Generation Boomerang: Caught in the Nest

Take Charge America has 7 Tips for College Grads Who Can’t Afford to Leave Home

PHOENIX, Ariz. (July 14, 2006)... They’ve got diplomas, work experience and motivation. So, why are growing numbers of 20-somethings moving back in with their parents?

The aptly dubbed ‘Generation Boomerang’ consists of about 18 million Americans between the ages of 18 and 34 who can’t seem to find their financial footing and are forced to fly back to the nest.

“As college tuition and other expenses associated with higher education continue to rise, students are saving less and less,” said Mike Sullivan, director of education for Take Charge America, a nonprofit credit counseling agency. “And what’s worse, debts are rising. Students need to understand that racking up high interest debt on credit cards will come back to bite them.”

Recent statistics support this view. Twenty-somethings are now twice as likely to have a negative net worth than older people.

“About two thirds of undergraduates are in debt,” added Sullivan. “They will feel the burden of that debt upon graduation. The sooner they act, the sooner they can make it on their own.”

Sullivan has seven tips for boomerangers who want to make it on their own:

• Communicate – It’s likely been years since you’ve lived at your parent’s home, so it’s important to communicate with each other about both of your expectations and lifestyles, as well as immediate and future plans. And don’t forget, your debt is affecting your parents’ lifestyles so they deserve to understand how your plan to deal with those obligations.
• Put it in Writing – Come up with a temporary living plan before you move in with your parents. Will you be paying rent and/or sharing part of the utilities? Put it in writing just as you would if you were renting your own home or apartment. This can prevent problems with finances and miscommunication in the future.
• Don’t Freeload – Moving in with your parents is not an invitation to freeload. Don’t expect your parents to cook your meals, wash your clothes or act as your alarm clock. You are an adult and should not only share the household duties, but if you are not paying your fair share of the expenses, offer to do more around the house. Show your appreciation and your parents will accept your return to the nest more easily. Nonetheless, don’t get too comfortable. Stay focused on your plan for independence.
• Pay Off High-Interest Debt – In 2004, 66 percent of college undergraduates had at least one credit card with an average balance of $2,169, according to Nellie Mae. If you only submit minimum payments, that balance can take years to pay off. Make it a priority to pay off this high-interest debt so you free up additional money for rent or a mortgage.
• Save, Save, Save – Live simply and start saving for your own nest egg. Living at home will allow you to free up more money, but that doesn’t mean you should spend more money. When possible, eat in, drive less, don’t ring up cell phone minutes and buy used goods. Small lifestyle changes like these can help you save hundreds of dollars a month.
• It’s Not Forever – Despite your current living situation, a college education really does pay off. According to the U.S. Census Bureau, the expected lifetime earnings of a person holding a bachelor’s degree is $2.1 million. Those with only high school educations are expected to earn $1.2 million over the course of their lives.
• Set a Date – Goal setting increases your chances of success. Set a specific timeframe that you expect to live at home and take the necessary steps to move out by your intended date. Share this information with your parents and ask for their emotional support. And there is good news for young job seekers. According to CareerBuilding.com, 70 percent of hiring managers say they plan to recruit recent college graduates this year.

About Take Charge America
Founded in 1987, Take Charge America, Inc. is a nonprofit organization headquartered in Phoenix, Arizona. TCA offers a variety of services including financial education, credit counseling, and debt management. To learn more about TCA or its programs please call 1-800-823-7396 or visit www.takechargeamerica.org.