Moving in Together? Your Guide to Managing Money

Moving In Together

Cohabitation, or living together outside of marriage, used to be frowned upon. It was referred to as “living in sin,” and nice girls and boys just didn’t do that.

Today, it’s commonplace. In the last 50 years, cohabitation has increased almost 900%, and two-thirds of today’s marrying couples already live together.

Now that societal norms have changed, the modern couple can test out life together before getting married, or simply cohabit sans matrimony. Alas, these gals and guys often fail at something important – talking about money. Contrary to the oft-quoted saying, money is not the root of all evil, but it becomes a thorny topic when couples don’t communicate. Note that when we say “communicate,” we don’t mean yell and hurl plates against the wall (although breaking plates sounds dramatically fun in a setting free of conflict!).

Smart communication is calm, open, respectful. Here’s a bold stake in the ground – your cohabitation will not succeed if you don’t successfully talk about money. For some, it’s easy, but for others, it’s uncomfortable and difficult. So was your awkward teenage stage, but you got through that, and you can get through money talks with your partner. You can even be awesome at it.

So man up. Woman up. Person up. Be an adult and talk about money.

This guide explores what to talk about for your cohabitation and how to do it smartly.

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Table of Contents

1: The Wrong Reason To Move in Together
2: How to Talk About Money Without Awkwardness or Arguments
3: How to Calculate Your Joint Housing Budget
4: Who Should Sign the Lease
5: What to Do If One or Both Partners Have Bad Credit
6: How to Split Joint Expenses
7: How to Keep Track of Joint Expenses
8: Discuss Your Doomsday Plan
9: Put it in Writing in a Living Together Agreement
10: What If

1: The Wrong Reason To Move in Together

Let’s just say it – money is the wrong reason for moving in with your romantic partner.

We won’t wax philosophical about the right reasons – we’ll let your mother do that. However, we’re pretty adamant that if you find yourself uttering the two phrases below, you should ask yourself (we dare you to do it dramatically, aloud and publicly), “Am I being smart?”

What are these two phrases that we urge you never to utter, not even under your breath when you think we can’t hear?

Red flag #1:

“We’re moving in together to save money.”

Let’s say you and your partner live in separate apartments, each with a roommate – or three, depending on rent costs (we’ve been there). Many think, “If I’m already sharing my space with a roommate, why not just share with my significant other? We’ll save money, and it will be more convenient.” So the common logic goes.

Sure, if you find a new place as a couple or if one moves in with the other, you may see some savings:

  • Save on rent after factoring in potential broker fees, moving expenses and new household purchases
  • Save on transportation costs such as Uber, gas or public transport, since you no longer shuttle between two homes
  • Save on food if you cook more together and eat out less often

This all makes sense, and we hear you. But hear us:

Saving money shouldn’t be the reason for moving in together. It should be the result.

If you think you’re being practical and that it’s a good thing, think again. Don’t get us wrong – we’re big fans of rational thought. However, this is what being practical should sound like: “We’re going to share an apartment because we’ve decided together, money aside, that we both want to do this and we’re ready for it. An added bonus is we’ll save some money.”

Why is money the wrong primary reason to live together?

  • It’s not a strong foundation for a relationship. If you don’t have the good reasons – wanting to live together, seeing a future together (all those things we’ll let your mother tell you), then there’s a decent chance things won’t work out.
  • You may decide down the road that you want out, but because the arrangement saves you money, you could feel compelled to stay. Not a healthy dynamic.
  • If you break up, you may need to look for a new place to live, in addition to dealing with the unpleasantness of a break-up while living with the person you broke up with, all while maintaining your job or studies. We’ve seen this happen oh so many times, and it’s not easy to deal with the upheaval of your personal and home lives all at once.

Red flag #2:

“My lease expires soon, so it’s the right time to move in together.”

Sure, paying two rents usually costs more than paying one. However, the looming deadline of a lease expiration can create an unnecessary sense of urgency and drive to a premature decision to move in together. Instead of allowing the relationship to take its natural course, this artificial milestone speeds up the decision to merge households. Ask yourself (pensively, with a raised eyebrow), “Did the lease make us talk about living together, or is it something we wanted to do anyway?” As before, being practical about money should not drive this decision. The end of a lease should not be the main reason for moving in with your romantic partner. If you’re both excited about living together and talked it through, then decide how to handle the lease, whether it’s expiring or not.

