Author Topic: Roommates with very different incomes?  (Read 8779 times)

cautiouslyunconventional

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Roommates with very different incomes?
« on: November 16, 2014, 11:37:42 AM »
I'm planning on renting an apartment with a good friend who has a lower income than I do. According to my own values, the arrangement makes sense (we can both afford it, and it'll be more fun than living alone), but I realized I was violating my personal rule of not doing things that "aren't done" until I know the reason why they aren't done. (I do a lot of unusual things, and often it turns out that conventions and rules of thumb that seem pointless, do have a purpose.)

I was hoping people around here might know something about why roommates having large income differences is uncommon. (Or maybe it's not that uncommon?) Is it just the natural result of most people consistently budgeting 25-35% of their income for housing and/or having social circles of people similar to themselves, or are there other factors at work here?

(I did try to google for the answer, and most of what I found was talking about non-living-together friends with different levels of spendiness, and how to negotiate choosing activities that everyone can afford. Pressure to choose low-cost entertainment sounds like a feature rather than a bug for someone trying to accumulate savings, so that's at least one way that the usual objections won't apply.)

mxt0133

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Re: Roommates with very different incomes?
« Reply #1 on: November 16, 2014, 12:20:06 PM »
I can see why it can be unusual for people with large income differences would be uncommon, more likely the places that each can afford and the areas they want to live in would be significantly different.  I know I live in SF.

But I think it can be done, I roomed with a good friend of mine when we had vastly different incomes.  I don't think the income difference would be an issue as long as everything is laid out before you live together, such as utilities, late payments, guests/boyfriend/girlfriend staying over, ect.  If your roommate starts to expects you to put up more than your fair share because you make more for things such as food, entertainment, ect, you nip that in the bud quick!

I would say that it is harder to live with good friends than strangers with large income gaps just because people can assume it's OK to cross certain boundaries because you are good friends, which you might not be anymore after you start living together.

sekritdino

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Re: Roommates with very different incomes?
« Reply #2 on: November 16, 2014, 12:24:06 PM »
My roommate made about half of what I did, but I liked saving money so I agreed to the arrangement and it worked out just fine. It sort of hurt watching roommate make unmustachian decisions with that lower income though.

La Bibliotecaria Feroz

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Re: Roommates with very different incomes?
« Reply #3 on: November 16, 2014, 01:10:27 PM »
Similar lifestyles seems much more important to me than similar INCOMES. Most people match their lifestyles to their incomes (or exceed their incomes, even!)--you, presumably, do not. If you think you'll be compatible as roommates, I don't see why you shouldn't go for it.

MrsSmitty

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Re: Roommates with very different incomes?
« Reply #4 on: November 17, 2014, 10:57:24 AM »
Just make sure your potential roommate doesn't have mooch tendencies. I have one friend who always seems to assume I'll pay a larger share than 50% just because I make significantly more than her and always have. Its nothing she outright asks me to do, she just has that entitled "I'm poor you should take pity on me" mentality. Picking up the tab every once in awhile is something I enjoy doing, but I can't imagine living with her.  She'd constantly expect me to buy the toilet paper, for me to pay the Netflix, for me to buy the more of the shared groceries. We'd go to the store for household items but somehow I'd be the only one pulling out my card at the checkout. Love the girl but living with her would be a constant drain on my budget.

lbdance

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Re: Roommates with very different incomes?
« Reply #5 on: November 17, 2014, 11:04:01 AM »
It also depends how much the difference in income is. It isn't uncommon in NZ usually at the age of finishing higher education / starting a job. Many people continue to live together unless they find work in other centers.

Also having some defined rules at the start would help. An agreement to pay the same amount weekly towards all expenses, would be smart, as well as a plan for what to do with unexpected expenses.

Agree if you have similar lifestyles, this should work out fine.

epipenguin

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Re: Roommates with very different incomes?
« Reply #6 on: November 17, 2014, 11:19:27 AM »
I have been in that situation, and found that I ended up constantly buying more of the household things (cleaning products, toilet tissue). Or loaning my roommate money. Not that he knew exactly what I earned but he was only partially employed some of the time, whereas I had a steady job so it was kind of obvious. He was a bit of a mooch, so it was also kind of obvious that I should have got out of there earlier, but I enjoyed living with him so I usually coughed up the money. We didn't really socialize much together or share things like takeout though, so there wasn't a vast scope for over spending on my part, as both our lifestyles were pretty frugal. Except for lending money - that I should never have done.

