke with sent my DD Form 2807-2 Medical Prescreen of Medical History Report (PDF) to MEPS where it was promptly returned with a PDQ (permanent disqualification) for medical reasons. As I mentioned, I had a couple minor knee surgeries while I was on active duty, and a couple other small issues. None of the medical issues were serious, but they still required waivers before I could rejoin the military. Unfortunately, at that time I didn’t know how the waiver process worked. The recruiter informed me that the PDQ meant I could never serve in the military again. He either didn’t know what he was doing, or he didn’t want to put in the effort to help me join the unit.

I was devastated. It felt horrible to be told that I wasn’t fit to serve. That my country didn’t need me, or want me. So for the next half a year, I did nothing with my application. I was disappointed, but since the recruiter told me I was ineligible to serve, I took his response at face value. That was a mistake on my part.

After about six months, I began researching medical waivers. I knew the medical issues I had weren’t very serious, so I wanted to see what could be done. The first thing I learned was a PDQ doesn’t mean you are permanently disqualified from serving again. It just means the issue is a permanent medical issue that cannot change. For example, I had arthroscopic knee surgery on each knee. That is a minor surgery in most cases (some NFL players return to game action 2-3 weeks after surgery). But it’s a permanent issue because you can’t undo the surgery. So you need a waiver. On the flip side, something like a broken finger would be a Temporary Disqualification – you can’t go through basic training or join the military with a broken bone, but it will heal, thus the temporary rating.

I began reading various websites and forums and official regs, like the DODI (Medical Standards for Appointment, Enlistment, or Induction in the Military Services, PDF). I learned how to research things like PULHES codes and other fun things. The more I learned, the more I realized each of the medical conditions I had was eligible for a waiver. I’ll write more about getting waivers in another article. Suffice it to say I was determined to give it another shot.

My Second Attempt Yielded Better Results

The next attempt at joining went much better. About a year after my first attempt to join the ANG, I contacted a recruiter at a different unit. I was able to explain everything in great detail during our first conversation. I explained that I had some medical issues on my DD Form 2807-2 and I would need medical waivers to join – but each item should be wavierable. There were no other outstanding issues that would prevent me from serving. I worked with two awesome recruiters to create a plan and we got to work. My main goal was setting up appointments with medical specialists to get examinations and letters from them stating I was medically fit to serve. This took a couple months to arrange everything, and it cost a little money of out my pocket (the medical examinations are on the applicant’s dime). But the time and expense were worth it, just for the chance of serving again.

Finally, we had to schedule a visit to MEPS and apply for waivers. The paperwork went back and forth a couple times. The medical pre-screen was again denied, which we knew would happen. So I had to get waivers just to visit MEPS. Then MEPS declined my entry into the military (as we expected), but recommended waivers based on the letters from my doctors and from my physical exam. Then we had to send my medical package to the Air National Guard Surgeon General’s Office, where they determine the waiver status. It honestly didn’t take as long as it sounds like it would take. The longest part of the process was actually scheduling the medical appointments on my end. The parts with MEPS and applying for the waivers took anywhere from a couple days to a couple weeks.

Waivers Approved – Now I was Cleared to Join

I can’t say how happy I was when I received word that the waivers were approved and I was cleared to join the ANG. It was almost a two year journey, and a bit of a roller coaster at that. It was awesome to hear I was approved to serve again! The next step was coordinating with my recruiter to find a job I was eligible to work and do some interviews. We narrowed down the list of jobs that I could do (based on rank, qualifications, ASVAB scores, etc.). Then we set up interviews. I sent in my resume, some letters of recommendation, and drove down to do the unit for some interviews.

I took a week or two to decide which job was the best fit. Then we set up the enlistment date, and last week I drove down and swore in. I met my supervisor then spent the rest of the day doing my security clearance paperwork and filling out all kinds of forms – record of emergency data, SGLI paperwork, I opened a TSP account, etc. My first drill will be the first weekend of September. It was a long journey, but I’m excited that it ended well.

There Are Some Sacrifices

The unit I joined is located 3 hours away. That makes for a lengthy monthly commute, but I don’t mind it too much. I work from home, so I don’t have a daily commute. I actually enjoy getting behind the wheel for a 3 hour drive once and awhile. The unit also puts me up in a hotel for drill weekends, so the biggest out of pocket expense is gas and food. But I can claim a mileage deduction when I file my taxes each year, at a rate of $0.56 per mile. So that will more than make up for the cost of gas each trip.

The biggest sacrifice is being away from my family, but that too, is manageable. I will be required to attend a 7 week tech school for my new career field. But that is a one-time event, so it isn’t something we have to do each year. The monthly drills are planned a year in advance, so we can plan much of our family schedule around that. And the two week annual drills can be worked around as well. The biggest concern I have is the possibility of being deployed. While it’s a remote possibility, it does exist, and it is something I am prepared to do if called upon (I’ve already done 5 of them, so I know the drill!). And this is the reality every military member faces. So it’s not something I jumped into without knowing the drill.

The Benefits

In my opinion, the benefits far outweigh the costs. At the base level, there is the pay that comes with joining the Guard. I will retain my old rank of E-5 (with the opportunity to promote). So my drill pay comes out to around $380 per month, and about $1,450 for the two week annual training period. The total for the year comes out to about $6,000 (here is a Drill Pay calculator for those who are interested in running some numbers based on their situation). It’s not a huge sum of money, but it’s also nothing to laugh at. I also took on an E-7 billet, so there is room for promotion after I complete my upgrade training and time in grade/service requirements. The promotions won’t happen right away and aren’t guaranteed, but the potential is there.

There are also other valuable benefits, including:

  • Health Insurance: TRICARE Reserve Select is one of the most affordable health insurance plans I’ve seen. It costs about $52 per month for an individual, or $204 for a family plan. It also has low deductibles and out of pocket expenses. I will write a more in-depth article about TRICARE Reserve Select. Overall, it’s an incredibly valuable benefit.
  • Education: The State of Illinois is one of the few states that offers 100% tuition assistance for courses at state universities. I have a Bachelor’s Degree, but I may take advantage of this to complete an MBA or other Master’s Degree program. It will be even better if I am able to transfer my Post-9/11 GI Bill to my daughters. I believe I have to serve for one year before I am eligible to begin using the benefits, but that’s OK. I signed a 3 year enlistment contract, so I have time to make plans.
  • Possible Pension & TRICARE for Life: You need 20 good years to qualify for a pension from the Guard or Reserves. Right now I should have about 7 good years, which means I would need at least 13 more good years to qualify for retirement and a pension. And the pension wouldn’t start until I reach age 60 (some people are eligible for an early retirement from the Guard / Reserves based on active duty time served after 2008). I am 34 now, which means I would need to stay in uniform until at least age 47, and perhaps longer, depending on how things work out. I can’t look that far into the future, so for now, I will take it one enlistment at a time. But I am intrigued about the possibility of earning a military retirement and the pension, health care coverage, and other benefits that go with it.
  • Intangible Benefits: As I mentioned, I miss wearing the uniform and being an active part of the military community and everything that goes with it. Being held to a higher physical fitness standard than I have held for myself over the last few years is another benefit. I like that I will be required to stay in shape and have at least one physical fitness test a year. It will keep me moving in the right direction!