Don’t move in together for financial reasons!

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2: How to Talk About Money Without Awkwardness or Arguments

Americans don’t like talking about money so much that we’d rather talk about death or politics. True story. In a survey conducted by Wells Fargo, 44% of Americans find personal finance the most challenging topic to talk about with other people, ahead of death, politics and religion.

That’s a problem! Why the hesitation to talk about a commonplace topic that affects us all?

  • Insecurity. Many people feel uneasy about their financial habits or ashamed of past mistakes. They’re worried they don’t save enough, invested in a stock that tanked, don’t give enough to charity. Wealthy, struggling or somewhere in between, most people worry about some aspect of their financial situation.
  • Fear. It’s difficult for many people to open themselves up to scrutiny from others if their finances are not in order. Conversely, some with substantial assets don’t want to reveal their wealth for fear that others will try to take advantage of them.
  • Lack of Confidence. As in other life areas, confidence is key. The Wells Fargo survey showed that while both genders lack confidence with money, women find it more challenging to talk about and also rate themselves lower than men on their level of financial literacy.

So, Americans have financial baggage.

No wonder we’d rather talk about anything else! As a result, money conversations tend to be emotionally charged rather than logical and strategic. Talking about money with your partner can be extremely uncomfortable, especially if you grew up in a household where money was never discussed. Maybe you don’t know how to start the conversation. Maybe you’re worried about your partner’s response. Perhaps you foresee it leading to an argument.

Listen up – talking about money doesn’t need to make you cringe. You can actually get to a point where talking about uncomfortable topics in general, and money in particular, is manageable if not easy.

We have a little system we call Embracing the Difficult Conversation. It’s common sense with a little Sage thinking built in. Learn it. Own it. Love it.

  • Step 1: Don’t let things fester. When you want to bring up a money matter, do it. Don’t let it build up, only to unleash your pent-up thoughts and feelings on your partner after too many margaritas. It probably won’t go well.
  • Step 2: Be casual but prepare your talking points. Don’t make a big deal of it but know what you want to say. If it’s a hairy topic, go into it with more extensive thoughts prepared.
  • Step 3: Pick the right time. When your partner gets home from work, tired and hangry (hungry + angry, happens to us all the time)? Nope. When you’re searching for a parallel parking spot in the rain? Probably not. Pick a drama-free time when you’re both relaxed – dinner or an afternoon walk or whatever it is you crazy kids do these days.
  • Step 4: Own the awkward. It’s as simple as saying, “I feel awkward bringing up money but I think it’s important to talk about.” Or “This is uncomfortable but let’s just hash it out.” You’ll be surprised how acknowledging it actually makes things less awkward. Admit it, clear the air, and plunge into the meat and potatoes of what you want to talk about. Also, don’t start with, “We need to talk.” No one likes to hear that, and you sound like someone in a bad 90s movie.
  • Step 5: Use positive, collaborative language. “Let’s create an arrangement that works for both of us.” “I think we’ll feel good about all this once we have a plan.” Don’t use accusatory language like “You always do this.” Don’t bring your partner’s parents into it.
  • Step 6: Listen. Listen. Listen. Hearing is not the same thing as listening. Process and acknowledge what your partner is actually saying to you and repeat it back to them to demonstrate you understand.
  • Step 7: Agree on a next step. This is important. Not every conversation needs to end with a resolution, but it should end with an agreed-upon next step. Even if you just agree to both think it over and speak about it again next Tuesday, that’s a concrete step forward. Don’t let the conversation end without agreeing to something.
  • Step 8: Finish with a high five. We know this sounds dumb, but just try it. At worst, it will make you grin sheepishly. At best, it will make you feel like a team, like you’re f*ing awesome and you’re figuring things out together. Like Marshall and Lily on How I Met Your Mother. They high five all the time.

Learn how to talk about money with your partner. We want you to get to a point where you’d rather talk about that than death or politics!

