Many peoples nightmare kitchen situation with roommates! Don't let your finances become a haphazard part of your relationship!
Living with other people can either be a pain or the best time of your life. Many suggestions for living with roommates deal with cleaning or other pet peeves. One that is rarely addressed is the issue of money: how to aggregate and pay for things with transparency.
One suggestion we have is to open a joint bank account between you and your roommates. While scary, this can actually help you to ensure that your roommate/s is splitting the bills instead of sticking you with an unpaid pay-per view bill!
- Make sure that the account is transparent so each party can see all deposits and withdrawals.
- Create only one debit card to ensure charges are tracked appropriately and only used to pay online bills that are split between roommates.
- Having a joint account means you can track expenses and go after delinquent roommates legally. If you sign a lease and one person does not pay, legally the lessor can evict both of you. Having the tracking of a joint account makes it significantly easier to prove things in small claims court.
- Build a small buffer of extra cash to aide when bills rise unexpectedly, i.e when the heat causes your electricity bill to spike.
- Remember that the joint account affects both parties credit, but since your already living together such issues should already have been considered and if they have not been addressed DO NOT LIVE WITH THOSE PEOPLE.
- Splitting bills between roommates can work beautifully, but if one party does not contribute their share it can quickly cause credit dings if the person whose name is on the bill cannot pay the balance. This method aides in convincing a court (if it comes to that) and credit agencies to help you in such situations. Additionally living with other people is like running a business, you should never run business expenses out of a personal account.
- When the lease is terminated all parties should close the account or zero out the balance to automatically close the account.
Hopefully a joint account can save you and your roommates some headaches. In the past it has worked well for us and was a much better solution that trying to run all of the rent and other collective payments through different individuals.
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(Top image: Flickr member alancleaver_2000 licensed for use under Creative Commons)
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yikes. no. and let me repeat: no. do this when you're married and make big decisions together. but for room-mate scenarios, just freaking talk about money. have agreements formally laid out in writing. don't mangle your credit or give another person access to your assets.
VERY VERY BAD ADVICE
I did this, and I ended up having to take both my flatmates to court!! A year later and they're still gradually paying me back (via the courts).
Although this sounds like the best plan, there is one huge flaw which makes it completely redundant:
What if they don't pay any money into the account?
That's what happened to me. I worked out what our monthly outgoing bills would be, let's call it £300. So I set-up a bank account in all of our names and we all set-up a £120 monthly direct debit into the account (so we'd have a float every month).
But, lo and behold, 3-4 months into our 12 month lease and my previously well off flatmates were completely skint and couldn't afford to pay any money into the account.
So I had to pay all the bills. I couldn't not pay them because pretty much everything (phone line, internet, gas, electric, council tax etc) was a 12 month contract, so non-payment would have resulted in us all being taken to court.
So I had to pay all the bills, and come leaving the flat, between them they owed me £800!! A long, arduous and expensive (although my expenses are added onto what they owe me) court battle later, and i'm now getting £40 a month, woop.
So yeah, this sounds good, but in reality it's the worst thing you can do. With hind sight, I would have divided all the bills amongst us all evenly (e.g. Flatmate A pays TV licence and gas, B pays internet and electricity, C pays council tax etc). That way, if someone can't pay something, then it's their sole responsibility and they can't drag anyone else into it.
this sounds horrible.
you could each have a couple bills you are responsible for, and then it would somewhat even out, or one person is designated as bill payer and if the other person/people don't pay you break their legs, easy peasy
this is probably the worst thing you could do. living with roommates/friends is indeed fun, but alot of people are clueless when it comes to banking, bills, responsibility. asking them to work with bank accounts, due dates, withdrawals, credits.....that just compounds the problem.
i was really surprised at how many past roommates (adults) i had that didnt even have a checking account, and couldnt even figure out how one worked.
I think the strong reaction to this is interesting. My roommates and I had a joint account--well, it was only in one roommate's name. And we used the debit card to pay for bills online as well as a dumping ground for rent so that we could sent a lump sum check to our landlord. We added an additional $175 to our rent (we live in DC where the cost of living is high) to cover bills as well as groceries. This way, no one was fighting over food or who used what. It was everyone's! Granted, this definitely worked because we were all good friends with each other and had a fairly trusting relationship. Need to grab something from the grocery store? Ok, grab the house card! We never had any issues with misuse. I think that in the right situation, this works wonderfully. I don't know if I'd be so willing to trust my money in the hands of a craigslist random roommate....
No. No. No. Never.
I will never co-mingle my finances like that. It's a disaster waiting to happen.
I currently have 3 roommates that can not manage to take the trash out, let alone keep up with OUR finances.