Roommates, Frugality, and Necessary Spending

A reader named John writes in about a conundrum with his future roommate:

I need to know if my best friend is saving his money wisely, or just being ridiculously cheap. There’s a difference between cheap and frugal, I know this. I’m frugal, but not cheap. I’m not so sure about him.

He has a fairly decent job, but he does spend a good chunk of money on college loans (about the same as me, around $500-$600 a month), and he spends about $200 a month on gas because he drives a long way to work. He’s working on getting a new job to fix that gas bill.

Now, my main question has to do with him and his savings account. The question came up because we plan to get an apartment together and I mentioned that once we get settled in we could maybe split a plasma TV. I’m not thinking anything crazy, I’m thinking in the $800-$1000 range. So it’d be $400 or $500 a piece, and at the end of the year I’d buy the rest of it from him. He flipped. Said that’s impossible, he doesn’t have the money, etc, etc. He tends to do this a lot whenever he has to do something that involves paying for anything other than his bills.

The thing is, he has something like $15,000-$20,000 in savings. I’m not exactly sure, but it’s a decent number. He’ll say “I need that for emergencies, if I start using that to buy stuff, it’ll be gone before I know it.” Now, I know the importance of an emergency fund, I have about $5,000 saved up in my own emergency fund. But is it foolish of me to think that he should be able to part with $400 from $20,000? Am I so wrong to think that would be ok?

I would appreciate any advice you could give to me that maybe I could pass on to him.

For starters, on the issue of whether to “invest” in a plasma television, it shouldn’t be a surprise to long term readers that I agree with John’s roommate – I’ve encouraged people to throw out the television they already have, let alone buy a new one. I’ll get back to this in a minute, but the important thing is that the television itself is very secondary to this overall situation – there are bigger issues at work that John and his potential roommate need to address.

First of all, they have different philosophies on what is a worthwhile expense and what is not.

John pretty clearly thinks it is reasonable to buy a plasma television, while his roommate-to-be does not. As I said above, I agree with the roommate, but there is no absolute right or wrong answer here – it depends entirely on personal values. Another major difference is the idea of what an emergency fund is and what it should be used for.

Given that, to be roommates who don’t resent each other, they’re going to have to be fully clear on this to each other. Based on the email, it’s pretty clear that John has a broader definition of worthwhile expense than his roommate and he feels that a plasma television is a worthwhile expense, and he already seems almost resentful that his potential roommate disagrees with this. Different people have different value structures, and if you’re concerned that your roommate’s value structure is different enough than your own that it’s going to cause problems, then perhaps a roommate situation isn’t a good idea.

Another note: if you want your roommate to go in half on an expensive item like this, then plan to buy their half at the end of the year, the roommate probably looks at it as being a $400-500 interest free loan for a year. At the same time, you’re expecting to be roommates, which probably has this person a touch uncomfortable – I know I would be in the roommate’s shoes. Why? First, it would make me wonder whether this scenario would be repeated on other luxury items – are you going to suggest similar things with similar pressure if you happen to want a Playstation 3? Next, given that you’re going to be sharing bills, I’d worry about your financial choices a bit – you’re asking me to go in half on an expensive item that I don’t want … what does that mean about your financial situation? Are you going to regularly try to buy expensive items that you can’t really afford?

So what should these two do? Before they even think of sharing an apartment, they need to sit down and hammer out how they’ll handle shared purchases. John pretty clearly has a taste for more expensive items than his potential roommate, which is fine, but to automatically expect the roommate to share in this is wrong. Sit down and rationally talk about it – it may be that the roommate is fine going in halves on a moderate television, but if you want to jump to a plasma and your roommate does not, then you should likely pay for it yourself.

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