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3: How to Calculate Your Joint Housing Budget

Before you start searching for your new dwelling, decide on your monthly housing budget. What is the maximum you two will spend per month? Financial experts have somewhat varying advice on this.

Some say that housing should be no more than 25-30% of your pre-tax income, while more conservative experts say it should be 25-30% of your take-home pay.

On the flip side, you may need to spend more than 30% if you live in a city like New York or San Francisco, where housing prices are notoriously high.

Let’s choose the conservative approach and say that you’ll cap your spend at 30% of your take-home pay. Enter Miss Piggy and Kermit, who will serve as volunteers from our studio audience for the rest of this guide. Miss Piggy and Kermit have a combined take-home pay of $60,000 per year, and using the 30% guideline, they calculate that they’ll spend a maximum of $18,000 annually on their rent. Divided by 12, this comes out to $1,500 per month. This is the maximum, and if you can easily find a place to live that costs less than your maximum, then by all means save the money. However, if you’re looking for a place in a pricey locale, you may need to compromise in order to stay on budget; for example, you can opt for a smaller apartment or a less popular neighborhood where your dollars stretch further.

At some point in your search, you’ll probably fall in love with an apartment that is higher than your max, and one or both of you will try to rationalize applying for it. We’ve all been there. Discuss if you’re both willing to put in more money each month. Just remember, it means you will have less money for other expenses and less for your savings accounts. The trade-off is up to you, but we recommend sticking to your budget.

The other common scenario is that one of you moves into the other’s owned or rented home. Make sure you discuss the monthly payment and confirm that the person moving in feels comfortable paying their share.

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4: Who Should Sign the Lease

A lease is a contract that legally binds each person who signs it. If a person is not written into the lease, they are not liable for the rent. Neither their partner nor the landlord can legally go after them for the money if the relationship turns sour. Think you know and trust your partner? For your sake, we hope you’re right. Unfortunately, there are too many sad tales out there of partners bailing town. Therefore, it’s a good idea to put both of your names on the lease.

An important consideration when both people are on the lease is that they both have a right to stay in the apartment if the relationship doesn’t work out. Decide ahead of time how you will handle this (see Chapter 8 for more details).

Additionally, some lawyers recommend that you check the lease for a clause that states each tenant is “jointly and severally” liable for paying the rent. This means that each of you is responsible for your own portion of the rent as well as the full amount if your partner fails to pay their portion. To protect yourself, try to have the clause say instead that each tenant has “several liability” or “individual liability,” meaning that each of you is only responsible for your own share. Your landlord or management company may not agree to it, but it never hurts to ask.

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5: What to Do If One or Both Partners Have Bad Credit

Credit scores may give you a flashback to the SATs.

It’s a way for lenders and landlords to know how creditworthy you are by using a number that is easy to compare against other applicants. Landlords and building management companies usually run a credit check when you apply for an apartment. The most widely used credit scoring system is the FICO Score, which ranges from 300 to 850. They typically want to see that your credit score is at least in the mid-600s, although many want to see at least the high 600s or low 700s.

If you don’t know your score, you can get it for free from sites like creditkarma.com, and some credit card issuers like American Express also provide it to you for no additional charge. You should also download your credit reports from all three credit bureaus – Experian, Equifax and TransUnion – at annualcreditreport.com so that you are aware of what’s being reported.

If you or your partner have a low FICO Score, talk to the landlord about running a credit check only on the person with good credit, to improve your chances of being approved. There are also other ways to overcome objections to a low credit score:

  • Demonstrate that your combined pre-tax income is 40x the monthly rent, which is the same as saying that the rent-to-income ratio is 30%, by showing your most recent pay stubs.
  • Offer to pay a higher security deposit or prepay a couple months of rent, if you have the cash on hand.
  • Show bank statements that demonstrate you have enough in your account to pay the rent.
  • Provide good references from past landlords.
  • Get a cosigner who has good credit. A cosigner is responsible for paying the rent if you fail to pay.

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6: How to Split Joint Expenses

There isn’t just one right answer for how to split living expenses with your partner. It depends on your individual situation. The only right answer is to communicate and agree on the solution that works best for you two. But hey, it’s not the wild west out here. There are best practices and common sense, after all.

