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The Basics

Let someone else pay half your bills

If you've found the right roommate, you've found someone to share the bills -- and the good times. But you also go out on a financial limb together.

By Christopher Solomon

Ever wish somebody would come along and shoulder half of your bills? It's not hard to find this magical person who will help share your financial burden. It's called a roommate.

Think what you could do with all of that freed-up cash: Finally take that ski trip to the Rockies. Retire your beater VW that's held together with duct tape and good karma. Or open the IRA your parents have been hounding you about.

In 2001, Americans ages 25 to 34 spent more than one-quarter of their income on rent, according to Runzheimer International and U.S. census data. The math is simple: Add a roommate and you can usually halve the cost of rent and utilities, saving thousands of dollars a year. (Now you can afford cable! Or save the difference for a down payment on a house.)

The benefits of a roommate go beyond the dollar: Another person in the apartment lends a sense of security, and an apartment-mate can grow into a good friend. At the least, you've got someone to feed Scruffy while you're on that ski trip.

Yet the roommate strategy can be a financial disaster. Here are some tips to make sure you come out ahead.

Know thyself … and others

Before you get revved up about all the cash you'll save by having a roommate, know what kind of person you can tolerate -- and know your own quirks and habits, too. (There's no savings if you have to pack up and flee the roomie's late-night jam sessions on the didgeridoo.) Are you compatible? Take a survey of your interests and desires, and ask would-be roommates to do the same, says Marian Latzko, author of "I Can Do It! A Micropedia of Living on Your Own."

Don't be afraid to quiz friends of the would-be roommate: Is he responsible? Does she have money to pay the rent? "Maybe your roomie won't be as bad as Jennifer Jason Leigh in 'Single White Female,' but if you have a feeling it won't work out, trust your gut," advise Sarah Young Fisher and Susan Shelly in "The Complete Idiot's Guide to Personal Finance in Your 20s & 30s."

Get it in writing -- even if it's bathroom duty

Don't sign that lease yet. Once you've found somebody to cohabitate with, draft a "roommate contract" -- a document that plainly outlines out the ground rules for the shared housing. It sounds smarmy, but who can argue with it later on?

"A lot of times people don't think of a housing situation as basically a business arrangement," says Lori Stephens, author of "House Mates: A Guide to Cooperative Shared Housing." "They don't look at it in the cold, hard light of 'What if we have some significant problems?'" The compact, which should be signed by all roommates, should anticipate and answer any questions that should arise -- especially what to do as roommates move in and depart. Call it a "prenup" for roommates.

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Realty Check
The end of the real estate boom has developers canceling land contracts and caused many condos to revert to rentals, reports CNBC's Diana Olick.
Some questions a contract should address:

  • Who lives in each room?
  • How is the rent divided among roommates? Who is responsible for writing the check each month? When is it due?
  • How are other bills split? Who pays each of them? By what date do roommates repay one another?
  • How are move-in fees (i.e. the security deposit) divided? Does everyone understand what they have to do to get the deposit back?
  • Who is responsible for each chore, and on what schedule?
  • What happens when a roommate departs before the end of the lease?
  • What does the lease allow and not allow?
  • What restrictions on behavior have the roommates agreed to?

Continued: Obey the lease

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