Fiscal Cliff Preparation – Military Style

Joe Freeman
Posted: Dec 11, 2012 12:01 AM

The countdown to the fiscal cliff seems ominous. Will we go over the ledge? What happens when/if we do? What about the debt limit, sequestration, tax hikes or tax cuts?  The uncertainty coming out of Washington is enough to make to make your head spin.

The policy debates and news reports are raising many questions from military families and veterans. Those who have bravely served defending our freedom are possibly the ones who stand to lose the most if there is sequestration, tax hikes, budget cuts, or even a government shutdown.

It has been years since the policymakers in Washington have agreed to a budget, setting a very poor example for the rest of us who have to stay within one. There is a continuing resolution that funds the government through March 27, 2013, but as that deadline approaches, the debates over government spending on the military and defense as well as tax policies will resurface once again.

Cuts in veteran’s benefits or jobs, or the slashing of defense budgets have the potential to create an additional burden for service members and their dependents. However, amid all these uncertainties there are things that can help us all be better prepared for whatever solution (or compromise) Washington decides to implement. It’s something military personnel are very familiar with: planning/preparation/discipline.

It is never too late to get your financial house in order. In fact, that’s exactly what Washington is trying to do right now. It isn’t easy to balance a household budget, much less one the size of the federal government.  But if we take the lessons learned in military service and apply them to our own credit cards and check books, we will be in a much better position to deal with whatever compromise is ultimately reached.

Military families and veterans have unique concerns about managing money in these uncertain times, especially when a spouse could be half a world away. The dilemmas are real, but with the right planning, preparation, and discipline one can get ahead of the game.

At Pioneer Services, we provide financial education services and information, specializing in serving those who serve in the military.  We know the struggles and have some sound advice for anyone concerned about the fiscal cliff, shutdowns, cuts, or tax hikes including:

  • Make a Spending Plan—Far too often, families set a budget or try to limit their spending, but don’t realize they’ve gone over it until it’s too late. And that’s usually when they get their credit card bill. This is especially true during the holiday season. Each year, millions of Americans get carried away with holiday shopping and the joy of giving leads to the sorrows of high debt. Set a spending plan for all major purchases. A useful tool is the Holiday Spending Planner website to stay within your budget.
  • Reduce Debt—Focusing on getting out of debt is critical to building a sound financial future. There are 5 easy steps to consider when tackling your debt including: (1) checking to see if there are fees for paying  off a debt early; (2) paying off the right debt first (usually credit cards); (3) “snowballing” your payments so your debts are paid faster; (4) dedicating yourself to the process by being flexible and proactive in sticking to your debt reduction and spending plans; and (5) sticking to your spending plan to make sure you don’t fall back into debt.
  • Save for the Future—A home purchase, new car, college savings, and even retirement will be much easier if you build short, medium, and long term savings. Part of your spending and debt reduction plan should also account for savings for the items and activities that are on the horizon in a few months and a few decades too. If you “pay yourself first” you can avoid scrambling to come up with the money when you need it, especially if a financial emergency arises.

There is no doubt that our military, defense industry and veterans have more skin in the game with the current fiscal crisis. They have more unique challenges, and are a frequent target for budget cuts. However as the debates rage on in Washington those who demonstrate, discipline, planning, and preparation will enjoy a level of financial stability that Washington can only dream about.