Halved or doubled – a problem shared?

David Davison

or Subscribe to Feed

A little tale of everyday folk and how sharing and best intentions may not always achieve the results you expect……………..

Peter, Graham, Phil and Rachel have just started their arts course at University in London and are sharing a house. Being arts students they have a lot of spare time on their hands. One evening, after a hard day staring out of the window, they’re in the pub (unusual for students I know!!) and Graham mentions he really needs a car for a part-time job he has on the other side of the city, and can’t get there easily using public transport because of the timing but he can’t afford it with all his other bills.

On further discussion they realise that Phil needs a car one out of every three weekends to travel back up to the North of England. Phil claims this is to see his girlfriend but the other three suspect it’s so his mother can do his washing. Rachel needs a car on alternate weekends to go to Kent. Rachel claims this is to spend a couple of passionate nights with her boyfriend, but the others suspect it’s so she can do his washing. Peter needs a car in the evenings to get him to his job but the others suspect it’s so he can do his washing – he works nights at a serviced launderette.

They’re lucky enough to have a driveway at the house they’re renting so parking isn’t an issue. Having thought about this Graham, the one who has a GCSE in maths and nearly did a social sciences course, suggests that they buy a car and split the loan, petrol and insurance costs every month (as they can’t afford to pay it up front). Any value left in the car at the end of the 3 years they can split equally. To a bunch of arts students this seems like a really clever idea and only requires them to divide by four, which should be ok as Rachel has a calculator app on her i-phone. So they agree to go ahead.

They are paying a contribution of £400 per month for the car, £200 for insurance and £200 for fuel, so after consulting Rachel’s i-phone and one false start which saw them accidentally ringing Rachel’s granny in Sevenoaks, they agree to spilt the costs equally £200 each. For the first few months everything goes well and pretty much as agreed with only a few minor niggles.

Phil’s trips up North however begin to become a bit more frequent  as he takes up running and squash thus increasing his laundry requirements, so there is some degree of discontent that he’s getting much more use out of the car (and his mother), and depreciating its value more quickly thereby reducing the amount everyone else will get at the end.

The next thing is that Graham decides University isn’t for him and he’s going to get a full-time job so he won’t need the car as the available options, McDonalds and Tescos, are both within walking distance. This means he can stop paying his 25% share which increases everyone else’s costs. They agree, by which I mean Phil, Rachel and Peter agree, that Graham won’t get any share from the car when it’s ultimately sold despite the agreement they all signed on the back of the phone bill when they set up the arrangement in the first place. This causes a bit of ill will and Graham feels he may have a cause for grievance based on a conversation he had with his shelf stacking supervisor over a hobnob in the storeroom.

Rachel then feels a bit hard done by when she realises that if she’d gone to Sheila’s Wheels her share of the insurance should be cheaper, so she wants to pay a lower amount even if it means having to put up with the odd patronising advert. Tensions begin to rise in the house.

They then discover that there was £2,000 out-standing finance on the car which they’re going to have to pay but how are they going to split this? They can’t find an app for it but suspect that Rachel’s calulator app could probably help if only they knew which of the virtual shiny buttons to push. Rachel’s daddy, the head of a local council, has offered to help out but Rachel doesn’t feel inclined to accept his offer.

This adds to the upset Peter is suffering as a result of struggling with his David Beckham and his Cultural Impact on Western Philosophy module and who’s drinking increases, making his use of the car more infrequent and his continued ability to pay the monthly amounts more challenging. When he does use the car he tends to leave it behind near a pub incurring parking fines which aren’t covered by their agreement and he can’t afford to pay. Gradually the group begin to fall a bit behind with their payments and the out-standing debt remains unresolved.

On one of Phil’s increasingly frequent trips home he has an accident in the car leaving skidmarks in his wake and damaging the front wing of the car. Once washed, his trousers are fine but the car will need some repairs. This causes problems for the other housemates, further increasing discontent. In addition someone mentions to Peter that this will reduce the ultimate sale value of the car which depresses him further increasing his alcohol intake and causing him to scrawl some very derogatory comments about Posh Spice on the wall of the pub’s toilets.

Two years in, the car is falling to pieces, no one is talking to each other and the car’s about to be re-possessed and laundry has fallen down everyone’s priority list with potentially devastating consequences.

And the moral of the story is…..

  • Clubbing together might seem like a really good idea but you need to know the risks.
  • People are likely to be happy with things at the start or providing they go well.
  • People are a lot more prepared to accept some form of averaging when it’s mostly in their favour.
  • Levels of discontent tend to rise as costs increase.
  • Change is inevitable.
  • No matter how good your documentation is it’s unlikely to cover every eventuality.
  • Make sure there’s an effective challenge to any decisions before they’re made.
  • Not everyone has access to a daddy with deep pockets!!

Does anyone see any familiarities with defined benefit pension schemes here!?!?

David Davison

Post by David Davison

Specialist consultant on pensions strategy for corporate, public sector and not for profit employers

Comments