Going Forward

Overall, I’m very excited about the opportunity of serving again. It’s something I have missed for a long time, and I hope I enjoy it as much as I think I will. I know there will be difficult times. The time away from my family will be the most difficult part of serving again. But it will be manageable. The opportunity to serve again means a lot to me. And I look forward to it.

Air National Guard Logo courtesy Wikimedia Commons.

Can You Join the Guard or Reserves if You Have a VA Service-Connected Disability Rating?

One of the biggest misconceptions about having a VA service-connected disability rating is that it closes the door on your ability to serve in the military ever again. Some injuries or disabilities may indeed prevent you from serving in the military again. But the service-connected disability rating isn’t what prevents you from serving again, it is the injury that does that.

Can you join the Guard or Reserves with a VA Disability Rating?

You can join the National Guard or Reserves with a VA Disability Rating – if you can get medical clearance.

If you have an injury or medical condition that is severe enough to warrant a VA disability rating, the chances are high that you will need a medical waiver to join the military again. Medical waivers are processed independently from your VA disability rating. There is no magic number that is too high to prevent you from joining the military – it all comes down to the type of medical condition and its severity. We’ll cover medical waivers in a separate article. For now, let’s take a look at how having a VA service-connected disability rating affects your ability to join the Guard or Reserves and how it affects your pay and compensation.

Dual Compensation from the VA and the Military is Prohibited

There is a law on the books often referred to as “concurrent receipt” which prohibits service members from being paid for active duty or active or inactive training concurrently with VA disability compensation or pension benefits.* You can find these laws written in 10 U.S. Code § 12316 – Payment of certain Reserves while on duty, and 38 U.S. Code § 5304 – Prohibition Against Duplication of Benefits.

You can read the full sections linked above, or check out these two excerpts which give you the gist of the law:

  • 10 U.S. Code § 12316: found under section (b) Unless the payments because of his earlier military service are greater than the compensation prescribed by subsection (a)(2), a Reserve of the Army, Navy, Air Force, Marine Corps, or Coast Guard who because of his earlier military service is entitled to a pension, retired or retainer pay, or disability compensation, and who upon being ordered to active duty for a period of more than 30 days in time of war or national emergency is found physically qualified to perform that duty, ceases to be entitled to the payments because of his earlier military service until the period of active duty ends.
  • 38 U.S. Code § 5304: under section (c) Pension, compensation, or retirement pay on account of any person’s own service shall not be paid to such person for any period for which such person receives active service pay.

In short, the law states you can collect a pension, retainer pay, disability compensation or other earned pay, however, you must choose to suspend that benefit if you are called up for training or to active duty if you want to receive active duty or training pay.

*Note: There is a similar law often referred to as concurrent receipt which applies to receiving disability compensation while receiving retirement pay; this is a separate application of these laws, which you can read about here.

Typical Guard / Reserve Training Schedule

Most traditional Reservists and Guard members receive pay for 63 training days per fiscal year. This accounts for the standard 48 Unit Training Assemblies (UTAs), and 15 days of Annual Training (AT) time. The 48 UTAs typically consist of 4 drill periods per month for 12 months. For our purposes in this article, we will consider 63 paid service days as a baseline. Just keep in mind this doesn’t account for further training, deployments, mobilizations, or other active time. So you may end up with more than 63 days for the calculations we will do later in this article.

Verifying Your Time with Dual Payments

Because you can’t be paid by both the military and the VA on the same day, you must choose which pay you wish to receive, and which you wish to waive. You can do this at the end of the year with VA Form 21-8951, Notice of Waiver of VA Compensation or Pension to Receive Military Pay and Allowances (PDF). You must fill out this form each year in which you receive VA service-connected disability compensation or pension benefits and you serve on paid status in the Guard or Reserves.

The VA should send you this form during the first quarter of the current year, for the previous fiscal year. If you haven’t received a copy, you should request an annual waiver from the VA. However, keep in mind, this is up to you to complete and return. If you do not receive a form from the VA, then you should initiate completing the form on your own.*

Completing the form: Once you have your form, you will need to verify how many days of paid military service you had in the previous year. Then you will need to complete the form and submit it to your Commander or his representative for correction or approval. The unit will keep a copy, a copy will be forwarded to the State if you are in the National Guard, and a copy is submitted to the VA. You should also keep a copy for your records, including the date it was submitted.

*Note: This is the law, and you cannot claim ignorance. You were informed by the VA when you received your VA Disability Rating Decision, found on VA Form 21-8764 – Disability Compensation Award Attachment. This form states your payments may be affected by receipt of active duty or drill pay as a Reservist or member of the Federally recognized National Guard. It is important to inform your Guard or Reserve unit when you join that you also have a VA Disability Compensation rating. Your recruiter or Personnel office will help you get this information into the system so it doesn’t catch anyone off guard.

The Service Member Chooses Which Pay to Waive

You should always run the numbers before signing and submitting the document. But in most cases, it will be best to waive the VA Disability Compensation. Here is how it works:

You must choose to waive your VA benefits for the number of days you served in the military, or, you must waive the military pay and allowances you received during your training days. The latter will almost always give the veteran less money.

Remember the number 63 above? That represents the standard number of training days for most members of the Guard or Reserves. If you waive your Va Disability Compensation payments, you will choose to waive 63 days of VA benefits. If you choose to waive your military pay from the training days you served, you would be waiving everything you earned from the military from the previous year.

Let’s look at an example:

Example of Waiving VA Disability Pay

Let’s look at an E-5 with 8 years and a 30% disability and no dependents (this example uses 2014 rates for both drill pay and disability compensation) .

The disability payments would equal $400.93 per month. $400.93 ÷ 30 days in a month = $13.36 a day in VA disability compensation.

The same E-5 would earn $385.80 per drill weekend (4 drill periods at $96.45 each). So 1 UTA = $96.45.

The E-5 can waive the VA disability compensation of $841.68 ($13.36 * 63 UTAs). Or he can choose to waive approximately $6,076.35 of military compensation ($96.45 per drill period * 63 UTAs & AT days).

It’s clear to see from this example that waiving the ~ 2 months of VA disability compensation is the right way to go!

