Is A Roommate Worth The Financial Benefit?

A new graduate is wondering about the financial benefits of having a roommate – are they worth the drawbacks?

I’m finally at a place where I’m able to afford living alone – and though I much prefer the cost savings of having a roommate (about $400 a month) I’m heavily considering living alone. My only options are to a) live with someone I don’t know b) continue living with someone I know but am very unhappy living with (I now view the savings as a payment to myself for living with this person, like a job). I don’t know anyone who needs a roommate, or anyone who is moving to town within the timeframe that I’d be looking to move.

Faced with spending $400 “extra” a month to live alone, plus the upfront cost of buying things like a TV and furniture (all off craigslist or on sale, and nothing ridiculous like a 50″ plasma – going for the best combination of long term value and cost savings), what would you advise your readers to do? In other words, in situations like this, where does the “personal” get factored into the “finance”?

I have my own ideas about the subject, which pretty much amount to: I’m currently not happy where I live – I haven’t been happy for a good 5 months, yet am planning on staying to finish out the lease. I’m saving $400 a month now my living where I am and finishing my lease out, enabling me to pay off my credit card, build up my emergency fund some more (targeted to be at 1.5 months worth of expenses by the time I move out), and have the cash upfront to pay for my large purchases before moving out to my own apartment.

In my view – paying the $400 extra a month (this includes the increase in rent and utilities) will provide me with a much greater sense of peace with my overall life – something that is a source of constant stress now.

My personal philosophy is this: if you can take an action in your life to relieve a constant stress without seriously damaging your financial state, take it. This goes for everything from switching jobs to switching housing – anything that provides day-in day-out stress is a bad thing for your life in the long run because it has constant adverse effects on your mental and physical health. Those adverse effects keep you from performing at your optimum level and eventually can lead to illnesses – these are real financial effects in addition to the overall effect on well being.

Thus, my first point of advice to the reader is to move out of the current situation, whether now or at the end of the lease. Don’t renew the lease, no matter what. Look for some other housing for your own well being.

So now the question comes down to is the additional financial cost of living alone worth it? There’s no absolute answer to this question because it depends heavily on the individual and how well they get along with people they’re sharing a living space with.

3 Questions to Consider When You’re Considering Having a Roommate

1. What do I really want for housing?

Some people are merely looking for a pillow upon which to lay their heads. If that’s all you really need, then many more possibilities open up for you. Generally, the more time you’ll be spending at your place of residence and the more possessions you have, the more strict you ought to be in selecting a living situation. I’ve lived in all varieties, from what amounted to a college place with several people jammed into a two bedroom apartment and all my possessions existing in two Tupperware tubs in the corner and a sleeping bag to the family home I live in now.

2. Would I feel safe, secure, and happy living with a stranger?

For most people, the answer here is no. If you’re also saying “no,” then you probably don’t want to post or answer an ad asking for a roommate. In some situations, I’d be fine with this – if I didn’t have many belongings at all, for instance, and had a room that was lockable. I lived in a situation much like that in college with some people I didn’t know well at all (I knew some of the roommates before I moved in, but not all of them).

3. Would I feel safe, secure, and happy living with a specific person that I know?

If you’re evaluating a roommate, ask yourself whether you would be fine sharing living spaces with that person. For example, if you’re a neat freak and this person leaves beer cans out all over the place, you may have problems. Similarly, if you go to bed at ten every night and this person jams to Norwegian death metal while playing World of Warcraft at two in the morning, you may have problems. Does the person have a drug problem or some unsavory relationships? Does this person have any odious personal habits that really bother you? Basically, if you’re thinking of sharing an apartment with someone and there are any big red flashing lights, don’t jump in.

Also, one major tip: lay everything on the table with your roommate. Seriously. If there’s something bothering you and you choose not to talk about it, you’re choosing to let that wound fester and grow far worse. If you think you’re pulling more than your fair share and it’s bothering you, say so. Just be calm and cool and civil about it. Most of the foul roommate situations I’ve seen were caused by expectations that weren’t clear to the other person – if you expect them to do something, at least have the guts to say so or else don’t expect it. If you follow that one little rule, your housing arrangement will go much better.

To me, choosing whether to have a roommate or not is a personal issue first, not a financial issue. There is no amount of savings worth making your day-to-day life completely miserable – it’s not even worth a serious distraction.

Trent Hamm

Founder of The Simple Dollar

Trent Hamm founded The Simple Dollar in 2006 after developing innovative financial strategies to get out of debt. Since then, he’s written three books (published by Simon & Schuster and Financial Times Press), contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.