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The virtual debt collector

Friend owe you $50? Roommates 'forgot' to chip in for utilities? Deal with it electronically.

By Donna_Freedman Oct 2, 2012 5:03PM

Logo: Woman Paying the Bill (Fuse/Getty Images)Are you the guy who books the party bus and always ends up eating more than his share of the cost? Does your BFF frequently "forget" that you picked up the last three lunch tabs?

Technology can help keep the bank of best friends running smoothly. "Social bill pay" companies like PayDivvy and Splitwise track expenses both small and large.

A third company, Crowdtilt, lets groups fund shared goals as small as booking a skybox at the stadium or as large as renting Alcatraz Island for Halloween.

Yes, really: A group of 300 got together to rent "The Rock" at the end of October. Imagine trying to collect fees from 299 other people.

Instead, the party organizer created a "campaign" on Crowdtilt, and participants sent their shares via debit or credit cards. (The company will soon allow payments from bank accounts.)

Once the goal was met, the money was sent to the organizer's bank account. Crowdtilt charges a flat 2.5% fee, but only if the campaign is fully funded. Credit or debit cards aren't charged until then, either.

Less confrontational

PayDivvy generates an electronic "bill" to the person who owes you money or the roommate who spaces on his share of the utilities. The system will even monitor your roomie's bank account if you want (both parties have to opt in) and clue you in if he doesn't have sufficient funds to meet his agreed-upon obligation. (It reminds the roommate, too.)



You can also use the system to reimburse the friend who booked last weekend's getaway, lend money to someone electronically or even pay your rent and utilities. About half the company's transactions are personal, according to PayDivvy spokesman Mike Melby.

"It's incredibly uncomfortable to have to tap a friend on the shoulder for money," he says. An e-reminder is less confrontational but generally gets the job done.

Bank-based transactions are free; PayDivvy charges a 3.5% fee for debit or credit card payments.

'Organized and fair'
Splitwise doesn't send automatic reminders, but it does give you the option of setting your own. The free service operates more like "an electronic whiteboard," says founder Jon Bittner. You scribble down virtual IOUs (Jon bought pizza and beer last Friday) the way roommates might write on the kitchen bulletin board.

"It's awkward to talk to your friends about money, and it's awkward to collect it," Bittner says. "We focus on keeping things organized and fair."

A couple of other interesting features:

  • The "rent-splitting calculator" helps house-sharing friends determine how much more the bedroom with three windows or the room with the walk-in closet should cost.
  • Splitwise supports international currencies, making it useful for travel. When Mark Abramowicz and his sweetheart took a trip to Argentina, he input all their expenses. "At the end of the trip, I could pay my girlfriend back via PayPal," the Rhode Island resident says.
Friends often treat friends, or give gifts. But anyone who's ever covered more than his share of costs knows what it's like to feel used. Some people are simply absent-minded, but others will simply try to get out of paying their fair share.

Obviously no system can force people to act honorably. But social bill paying encourages accountability thanks to agreed-upon goals ("We're splitting the cost of the weekend getaway/Wi-Fi bill/house party"). Once you've signed off on the share, it's harder to weasel out.

Do you manage expenses and IOUs electronically?

More on MSN Money:

Oct 3, 2012 5:50PM
I love crowdtilt! way easier to use than splitwise. never heard of paydivvy...
Oct 5, 2012 7:40PM
and article about crowdtilt! awesome!! i used them a few weeks ago to get a wedding present for my friend.
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Donna Freedman's Frugal Nation blog is for readers who want to live cheaply -- whether due to necessity or a lifestyle choice. It explores living sustainably and making life more meaningful at the same time.


Donna Freedman

Donna Freedman, a writer based in Anchorage, Alaska, writes the Frugal Nation blog for MSN Money. She won regional and national prizes during an 18-year newspaper career and earned a college degree in midlife without taking out student loans. Donna also writes about the frugal life for her own site, Surviving and Thriving.