Run your own calculations: Here are the current VA service-connected disability compensation rates, and a current Drill Pay Calculator. Simply plug in the numbers for your situation and run the numbers. It should be quick and easy to determine which pay is better to waive. Note: don’t just use 63 days – verify how many days of paid military service you had in the previous year.

Factors to Consider When Choosing Which Pay to Waive: VA disability compensation is tax free. Most drill pay will be considered taxable income. So if it’s close, you may come out ahead if you choose the VA service-connected disability payment. But you would need to bring in a lot of VA compensation pay to offset a year’s worth of drill pay. In most cases, it is best to waive the disability compensation. But be sure to run the numbers, just in case.

How Does the Government Collect What You Owe?

Great question. In most cases, the VA will not ask for the money back. They will simply withhold your future payments until they have collected the funds you owe. So if you had a standard year with 63 paid days, the VA would withhold your future earnings at a rate equal to 63 days of compensation pay. Keep in mind this equals just over two months, so you can expect to miss those payments after you submit your form. Be sure to verify the total number of paid military days you had in the previous year so you will know how long you will be without your disability compensation payments. You will want this information so you can work it into your budget so you don’t cause yourself any financial hardship!

Suspend Your VA Compensation if You Return to Active Duty

You should contact the VA to suspend your VA service-connected disability compensation if you return to active duty for an extended period of time, including mobilizations, deployments, long TDYs, taking an AGR slot, and long training assignments, such as technical training, Officer Candidate School, etc. Failure to do so will force you to incur a large debt to the VA and could cause problems down the road. The easiest thing to do, and the correct thing to do, is to suspend your compensation payment, then request its reactivation when you go off active duty orders.


You can join the Guard or Reserves with a VA service-connected disability rating – if you are medically cleared. But it does affect your pay and benefits. Make sure you keep this in mind if you have a VA disability rating and you are considering joining the Guard, Reserves, or even active duty.

Military Involuntary Separation Pay Rules & Eligibility

With the current military drawdown, involuntary separations will be a way of life for military members for the foreseeable future. Unfortunately, being informed you will be involuntarily separated from the military usually comes with little notice. You will likely go through a range of emotions as you come to terms with the fact that your military career is ending, whether you want it to or not. We covered this topic recently in a podcast about Force Shaping and involuntary separations. The podcast covers some of your options, including the benefits that will be made available to you, the option of joining the Guard or Reserves, early retirement, or in some situations, being eligible to receive separation pay.

This article covers separation pay in more detail, including an overview of the eligibility requirements, types of separation pay, how to calculate involuntary separation pay, and more.

Involuntary Separation Pay Rules & Eligibility

Military Separation Pay Eligibility (Non-Disability)

Military separation pay is comparable to the severance pay you might find in the civilian world. However, not all servicemembers who are involuntarily separated from the military are eligible to receive separation pay benefits. There is also two types of pay, (1) Full Separation Pay, and (2) Half Separation Pay. (for the purpose of this article, we are not considering separation pay for a disability).

Full Pay Eligibility: You must have served at least 6 years on active duty, but less than 20 years* to be eligible to receive involuntary separation pay. In addition to the service time requirements, you need to be fully qualified for retention at the time you are let go, and your service must be characterized as “Honorable.”

Common reasons for being eligible to receive involuntary separation pay include separated under Force Shaping, or Reduction in Force measures, or exceeding high-year tenure for your rank.

To qualify for Full Separation Pay, the service member must agree to serve in the Ready Reserve or similar Reserve Component for a minimum of 3 years following release from active duty service.

Half Pay Eligibility: Half Pay also requires a minimum of 6 years of active service, and less than 20. However, servicemembers can get by with an “Honorable,” or “General” discharge. Some common examples include involuntary separation due to failure to meet fitness/weight standards, loss of security clearance, involuntary discharge due to parenthood, etc. Be sure to check with your personnel department to verify you will be eligible for separation pay.

*Service of more than 15 years, but less than 20: In some cases, those who have served at least 15 years on active duty may be eligible to retire under TERA rules. However, TERA is only offered on a case by case basis, and is not guaranteed to everyone with 15 years of service. You need to apply for TERA and it needs to be approved by your branch of service. Hopefully those who have served at least 15 years will be eligible to retire under TERA, as the retirement benefit is substantially more valuable than the one time, lump-sum payment that comes from involuntary separation pay.

How to Calculate Involuntary Separation Pay

Here is how to calculate full military separation pay:

  • 10% x Years of Active Duty Service x 12 x Most Recent Monthly Base Pay.
  • Months of service are counted as 1/12 of a year.

You can express this in words as, “10% of your annual base pay, multiplied by the number of years you served.”

Let’s work through an example of an E-5 receiving involuntary separation pay at 6 years:

$2,734.50 base pay x 12 = $32,814.00

$32,814.00 x 6 (number of years served) = $196,884.00

$196,884.00 x 10% = $19,688.40 = Full Separation Pay.

To determine the separation pay you may be eligible to receive, simply plug in your base pay, number of years (including fractions), and multiple by 10%. The longer you have served and the higher your rank, the greater the value of your separation payment.

Important Things to Know About Separation Pay

Taxes: Taxes will be withheld from your separation pay, usually at a rate of 20% or 25%. So far as I know, you cannot change the withholding rate. If you overpay your taxes, you will receive a refund when you file your tax return the following year. Taxes will be handled in a similar manner to taxes on a military bonus.

Separation Pay & Joining the Guard or Reserves: You may be eligible to join the Guard or Reserves after leaving active duty military service, even if you receive separation pay. However, if you go on to retire from the Guard or Reserves, you will be required to pay back your separation pay. DFAS will withhold 40% of your retirement pay until you have paid back the separation pay you received. There is no option for repaying the balance in a lump sum, but you can request that DFAS increase your withholding to speed up your repayment of the separation pay. Here is more information about paying back separation pay upon retirement.

Don’t let the possibility of repaying the separation pay prevent you from joining the Guard or Reserves, as this can be a great way to continue your military career and continue earning important benefits for yourself and your family.

Additional notes: Separation pay benefits can be complicated and each situation is unique. The DoD Reg for separation pay is over 60 pages long (DoDFMR 7000.14R, Chapter 35, Section 3502, Separation Pay (Nondisability) – pdf) and includes many exclusions and other information. The goal is to give you a rough idea of how the benefit works, so you can run some calculations on your own. It’s up to you to ensure you double-check your status with your finance or personnel office to verify your situation.

You can also read the law as written in 10 U.S. Code § 1174 – Separation pay upon involuntary discharge or release from active duty.

