Army officer and future wife need to discuss finances now

Dollars & Sense

December 21, 2003|By Liz Pulliam Weston | Liz Pulliam Weston,SPECIAL TO THE L.A. TIMES

I'm an infantry officer serving in Iraq. I plan to propose to my girlfriend when I return. Knowing that money is the cause of a lot of marital strife, I'd like to know what I can do to minimize financial problems and set us up for success. I'm 29 and 15 years from Army retirement, making about $60,000 a year. I contribute to a Roth IRA each year and invest 7 percent of my gross pay in the military's Thrift Savings Plan.

I have about $5,000 in a cash reserve and my only debt is a car payment of $650 a month. I'm not as certain about my girlfriend's finances. She will finish school in December with no student loan debt and will be looking for a job as a teacher.

What sort of things should we be talking about now?

One of your first discussions - after you both have settled down a bit from the thrill of getting engaged - should be a full financial disclosure: what each of you owns and owes. If her finances aren't as orderly as yours, she might resist this talk, worried that she'll disappoint you. You can help by reassuring her that you love her for more than her net worth.

It can be smart for both of you to order your credit reports and go over them together. You'll get a good idea of how well she has handled money from her history of paying bills on time, the amount of credit she has at her disposal and how much of that credit she regularly uses.

Then discuss your goals, both as individuals and as a couple. A comfortable retirement is obviously important to you. How does she feel, and how much of her income is she willing to put toward that goal? The earlier you want to call it quits in the working world, the more aggressively you'll need to save.

Then there's the issue of kids. Do you want them, and if so, how many? Children have a major effect on a family's finances, and you'll want to make sure you can comfortably feed, clothe and educate them.

You also might ask whether your bride-to-be wants to be a stay-at-home mom for any length of time. If so, it's a good idea to live on your income and save hers while she's working. That way you can build up a bigger financial cushion, and you won't have to crank back your lifestyle drastically once the kids arrive.

Homeownership is a bit of a crapshoot when you're in the military. If you move every two to three years, which isn't unusual, you run the risk of losing money. The costs of buying and selling usually outweigh any appreciation you'll get in that short period of time. You could consider buying a home and renting it out when you move, but being an absentee landlord also is a risk. You and your bride-to-be should discuss whether you want to take those chances or save up to buy your dream house once you have completed your military service.

Most couples also wrestle with whether or not to have joint accounts. People who have been on their own for a while often resist the idea of sharing control, but pooling your resources can help solidify the sense that you're working together as a team. You can start out with a compromise: a joint account for household expenses and separate accounts for individual expenses and "mad money."

The discussions you have now can serve as a template for your marriage and future happiness. Learning to share information, to listen to each other's needs and to compromise is an essential relationship skill. Start out right, and harmony will follow. Best wishes to you both.

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