When you graduate college, it feels like you are finally free to start your life as an adult. You’re no longer stuck in school, no longer at the mercy of your parents’ rules. It can feel exhilarating and liberating—time to finally strike out on your own!
But that optimism can quickly be eclipsed by the costs of living independently. Let’s face it—being an adult doesn’t come cheap. Rent, utilities, insurance, groceries, transportation, and more all add up quickly. And when you’re trying to dig yourself out of student loan debt, it can be a challenge to manage it all.
If you’re one of the 40 million Americans in student loan debt, you may have considered moving back home with parents to pay it off—and you wouldn’t be alone.
According to a Pew Research Center analysis, in the first four months of this year, only 67% of Millennials were living independently—meaning 33% are probably living with mom and dad, also known as “boomeranging.”
As Millennials continue to battle high unemployment and low wages, moving back home may seem like a good option. But is it the right decision for you? Here’s what you should consider if you’re thinking of moving back home to pay off debt.
Look at the Situation Realistically
Moving back home to live with your parents in your 20s or even 30s can be tough. Once you’ve had a taste of freedom and independence, going back to the house you grew up in and living under your parents’ “house rules” can be challenging.
If you’re unemployed or underemployed, moving back home can make sense. Even if you’re working and could make it on your own, it can seem like the right move to save money.
But there are some important considerations you should think about before heading home. Consider the following:
- Your relationship with your parents. Do you get along with your parents? Will you drive each other mad in less than a month’s time?
- What are you giving up to move back home? Everything comes at a price. Even though moving back home might make sense financially, it could mean giving up at least part of what you value most about your new life—autonomy, independence, freedom, personal relationships, and your network.
- What are the terms and conditions of the arrangement? If your parents are cool with you moving back home, will they allow you to live rent-free? Or will they charge a nominal amount? Will you have a curfew? How will this move affect your personal and romantic relationships?
- What is your expected timeline? Moving back home can be tough at first, but then you can quickly get a little too comfortable. Mom buys groceries, cooks for you, maybe does your laundry—maybe you don’t even pay rent. Sweet deal, huh? It can be easy to stick around and wear out your welcome, so come up with a realistic timeline for moving out. Decide on a firm plan of action—”I’ll move back home, pay off my loans in a year, and then move out,” for example.
Before giving up your freedom, look at the situation realistically. Does it make sense for you? Is it a viable option? Will you be able to maintain a positive relationship with your family without losing your sense of self? These are important things to consider before making the move back to your old bedroom.
Weigh the Real Costs and Benefits
On its surface, moving back home may seem like an obvious option to help you pay off debt. You can live rent-free or pay a low rent while working hard to get out of debt. But it’s crucial that you look at all the hidden costs.
- Look at your employment situation. If you are employed and your parents live near your place of work, it may make sense to move back home. But if your parents live a significant distance from your job, does it make sense to pay more for gas or public transportation, or give up your job to live rent-free?
- If you are unemployed, is it easier to find a job where your parents live? Moving back home to pay off debt seems like an attractive option, but if you can’t find a job, it’ll still be hard to pay off debt. And you and your parents may find it hard to spend so much time together while you’re out of work.
- Look at the big picture. When I was struggling to pay rent and student loans, I often thought about moving back home. Ultimately, after evaluating all the factors and additional costs (moving to another state, employment prospects, tax rates, etc.), I realized I wouldn’t be saving much money.
Amanda Abella, who was a boomerang kid herself, offers this advice: “It’s a catch-22. Don’t live in a city where it’s cheaper but you can’t find a job, or go to a city where there are lots of jobs but you can’t even cover rent.”
For her, living at home with her parents made sense financially. “Even when I had a regular job, had I moved out [of my parent’s house] there was no way I would have been able to set up a retirement account, start investing, and start a business,” she says.
Abella admits that her entire paycheck would have gone to rent and bills, making it difficult to get ahead financially.
Moving back home can help you get on your feet while paying off debt, but it shouldn’t be decided lightly or considered a long-term solution. So, when is the time right to strike out on your own?
“When you can afford it without being stupid with your money,” Abella says.
Once you have built up savings and have sufficient income to pay bills and your student loans, it’s time to fly the coop.
In the end, moving back home is a very personal decision. Consider not only all the financial implications but also the emotional, social, and psychological ones. How will it will affect your lifestyle as a whole?
Some people like me find that moving back home isn’t a very good option, while others think it makes the most economic sense. Only you can decide what is right for you—understand how much you will be saving, and if you do make that move, be sure the money you save is actually going towards your debts.
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