Best Military Banks and Credit Unions

best military banks and credit unionsMilitary members and their families have a unique banking needs. For example, it’s not uncommon for military members to travel frequently, relocate, work irregular hours, live overseas, maintain multiple official addresses in the course of a year, etc. All of this can make banking difficult, at least, if you don’t use a military financial institution. Military banks and credit unions are better at anticipating and meeting the needs of our military families. Even then, they aren’t all created equal. We created this list of military financial institutions to help you narrow down the list and choose a bank that meets your needs.

I’ll run through the methodology used to compare the banks we list, but I’ll preface it by saying it’s virtually impossible for me to list every military bank and credit union in existence. The Defense Credit Union Council consists of more than 200 credit union members which operate branches on military installations around the world. Collectively, they serve over 18 million members. That’s a lot of credit unions! And that doesn’t even include other banks or financial institutions that aren’t classified as a credit union.

Methodology For this List

We can’t cover 200+ financial institutions in this article. The truth is most of the credit unions you will find at your local base or military installation are going to do a fair job at offering you stable financial products and services for most basic banking needs. So we are focused on some of the military banks and credit unions that offer the widest array of services that cater to the military population. This includes features such as:

  • Free checking
  • Remote check deposit through smartphones or scanners
  • Free ATMs and ATM fee refunds
  • Smartphone and tablet apps for full banking needs
  • Full financial services, including loans, investments, insurance, and other products
  • Dedication to the military mission

Inclusion in this page doesn’t mean this is the best financial institution for your banking needs, and not including a financial institution doesn’t mean it isn’t worthy. The above features help us narrow down the sheer number of financial institutions to a more manageable number. From there, we went based on their features, size, accessibility, and dedication to the military mission. This last one is important. While many large, commercial banks have military departments, they often don’t have the same understanding of military members’ needs as some of the financial institutions that are dedicated almost entirely to serving our military and their families. This often includes things like frequent travel, dealing with deployments, seamlessly processing VA Loans, understanding how the Servicemembers Civil Relief Act works, and more.

The following chart lists our top rated Military Financial Institutions. We have avoided giving them a specific numerical ranking, as each of the top three will meet the needs of almost any military member. I don’t hesitate to recommend any of them to any service member or veteran. If you are already a member of one of these banks, and you are happy, then don’t change. Stick with what you know and love! But you may find that one or more of these military financial institutions offers something your current bank doesn’t offer. In that case, it may be worth your time to look deeper.

Top Military Financial Institutions

USAA Federal Savings BankNavy Federal Credit UnionPentagon Federal Credit Union
FeaturesUSAA Federal Savings BankNavy Federal Credit UnionPentagon Federal Credit Union
Free Checking AccountsUSAA Secure CheckingActive Duty Checking
(Qualifying Military Direct Deposit Required).
Complete Access Checking (free with Daily balance of $500, or $500 monthly Direct Deposit; other wise $10 per month).
Free replacement checksYesYesNo
ATM AvailabilityFree use of 60,000 USAA-preferred ATMs nationwide55,000+ free ATMsover 28,000 surcharge free ATMs within network.
ATM Fee Refundsup to $15 per monthup to $20 per monthNone;
Free withdrawals from PenFed ATMs, otherwise $1.50 network fee, or $3.00 surcharge for non-PenFed ATM withdrawal.
Mobile Check DepositScanner, iPhone, Android, mail option
Ability to make deposits from UPS Store
Scanner, iPhone, Android, mail optionScanner, Mail option. More info -
Free online bill payYesYesYes
Auto LoansYesYesYes
Credit CardsYesYesYes
Mortgages / VA LoansYesYesYes
Insurance ProductsAuto, Home, Life, Health, Renter's, Rental Property Insurance, Valuable Property, Flood, Umbrella, Motorcycot, RV, Boats, Small Business, and more.Auto, Home, Renters, Boat, LifeAuto, Home, Life, Health
Investment ServicesInvestment advisors, Full service brokerage account, In-house mutual funds, stocks and bonds, annuities, Investment calculators, and other tools.Investment advisors, mutual funds, stocks and bonds, annuities, Limited to Certificates of Deposits.
International toll-free customer serviceYes - collect internationally: 1-703-255-8837Yes, from certain locations -
Smart Phone / Tablet AppsiPhone, iPad, Android phones and tabletsiPhone, iPad, Android phones and tabletsiPhone, iPad, Android phones and tablets
Additional serviceshome-buyin gservice, car-buying service; travel agency; member shopping discountsPenFed Car Buying Service
ToolsUSAA Money Manager - track spending and budgeting; budgeting tools, retirement planning tools; Variety of financial calculatorsVariety of financial calculatorsVariety of financial calculators
Physical Branches1922327
Learn More:Visit USAA Federal Savings BankVisit Navy Federal Credit UnionVisit Pentagon Federal Credit Union

As you can see from the above chart, there are many similarities between these three military banks. They all offer free checking, the ability to manage your finances online and through your mobile phone or tablet, the ability to deposit checks remotely, and much more. The other benefits include excellent customer service and a dedication to serving the military community. This goes a long way in my book. Here are some quick high points for each of these three banks:

  • USAA Federal Savings Bank: Free checking, free replacement checks, no minimum balance, online and mobile access, remote check deposit, ATM Reimbursements, home, auto, and personal loans, VA Loans, full investment services, a variety of insurance products, financial advice and planning, free online tools including the USAA® Money Manager, and much more. Learn more about USAA Federal Savings Bank.
  • Navy Federal Credit Union: Free checking, free replacement checks, no minimum balance, online and mobile access, remote check deposit, ATM Reimbursements, home, auto, and personal loans, VA Loans, full investment services, a variety of insurance products, financial advice and planning, free online tools, over 200 physical branches, and much more. Learn more about Navy Federal Credit Union.
  • Pentagon Federal Credit Union: Free checking with Direct Deposit, online and mobile access, remote check deposit (scanner only), home, auto, and personal loans, VA Loans, and insurance products. Learn more about Pentagon Federal Credit Union.

Other Notable Military Financial Institutions:

There are many other notable military banks and credit unions that go along with the big three financial institutions mentioned in the above table. Some notable military banks include:

  • Air Force Federal Credit Union: Account types include: Checking, savings, CDs, IRAs, money market accounts, auto and home loans, VA Loans, credit cards. Features: moneyTracker to monitor account transactions), online calculators, online bill pay. More info: Air Force Federal Credit Union.
  • Armed Forces Bank: Account types include: Checking, savings, CDs, IRAs, money market accounts, auto, consumer and home loans, VA Loans, credit cards. Features: online financial education section, online bill pay, online banking, mobile banking. More info: Armed Forces Bank.

