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LOANING MONEY TO A ROOMMATE

Loaning money to a roommate can be a tricky situation. It is usually a bad item to ask friends for money as you may be in hot water if you cannot pay them back right away. Before you loan money to your roommate make sure you have set up some ground rules about payment terms and conditions. That way both of you can feel more at ease with the situation.

Problems with Loaning Money to Friends

One of the problems with loaning money to a roommate is that you are often not paid back right away and this could affect your savings account. Then, rather than paying you back, you notice that your roommate comes home with a new pair of shoes, a case of beer or a full tank of fuel. Perhaps he needed all of these items but, until you are paid back, you will probably question every purchase he makes, wondering why that cash wasn't used to pay you back. This can lead to frustration, resentment and eventually an argument.

Your roommate will probably feel similar anxieties every time you guys bump into one another in the hallway. He may feel guilty buying the expensive cheese at the grocery store or buying himself a pair of jeans for work. He may tell you every time you see him "the money's coming" which can lead to more anxiety and guilt. The whole situation is best avoided if possible.

How to Loan Money to a Roommate

However, if it is not possible or if you are not worried about your financial situation, then loaning money to a roommate can be a nice thing to do to help out a friend. How much money you are loaning to your friend will make a big difference in how you go about the situation. Loaning him $20 is nothing; however, there is a good chance you won't see that money for a while. Loaning him $2000 is a big deal and you probably want that money back as soon as possible.

If you are loaning your friend a large sum of money then having a time frame is important. "I'll pay you back when I can" sounds great in theory but it often doesn't happen. You may want to work on a payment plan, such as $200 each month, until the debt is paid off. Or you may make a due date down the road. Either way, you are ensuring that you are getting your payment and avoiding confrontation and fights in the process.

Another concern when it comes to loaning money to a roommate is borrowing small amounts of money often. $20 here, $10 there will add up quickly and often you will not even realize it. If you are loaning your roommate small amounts every so often and are looking for a way to get this money back, then give him a running tab. Remind him of all the other times you have loaned him money and ask for some payment back before you do it again. This may stop him asking and may help him to get back on his financial feet.

Another thing to remember is that you should only loan money to a roommate if you are financially stable and can afford to. If you notice that you are constantly footing the rent, the utilities and other bills then your roommate may not be financially capable. If this is the case, you may not have any other option but to talk to him about it and suggest he finds somewhere else to stay until he is ready for the financial responsibilities of living on his own.

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