Pay the Rent!

Rent Woes

by Econlife Editor    •    Feb 5, 2014    •    559 Views

Dear Alexa,
My roommate is my best friend. We met as freshmen in college and have been inseparable ever since. Unfortunately, she lost her job a couple months ago, and as a result she has stopped paying her portion of our rent. I have been paying the entire rent bill ever since, but now my budget is starting to get tight. I don’t want to be selfish and kick her out, but I also don’t want to jeopardize my own financial security. What should I do?

Sincerely,
Puzzled Pal

Dear Puzzled Pal,
Oh my dear! You really are stuck between a rock and a hard place! But, if we look at your predicament from an economic perspective, I have a hunch that we will be able to find a solution.

The key to solving your problem is that people are more willing to commit now to something that happens in the future. Or, as a behavioral economist might say, with short-term gratification and long-term pain, you can walk the thin ice between friendship and finance.

So, here is my suggestion: settle on a solution now with outcomes that will not arrive immediately. Carve out an afternoon this weekend to play with your budget, and find the exact date when you no longer feel comfortable paying the whole rent bill. Then, mark that date on your calendar as a deadline. On this date, your current roommate will have two choices: remain and start paying her portion of the rent or move out.

However, do not wait until the deadline to tell your friend that she has to pay up or get out. Instead, you should tell her on the day that you decide on the deadline. By doing this, your friend will be aware of your worries and have time to get her act together.

If you follow my suggestion, not only will you seem like a good friend by showing your roommate that you want to support her for as long as you financially can, but you will also be following a behavioral economist’s advice.

I wish you the best of luck.

Sincerely,
Alexa

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