Major Banks with Military Accounts

Many major financial institutions also offer accounts for military members. These often come with free checking (usually requires direct deposit), and some other perks. Be sure to compare their features with your current bank and the military institutions listed above to see which is best for your needs.

  • Bank of America Military: Account types include: checking, savings, credit cards, auto, home, and personal loans, VA loans, credit cards, online and mobile banking, free bill pay, and more. Learn More: Bank of America Military Account.
  • Chase Bank Military Banking: Chase Premier Plus Checking account with Chase Military Banking benefits. Features include no monthly service fee ($25 fee waived with Direct deposit), no minimum balance requirement, no fee for basic checks, no fee for small safety deposit box, no fee for money orders, official checks, travelers checks and gift cards. Learn more: Chase Bank Military Banking.
  • Us Bank Military Banking: Account Features: Free checking, online and mobile banking, online and mobile bill pay, Unlimited free non-U.S. Bank ATM transactions, Free DepositPoint™ remote check deposit, Free money orders, cashier’s checks and more, Safe deposit box annual fee discount (50% off) on new rentals, Free U.S. Bank logo checks and 50% off all other personal styles, No fees for overdraft protection transfers, Additional Easy Checking accounts with no monthly maintenance fee. Learn More: US Bank Military Banking.
  • Wells Fargo Worldwide Military Banking: Account Features: online and mobile banking; checking and savings accounts; auto, home, and personal loans, VA Loans; homeowners, auto, and renters insurance; online tools for monitoring budgeting, spending, and saving; No Wells Fargo access fees for up to four ATM cash withdrawals per statement cycle at non-Wells Fargo ATMs; investment and wealth management services. Learn more: Wells Fargo Worldwide Military Banking.

Local and Regional Credit Unions

Don’t forget to take a look at the banks and credit unions at your local base, or in your region. Many of these financial institutions are more convenient if you need to visit a bank or credit union in person. You may also find that you need to open an account with a different bank or credit union if you are stationed overseas and need to open an account in the local currency. Many credit unions offer foreign currency accounts if they have a branch at an overseas location. The larger banks don’t always offer this service.

As with everything, determine the items that are most essential to you and find the service that is the best match for your needs.

Disney World Military Discounts – 2014

If you are a military member or retiree who is planning a Disney World vacation, then it pays to take advantage of the generous military discounts Disney offers. The promotion is good for a 4-Day Park Hopper ticket for just $169 per person, plus tax. The Park Hopper option gives you access to all four Disney World parks. You can also add park admission to the water parks for $29 more per person.

Disney World Military Discounts Eligibility

Disney World Military Discounts

See the Magic World of Disney without paying a fortune!

Eligible participants include:

  • Active duty members of the Air Force, Army, Marines, Navy, Coast Guard
  • Members of the National Guard and Reserves
  • Military Retirees

Valid ID is required to purchase and use these discounted tickets.

Where to buy tickets: Disney Military Promotional Tickets may be only purchased at participating U.S. military sales locations, and can only be purchased by the servicemember, or their spouse (but not both), for use by themselves and other family members and friends. Up to 6 tickets may be purchased at these discounted rates, however, the tickets may not be sold or transferred, so be sure to only buy what you will use!

The Disney website states, “The actual prices charged at the individual U.S. military base ticket offices for Disney Military Promotional Tickets may be less than the prices set forth above.” There are no guarantees your local base will offer these tickets for less than the stated price, but that would be a nice bonus!

Fine Print and Exclusions

As mentioned above, you or your spouse can buy up to 6 total tickets, however, they cannot be transferred. In addition, there are some blackout dates and locations:

  • December 20 to December 31, 2013: Not valid at any theme parks or gated attractions.
  • April 13 to April 20, 2014: Not valid at any theme parks or gated attractions.

Expiration dates and other fine print:

  • Tickets and options expire and may not be used after Sept. 27, 2014.
  • Valid military identification will be required for purchase and use.
  • No more than six (6) Disney Military Promotional Tickets may be purchased and (if applicable) activated by any Eligible Service Member or spouse (regardless of the place of purchase and whether purchased by that person or that person’s spouse).
  • In addition, one of the six (6) Tickets purchased must be used by the Eligible Service Member or his/her spouse.
  • Each Disney Military Promotional Ticket must be used by the same person on any and all days.

More Military Discounts, Disney, & Travel Savings

Here are some more savings you may find helpful:

For more information, see the Disney website.

Photo credit: Scott Smith.

TMW 003: Force Shaping and Involuntary Separations – How to Handle Being Laid Off from the Military

The military is cutting their end strength across all branches of the military, including active duty, Guard, and Reserves. In today’s podcast we discuss how you can decrease the odds of being involuntarily let go, and what you can do if you are informed that you will lose your military job, including the financial implications of being laid off, benefits eligibility, civilian career options, transitioning to the Guard or Reserves, and how to handle the emotional impact of suddenly being unemployed.

Force Shaping Involuntary Separation

Learn how to prepare for an involuntary separation.

Read this article and listen to the podcast. What follows is an in-depth version of my talking notes from the podcast, not a complete transcript. If you or someone you know is being impacted by the Reduction in Force, then I encourage you to listen to the podcast as well as read these notes. There is value in both. The podcast gives multiple anecdotes and examples. This article is almost 4,000 words and includes a variety of helpful links to internal and external resources. This is a huge topic, and one that you need to spend a lot of time on. Your life is being impacted in a huge way and it’s not something you can solve in an hour. As always, feel free to drop us a comment or question on this page, or our contact page.

The Military Drawdown – Reduction in Force

In the civilian world, you often hear about large companies laying off dozens, or hundreds of workers. In rare cases, a company may lay off thousands of employees. Rarely do you hear about this happening in the government sector, where job stability is often greater than in the commercial sector.

But right now, the military is going through some major downsizing. Call it a drawdown, Force Shaping, Reduction in Force, or RIF, or any other term, it’s all the same. The government is laying off tens of thousands of service men and women currently serving on active duty, and thousands from the Guard and Reserves.

This is a numbers game in Washington D.C., but this isn’t just a numbers game to the tens of thousands of people whose lives are being affected by the Force Shaping our military is experiencing. This is real life. And it’s hard.

Today we are going to talk about the problem, who it is impacting and how it is affecting them, and what you can do if your number is called and you are involuntarily separated from the military.

Joining us in our podcast is a special guest, Rob Aeschbach. He is a retired Marine officer and is in the process of starting a financial planning practice with the goal to help military members and their families. I met Rob at a financial conference about two years ago and we hit it off right away. He is a great guy, and knowledgeable about what’s happening in the military right now, and how you can protect yourself.

