For troops, mixed financial homecoming

The war in Iraq is revealing an uneven financial landscape for those who serve in America's armed forces.

Hazardous-duty pay is a boon, allowing single personnel such as airman Steven Creek to splurge. After four months on a desert air base with little to do and nowhere to shop, Mr. Creek returned here to Langley Air Force Base and added $2,200 silver rims to the wheels of his Lexus ES 300 - a car he bought after a previous deployment.

But for many military families, the windfall doesn't outweigh the added costs of deployment, such as childcare. And for reservists and those in the National Guard, extended deployments in the age of a war on terrorism can mean long-term pay cuts.

When Army National Guard Sgt. 1st Class Clarence Savage was called to duty here at Langley Air Force Base in January, his earning power fell by about $15,000.

That's because, although his employer covered the difference between his private-sector salary and his military pay, he no longer earned overtime. He cut back on savings and asked creditors for some leeway.

Such is the mixed financial picture for those who defend America.

Washington policymakers have already begun grappling with ways to improve pay and benefits, especially for those most likely to leave. All service members deployed in or near Iraq benefited from combat bonuses that fattened their paychecks by as much as 50 percent. The Bush administration and Congress have moved to further expand pay, and are now considering moves such as improving health benefits for reservists. The recent tax cut, too, is coming under scrutiny this week as some lawmakers object that about 200,000 military families won't see their child tax credits expand.

Consider Jason Kayla: After seven years in the Air Force, he plans to double his $19,000 military salary by leaving the service to become a civilian police officer.

Kayla and his fiancée, Michelle, scrambled to find childcare for their two-year-old when Jason was deployed last year. It's a common dilemma for those with families: As spouses leave jobs at home, those left behind cut back work hours to care for kids.

When Kayla redeploys this summer for a year abroad, his fiancé will save money by moving to her parents' Massachusetts home. "It's just not worth it," says Michelle, who served two and a half years in the Air Force and now works for the federal Transportation Security Administration. "He could be making so much more as a civilian."

The Bush administration has already tried to address this pay gap; Congress has raised bonuses for those in danger zones. Hazardous-duty and imminent-danger pay and other bonuses rose to $470 per month for those in or near Iraq. Those separated from spouses or children received an additional $250. And as long as one serves in a combat zone, all earnings are tax free.

At Langley Air Force Base, few service members complained last month about base pay or benefits. Each receives a food allowance, 30 days leave, and reenlistment bonuses that can total $75,000. They are eligible for cheap medical coverage and interest-free loans. Those living off base receive a housing allowance that covers about 80 percent of rent and utilities.

Still, as Sergeant Savage commands more than 100 Army troops guarding the base, he's working the same hours as always, and earning far less. "I knew, going in, I was going to lose," says Savage.

But the money troubles of this deployment are far less than in the past. Military financial counselors say additional fiscal training has ensured that service members and spouses are better equipped to manage their money than they were during Desert Storm.

Airmen face a day of financial planning before they begin work at Langley AFB, says Jean Michel, director of Langley's family-support center. Anyone on base can take financial management classes on everything from checkbook balancing to investing.

During deployment, each unit's first sergeant keeps tabs on airmen's finances, checking in with spouses at home and prodding service members about unpaid bills. Navy instructors flew out to ships returning to Norfolk recently to teach workshops on money management. As a result, fewer spouses sought emergency assistance and fewer service members are returning to messy checkbooks, financial planners say.

Indeed, many families saved money during the recent deployments. Staff Sgt. Melissa Hancock says she saved an extra $5,000, thanks to her husband's added income for maintaining fighter planes. Not having him home to splurge on electronics was key to savings, Sergeant Hancock says.

The Hancocks used their savings to pay off credit-card debts, enjoy their first family vacation, and start investing.

Of course, not everyone is so disciplined. Single sailors and young airmen often spend that extra money as if it's burning holes in their fatigues. The buying boom is most pronounced among sailors cooped up on ships for months on end.

Hampton Roads is home to the world's largest naval base: On a recent day, more than 8,000 sailors returned. Almost half were expected to buy a vehicle within two days, says Christine Bacon, a financial educator with the Navy Fleet Support Center.

That 's nothing new. Car dealers used to wait on the pier and drive sailors straight to their dealerships. Today, some sailors don't even wait for their land legs, but e-mail loan applications to the Navy credit union while still afloat, says Burt Twisdale, general manager at a local Ford dealership.

Airman Creek wasn't thinking about car loans as he prepared to decontaminate biological- and chemical-attack victims in the Saudi Arabian desert. But living in a tent, eating every meal from a pouch, meant savings piled up: He spent $150 in 76 days. That left plenty of cash for the car rims.

"I had just turned 21, I have my own apartment, my own car," says Creek. "I see it as a pretty good job."