Next, I will break down several Next Steps to adulting.
When it comes to leaving your parents’ house, you can try to afford your own place to rent but with current rental rates you may need a roommate to help increase your monthly margin especially if you are paying back large student loans. Rent is expected to continue to be on the rise. Always be thinking ahead for it will minimize painful failures. Unless you have a great paying job don’t be surprised if you have to work two jobs to make ends meet.
When it comes to buying a home, I recommend 10-20% down 15–20-year Fixed mortgage. Putting 10-20% will keep you from paying an extra monthly fee called PMI insurance. PMI protects the lender not you in case you default and it generally cost $75.00 per month per 100k. Therefore, if your loan is for 200k PMI will cost $150/month extra! 15-20yr term will keep on track of being debt free by retirement and with plenty of time to save and build wealth.
If times get super tough and living with your parents allows more margin in the monthly income then that might be a good choice for you. It’s a personal decision but with all the changes in our economy there may come a day where it’s not an option and it becomes more of a means to an end. Working as a team and putting your resources together and be very helpful. In other countries living with multiple generations is common.
As a financial coach I suggest you avoid all consumer, unsecured debt at all cost. It’s pretty simple if you don’t have the CASH, you can’t afford it. I would encourage you to be gazelle like when it comes to any secured debt you may have. Don’t hang out in debt it’s a vulnerable place to be and it will steal from you monthly, preventing you from making an impact in other areas of your life.
Let me take a quick moment to explain the difference between unsure vs secured debt. Unsecured debt is not backed up by collateral, approval is usually easy, shorter term and lower dollar amount. Secured debt is “backed” by some sort of collateral, approval is harder, lower interest rates, longer term and higher dollar amount. If you were to lose your job, fall sick or injured, the more you owe in that moment the more of a crisis you have. I warn you against our culture that says its ok you don’t have the cash we’ll be kind, fast and convenient to loan you the money like they are doing you a favor. The favor is for them. Consider the fact that 8/10 people live paycheck to paycheck. The moral of the lenders story is they win and you lose. If you accept their offer even with good intentions life has a way dealing some bad hands at times and then your great intentions go by the way side. Wouldn’t you know the oldest book in history has something to say about this too? Proverbs 22:7 The borrow is slave to the lender. And in Romans 13:8, Paul calls us to pay off all our debts so that the only thing we owe each other is love.
Let me be clear the Bible doesn’t say debt is sin, but it has nothing good to say about it and definitely discourages it. Personally I can tell you removing all debt has allowed me and my family to endure 2 jobs loses, one parents ability to work part time to be there for the children’s schedule, a career change out of choice seeking an additional passion, as well as part time early retirement. Real person real story.