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When Live-in Lovers Break Up: The Financial Consequences

Daniel Bortz

When a relationship crumbles, partners are free to go their separate ways--that is, unless they're also roommates.

These days, it's common for twentysomethings in a relationship to live together. According to a recent survey by the National Center for Health Statistics, about half of women ages 15 to 44 reported they had a "cohabiting" relationship prior to marriage; about a quarter of those women said they broke up within three years of living together.

As many college graduates enter the working world loaded with student debt, moving in with a partner may seem logical. However, living with a boyfriend or girlfriend can have damaging financial consequences should the relationship fall apart.

This is especially true for the "serial cohabiter," who bounces from one relationship (and home) to another and loses money each time. "They think they're saving money, but in the end, they're not," says Susan Fee, a professional clinical counselor and author of "My Roommate Is Driving Me Crazy." Fee recalls a former client whose relationship status was in a constant state of flux: "I can't tell you how many times he moved, gave away stuff and dug himself into a deeper hole of debt."

[Read: Why You Should Keep Money Separate While Living Together.]

Some cohabitating couples, however, hit a wall when they try to end the relationship. According to a recent survey by Rent.com, about a third of former cohabitors said they continued to room with their partner for a significant period of time after separating because they couldn't find an apartment they could afford. Sharing a living room with one's ex is certainly awkward, but more serious conflicts can arise over money. Michelle Callahan, a psychologist and relationship expert in New York City, says most live-in couples don't keep financial records during their relationship; not knowing who paid what is troublesome when it comes time to divvy up possessions.

Many couples don't even have a conversation about finances before moving in together, according to relationship experts. Some don't make a conscious decision--instead, it's something that "just happens." Scott Stanley, a professor and co-director of the Center for Marital and Family Studies at the University of Denver, says people sometimes fear talking about financial expectations upfront because they're afraid their partner will disagree and end the relationship. "It's almost like a card game," Stanley says. "People have to match the bet of the other person if they want living together to work."

Wendy Walsh, a relationship expert and author of the forthcoming book, "The 30-Day Love Detox," says couples should discuss how they view the move before it occurs: Is it for convenience? A step toward marriage? (Research shows partners who are engaged prior to cohabiting are more likely to stay together.) Rather than have that tough conversation, Walsh says couples often focus on minor terms. "The elephant in the room is their future together, but instead they're talking about what's in the room, such as who is going to pay for the furniture," she says.

Some see a baby in the near future--although partners may not necessarily share that vision. Approximately 20 percent of the women in the National Center for Health Statistics survey got pregnant and gave birth in the first year of their first premarital cohabitation. By living together, "You're putting yourself at a high-risk path," Stanley says. "When people share a roof, when there is proximity, you have more sex. That puts a stronger likelihood of bringing a child into your next relationship, should this one deteriorate, which makes your life a lot more complicated."

[Read: Why Almost Everyone Needs a Prenup.]

Sometimes, though, having a child doesn't end the relationship; instead, it can lock couples into staying together. "If you're living together, you can't sever ties easily. It's even harder if you have a kid," says Meg Jay, clinical psychologist and author of "The Defining Decade: Why Your Twenties Matter--and How to Make the Most of Them Now." "People will tread water there for a really long time because it's so hard to get out." And Jay says some preserve the relationship because they don't think they'll be able to support the child on their own.

Before moving in with your partner, consider these tips to protect yourself financially:

Put both names on the lease. Pierre Calzadilla, a rentals team manager at Trulia.com, a real-estate listings and information resource, says this is a fundamental part of sheltering your finances. Having the lease in both names makes your partner equally liable to pay rent--meaning you won't get dumped with the costs should you break up.

Look closely at the lease before signing. Like many young couples, you're looking for a one-bedroom unit. Keep in mind that you may have a hard time breaking the lease should you part ways. In some cases, renters are locked into a lease for the remainder of their contract.

Some landlords and management companies charge a penalty of one extra month's rent, while others allow you to break the lease if you pay a nominal "move-out fee" and find a tenant to replace you, says Alex Starace, a Zillow contributor and senior blogger for MyFirstApartment.com, an online guide for consumers looking to move.

Draw up a roommate agreement. Agreeing to split the cost of utilities, for example, may be worth laying out in a roommate agreement. In many jurisdictions, as long as an agreement is signed and dated and both parties have copies, Calzadilla says it will hold up in small claims court. However, relationship experts caution that this may make your partner feel like you're asking for the equivalent of a prenuptial agreement, which can scare some people away.

[See 12 Money Mistakes Almost Everyone Makes]

Put cohabitation on hold (at least until the time is right). While many say it's a good idea to live with your partner before marriage, some experts, including Fee, disagree. "When I hear couples moving in together [to save money], I cringe," she says. "Such a commitment should not be financially based. There's so much more that goes into a healthy, respectful, loving relationship. You don't want the No. 1 reason you chose a mate to be because that person was a good financial decision." Fee recommends rooming with a friend if money is tight and waiting until marriage to live together.

Callahan, however, thinks couples don't have to be on the marriage track if they want to move in together; they just need to be in agreement as to what would happen should they break up. And for those dreaming of wedding bells? "Sometimes people think everything changes when you get married," says Callahan, "but sometimes everything changes when you move in together before you get married."

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