Successful © George Doyle/Stockbyte Platinum/Getty Images

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.

Video on MSN Money

© Creatas / AGE Fotostock
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

While an agreement isn't a full-fledged, binding legal document -- a judge isn't going to order your roommate to do the dishes -- a judge can enforce financial arrangements stated in it, such as how much rent each person pays.

Thou shalt obey the lease

Read the lease. All of it. No capisce? Have someone explain it to you. See that "jointly and severally" peppered throughout? That means once you and your friend/paramour/acquaintance have signed a rental agreement, you're legally joined at the hip. If one walks out, the other can be forced to pay. If one spills sangria on the carpet, the other pays.

Despite any agreements you might make between yourselves, each of you can be held liable for the entire rent. Each of you is liable for any damage. And if your roommate turns out to be a deadbeat, but his name is on the lease, too, you can't have him evicted (in most states, anyway).When a new tenant moves in, a landlord can change the terms of the lease -- raising the rent and/or the security deposit, or even evicting you. It's therefore tempting not to tell the landlord about a new roommate. Don't succumb to that temptation, says Latzko. If a roommate who was never an official tenant in the first place throws a rave in the living room and then skips town, guess who loses his cleaning deposit, and perhaps get evicted? You do. So, everyone signs the lease. Remember that a bad encounter with a landlord can hurt your chances of using him or her as a reference when you move elsewhere.

For more information on the intricacies of dealing with your landlord, contact your state's landlord-tenant association or consumer-protection division.

Don't bollix up the bills

Don't put all the bills in your name. If that flaky roommate racks up a $400 phone bill calling her boyfriend in Kuala Lumpur and then steals out of town to join him, you'll be left holding the bag. And if someone doesn't pay a bill that also has your name on it, your credit rating will get a blotch along with theirs. (That's no small consideration in your 20s, for the credit rating determines lenders' willingness to let you borrow money for all sorts of little purchases… like that first house.)

Spread the risk by putting the bills -- heating, electricity, water, sewer, phone, cable -- in different roommates' names so that each writes checks for roughly the same amount of money as the next roommate. Establish a method for how and when to reimburse each other, and put that arrangement in the roommate contract.

Video on MSN Money

© Creatas / AGE Fotostock
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.
The phone bill is the invoice that launched a thousand roommate arguments. Avoid this pitfall by asking your phone company if it can assign roommates different codes, which show up on the long-distance bill. Mary Lou Podlasiak, author of "Rules for Roommates: The Ultimate Guide to Reclaiming Your Space and Your Sanity," suggests yet another strategy: "I wouldn't even share that phone," she says. "I would get a cell phone."

While the economies of sharing food are obvious, the experts differ on whether to endorse it. "A shared-food agreement is a pain," argues Podlasiak. "I've never talked to anybody who didn't feel like they weren't getting screwed."

Finally, in the rush to make the apartment feel homey, don't go nuts and buy a lot of furniture together; doing so can create big problems when roommates inevitably part, says Latzko. Better to agree beforehand who keeps which pieces of furniture -- an "exit strategy" of sorts.

Joining forces with a roommate can be a great experience. It can also be a bad rerun of "The Odd Couple." As with any venture that involves your hard-earned money, take it seriously. Do your homework. Then, start dreaming of ways to use that newfound cash.

Updated Jan. 5, 2010