Completing many of these tasks can help you get in financial shape once your spouse is deployed.
By Susan Johnston Taylor March 16, 2016, at 4:31 p.m. + More
When one spouse is deployed, the spouse on the homefront often handles the lion’s share of financial tasks. Of course, military families aren’t the only ones who face long-distance marriages. As women continue to achieve higher levels of career success and pursue advanced degrees, many dual-career couples have entered into commuter marriages. And the U.S. Census Bureau reports that 1.5 percent of Americans over age 15 were married with a spouse absent in 2015.
While these good housekeeping tasks are especially important prior to an absence, even if you aren’t anticipating taking on new financial responsibilities, completing many of these tips can help you ensure you’re in tiptop shape for the future. Read on for a checklist of suggested financial tasks for military and civilian couples to tackle in preparation for a spouse’s absence.
- Go over your finances together. Make sure you both know what bills and accounts you have. “Lots of times the husband will be taking care of all the finances, and the spouse doesn’t know where the documents are, what the documents are and what to do if something happens,” says Jim Hanna, the founder and CEO of the San Antonio-based Retire with Jim Hanna Wealth Advisors. “You’ve got to include your spouse in everything you’re doing,” he adds. If one spouse needs signature authority to manage the account, it’s easier to make that change before leaving town.
- Agree on who will pay what. Get clarity on who will pay what bills and when each payment is due. Most expenses, including credit card and cellphone bills as well as mortgages and car payments, occur monthly, so it’s easy to forget bills that pop up less frequently such as quarterly taxes or annual life insurancepremiums. However, never sign blank checks. “If that [a blank check] falls into the wrong hands, that can wipe you out,” says Kevin Cortes, chief military officer at Miramar Federal Credit Union, a military membership credit union in San Diego.
3. Monitor bills. Experts are split on the value of paying bills automatically. On the one hand, automated payments ensure that bills get paid and you never pay a late fee. But if nobody is monitoring the bills, you could be overpaying for extra fees or not realize when a bill has skyrocketed. “They need somebody that’s more hands-on of the two to actually write the check and know what they’re spending each month,” says Drew Horter, founder of the Cincinnati-based Horter Investment Management LLC.
- Check your insurance. Especially in the event that you’re going into a combat zone, make sure to assess whether or not you have enough life insurance to cover your survivors’ financial needs and confirm if you’ve purchased disability insurance. Also, make sure that your insurance beneficiaries are current, Hanna adds. The last thing you’d want is to pay for an insurance policy, only to have the benefits go to an ex-spouse or someone else who is no longer in your life.
- Agree on a budget. A spouse’s absence can impact your budget in a few different ways. For instance, a military spouse may earn extra money for hardship duties, and it can be tempting to spend that extra cash during the separation to ease loneliness or to celebrate a reunion. But Hanna recommends avoiding these temptations, “because that’s an opportune time to put that money into temporary savings programs,” he says.
On the other hand, a civilian spouse who’s traveling for work may have higher than normal expenses, and some costs may be eligible for reimbursement. “How quickly do they file for reimbursement, and how quick is the turnaround time if they’re using their own credit card?” Horter asks. Discuss these potential issues to avoid blowing your budget.
6. Look at ways to cut costs. A spouse’s absence may be an ideal time to boost savings. One spouse might choose to move in with family to cut costs, for instance. Military members and their dependents can break an apartment lease without penalty for a deployment. Or “you can terminate or suspend cellphone service for that spouse during deployment,” Hanna says. “If they can prove they’re going on deployment, they can get exemptions from early termination fees,” he adds. Even nonmilitary couples who don’t have these exemptions may have savings opportunities such as ditching one spouse’s auto insurance while it’s not needed or taking in roommates to fill empty rooms to bring in extra cash and avoid isolation.
7. Consider a credit freeze. Identity theft was the top complaint of military members in the Consumer Sentinel Network Data Book for 2015. Military members can contact credit bureaus to request an active duty alert on their credit reports, requiring businesses to verify their identities before issuing credit in their names. The alert lasts for a year, but it can be removed sooner or you can place another alert if necessary. Even with a small required fee for civilians (depending on your state), you may also want to consider a credit freezeif you’re not planning on applying for new credit and want the added peace of mind at a time when you might be especially busy.
8. Discuss possible tax implications. Those serving in a combat zone have certain tax exemptions, but nonmilitary couples with employment or residences in multiple states could have additional state tax issues to consider. For instance, if you’re a married couple selling a home, you’d get a half-million dollar capital gains exclusion on any profits. “But you only get that $500,000 exclusion if [the] home is the principle residence of the husband and the wife for two out of the five years,” says David Seiden, partner-in-charge of Citrin Cooperman’s state and local tax practice. If one spouse was technically domiciled elsewhere for those two years, then the couple wouldn’t qualify. And in some cases, military members can choose to suspend the five-year test period. These situations could also complicate income tax filings or necessitate filings in multiple states, so consult your tax preparer if you’re unsure of the impact.
- Put support systems in place. The last thing you want is for a young spouse living in an unfamiliar place to feel overwhelmed, or, in a worst-case scenario, get conned. “You may have somebody who got married at the last second and [the husband is] gone for six months,” Cortes says. “A brand new wife has no resources because she has nowhere to go on base. She doesn’t know all the benefits available,” he adds. Fortunately, every military installation has a resource center for families, offering benefits like financial education, parenting classes and integration training.
Nonmilitary spouses may not have these official resources, but they should look to strategies for creating their own support systems, whether it’s a relationship with a trusted financial advisor, the phone number of the in-laws or a colleague’s spouse they can call for emergency childcare or other assistance.