First, make a list of your shared living expenses. Below is a list that covers most situations, although some may be irrelevant to you. Add anything else particular to your lifestyle:

  • Rent / mortgage
  • Renters / homeowners insurance
  • Utilities – electricity / gas / water / heat
  • Telecom – Cable / Internet / landline phone
  • Service subscriptions – Netflix / Hulu Plus / Amazon Prime
  • Eating in – Groceries / order delivery
  • Entertainment – eating out / movies / concerts
  • Cleaning – Supplies / house cleaning service
  • Toiletries – Toilet paper / soap
  • Pet – Food / supplies / vet bills
  • Child care
  • Vacations

Some things are not shared and should remain separate. We’re putting on our serious faces right now. Seriously, keep things separate if you are not married.

If you’re intent on combining finances, it shouldn’t happen until you’ve had a long time to build trust in the relationship. In the event of a divorce, married couples have legal protections for their assets and liabilities, but unmarried couples don’t have the legal system in most cases. You can create a Living Together Agreement that is enforceable in a court of law if it’s properly written (see Chapter 9).

Otherwise, keep these assets and liabilities separate:

  • Large purchases for your home, such as furniture or a new TV. In the event of a break-up, it’s easier to divvy things up based on who paid for them. The best thing to do is to pay for separate items – you buy the couch while your partner springs for the TV. It’s just easier.
  • Major asset purchases – house, apartment, car, boat. You saw the movie The Break-up, right? If the relationship turns sour, you will battle it out, unless you have a strong Living Together Agreement. Why put yourself through a divorce if you aren’t even married?
  • Debt repayment – credit cards, student loans. The debt you bring into the relationship is yours alone. Also, don’t take on your partner’s financial obligations.
  • If the apartment or house you live in belongs to one of you, repair and renovation expenses are the responsibility of the owner. The non-owner has no legal claim on the property and therefore should not pump money into it.

Second, agree on how much you will each pay toward your shared expenses. There are two recommended systems:

  • Go halfsies. Each person contributes 50% of all shared costs. This approach works well when two people make about the same amount of money and see eye to eye on spending habits. As a bonus, it’s easy to know how much you owe when settling up. However, if one person has more expensive tastes, consider a different split. For example, Miss Piggy likes eating out while Kermit wants to save money by cooking at home. One solution is that Miss Piggy will pay 60-70% of the check when they eat out since Miss Piggy is the one who wants to eat out, but they will split everything else 50/50. This could even extend to rent, if Miss Piggy prefers to be in a prime location or to live in a luxury apartment, causing their joint housing expense to be higher than if they lived more frugally as Kermit would like. Miss Piggy could pay more than 50% in those cases.
  • Pay according to your income. Each person contributes to shared costs in the same proportion as how much they make versus the other person. Miss Piggy and Kermit have a combined take-home pay of $60,000 after taxes. Miss Piggy makes $36,000 (60%) and Kermit makes $24,000 (40%). The rent and shared expenses are $2,500 per month. Miss Piggy pays 60% – $1,500, and Kermit pays 40% – $1,000. Again, if one of you makes significantly more and therefore wants to spend more on housing and dinners out, then talk about a fair arrangement where that person pays more than their proportion since they are driving higher spending.

Additionally, there are three systems that we don’t recommend:

  • Divvy up the list of expenses. Miss Piggy is responsible for the rent and Kermit is responsible for the utilities, cable and Internet, groceries, and other expenses. In one month, this arrangement may work out to an approximately 50/50 or income-based split. However, there can be a lot of variability from month to month in what Kermit pays while Miss Piggy’s expense stays constant, which can be unfair to either party depending on the amount that month. This method may be easy because there is no need to settle up, but it is usually unfair and not advised.
  • Go lopsided. One person pays for most things or even everything, even though the other person has an income. This is rare but does happen. This can create an unhealthy dynamic and resentment on both sides. It’s best if both people find a way to contribute.
  • No system at all. This is also less common, but plenty of couples pay for expenses as they arise, using no pre-determined system of how to split costs. This will likely lead to conflict as questions over fairness are bound to arise.

