Bad Credit Helper: Does Moving Back Home Make Sense.
There’s a definite stigma against moving back home once you’ve left the house. It’s seen as setback or even total failure if an adult child moves back in with their parents, which is unfortunate, given that whether or not society approves of it, more and more college grads are moving back home.
But what if the alternative is getting behind on your payments? That would leave you with bad credit, and bad credit is not a great place to start your financial journey.
We talked to the experts to find out if a “failure to launch” might just be a chance to refuel. After all, getting more money in the bank and getting ahead of your payments so you aren’t haunted by bad credit for the rest of your life doesn’t sound so bad.
Ignore the haters.
We don’t have to tell you that there’s a stigma attached to moving back home, although we did anyway in the first line of this article. Other people’s opinions about the decision should be the last thing on your mind. The only important question is if it’s the right thing for you.
That’s what we think, and certified financial educator Maggie Germano (@MaggieGermano) agrees: “Sometimes when you fall on hard times financially, the only option is to move home. (Not everyone has this option, so it’s important to keep in mind the privilege of this opportunity.) I definitely think there is no shame in moving home if you need to. It’s a great opportunity to save money in rent and get back on your feet. If your parents don’t charge you any rent, you can end up saving thousands of dollars. You should take advantage of this time to pay off debt, build up savings, and work towards other financial goals. Once you feel more financially stable, it may be time to go back out on your own. There’s no right or wrong amount of time to stay home; whatever works for you and your parents is the right thing.”
Moving back home (if you have the privilege to do so, as Germano clarified) can indeed be a smart financial choice. And we even have the experts with the first-hand experiences to prove it!
“I paid off 30k in student loans in 12 months making 48k. After, I saved up and bought my place with cash at the age of 25.
“Without moving back home after college I would not have been able to do these things.
“I always recommend for young adults to live somewhere inexpensive while they are building good financial foundations. If it isn’t at home, it could be a basement or a 1 bedroom, 1 bath apartment.
“I never lived with my Dad until I asked him if I could move home after college. I sweetened the pot by telling him I would cut the grass, clean the gutters, and be an on call baby sitter for my younger siblings. (What a deal!)
“Some steps you can take to get back on your feet are to start budgeting and creating goals. A goal could be when you want to move out again. And a budget is imperative to control your money and reach your goal.”
Kelan Kline of The Savvy Couple (@TheSavvyCouple) wrote about his experience moving back home at Millennial Money Man (@GenYMoneyMan): “We all know moving back home with your parents is not the most glamorous thing in the world. Reverting back to following their rules and having a chore list to complete was not an easy transition.
“The biggest piece of advice I can give you is to remember it is temporary. Most things in life take time and sacrifice to reap the rewards. Be patient. The financial gain you can make while living at home is second to none, trust me!
“I was not only able pay off my student loans ($8,000), but save enough money for a down payment on our first house. My expenses were next to none living at home, and I have always been extremely frugal. You can’t beat free room and board! Almost all my income went straight towards my loans to get debt free as quick as possible. Then I focused on stacking the Benjamins in the bank. My net worth went from -$8,000 to +$12,000, a $20,000 swing!”
But what about the “landlord’s” perspective?
Meet the parent.
“When I’ve tackled this topic in the past it has always been an “it depends” situation.
“The first thing that comes to mind is a recent college graduate coming back home. Sometimes it takes a little longer than expected to land a job that aligns with their education. But working part-time somewhere just to bring in money can hurt them in the job search. In that case moving back in with their parents for a short transition period might be the best short term option.
“The second thing is an older child who wants to come back home. If there has been an unforeseen emergency or life situation outside of anyone’s control, then I’d certainly want to be sympathetic and support that child through the specific challenge.
“In either case there should be a plan though. Having a child move back home should never be an open-ended stay-as-long-as-you-want-for-free type of situation. It can be a bridge from one point to another, but it should not be the destination. And without a plan in place, it can quickly turn into the destination by default.
“I recommend the parents and child agree on timing, responsibilities, expectations, and ‘the plan.’ Yes, the child should share the plan because it impacts the parents and they have a right to know and agree – or disagree and encourage other options.”
In conclusion, moving back home for a while has helped other people and it could help you too. Some people might give you a side-eye, but as long as your parent(s) and or guardian(s) are on board, the side-eyers will be feeling silly when you’re in a better financial situation down the line.
|Maggie Germano (@MaggieGermano) is a Certified Financial Education Instructor and financial coach for women. Her mission is to give women the support and tools that they need to take control of their money, break the taboo of discussing debt and income, and achieve their goals and dreams. She does this through one-on-one financial coaching, monthly Money Circle gatherings, her weekly Money Monday newsletter, and speaking engagements. To learn more, or to schedule a free discovery call, visit MaggieGermano.com.|
|Brad Kingsley (@maximize_money) is a certified financial coach helping people create a plan for their finances to achieve big goals like becoming debt free, paying for college, and preparing for a comfortable retirement. Visit his site at MaximizeYourMoney.com.|
|Kelan and Brittany Kline aka The Savvy Couple (@TheSavvyCouple) are two thriving millennials that are daring to live differently. They started their personal finance blog September 2016 to help others get money $avvy so they can live a frugal and free lifestyle. Brittany is a full-time 4th-grade teacher and Kelan runs The Savvy Couple full-time and works as a digital marketer. You can follow them here: Facebook, Twitter, Pinterest, and Instagram.|
|Phil Risher is the founder of YoungAdultSurvivalGuide.com. Phil paid off $30,000 in student loans in 12 months making 48k. After, he saved up and bought his first place with cash at the age of 25. Phil now speaks with college students and young adults around the country about his 5-Step Guide to help them on their financial journey.|