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Housing Calculators

By Jonathan Cook
MoneyMix Contributor

You're moving in together. That's great. But listen up, because taking the romantic approach to living with your significant other might cost you a bunch of money and headaches down the road.

"It's a grown-up relationship, and if you decide to be less responsible than what's warranted, that's when you run into the pitfalls of the situation," says Jane Parker, an agent in the office of Family and Consumer Sciences with the Texas AgriLife Extension in College Station.

According to Parker, taking responsibility when it comes to cohabitation—what the experts call living together—starts with clear communication.

frankly my dear...

The first step is to make sure you and your partner have the same outlook on your relationship. Are you hoping to get married? Or are you moving in together to save money on rent? Ask before you assume.

Once this is clear, talk about what's expected of each partner in the living arrangement and any general concerns each of you has.

"Keep in mind that you probably won't stay together in this form of cohabitation for very long," says Linda Waite, a professor of sociology at the University of Chicago. "Essentially, in a short period, either you will get married if it's a possibility for you, or you will break up."

With that in mind, many couples make a breakup agreement before move-in day. The agreement should detail what happens if the relationship sours.  

"A cohabiting union is not a marriage. It is defined by uncertainty. Don't assume you and your partner will be together in six months. Make decisions on that basis," says Maggie Gallagher, president of the Institute for Marriage and Public Policy, Manassas, Va., and co-author of "The Case for Marriage."

This uncertainty can have financial implications down the road, so be careful, warns Waite.

write it down

Develop an agreement in writing that outlines what is expected of each of you. "A simple handwritten document will suffice when the assets aren't too great," says Parker.

The agreement should address payment of utilities and rent, general apartment or house rules, and who gets what if you break up. Both you and your partner should sign the agreement. This way, you can simply refer to the mutually agreed rules when a dispute or breakup occurs. The agreement will become more complicated if you have signed a long-term lease. In that case, figure out who will live in the apartment for the remainder of the lease, and if the partner who moves out will continue paying the appropriate share of the rent even if he or she doesn't live there.

right down the middle

When it comes to expenses, half of everything is best. Here's why:

Jack and Tracy decide to sign a lease. Tracy says she will pay for the lease deposit, and Jack says he'll pay for new furniture. The deposit and the furniture cost $800 each, so it's fair, right? It is fair until Jack gets cold feet two weeks before the move-in day and backs out. Now, at least Jack has something to show for his $800.


partner benefits
Believe it or not, you may be entitled to health-care benefits through your partner's employer if you meet certain "domestic partner" criteria laid out by the company and its insurance carrier.

Check out the Human Rights Campaign for a list of employers offering domestic partner benefits.

buying property
What happens if your relationship grows and you want to buy a house or condo together? In this case, you'll want to see a lawyer to draw up a "tenants in common"  agreement, and take out a mortgage on this basis.

The better method would be for Jack and Tracy to split the deposit and then pick particular pieces of furniture to purchase individually. This way, if a breakup happens, you each can easily take what is yours. Splitting the expenses equally ensures that both partners share the financial risk.

joint finances?

When it comes to joint finances, proceed with caution. "The inherent problem is uncertainty: Where will each of you be a year from now? If you are uncertain, there is little point in creating interdependence," says Gallagher.

That said, there are financial experts who say it's OK for couples to have a joint bank account for paying general joint living expenses, but this can be a slippery slope. The problem is that you might be risking your credit score by doing so.

"My advice is to keep financially separate and share financial responsibilities like roommates—because, essentially, you are roommates," says Parker.

Some experts recommend waiting to open a joint bank account until you're engaged. Even then, you should be sure to keep a personal account for individual expenses, according to a Kiplinger article.

Making decisions about cohabitation isn't as romantic as a candlelit dinner, but that's OK. Sharing living space has little to do with roses and chocolate. What's most important is that both parties speak frankly and are comfortable with the living arrangement. As Gallagher puts it, "You may fall out of love, so don't sign anything you wouldn't sign if you weren't in love."

Published April 16, 2010

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