Monday, November 5, 2012

Some tips of Protect Your Finances living in a shared apartment

Living with a significant other may not seem like a typical roommate situation, but when it comes to finances, more people should treat it like one. At least that’s the advice in a recent article from Fox Business.
In other words, unmarried couples who live together often mix finances in ways they wouldn’t with regular roommates. And that can leave them in a lurch, the article points out, as unwed cohabitation doesn’t have the built in legal protections marriage has. If the relationship ends, prying apart intertwined finances becomes tricky, as the former couple can’t rely on the asset-division rules that automatically come into play during a divorce.

This advice was particularly interesting to me, as I’ve been living with my boyfriend for two years — that’s two years of living in fear of making the same mistakes my fellow unwed cohabitors have made. I’ve seen couples co-sign on car loans together. I’ve seen them share credit cards and cellphone family plans, buy houses together —  I’ve seen them go half-sies on a puppy. And then I’ve seen them break up.

For the most part, though, the article reassured me. It gives terribly unromantic advice I’ve followed for the most part:

    Don’t share a car: Don’t put both your names on a car title, the article recommends. If you’re sharing a car that’s not in your name with a partner (and chipping in on the car payments), keep in mind that you’re basically paying rent on that car. If it’s not in your name, it’s an asset you’ll lose when you break up.
    Don’t share financial accounts: Sharing a joint credit card account means that both parties are equally responsible for the balance. Being responsible for the debt of someone I’ve broken up with is one of my worst nightmares. Furthermore, consolidating student debt into a single personal loan that both parties pay down might mean a lower interest rate, but it also gives both parties an obligation that might outlast the relationship, the article points out.
    Be careful when buying a house together: Buying a house entails a ton of paperwork. If you buy a house with a significant other, you’ll want to draw up some paperwork of your own. Plan with the assumption that the relationship will end. Specify who is responsible for maintenance and insurance costs. Decide who will keep the house if the relationship dissolves.

I appreciate that there are couples who don’t — and shouldn’t — follow this advice. Not everyone who wants to get married can. Many unmarried couples have kids together, and that entails joint finances.

Plus, even my living situation is not perfectly business-like. When you live with someone you love, they are not just a roommate. If a roommate can’t make rent, you get annoyed. When your significant other can’t make rent, your heart goes out to them. My boyfriend once (OK twice) came to my rescue when it came to rent (which I appreciated when I first moved to Austin and had no job). I returned the favor later. The thing that helps me sleep at night, though, is that, if we break up, the biggest decision we’ll have to make is who gets to keep the $100 Ikea couch.

With wise financial planning in mind, here are some of the best personal finance blog posts of the week:

Mint has an interesting infographic that compares male and female holiday shoppers.

Money Saving Mom explains how the cash-only crowd can buy gifts online.

Beating Broke lists five foods you shouldn’t waste your money on.

Money Coun$elor argues that shoppers should avoid layaway.

Plunged in Debt wonders if being too frugal can alienate your friends.

Make Love, Not Debt discusses how an emergency fund can keep you secure and help you take risks.