Hi Vicki21:
My suggestion would be to use separate external drives. If the external drive failed you would lose all the data for both computers. External drives are very cheap now.
I use Carbon Copy Cloner which makes an exact clone of your hard drive and is bootable. So if your hard drive were to fail, you could boot from hard drive and continue.
However, back to your question, it looks like you can do it. See the following article for everything you ever wanted to know about Time Machine.
http://pondini.org/TM/4.html
The forum software is still not working properly with links, so try triple clicking on link which will select complete line and then right click and select Go to address.
Kim