2nd Year of Uni - The Hassle of sorting out bills (ADVICE NEEDED)

minerva_windsong

life_nit wrote: »

She then said her parents would not allow her to manage any bills and that she would not be willing to do it, after my suggestion of putting names in a hat for each provider.

She is at least 19 - ie, she is a legal adult and is therefore perfectly capable of managing her own money. None of this 'my mummy and daddy won't let me' rubbish.

But to answer the question - in my uni house, one of us was in charge of each bill (gas/elec, water, TV, phone/broadband) and then it was split four ways with the exception of phone calls as one housemate tended to ring his girlfriend's mobile on the house phone and the rest of us either got people to call us or used our free minutes on our mobiles. We then paid the person who was in charge of that bill when we were asked, occasionally doing little bits for each other (for example I would pay the girl who was in charge of the gas bill's share of the internet bill and she would take that amount off my share of the gas bill).

Most of our bills were on direct debit so we always had a two week window between being sent the bill (and asking for the money) and it coming out of our account. I'd recommend that as normally you can get a discount, and getting online only bills can often get discount as well.

I'd personally be slightly reluctant to have anything resembling a joint account for bills, purely for the worry about being financially linked to your housemates, but that might just be me being over-cautious.

Oh, and as I'm sure you know, definitely shop around for the best deals!

bigwigtom

The funny thing is, a while back I read some advice on this in a student book, and the advice was to get one person to manage all the bills and make sure it isn't you! How DUMB!


I have heard of people doing the 'everyone takes one bill' idea, but their are several problems with this. Different bills occur at different frequencies, and for differing amounts. For example, the broadband bill will usually be paid monthly, and that person will then be hassling people for petty amounts of cash each month. Often you will find 'rounding' seemingly small amounts up/down leaves you mysteriously out of pocket at the end of the year. Also, If you're stuck paying the quarterly electric bill, that will be a lot more than say, the water bill, and consequently if that person doesn't pay you, you will still be stuffed. Also, many bills offer reductions for paying by direct debit, so if possible it is best to use that method of payment. Of course you can only do that if you have an account with the funds to pay the direct debits! If you end up using prepayment card (eg. a prepaid meter) expect to get severely ripped off by the utility companies!


Anyway as someone who has lived in several shared houses and managed the bills, my advice would be this:


1. Assign one person to manage the finances
Yes, typically one person does have to manage the bills. This is mainly because the utility companies don't like/can't/won't deal with you as a group liability. If they do agree to handle you as a group, then this actually works to your disadvantage, because you become joint and severally liable, meaning that if one of you refuses to pay, the rest of you still have to. There may also be implications to everyone's creditworthyness if you group bills in this way.

You should choose a person who has shown some financial reliability in the past. If you don't know each other well, this can be hard to decide, but use what you know to your advantage. If some of the group seem disorganised, late for things, unreliable, constantly hungover, borrowing money from you all the time and being cagey about repaying it, constantly skint, these are warning factors which should tell you that they probably are not the one to manage the money!

It is also helpful if the person looking after the bills has some understanding (or is willing to learn) about various banking principles. ie. They should know what direct debits/standing orders are (and how they work), how bank accounts work, how to use a calculator etc. Basic stuff but you'd be amazed how many students are clueless when it comes to this kind of thing.

Now, UNDERSTANDABLY, most people don't want this responsibility (managing all the money). For this reason it is important to incentivise this role. By this I mean the person who takes on responsibility for paying the bills should be given additional priviledges as a result. A good example would be giving that person sole control of the internet router. You'd be surprised how effective cutting off someone's internet can be if they refuse to pay the bills! For the hassle involved in sorting out the finances perhaps they can be exempt (by agreement) from doing certain specific chores (eg. taking the bins out).


2. Setup a 'house' bank account at the earliest possible opportunity.

Banks offer a variety of accounts which can be used for managing bills. Typical options include:
A. Regular current account
B. Current account with multiple parties to sign on the mandate (not offered by all banks)
C. Joint account


From experience, I would suggest option A. What this means is that you set up a new, standard current account in the name of the person who will be managing the bills (eg. you). Housemates then pay money into this account. Bills (and any other house expenses such as cleaning products, toilet paper etc) are paid out of this account.

You should make the statements for this house account available in a public location (eg. pin them on the living room wall). Housemates can then easily see all the house finances, and can see how the money is being spent.

