Managing House Finances

Who pays?

How much?

When do they have to pay?

What about the kid whose money ran out in March? (Get a Job! Come on)

Money can become a rough issue among a group of poor college roommates. Therefore, we advise you to work out a house/apartment finance system immediately at the start of the year. Even better would be to discuss finances before you all take up communal residence. It is good policy to have a basic understanding of each of your roommates' financial situations before you enter the house. A roommate that is suddenly struggling to get by halfway through the year and trying to free-ride off the rest of the residents can cause a lot of tension. Alternatively, it may be smart diplomatically to put slightly less pressure to repay debts on the student who is working to pay rent, as opposed to the students whose parents are paying. It never hurts to know the whole situation before going into a communal living situation.

There are many, many different ways to manage house finances. The important thing is that all residents agree and are comfortable from the outset with whatever system you choose. Ideally, all members should also be comfortable with the protocol for resolving disputes. Finally, you should look for the simplest possible option. Money matters should not get in the way of more important activities, like deciding whether to wear shirts with horizontal or vertical stripes.

Finance Systems

Here are some tried and true systems for managing house finances:

• The Spreadsheet- This vaunted financial management system is hailed by Practical U as the best and easiest, if a housemember is up to the task. In this method, all debts are reported to one housemember (CFO). This CFO then records the debts on their Excel spreadsheet (Download here). The spreadsheet then keeps track of the quantities that each household owes to each other. The CFO can then issue debt reports monthly, quarterly, or at the requests of housemembers. This system works best if the CFO is exceedingly trustworthy and diligent about his/her duties. Disputes can be easily resolved with a trustworthy CFO. Basically, if it is on the spreadsheet the expense exists. If not, then the expense never occurred. Download the Excel spreadsheet with instructions for use.
  Download Spreadsheet (spreadsheet.xls; 22.5 KB)
  Download a Simple Sample Spreadsheet (simple spreadsheet.xls; 17.5 KB)
• Post Debts as They Come- A straightforward, more open method that enables quick settling of debts. In this system, a form is posted on a wall or corkboard. When a mutual expense is occurred by one housemember, such as a taxi fare or groceries, then he or she posts it on the wall form. In this way, all debts are immediately visible, and can be repaid quickly.
  Download a Sample Table (debt form.doc; 36.5 KB)
• Caveman Method- Debt collection is done by force.
  "You want me to pay for that gallon of milk? Come here and make me!"
  This is also known as the alpha dog method. The meanest, strongest, or most wiley member of the house ends up determining what debts exist and who pays. If you are small and decide to go with this method, then we suggest stocking up on airsoft guns.

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