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HELPING A ROOMMATE IN FINANCIAL TROUBLE

If you have ever had a friend ask you for money then you know how sticky this situation can be. On the one hand you want to help out your buddy; on the other hand, however, you don't want to get into a fight about the owed money down the road. If you do choose to help a roommate out that is in hot water with their finances, then you need to set up a few ground rules. Having rules in place will ensure that you are paid back and that your friendship remains intact.

Most people prefer to keep finance and friendship separate. That way if there is ever a problem and you are not paid, then your friendship will not dissolve because of it. If you and your roommate get into a disagreement then you may never be paid back. Or, if you are not getting your money, then this may cause a serious disagreement and you may lose your roommate and your friend in the process. Whatever the case, if you can, avoid helping your roommate with financial trouble. Suggest getting a loan from a bank, a credit store or any other service.

Lending Money to a Roommate

If lending your roommate money is going to end up putting you in hot water in terms of your finances then do not do it. While you want to be a good friend and help out your roommate, you don't want to risk your own credit score in doing so. If you can afford to let them borrow some money and you are not worried about when you will be paid back, then go for it.

If you have decided to help out your roommate, then it is important to talk about it. Find out why your roommate is in trouble and how much he needs to borrow. Does he need help with the rent for this month or for the next year? Is he broke because of debts, because of overspending or because of an unexpected emergency or financial problem? This is the one time thing or a regular occurrence? Would he be willing to clean the garage or help with extra chores to pay you back?

There is a big difference between paying the rent just once and paying the rent every month for your roommate. Make sure you and your roommate are clear about what category you fall under. If your roommate is spending the money on items he doesn't need, then you may need to ask for the money up front. Try to help him budget his cash without coming off as a nagging parent.

One of the benefits of borrowing money from you is that you will most likely not charge interest the way a bank does. If he borrows $1000 from you today and doesn't pay you back for six months, you will probably only ask for the $1000 back without interest. However, don't let your roommate take advantage of this situation. Set up a payment schedule if it is a fair share of money.

When it comes to helping a roommate in financial trouble you are probably torn between friendship obligation and fear for financial complications. Choosing to help someone out depends on your personality as well as theirs. If you know the roommate is good for it and you know that they have recently had a hard time with money, then you may feel comfortable lending them money. If your roommate is always getting into trouble with his finances, then you may wish to avoid this situation. Let your head, not your heart, decide whether lending your roommate money will be the best move for now and for the future.

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