Now, understandably, your other housemates may not want to transfer money to an account in your name. They may fear you will run-off with the money and not pay any of the bills! In the interests of transparency, you may wish to ask the bank to allow access by the other housemates (they and you will need to sign a form authorising this). This will mean that everyone in the house has full access to the account. It should be made clear however, that this access is for EMERGENCY situations only, and only the person delegated to manage the finances should be touching the account.

Alternatively, you could choose option B. This type of account requires two (or more) persons to do anything to the account (eg. sign a cheque, withdraw money, check the balance). This means that no one has the ability to run off with all the money. Whilst this might seem like the safest option, in reality you will find it a massive hassle, and will constantly need to arrange group trips to the bank to manage the account. I have done this in the past and I don't recommend it.

If the people you are going to live with are somewhat 'dubious' when it comes to money, I would steer clear of option C. Getting a joint account with anyone has the potential to have an adverse effect on your credit rating (because it joins your financial records to a certain degree).




3. Everyone should contribute an equal amount into the house account.

The easiest way to manage your house finances is to ensure everone pays in an equal amount into the house account. So, if one person pays in £100, everyone else should also pay in £100.

That way you know for certain who has what money in the house account.

Eg. if you have £444 in there, and 4 housemates, then divide the balance by 4 and you know you each have £111 in it.

When you move out of the account, you can simply split the balance in the account equally among the housemates.

It also means that any house expenses (eg. toilet paper) can be taken from the account and you will know for certain that they have been split evenly between all housemates.

Eg. If I spend £6 of my own money on cleaning products for the house, I simply transfer £6 from the house account into my own account, and thus everyone has contributed equally for that expense. (Of course, make a note that you have done this, so it doesn't look like you are simply helping yourself!)


4. Arrange for everyone to pay into the account, each month.

You should agree a regular monthly amount which EVERYONE in the house pays into the house account. Work out roughly what is likely to be a monthly expenditure.

Eg:

TV Licence (£145 annually) = £12pm
Water (£350 every 6 months) = £58pm
Broadband (£20 each month) = £20pm
Electricity (£150 a quarter) = £50pm
Gas (£100 a quarter) = £33pm
Misc Expenses (eg. cleaning products) = £10pm
TOTAL APPROXIMATE MONTHLY OUTGOINGS = £183pm


Now, divide that by the number of housemates:

Eg. between 4 housemates that's about £45 per month. So each housemate should set up a STANDING ORDER to pay that amount from their account into the house account each month. Without fail.

There may be occasions when bills are higher than expected (this shouldn't happen very often if you did your calculations correctly). In which case ask all housemates to pay in more money, remembering that everyone should pay in the same amount.



5. Ensure the account has sufficient money in it at all times

It is IMPORTANT that the house account does not exceed it's authorised limits! (especially if it is in your name). In order to ensure this never happens, everyone should place an initial deposit into the account of a certain amount (eg. £100).

After some time (if people seem reliable), you may be able to ask for an overdraft facility from the bank. This can be a helpful buffer zone to ensure you don't exceed the account limits (and so everyone doesn't need to have money sitting in the account to cover this eventuality).


6. Deal with problems EARLY and deal with problems FAIRLY.
This applies to money as much as to anything else. It is amazing how much resentment people can build up for one another when living together. Often this turns into !!!!!ing and backstabbing which achieves little towards resolving problems, and merely validates housemate's grievances towards one another.
When it comes to cash, it is important to identify problem housemates early. If someone has not paid the bills, raise it with them ASAP. Ask them why they haven't paid. Students seem especially prone to financial mis-management and consequently financial difficulties. If they seem rather clueless, you may be better off helping them setup an overdraft (or other borrowing). If you just yell at them it probably won't do much good.


If they choose to be a !!!!!! about it then some helpful steps could be:
- cutting off their internet (shows you are serious, gives them an incentive to repay)
- contacting their parents and telling them they're not paying their way (typically very effective)
- confiscating their front door key if they still don't pay (if they won't pay, what right do they have to live in the house)
- contacting the landlord and explaining the problem (often a stern word from the landlord will sort out the problem housemate)


Keep records of all the bills paid from the house account. You may wish to draft some form of 'contract' or agreement which everyone agrees to sign. You could take people to the small claims court if they owe you money - and that would be useful to have. Realistically though, that's a bit of a hassle - far better to take action before people start to owe you lots of money!