Find Rob Aeschback online: If you wish to learn more about Rob, or get in touch with him, you can find him at the following online locations:

Force Shaping – What is Happening in Each Branch

Let’s talk about the military drawdown going on. This is the largest drawdown since the Cold War, when the military reduced the size of their active-duty ranks by 494,000 from 1991 to 1995. That’s almost half a million people whose lives were affected by the drawdown (source).

In comparison, today’s cuts are a small percentage of that. But it’s important to remember these cuts don’t represent statistics, they represent real lives that are being affected. Each branch is cutting thousands of active duty troops, and in the case of some branches, tens of thousands of troops.

Here are some scary numbers (note: some of these sources are somewhat conflicting, and of course, are subject to change):

Army Cuts: The Army has the most significant Reduction in Force, with roughly 50,000 active duty spots in the next few years, and about 30,000 Guard and Reserve slots.

Air Force, Marines, and Navy cuts: The other branches are cutting their numbers at a lower rate.

  • Air Force is cutting 16,700 Airmen (source).
  • The Marines are cutting 6,100 by 2015, and another 4,000 by 2017. Also cutting 1,100 members of the Reserves (source). One source showed a cut of 15,000 Marines by 2017 (source).
  • The Navy is keeping their end strength the same for 2015.

Who is Affected – Officer, Enlisted?

Each branch determines which careers and ranks are being cut. This is something they normally decide based on desired end strength, current overages, and other needs. What is important to know is that the Reduction in Force affects officer and enlisted alike. For example:

  • In June 2014, the Army cut 1,100 Army Captains, and they were scheduled to cut 500 Majors in July. In most cases they are given a little less than a year to separate.
  • Many enlisted members’ jobs are also being cut. Instead of being given a separation date, enlisted members are often allowed to finish their enlistment, but aren’t allowed to reenlist.

Which jobs are being cut? There is no public list. If your career field is over-manned, or your officer class has too many people, then you may be in danger of being selected for involuntary separation. If you don’t know the status of your career field, then you may try contacting your personnel officer or assignments officer to find out what is happening with your career field. If you want to be proactive, find out if you are eligible to cross-train into a high-need career field, or one that is undermanned.

Special to the podcast: Rob shared some anecdotes about his time in the Marines. He joined in 1990, right before one of  the largest drawdowns in US Military history. He saw the end force strength of the Marines decrease each year he was in the service. Rob’s stories and tips can help you understand how others made it through a RIF, and possibly help you put things in perspective.

Options for those Facing Force Shaping

Let’s talk about some different classes of service members in regard to time in service and some of the options they have available to them if they are RIF’d. We’ll list a few, then tackle them individually.

  • Less than 6 years of service: Most members in this career group are simply let go from military service.
  • More than 6 years of service and less than 20 years of service: are often eligible for involuntary separation pay, which is similar to severance pay in the civilian community. Involuntary Separation Pay is based on your rank and years of service.
  • Voluntary Separation Pay: Some branches are offering select service members the option of voluntarily separating from the service in exchange for a Voluntary Separation Bonus.
  • Temporary Early Retirement Authority: Some military members are eligible for early retirement under TERA, the Temporary Early Retirement Authority.
  • Guard/Reserves: Members may also be eligible to join the Guard or Reserves.

Keep in mind that everyone facing a Reduction in Force or involuntary separation should be eligible for unemployment benefits. In fact, military members are eligible for unemployment benefits even if they voluntarily separate from the service at the end of their service commitment. One of the few exceptions may be for those who are receiving retirement pay. Unemployment benefits won’t cover all your expenses, but they should help defray your cost of living until you land on your feet. Check with your state for more specific information on filing an unemployment benefits claim.

Less Than 6 Years of Service:

Those who served less than 6 years on active duty are ineligible for involuntary separation pay. So they will leave with the ability to call themselves a veteran, and they will have some basic benefits, such as the GI Bill, VA Loan, and possibly other veterans benefits, depending on individual circumstances. With less than 6 years of service time, junior enlisted members and junior officers haven’t yet become career military members. The transition is difficult, but may be easier for many to bounce back from. The key thing to remember here is you are losing your job and benefits. The goal is to make yourself employable and find a new job as soon as you are able.

Special to the podcast: Rob gives tips on how to find a job using your military experience and credentials. There are many employers seeking those with military experience and leadership qualities.

More Than 6 Years of Service, But Less Than 20:

Those who served more than 6 years, but less than 20 years are generally considered mid-career personnel, or sometimes careerists, depending on how long they have been in. This can be a more difficult transition, especially if you have built your career and financial future around the military and potential military retirement. The good news is the military recognizes this. If you meet these service requirements are are involuntarily separated, you may be eligible for involuntary separation pay.

To qualify for full Involuntary Separation Pay, you must be involuntarily separated, be fully qualified for retention at the time you are let go, and your service must be characterized as “Honorable.” An involuntary separation due to Force Shaping or a Reduction in Force is a common qualifier for receiving Involuntary Separation Pay. There are also rules for receiving Involuntary Separation Pay at a half rate. You can find these rules here.

How to Calculate Involuntary Separation Pay:

Take your monthly base pay, multiple by 12. Then multiply this by your years of service (including full months as a fraction of the year). Then multiply this by 10%.

Example of an E-5 receiving involuntary separation pay at 6 years:

$2,734.50 base pay x 12 = $32,814.00

$32,814.00 x 6 (number of years served) = $196,884.00

$196,884.00 x 10% = $19,688.40 = Involuntary Separation Pay.

Involuntary Separation Pay is nice, but it’s no substitute for losing your career. This group of service members is often hit the hardest because they might be over half way to an active duty retirement. Many people who fall within this group have built their lives and financial future around serving until retirement, and then finding another career for their later years. Unfortunately, that option is taken from them.

Voluntary Separation Pay:

Some branches are offering Voluntary Separation Pay on a limited basis. This is often limited to select branches, career fields, and pay grade. In some cases it may only be open to certain ranks that have been passed up for promotion more than two times, or other various factors. Voluntary Separation Pay may be a good offer if you were already considering leaving active duty, and were not planning on making the military a career. Here is a news article from the Marine Corps which covers Voluntary Separation Pay for select individuals.

