Sharing expenses with a roommate is a great way to ease the cost of living on your own. You may even be able to afford a bigger or nicer place if you have someone (or two or three) with whom you can split the rent.

But living with roommates can be costly if you don't do it right. What if your roomie stiffs you on rent or utilities? Or runs up an outrageous phone bill? Or likes to eat potato chips on the living room couch in his birthday suit?

We can't help you much with that last one, but we can show you how to protect your finances from a deadbeat roommate. First and foremost, it's important to find the right person to share your home, so check out the box to the right for some tips and Web sites to aid your search. When you've found your match, here are a few strategies to help protect your pocketbook in case things just don't work out.

Roommate pre-nup

Remember that hilarious episode of "Friends" where Joey and Chandler sat down before they moved in together and drew up a contract, outlining who would pay what, when the bills were due and other general bylaws for living in the apartment?

Of course not -- it never happened. But in TV land, things always turn out with finances and friendships in tact -- no matter how many times Joey stiffed Chandler on the rent.

Here in the real world, though, it's a good idea to spell out the conditions of your living arrangement to protect yourself in case things don't work out, say Janet Portman and Marcia Stewart, authors of Renters' Rights. Each roommate should sign the contract and then get it notarized. This can help you resolve disputes and give you legal recourse to recover your money from an irresponsible roommate in small-claims court if necessary.

Here's what to include in your "pre-nup:"

• How much each person pays for rent
• How you'll split other bills and expenses
• Dates all bills are due
• Who owns what furniture
• How you'll pay for damages and late fees
• Chores, food and space-sharing arrangements
• Guest and noise policies
• How much notice needed before one can move out
• How to handle disagreements -- who has to leave if it doesn't work out

This is as much of a measure to protect them as it is you, so if they refuse to sign and you can't work out a mutually beneficial agreement, you may want to find new roommates.

Once your roomies move in, you may find that you're short a few essential items (such as a DVD player, vacuum cleaner, toaster, etc.). Make a list and decide ahead of time which roommate will buy what, instead of splitting the cost on each item. That way, no one bears the full weight of furnishing the apartment and you'll avoid arguments over ownership later.

On large-ticket items, you may need to get creative in order to keep it affordable. In college, my brother and his roommates didn't have a TV, so they all pitched in $50 to buy one with the understanding that at the end of the year they would have a raffle to decide who got the set.

Gotta pay the rent

Landlords generally want all tenants to sign a lease, and will accept one or separate checks.

This arrangement is in your best interest. It won't keep the landlord off your back if someone doesn't pay, but if you end up in small-claims court trying to collect from a deadbeat roommate, you'll stand a better chance of winning if his or her name appears on the lease. "It also protects you if one of your roommates suddenly changes his or her mind and decides to move out before the lease is up," says Beth Kobliner, author of Get A Financial Life: Personal Finance in Your Twenties and Thirties.

But note that when people are on the lease as equals, they can't kick each other out if the arrangement doesn't mesh. Some landlords may allow subletting -- meaning only one person's name is on the lease and any roommates pay their share of the rent to that one person. If you enter into such an arrangement, make sure you pay your share by check or get a receipt from your roommate so you have proof of payment.

Divvying up utilities

Say your roommate spends four hours every Friday night chatting with Mom in Mumbai, and the most you pick up the phone is to order an occasional pizza. Splitting the phone bill 50/50 may not make much sense. Getting separate phone lines is the best way to make sure you only pay for what you use. Or use your cell phones exclusively and forgo a landline altogether. Either way, if your roommate runs up huge bills and doesn't pay them, there is no connection to you (or your credit report) whatsoever.

If either of those aren't an option, you can always share the cost of basic phone service and use calling cards for long-distance, or even ask your phone company to assign each roommate a personal identification number.

Utilities are a different matter. There's no way to ensure you pay only for the electricity or water you use. But there is a simple solution: Rent an apartment where the cost of utilities is included in the rent. That way, you have fewer bills to worry about divvying up.

If your apartment doesn't offer that convenience, you'll probably have to pick one person to set up the account. Utility providers usually don't allow more than one person's name on a bill. You can break up the monthly cost equally and everyone pays their share to the one person. If anyone doesn't pay his portion, the person whose name is on the bill is responsible to pick up the slack, or she'll risk a black mark on her credit report.

You can spread the risk by putting each utility in a different name. For example: You cover electricity, Monica covers gas, Rachel takes water and garbage and Phoebe pays for cable. Though, if Monica loses her job and can't pay the gas bill, it could be a cold winter unless the rest of you scrape up enough money to cover for her.

If any of your roommates consistently skip out on monthly bills -- including rent -- you may have some legal recourse to collect the money if she signed a roommate contract before moving in.

Protect your stuff

You've heard us talk about the importance of renter's insurance before, but if your roommate already has a policy, don't assume it will cover your stuff too. Chances are it won't. You can buy a single policy with your roommates to cover everyone's belongings, but that's just one more bill and hassle to sort out. You're better off buying your own coverage.

And let's say you and your roomie just don't seem to mesh. Upon his moving out he decides to take a small souvenir, such as your stereo, your couch or, heaven forbid, your antique shot glass collection. Your renter's policy can help make you whole, even if the police department can't.

It goes without saying that you shouldn't leave cash, credit cards or other valuables lying around the apartment. But you might want to trade in your sock drawer for a small safe (about $100) for some added protection.

If you'll notice in our roommate pre-nup, we suggest detailing who owns what. This may seem petty, but after a couple years of living with someone, you may forget who really owns that kitschy table lamp. When it comes time to part ways, you can save yourself a lot of hassle with a bit of record keeping.

MORE: Kiplinger.com | Your Money | Credit & Money Management | Column

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