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    iAMfromHuntersBar's Avatar
    iAMfromHuntersBar Posts: 943, Reputation: 146
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    #1

    Nov 3, 2008, 10:30 AM
    Splitting our bills according to our wages
    Hi all!

    I was wondering if someone could help me out with this;

    My partner and I want to find a way to pay our joint bills in a fair manner.

    I think the best way is to pay a percentage each, appropriate to our take home wage...

    But I can't for the life of me work out how to do it!

    Put me out of my misery guys! :D

    J
    KISS's Avatar
    KISS Posts: 12,510, Reputation: 839
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    #2

    Nov 3, 2008, 11:14 AM

    There are two ways of doing it:

    Take the ratio of (Your take home)/(total take home). It will be number less than 1. call that w. Call h=1-w


    Take the sum of all your bills and multiply by the approprite fraction and subtract that from the total for the other spouse to pay to avoid rounding errors.

    example:
    Husband $75,000, wife: 25,000
    w = 25K/100K = .25, h = 1-.25 or .75
    Wife pays 25%, Husband pays 75%

    bills: telephone: 10
    mortgage: 1020

    Total bills: $1030

    Wife pays 0.25 * 1030
    Husband pays 0.75 * 1030

    or to avoid rounding errors: wife pays 0.25 * 1030 and huspand pays balance: 1030 - (0.25*1030).

    To be equitable, remove things like bonds which are titled in both names. You can add 50% to your income. You can also add values of insurance premiums if one is joint. You could take 50% of his premium or the actual cost of adding a spouse.

    Remember to pay your taxes the same way. But what's equitable here. The marriage penalty takes over. Take 50% of interest? Prorate interest? Or just pro-rate the take bill.

    Or do you want to figure out some complex formula based on you filing as single and him filing as single and prorate the tax burden based on these values based on taking 50% of investment income.

    It's not as simple now, when you consider the tax burden. This is another bill.

    The mortgage can be set at 50%.

    The reason why I am saying to split the mortgage and interest is that they are in general both yours and will likely be divided equally in the event of a divorce. So it makes sense that you take on 50% of the mortgage when paying bills and you take on 50% of the investment assets. To really be equitable, I'd say each do the returns as single with 50% of the investment income and use these numbers to prorate the tax burden.

    It's not simple any more, is it?

    Just remember to treat as 50% anything that is joint property. 401K's and IRA's can also be considered as belonging to both. So, tax consequences can be pretty interesting. So, I'd look at the problem from the eyes of a divorce property settlement where it's 50/50 for joint property.

    Yea, you can get weird to and say you have a joint medical plan. You can say 50/50 there or you can use what it would take for you to have your own and him to have his own and pro rate that. That's actually more equitable, but 50/50 might be in your favor.
    iAMfromHuntersBar's Avatar
    iAMfromHuntersBar Posts: 943, Reputation: 146
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    #3

    Nov 3, 2008, 12:03 PM

    Woweeeee, that is a complicated post!

    We're not married, and don't have any 401Ks, IRAs or a mortgage to worry about!

    It's literally just the utility bills, council tax, phone, rent... stuff like that!

    Thanks a million for your post though, it helped me out LOADS!
    imirakov's Avatar
    imirakov Posts: 4, Reputation: 1
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    #4

    Nov 3, 2008, 08:53 PM
    You each pay for what each of you uses. If you guys use something together you split it in half.
    iAMfromHuntersBar's Avatar
    iAMfromHuntersBar Posts: 943, Reputation: 146
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    #5

    Nov 4, 2008, 10:37 AM
    Quote Originally Posted by imirakov View Post
    You each pay for what each of you uses. If you guys use something together you split it in half.
    Yeah, that's hardly fair though! What if she earns 10 times more than me? Splitting stuff 50/50 isn't the best answer to this problem I'm afraid!

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