Temporary Early Retirement Authority

There is one group of servicemembers who are somewhat more fortunate than the others – those who are eligible to retire under TERA, the Temporary Early Retirement Authority. TERA allows eligible service members to retire from active duty with as little as 15 years of service, and less than 20. There are some caveats though. Each service determines which career fields are eligible for TERA, and you will receive a reduced pension if you retire under TERA. Let’s take a look at how the pension works compared to a normal pension:

  • High-3 Pension: 2.5% of average of top 3 years of service for each year served. So 20 years on active duty = 50% of base pay. You receive 2.5% of your pay for each year served above 20. (click here for an explanation of the REDUX retirement system, another retirement system many are eligible for).
  • TERA: TERA involves using a reduction factor of 1% per year of early retirement. You start with 100% as your base rate, then reduce that by 1% for each year you retire early. So if you retire at 15 years of service, your reduction factor is 95% (100%-5%). If you retire at 19 years, your reduction factor is 99% (100-1). Months also count toward service, but we will use round numbers to keep things simple.
  • Assuming we are using the High-3 Pension plan: Take the number of years you served and multiply by 2.5%. Then multiply that by a reduction factor. So if you serve 15 years, you multiply that by 2.5%, which comes to 37.5%, then you multiply that by your reduction factor, which is 95%. So that 37.5% multiplied by 95% now comes to 35.625%.
  • Multiply your new percentage by your average of high-3 pay and you will get your monthly pension.
  • This is likely to be a far cry from the 50% retirement you were expecting, but you also get your pension immediately, as well as all other military retirement benefits including TRICARE, base access, military retiree card, etc.

Here is another resource for calculating a retirement pension under TERA.

The decision to take TERA shouldn’t be taken lightly. You will need to run the numbers to see if it makes financial sense, or if you believe leaving the military early will enhance your quality of life.

Transitioning to the Guard or Reserves Can Be a Great Option

Many service members targeted for involuntary separation from active duty may be eligible to join the Guard or Reserves, provided they had a positive reenlistment or separation code. Keep in mind the Reserve Corps is also undergoing some Reductions in Force, as some branches are cutting thousands of jobs in the Guard and Reserves. But that doesn’t mean you won’t be able to get a job in a Guard or Reserve unit. It all depends on the needs of each individual unit, as well as your ability to cross-train into a career they may need.

Joining the Guard or Reserves may be an option for many people, depending on their branch of service, career, rank, and other factors. You may even be able to change branches of service, depending on your situation.

The Guard and Reserves offer some great benefits, and that may be a great way to continue earning benefits toward retirement, as well as inexpensive health care, education benefits, and much more. Don’t dismiss the Guard or Reserves out of hand. I did that, and it was a mistake. I have since changed my mind about serving in the Guard/Reserves. Chances are high that you will go through similar changes when you leave military service. It’s a huge transition.

Special to the podcast: Rob retired from The Marine Reserves and has a lot of experience with how you can make the Guard or Reserves part of your lifestyle and career.We discuss some specific examples and benefits of joining the Guard or Reserves. This is where listening to the podcast adds more value than this article alone.

Military Retirement + Separation Pay = Repayment

Read this next section carefully.

If you received Voluntary or Involuntary Separation Pay and later joined the Guard or Reserves and remained on duty until you were eligible for retirement, then you would be required to repay the Voluntary or Involuntary Separation Pay you received. Upon retirement, DFAS will begin recouping your separation pay at a rate of 40% of your retirement pay. You cannot repay your separation pay in a lump sum, however, you can request DFAS increase your withhholding. Here is more information about paying back separation pay upon retirement.

Don’t let this stop you from joining the Guard or Reserves if you feel that is your calling, or in the best interest of your personal, professional, or familial goals. Just be aware that this exists.

Can You Avoid Force Shaping?

You may not be able to prevent Force Shaping completely. But you may be able to reduce your chances of being hit. To start with, Force Shaping is a way to reduce the manning from overly manned career fields. The best thing you can do is put your best foot forward. Imagine you are going in front of a promotion board. Those who have met their promotion schedules, completed Professional Military Education (NCO Academy, Squadron Officer School, War College, etc.), completed off-duty education, and achieved other benchmarks are likely to be looked upon more favorably than those who have negative marks on their personnel records. For example, you would want to avoid negative records in your personnel file such as Letters of Reprimand, an Article 15, or other non-judicial punishment. You will want to ensure you have completed all your training, pass your fitness exam, and avoid the military kiss of death – the dreaded DUI.

Special to the podcast: Rob gives more concrete examples of how some of his former colleagues avoided Force Shaping. It can take some creativity, but you may get lucky. The key here is to be proactive.

Big Picture – Financial Planning Before Separation

One of the benefits of being involuntarily separated, if you can call it a benefit, is that you know you are going to be laid off. This is a tough situation to deal with, but you have the benefit of knowing when you will lose your job. Many people in the civilian sector are only given a couple weeks notice at best. Many military members have several months to plan. That isn’t a long time, but it is enough time to get started with some basic preparation.

There is too much to cover in this article, but we go into more depth in the podcast.

Special to the podcast: Rob gives concrete examples of steps you can take to get your financial house in order before you are laid off.

Health Insurance and Life Insurance – Make Sure You’re Covered!

You will want to make sure you and your family are covered when you leave military service, especially with health insurance, which is mandated under the Patient Affordable Care Act.

TRICARE is often under appreciated by military members and their families. But it’s actually one of their most valuable benefits. Those who are involuntarily separated may receive a couple extra months of health care, but it doesn’t always extend to their families. There are a few programs to look at:

  • The Transitional Assistance Management Program offers 6 months of TRICARE coverage to the service member and their family if they are forced to leave the service involuntarily. The benefits are the same as active duty health care. Check to see if you are eligible for this program if you are forced out of the military.
  • The Continued Health Care Benefit Program is similar to COBRA. Basically you are eligible to continue receiving health care benefits similar to TRICARE – the benefits are administered through Humana. However, you have to pay 100% of the cost, which is roughly $1,200 per quarter for the servicemember only, or almost $2,700 per quarter for a family plan. You can receive these benefits for up to 18 months in most cases, and up to 36 months in some cases. (source).
  • You can also elect to pay for a private health insurance program, or find health insurance through your new employer or school, if offered.
  • Service members who deployed to a war zone may be covered by the VA for up to 5 years. However, that doesn’t cover their families.
  • More tips on getting health insurance after leaving the military.

Life insurance after the military: Life insurance is also important. SGLI is inexpensive life insurance, but you will lose access when you separate from the military. The good news is you will be able to convert your SGLI policy to a Veterans Life Group Policy shortly after you separate. The rates are based on age, and you may be able to find less-expensive life insurance from a commercial provider. It pays to shop around.

Career Search – How to Get Started

Finding a new job will be high on the list for those who are forced out of the military. It’s important to start the job search process as soon as possible after learning you will lose your military job. There are several things you can do, such as building out your resume, using Tuition Assistance or the GI Bill to start taking some classes or earning professional certificates, enhancing your skills, and building your professional network.

Again, this is a massive topic. We go into more detail in the podcast and list a few resources here:

Special to the podcast: Rob and I discuss some tips for getting started with your education and training, and how you can start your career search. The key is to get started right away. You don’t need to start trying to get interviews if your separation date is months away. But you do need to start thinking about what type of job you want to do, where you want to live, creating your resume, etc.