7. Whoever manages the bills should be proactive and take their responsibility seriously.

That means taking meter readings on the day you move in and telling your gas/electricity suppliers straight away!

That means checking the MSE website and changing suppliers to make sure you're on the best utility tarrif.

That means checking the house account regularly and making sure bills are getting paid/there is enough money in the account

That means taking swift action against non-payers (see above).

If bills don't get paid on time it could have undesirable consequences, such as hurting your credit profile, or having your utilities cut off.


8. Avoid getting a landline

If at all possible, avoid this facility. Eg. get cable broadband and choose not to get the landline, or ask your landline provider to bar outbound calls.

Landline calls are very difficult and time consuming to split. In these days of skype/voip and mobile phones, there really is very little need.


9. Ultimately, whilst this may be too late, the best advice I can offer is not to live with twatty people!
Even if they pay the bills they can !!!! you off in ways you cannot imagine! Washing-up and general foulness are but two.



Hope this wasn't too longwinded!

devildog

bigwigtom-your post is fantastic, clear and to the point! I hope all students take heed of your advice

adelight

Me and my flatmates have broadband only from Virgin(you can get a good deal on this atm with nus, think it's a 10 month contract and a discount) and as we know upfront how much it will cost us for the year we've already paid our shares to the person who's managing this. It was too difficult to set up a phone line and to divide a phone bill, especially as some of us would just make calls to UK landlines whereas others might call abroad... We've done the same with the TV licence.
We are all close so fairly trusting with each other and everyone (except me, but i have ample savings) gets a steady cash flow from parents or staggered student loan, but we've still gone for the simplest options. Our electric is paid by direct debit from one person's account, i upload the meter readings and then we all transfer our share of the bill to the person holding the account.
Like the idea of a joint account, you could all put money into a jar to buy things like loo roll, toilet paper, cleaning products, soap etc on weekly/monthly trips.

A group of my friends are living in quite a big house and it's already going pear shaped. People aren't/can't put money on the electric/gas meter, OHs virtually moving in without paying rent, messy people... So far I think i'm very fortunate in my house share, think me cracking the whip to start with and having lived in a disasterous house share with strangers last year has really helped. Arguments over bills got so ridiculous that I ended up having to caluclate exactly how many days each person had spent in the house in the period and then divide the bills up like that!

Blacksheep1979

life_nit wrote: »

She then said her parents would not allow her to manage any bills and that she would not be willing to do it,

Tell her she's meant to be an adult and if she can't/isn't willing to be trusted with a bill in her name then maybe she can't be trusted to use electricity or the phone...

melancholly

Blacksheep1979 wrote: »

Tell her she's meant to be an adult and if she can't/isn't willing to be trusted with a bill in her name then maybe she can't be trusted to use electricity or the phone...

let alone any gas! nice post!

TomB_88

Uni living can be mental torture when it comes to sorting out bills, i found that unbearable in 2nd year with a few people in my house who i generally disliked. If i was you for your third year get a smaller place probably a flat and live with two/three people.
In terms of an internet provider i found Virgin was probably the best for students, fairly quick, reliable and reasonably cheap ( worked out £5 a month each).
Finding a balance in a house is probably the best option for you sharing the bills out for example who goes to pay them and who sort's who owes what also put a pot in the front room and save the spare pennies it does add up especially when there's a few of you
Good Luck!

life_nit

TomB_88 wrote: »

Uni living can be mental torture when it comes to sorting out bills, i found that unbearable in 2nd year with a few people in my house who i generally disliked. If i was you for your third year get a smaller place probably a flat and live with two/three people.
In terms of an internet provider i found Virgin was probably the best for students, fairly quick, reliable and reasonably cheap ( worked out £5 a month each).
Finding a balance in a house is probably the best option for you sharing the bills out for example who goes to pay them and who sort's who owes what also put a pot in the front room and save the spare pennies it does add up especially when there's a few of you
Good Luck!

Thanks Tom,

I think if i do experience any of the problems talked about in this thread, i will most likely do what you said and live with a smaller no. of people that i do trust entirely in my 3rd year.

life_nit

Thanks so very much BigWigTom! You have really prepared me for what im in for. When im in need of help i will refer back to your post no doubt, along with many others.

cheers.