If I were to do it all over again, I'd make sure that a) my roommate didn't know how much I earned, b) kept my lifestyle down to their level so it wasn't obvious that I earned a lot more, and c) never loaned money.

rocksinmyhead

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Re: Roommates with very different incomes?
« Reply #7 on: November 17, 2014, 11:23:50 AM »
Similar lifestyles seems much more important to me than similar INCOMES. Most people match their lifestyles to their incomes (or exceed their incomes, even!)--you, presumably, do not. If you think you'll be compatible as roommates, I don't see why you shouldn't go for it.

agreed. and I would just try to keep as quiet as possible about how much you actually make, even if they can obviously make a guess that it's more than them.

Terrestrial

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Re: Roommates with very different incomes?
« Reply #8 on: November 17, 2014, 12:45:36 PM »
I think as long as the expenses are geared to be comfortably doable for the lower earning person to shoulder their portion of, it's not a big deal.  I've lived with both people who made alot more and less than myself and never found it to be awkward when people are honest about what they can spend and what their expectations are. 

I agree that matching lifestyles is more important than incomes.  There are many people out there raking in 6-figures living frugally who would pair well when someone of much more modest income, as well as many others living the 30k millionaire credit-fueled lifestyle who would be a poor fit.

windawake

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Re: Roommates with very different incomes?
« Reply #9 on: November 17, 2014, 01:16:29 PM »
When I was in grad school, I lived with someone who was working full time. It didn't matter that she likely made 2x what I was making.

One time, in grad school, I agreed to take on more rent (I was getting a $100 discount on my apartment because my parents own the condo I live in) so I could live with a close friend. I think I ended up taking on $20/mo. more than I would've otherwise. It was worth it for those 9 months of living with that close friend before she moved away.

Right now I'm working full time and my roommate is in grad school. I know how much she makes and it's very little, but she agreed to a set amount of rent/utilities and there hasn't been any issue.

Just make sure everything is squared away before you move in together and I really don't think it would matter.

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Re: Roommates with very different incomes?
« Reply #10 on: November 17, 2014, 01:40:00 PM »
If you want to be able to live frugally, living with a lower income roommate is PERFECT. 

You can enjoy living more cheaply with someone else who has to live cheaply due to their more limited income.  If it comes to splitting costs for something, hopefully your roommate will be on board with economizing whether that's groceries, decor, cable, internet, heating, electricity, etc. 

It's like living in a cheaper house than what your income would allow.  Your neighbors will be lower income, so there aren't as many Joneses to keep up with, and you'll be more likely to enjoy less expensive pastimes if you do any neighborly activities together.  And your neighbors might be up for getting frugal with you on some joint venture, whereas neighbors in a rich neighborhood would probably suggest throwing money at any problem. 

galliver

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Re: Roommates with very different incomes?
« Reply #11 on: November 17, 2014, 02:03:19 PM »
Currently living with my bf and he makes about 2x as much as me...but that's a slightly different situation. However, I insisted that we split rent, groceries, gas, car insurance (since we share use of his car), and joint household purchases evenly (like, 50-50). People have pride. Also I'm trying to keep his standard of living even with mine.

Personally, I would share things like Netflix, Hulu, Amazon video, etc for free, but mostly because whichever of those I had, I would probably choose to have independently of my roommate's choice, and at that point it's no skin off my back if they use it...and it gives you karma points.

If for some reason you didn't want to split everything 50-50, one fair approach I have seen is to split rent weighted by bedroom area. Obviously this only makes sense if there's a reasonable discrepancy. The house I rented in for 4 years had a tiny bedroom, and while we had 3 people, the rents came out 200-300-300. After I moved into the larger room and we decided not to get a third roommate, we just did 400-400 because they were close enough (Yes, my rent was 200/mo for 2 years, it was awesome! but eventually the space got pretty tight when my bf visited). I could also see a similar approach being used for another valuable room commodity: bigger closet, window, bathroom, better view, whatever. Not saying you *need* to pay more, but if the income disparity makes you uncomfortable, this is a not-unfair way to justify unequal rent-sharing.

Zikoris

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Re: Roommates with very different incomes?
« Reply #12 on: November 17, 2014, 02:26:35 PM »
I think the reason it's unusual is that most people like to have a lifestyle that matches their income - the high earner would typically want a much fancier place than the McDonalds worker.

That said, I'm not sure why there would be any issues if you both make enough to comfortably cover your portions of the bills.

purplepear

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Re: Roommates with very different incomes?
« Reply #13 on: November 17, 2014, 02:28:22 PM »
My situation is similar to that. I'm making a big-kid-engineering-job salary... and my roommate is still in college and works as a waitress. In our case, we are really good friends and had always wanted to live together.

So we agreed that she would pay $500 of the rent (all that she could afford)... and I would pick up the rest (so about 60/40 split) and get the larger bedroom. We split all other bills 50/50. It works because it's still much cheaper for me to live with her than on my own in a decent apartment by myself. And we share household responsibilities. The income equality never really bothers us. If anything, she's helped keep my former spendy tendencies in check. :) If you have the higher income, but are trying to live more mustachian, living with a lower income friend might actually be a good arrangement.

With previous roommates, I've usually had the agreement that "whoever has the master bedroom pays slightly more". Especially if the master bedroom also included a master bathroom. Worked out well.

frugalnacho

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Re: Roommates with very different incomes?
« Reply #14 on: November 18, 2014, 07:58:46 AM »
I'm not sure why it would even be an issue.  Is your income public knowledge? Why not just keep it secret and you both pay for your own share of the bills?

Hannah

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Re: Roommates with very different incomes?
« Reply #15 on: November 18, 2014, 08:18:20 AM »
I lived in a house with 4 women. Our rough incomes were:

$15K (jumped to 40K when she finally landed a full time job)
$35K
$55K
$120K

It was the most fun living arrangement of my life. We had tons of fun together despite the fact that the other 3 were introverts.

We would split utilities 4 ways, but we didn't share much else. I usually bought toilet paper, paper towels, and cleaning chemicals for the whole house, but sometimes a $20 would show up in my room unexpectedly, or a roommate would buy me a bus pass, so it would work out. The $120K was the owner of the house, so she paid for all the maintenance, and she was pretty good about keeping up on things. The rest of us paid $300-$400 per month, so I would guess the owner was coming out ahead.

I also had unlimited free books due to the introverted nature of the roomies.

RelaxedGal

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Re: Roommates with very different incomes?
« Reply #16 on: November 18, 2014, 09:59:31 AM »
If for some reason you didn't want to split everything 50-50, one fair approach I have seen is to split rent weighted by bedroom area. Obviously this only makes sense if there's a reasonable discrepancy. The house I rented in for 4 years had a tiny bedroom, and while we had 3 people, the rents came out 200-300-300. After I moved into the larger room and we decided not to get a third roommate, we just did 400-400 because they were close enough (Yes, my rent was 200/mo for 2 years, it was awesome! but eventually the space got pretty tight when my bf visited). I could also see a similar approach being used for another valuable room commodity: bigger closet, window, bathroom, better view, whatever. Not saying you *need* to pay more, but if the income disparity makes you uncomfortable, this is a not-unfair way to justify unequal rent-sharing.

Yep, pretty common.  My first "real job" apartment was $275 for me, $300 for her.  I made more, but she go the carport.  My second was I think $325 for me and the other gal, $300 for the third gal who didn't get a parking spot. 

Currently living with my bf and he makes about 2x as much as me...but that's a slightly different situation. However, I insisted that we split rent, groceries, gas, car insurance (since we share use of his car), and joint household purchases evenly (like, 50-50). People have pride. Also I'm trying to keep his standard of living even with mine.

I got bit by that when my boyfriend (now husband) and I bought our house together.  We bought at the top of what I could afford, plus I totaled my car the week of closing on the house and suddenly had car payments so I was stretched each month and had no fun money.  He, meanwhile, had a fountain of cash and no idea what to do with it.  It was stressful to me and yet it took me at least a year before I could set aside my pride and agree to divvy everything equitably based on income.  Not that your income has to have any say in the rent, just tossing out an example where it didn't go well - make sure your buddy has an emergency fund and isn't overextending himself to share a place with you.

OptimizeOptimism

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Re: Roommates with very different incomes?
« Reply #17 on: November 18, 2014, 10:41:30 AM »
I was actually in this situation for about 3 years and I would never trade that time for anything in the world.

That said here are a few things that I think helped it all work out:

- Even though we weren't bestie best friends before we moved in together, I did know her general feelings toward finances and while she's not Mustachian by any means, she did put a lot of value on pulling her own weight. "Mooching" would have felt like a personal failure to her.

- Partially because of that previous point, I tried to find ways to help her out without it just being about helping her out. Like someone mentioned before, I claimed the master bedroom and paid a little extra for it. We also moved into somewhere a little nicer than what she could afford, without the price offset but we both liked it much better, so to me it was me paying to get what I wanted. (This was pre-MMM for me so I now see the silliness in the extravagance that we paid for, but I was enjoying my new engineering salary!)

- Keeping track of IOUs. This is where it could have gotten tricky, but a little flexibility and compassion go a long way. There were legitimately times where her financial situation was stretched. There were also probably times where things weren't as stretched as she thought, but I decided early on that if she said she couldn't afford utilities or whatever one month I would take her at face value. What we would do would be to write down money owed on a notepad on the fridge. The rule was simply that everything had to be paid off by the time we weren't going to live together anymore. It was visible so impossible to forget about and nobody could claim they didn't know what was owed. When things were paid, they got crossed off. Easy Peasy and it was never more than a couple of months before we were square again.

- My attitude. I decided very early on that I would not be upset about any trouble that she was inflicting on herself (short of anything that could get her killed). She's an adult and has the privilege of making bad decisions if she wants to, including financial ones. lol As long as she was paying her share and honest during the infrequent times when she couldn't, all was well.

Overall, remember that you are friends and would like to remain so. :)

mm1970

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Re: Roommates with very different incomes?
« Reply #18 on: November 18, 2014, 10:56:31 AM »
I'm planning on renting an apartment with a good friend who has a lower income than I do. According to my own values, the arrangement makes sense (we can both afford it, and it'll be more fun than living alone), but I realized I was violating my personal rule of not doing things that "aren't done" until I know the reason why they aren't done. (I do a lot of unusual things, and often it turns out that conventions and rules of thumb that seem pointless, do have a purpose.)

I was hoping people around here might know something about why roommates having large income differences is uncommon. (Or maybe it's not that uncommon?) Is it just the natural result of most people consistently budgeting 25-35% of their income for housing and/or having social circles of people similar to themselves, or are there other factors at work here?

(I did try to google for the answer, and most of what I found was talking about non-living-together friends with different levels of spendiness, and how to negotiate choosing activities that everyone can afford. Pressure to choose low-cost entertainment sounds like a feature rather than a bug for someone trying to accumulate savings, so that's at least one way that the usual objections won't apply.)
?

Haven't had roommates in a long time.  When I was first living in DC, I rented a room in a house with 2 other people.  I have no idea how much they made.  I'm guessing that the woman I knew from college was making a similar amount to me.  She was one year older, worked for the Federal Government, and I was a Navy Ensign.  But the other guy?  He was a good 10 years older.  Probably made a lot more.

I paid 1/3 the rent, 1/3 the utilities.  This was back before internet, and cable wasn't that expensive, so I guess that could be an issue.  We took turns cleaning the kitchen/bathroom and lawn mowing.  I paid someone to mow the lawn on my week, which drove my male roommate crazy.  But it was my $20.

Eventually I moved to an apartment with just the woman, and we split it based on bedroom size, so she paid a little more.
« Last Edit: November 18, 2014, 11:00:05 AM by mm1970 »

galliver

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Re: Roommates with very different incomes?
« Reply #19 on: November 18, 2014, 10:59:07 AM »



Currently living with my bf and he makes about 2x as much as me...but that's a slightly different situation. However, I insisted that we split rent, groceries, gas, car insurance (since we share use of his car), and joint household purchases evenly (like, 50-50). People have pride. Also I'm trying to keep his standard of living even with mine.

I got bit by that when my boyfriend (now husband) and I bought our house together.  We bought at the top of what I could afford, plus I totaled my car the week of closing on the house and suddenly had car payments so I was stretched each month and had no fun money.  He, meanwhile, had a fountain of cash and no idea what to do with it.  It was stressful to me and yet it took me at least a year before I could set aside my pride and agree to divvy everything equitably based on income.  Not that your income has to have any say in the rent, just tossing out an example where it didn't go well - make sure your buddy has an emergency fund and isn't overextending himself to share a place with you.

Yeah, since my income was the limiting factor, I ended up setting the bar, and basically said, if you want granite countertops, a pool, and a dishwasher, you'll have to pay anything over xxx that I can handle. We ended up finding a really awesome place at the bottom of the budget, though (even if it doesn't have a pool or dishwasher), so no one is complaining. And he can overpay his student loans (more). :)

My bar, incidentally, was that I could afford it myself if push came to shove.

cautiouslyunconventional

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Re: Roommates with very different incomes?
« Reply #20 on: November 19, 2014, 02:39:49 PM »
Thanks so much for all the advice (and sorry for being absent from my own thread - stuff got busy). I feel a lot better going into this knowing what other peoples' experiences were like.

I think we need to have another talk about how the specifics of splitting things are going to work, but other than that, things are looking good. Thanks.

act01

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Re: Roommates with very different incomes?
« Reply #21 on: November 19, 2014, 11:51:08 PM »
I remember being on the opposite of this. It was mostly awkward when we'd go out. They would want to order a bunch of expensive appetizers or a bottle of wine, and I just didn't have the money to chip in. I guess this happens now with friends still and it drives me nuts - except now, I'm not afraid to say "I'm not paying" and joke about how cheap I am.

I've also been on the other end of this, renting out a room in my home to a friend... he made a lot less (and I owned the house). But, he was great at cooking, cleaning, making cocktails at home vs going out, etc. Some of his frugal habits rubbed off on me, which helped me save more money. If I was busy, I'd offer to buy him lunch or give a little rent discount for helping with yard work or cleaning. Some people might be offended by that, but it worked well for us. He was happy to do it (and it cost me less than hiring help).

Adventine

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Re: Roommates with very different incomes?
« Reply #22 on: November 20, 2014, 01:07:34 AM »
I was actually in this situation for about 3 years and I would never trade that time for anything in the world.

That said here are a few things that I think helped it all work out:

- Even though we weren't bestie best friends before we moved in together, I did know her general feelings toward finances and while she's not Mustachian by any means, she did put a lot of value on pulling her own weight. "Mooching" would have felt like a personal failure to her.

- Partially because of that previous point, I tried to find ways to help her out without it just being about helping her out. Like someone mentioned before, I claimed the master bedroom and paid a little extra for it. We also moved into somewhere a little nicer than what she could afford, without the price offset but we both liked it much better, so to me it was me paying to get what I wanted. (This was pre-MMM for me so I now see the silliness in the extravagance that we paid for, but I was enjoying my new engineering salary!)

- Keeping track of IOUs. This is where it could have gotten tricky, but a little flexibility and compassion go a long way. There were legitimately times where her financial situation was stretched. There were also probably times where things weren't as stretched as she thought, but I decided early on that if she said she couldn't afford utilities or whatever one month I would take her at face value. What we would do would be to write down money owed on a notepad on the fridge. The rule was simply that everything had to be paid off by the time we weren't going to live together anymore. It was visible so impossible to forget about and nobody could claim they didn't know what was owed. When things were paid, they got crossed off. Easy Peasy and it was never more than a couple of months before we were square again.

- My attitude. I decided very early on that I would not be upset about any trouble that she was inflicting on herself (short of anything that could get her killed). She's an adult and has the privilege of making bad decisions if she wants to, including financial ones. lol As long as she was paying her share and honest during the infrequent times when she couldn't, all was well.

Overall, remember that you are friends and would like to remain so. :)

This is really great advice. I'm about 8 months into living with my first roommate and I've tried to do the same with her, with good results.

GumbyPickles

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Re: Roommates with very different incomes?
« Reply #23 on: November 20, 2014, 06:36:37 AM »
My roommate made about half of what I did, but I liked saving money so I agreed to the arrangement and it worked out just fine. It sort of hurt watching roommate make unmustachian decisions with that lower income though.

You know what?  I'm sure it hurt them to see you living so frugally. 

dragoncar

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Re: Roommates with very different incomes?
« Reply #24 on: November 20, 2014, 11:28:40 AM »
I've seen it done successfully before.  In this particular situation, it was an underemployed actor living with a highly-paid corporate type in NYC.  Money caused occasional issues, but those were usually resolved in painless and sometimes hilarious ways.  Don't remember what the highly-paid guy did... I think he was a transponster or something like that.

Goldielocks

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Re: Roommates with very different incomes?
« Reply #25 on: November 20, 2014, 03:32:10 PM »
Pretty common from my experience... Except it was usually a married or long term couple , with a nice place, that rented a room to the BIL or SIL.

Never any question that the roommate was playing less, never any question that the place belonged to the primary couple.  Usually worked for up to 5 yrs until babies became about 1 yr old.

I think the " feels like family"  is the deciding factor.  Either they are just a temp tenent to off set costs, or they are like family, and all that goes with it.