Emotional Fallout of Being Laid Off

We would be remiss not to mention the emotional fallout that comes with being laid off. It’s tough. I was jobless for 6 months after I left the military. Emotionally, it was very difficult for me to go from having a lot of responsibility to having none. This was the most difficult aspect of my transition from the military to civilian life. But there is something you need to remember: It’s not your fault. Many of these cuts are simply a numbers game for the bean counters in Washington D.C. It’s highly unlikely you were singled out to be cut.

Special to the podcast: Rob and I discuss the transition and how you can make it go more smoothly. Serving in the Guard or Reserves can be a great way for many people to replace the loss of being around the military community and the loss of responsibility. Other tips include joining professional organizations, becoming more active in your church or community, finding hobbies that get you out of the house and around other people, volunteering, and more.

There Are No Quick Fixes – This Takes Time

Losing your job isn’t easy. It’s more difficult when you have given so much to your country and you want to continue serving, only to have them inform you your services are no longer needed. Just remember this isn’t personal. It’s simply a numbers game and your number was called. The key is to take this a day at a time and dedicate the same energy and discipline you had in the service to providing for yourself and your family.

Finally, don’t be afraid to reach out for help: You can contact support services on your base – they offer financial and career counseling. You can contact a Veterans Service Organization if you need assistance filing for veterans benefits. And feel free to leave us a comment here. We are here for you.

Thank you for your service.

Servicemembers Group Life Insurance Premiums to Increase

Life insurance is an important part of financial planning, especially when your job often requires you to put your life on the line. Thankfully, military members have access to inexpensive life insurance through the Servicemembers Group Life Insurance program, or SGLI. The SGLI is a low-cost life insurance program available to military members. Family members are also eligible for coverage under the Family Servicemembers’ Group Life Insurance (FSGLI), (rates vary by age for FSGLI participants).

SGLI Rate Increase, July 2014: The SGLI rates are increasing slightly starting in July 1, 2014. But even with the small rate increase, the rates are still very affordable compared to many private life insurance options.

The new cost for SGLI life insurance is 7 cents per $1,000 coverage, a slight increase from 6.5 cents per $1,000 coverage (This is also the previous rate charged prior to 2007 when rates were decreased). To put this in perspective, the cost increase for the maximum amount of life insurance coverage of $400,000 is only a $2 per month increase, or $24 per year.

Current SGLI Rates Effective July 1, 2014

Here are the Servicemembers’ Group Life Insurance premiums:

Servicemembers' Group Life Insurance Rates

Coverage: You can elect to purchase coverage in $50,000 increments, up to a maximum of $400,000.

How these rates compare: These are group life insurance rates, which means that if you are in the military, you should be eligible for the same SGLI rates as everyone else. Individual life insurance plans bought on the open market have individualized rates based on your age, health, whether or not you smoke, and many other factors. You often need to fill out a questionnaire and health assessment before a company will issue you a private life insurance policy. This can make the SGLI insurance an excellent deal for those who are in an older age group, or who have health conditions that might make life insurance more expensive to purchase on their own.

Eligibility: You are automatically insured under full-time SGLI if you are one of the following:

  • Active duty member of the Army, Navy, Air Force, Marines, or Coast Guard
  • Commissioned member of the National Oceanic and Atmospheric Administration (NOAA) or the U.S. Public Health Service (USPHS)
  • Cadet or midshipman of the U.S. military academies
  • Member, cadet, or midshipman of the Reserve Officers Training Corps (ROTC) engaged in authorized training and practice cruises
  • Member of the Ready Reserve or National Guard and are scheduled to perform at least 12 periods of inactive training per year
  • Servicemember who volunteers for a mobilization category in the Individual Ready Reserve (IRR)

Ready to leave the service, or have already left? The SGLI provides 120 days of free coverage for those eligible for full-time SGLI from the date of separation from the military (or up to 2 years if the servicemember is totally disabled at separation). You may also be able to convert your SGLI policy to a Veterans Life Group Policy. This can be a good deal for people with pre-exisiting health conditions, as a straight policy conversion does not require additional health exams (those who convert their policy after 240 from separation are required to submit a statement of good health). However, VGLI rates are based on age and do not feature the same flat premiums as the SGLI program. Some younger individuals, or those who are in good health, may find it less expensive to purchase a private life insurance policy. It pays to shop around and examine your situation thoroughly before making the decision.

Related Topic: How Much Life Insurance Do Military Members Need?

SGLI Traumatic Injury Protection Program (TSGLI) Rates Unchanged

Servicemembers covered under the full-time SGLI program are automatically covered for the TSGLI program. Servicemembers’ Group Life Insurance Traumatic Injury Protection (TSGLI) provides financial assistance for servicemembers who experience a severe or traumatic injury. This includes combat injuries, as well as injuries that may occur on or off duty.

TSGLI coverage applies to active duty members, Reservists, members of the National Guard, those performing funeral duty honors, and one-day muster duty. The cost is $1 per month. You can read more about TSGLI benefits here.

Blue Star Museums – Free Admission for Military

More than 2,000 museums across the US have partnered with the military charity Blue Star Families, the Department of Defense, and the National Endowment for the Arts, to offer free admission to our nation’s service members, including members of the Guard and Reserves, and their families. Free admission at participating museums runs from Memorial Day, May 26, 2014 through Labor Day, September 1, 2014. This is the fifth year of the annual program.

Blue Star Museums - Free Admission for Military Members

The goal of the Blue Star Museums program is to help servicemembers and their families enjoy our nation’s national heritage and learn more about their new communities after completing a military move.

Participating Museums: There are more than 2,000 participating museums, which are located in all 50 states, Washington D.C., Puerto Rico, and the American Samoa. There are also a wide variety of museums participating, including museums that feature the fine arts, science museums, history museums, nature centers, and children’s museums. You can find participating museums at the following link:

Free Admission Eligibility: Free admission* is open to anyone carrying a valid military ID card (CAC Card), or a DD Form 1173 ID Card (Dependent ID Card). This includes members of active duty military, National Guard, Reserves,U.S. Public Health Service Commissioned Corps, and the NOAA Commissioned Corps. Free admission is valid for the service member, and up to 5 dependents.

*Some special events or limited time exhibits may not be eligible for free entry, so be sure to call ahead to verify availability.

U.S. Public Health Service Commissioned Corps, NOAA Commissioned Corps – and up to five family members. – See more at:
U.S. Public Health Service Commissioned Corps, NOAA Commissioned Corps – and up to five family members. – See more at:
U.S. Public Health Service Commissioned Corps, NOAA Commissioned Corps – and up to five family members. – See more at: