I manage them by saying “just buy me a beer next time we go out” or “I’ll buy lunch next time”. I think this tends to work in the long-run, as long as you have friends that are relatively in the same personal financial position as you. But I honestly have never analyzed in detail what my exact position is with money I have lent out to and money I have borrowed from friends and family. How would you do that anyway? Keep all the receipts? Input them into an Excel spreadsheet? Input every transaction that involves more than one person paying? What a pain!

So my next question is what are the things that cause these debit and credit balances among friends? Well, here are some that I run into:

• Not having correct change to pay for my portion of the meal at a restaurant
• A single roommate being the contact person on apartment-related bills (water, electricity, etc.)
• A single person paying for food or refreshments at a party that is actually hosted by a number of people
• Receiving “employee-purchase” items from friends who are not giving them as gifts
• Just plain loaning money to someone who does not have enough cash with him

Gaurav Oberoi and Chuck Groom have come up with an innovative and, most importantly, easy way to keep track of this mess. They created BillMonk to “ease the strain of finances on friendships by providing a tool that manages social money in a manner that is easy and fair.”

You can go on the site and sign-up for a FREE account. From there you can easily enter your debits and credits with people. You can also enter them from your cell phone, while at dinner, or at a bar, or at Target or something. BillMonk then takes care of keeping track of who owes who, and can let you know this information using a standard web browser or your cell phone.

What a great and simple way to solve such a nagging, ubiquitous problem. Check them out and let me know what you think!