A few more words of wisdom…

  • Differences in values matter. If there’s a big difference in how the two of you prefer to spend money, that can easily lead to conflict on shared expenses. Be aware of it, discuss it and find compromises.
  • Money should not equal power. Just because one person makes more or pays a greater share, that doesn’t automatically mean they should wield more power. In general, both people should have a say in joint money decisions. Of course, there are exceptions, but respectful communication is always key.

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7: How to Keep Track of Joint Expenses

Gals and guys, now that you’ve decided how to split your expenses, do yourself a favor and track them. A simple tracker will help you settle up at the end of each month according to your agreed split. How you track is up to you, and here we provide your main options:

  • Spreadsheet (our recommendation). The most efficient way to manage a spreadsheet together is to create it in Google Sheets and give both people access. It can be accessed from anywhere with an Internet connection, and you can both edit it, even at the same time. The only requirement is to create a free Google account. Below is a basic monthly expense tracker created in Google Sheets. You input your percentage split, then each of you inputs everything you spend on joint expenses, and it calculates how much one person owes the other at the end of the month. You can change the expense category labels or add more lines depending on your situation. If you pay for something together based on your agreed split, you don’t need to put it in the tracker, but you may decide to do so anyway so all your expenses are in one place. Then settle up using cash, check, bank transfer, Paypal, Venmo, carrier pigeon – whatever works for you. You can settle up at the end of the month or more often. Click here to access this free Google Sheets template.
    Joint Expenses Tracker
  • Pen and paper. Oh, how quaint, you old fashioned creature, you. But hey, if it works, it works. Whenever one of you pays for something, jot it down in the tracker. Then settle up with your preferred payment method.
  • Joint credit / charge card. We at SageCouple believe in always paying off your full card balance so you can avoid costly interest charges. We also don’t recommend this approach unless you and your partner have built significant trust. With that in mind, cards are convenient, and the paper and online monthly statement will list all the transactions, eliminating the need to track them. You and your partner can open a card together specifically for your joint expenses. Do not commingle your personal and shared expense – keep them separate! Each month, pay off the full card balance by each contributing your agreed-upon share toward the payment. There are some drawbacks and considerations:
    • Some establishments don’t accept American Express so you’ll want to get either a MasterCard or Visa, or simply use cash where American Express isn’t accepted. Using cash means you’ll still need to keep track of those expenses.
    • Some establishments are cash-only and landlords typically don’t accept cards, so again you’ll need to keep track of cash and check transactions.
    • Most cards earn reward points that you can redeem for flights, hotel stays, merchandise, gift cards and more. It’s a smart way to save money, but make sure you decide together how you’ll use the points. Also, some cards give you cash back instead of reward points, so you’re effectively earning a refund that you can use toward future shared costs. Again, make sure to talk about how you’ll use this money.
    • If you’re late on your payment, you’ll be charged a late fee plus interest, so always pay the full balance by the due date.
    • If things go sour and your partner refuses to pay off their part or maxes out the card and bails, you may or may not be able to get the card company to take off the charges.
  • Joint checking account. Be smart – this approach also requires a significant level of trust and is not recommended otherwise. If your partner goes rogue, they could drain the funds – this really happens! If you trust, then each month, you both deposit or transfer in enough money to cover your joint expenses. If your split is 50/50, you each put in half of the required amount; if it’s 60/40, follow that contribution split and so on. Then write checks from your joint account and/or use the account debit card to pay for rent, utilities and other shared expenses.
  • Mint.com and a slew of personal finance apps. Mint.com is a popular tool that lets you track and analyze expenses, set budgets and receive alerts, among other things. There is a universe of other apps out there designed to help you keep track of spending and budgeting.

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8: Discuss Your Doomsday Plan

What will happen financially if you two break up? No one wants to talk about this, but talking about things you don’t want to contemplate is part of adulting. Think you’re adult enough to live with someone? Then adult up and talk about this! It’s a lot easier to hash it out now when you’re happy and want to do right by each other than when there are anger, resentment and hurt feelings involved should you break up.

At minimum, there are three things you should discuss:

1. Will one of you keep the apartment / house or will you both move out?

For the sake of your sanity, it’s a good idea to have separate spaces immediately after a break-up. We’ve known couples who continued to live together for weeks after they broke up, and it was very stressful and emotionally draining. You have some basic options below, although your situation may require a unique solution.

  • If Miss Piggy lives on her own and Kermit is moving in, then agree that Kermit will move back out and stop paying rent in case of a break-up.
  • If Miss Piggy and Kermit move into a new place together, then things get a little more complicated. There are several things to consider:
    • Who ends the relationship? Usually the one breaking up should be the one moving out. But nothing is black and white, especially since many break-ups don’t have a clear breaker upper.
    • Who can afford to pay for the apartment / house on their own without getting a roommate? Usually that person should stay, rather than sticking the lower earner with the rent.
    • Does your lease allow subletters? You could both move out and sublet the apartment until the lease terminates.
    • What is the fee for breaking the lease altogether? You could both move out after paying the fee. You could even find another tenant to take over your lease and perhaps your landlord would allow you to leave without paying the fee.
    • Does the apartment layout work for two platonic roommates? One of you can move out and the other can get a roommate.

There are other rational ways you can deal with the housing situation. Remember that if your name’s not on the lease, you don’t have legal claim to the apartment.

Things get more complicated if you purchased your home together. A Living Together Agreement is recommended in those cases (see Chapter 9).

2. Who will keep the dog, cat, bird, giraffe, elephant that you are planning to get together or already have, and will there be financial compensation?

There are four basic options:

  • One of you will get Fluffy full time. If you purchased your pet together or paid adoption expenses, discuss if the person who keeps the pet should reimburse the other.
  • You will share ownership – decide on the time split.
  • You will find a new home for Fluffy.
  • You will give Fluffy to a shelter.

3. Who will keep the stuff?

There are four main categories of stuff:

  • What you each brought in. What was yours before the merge is yours after the divide.
  • The stuff you bought for your mutual use in the merged space. The couch, the TV, the artwork. A basic rule of thumb is whoever paid for it will keep it. If you bought it together, then decide who wants it more and consider reimbursing the other person fully or partially. Or barter – I’ll take the TV and you’ll take the couch. Or, decide that you will sell and split the proceeds at the same percentage as what you paid for the items. Finally, there is always the option of being the bigger person and letting your partner take the stuff.
  • Gifts from each other. This is more relevant for big ticket items. Some people think they should keep the gifts they receive. Others don’t think it’s right to keep the gifts. Others simply don’t want to be near anything the other person gave them.
  • Anything inherited or received as a gift from someone else during your cohabitation. It’s yours if given to you individually. For anything given to both of you – decide who wants it more or sell it.

Decide ahead of time! You’ll be more rational now than later, and if these conversations turn aggressive and argumentative, that could be a red flag – should you be living together at all?

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9: Put it in Writing in a Living Together Agreement

If your partner wants you to sign an agreement, does that mean he or she doesn’t trust you? Not necessarily. If you’re honest with yourself, you know that your relationship could hit rough patches or end altogether, and the good intentions you have for each other now could fade. So protect yourselves by writing up your decisions and sign it. This way you have a record of what you’ve decided fairly during a rational discussion. At best, a Living Together Agreement will reinforce your joint decisions and make you feel united and prepared. At worst, it will serve as a record for court proceedings should things not work out.

You can decide what to include in your Living Together Agreement. We recommend that at minimum you include:

  • How you’ll split joint expenses (Chapter 6)
  • Who keeps the apartment / house and other property if you break up (Chapter 8)

Do consider what could go wrong. Cheaters gonna cheat and liars gonna lie. If one of you does the other wrong, you can’t reasonably expect the wronged person to go splitsies on your joint assets. You will likely need to decide on what’s fair in the new state of things, now that one or both of you has been less than honorable. For example, you may decide that as compensation for being wronged, you will keep the expensive gifts or shared assets. Consider writing this what-if scenario (and others) into your agreement.

Do research on how to draft an agreement that is enforceable in a court of law. Maybe you can’t imagine things getting to that point now, but anything can happen. A properly written agreement can hold up in court.

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10: What If

What if one of you loses your job?
What if one of you wants to go back to school?
What if you live together but also with other roommates?

Money is intertwined with almost every life decision or circumstance. Assess your options and agree on the best course of action. Talk it out. Then hug it out.

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