Hey /r/personalfinance!
I have a dilemma before me, I am 23 and currently taking home 41k/year ($3416/month) after tax (pre-tax is about $58k), and I am wondering if I should move back home to save money and pay back my debts.
I started living on my own after high school, as I was tired of living with crappy roommates and so as soon as I got what I thought was an ok-paying job (with no dependents/or significant expenses) I went ahead and rented an apartment by myself.
As this was the first time I lived entirely on my own (I had only lived with roommates etc or at home up to that point) I had to start entirely from scratch, and had the (in hindsight, bad) idea of purchasing all the the furniture and various household items that I wanted straight away when moving in as I thought it’d be worth it to have everything I thought I needed from day 1 and just pay it off in 1 year.
4K 75” TV, home teathre, shelves, books, lamps, plants, furniture, kitchen supplies, beds, sofas, fridge, freezer, washer, dryer, tables, bookcases, and all sorts of things later I ended up using all that I had saved ($3-4K), and with $14k in debt all in all (loan at 12.95% EAR)
On top of that, because of things I shouldn't have purchased, misc. emergency expenses and unforeseen circumstances, I also ended up with $13k of credit card debt (6k at 0% EAR for 6 months and 7k 11% EAR)
I also have my student loan at 5 years/$8k left, though with an interest rate of only 1,75%, so paying this back beyond minimum payments hasn’t really been a priority.
My fixed monthly expenses are:
- $1400, rent+electricity/water
- $280, transportation (fuel, insurance, toll roads, maintenance)
- $300 groceries
- $150 phone, internet, tv/music streaming etc
(I should add there is little room for cuts here, all of this is already at the bare minimum for the local COL)
This means that in living expenses only, I am at $2130/month. Realistically, it’s more than that as I always have at least $50-200 in various costs popping up once in a while.
This leaves me with $1200 a month to pay off my debt. And that’s without any fun money, no traveling, never eating or going out, or buying any gadgets.
At this rate, I’ll have paid off my $27k off in 27 months, provided nothing major breaks down, and I still never go out/travel/buy anything new. Which seems sad and unrealistic.
—
In short, even though I really enjoy where I live and my material possessions, I feel trapped by debt, and as I sit down on my $1k leather sofa watching the 75” 4K TV I just had to have, I wonder each night if I should just cut my losses, sell everything, and move back home.
If I sold all of my furniture, gadgets and misc. stuff, I estimate that I’d end up with 7-10k (this is realistic from experience), in addition I’d also get my $4k lease security back and could also return some other items that I purchased for full price thanks to extended return policies for $5k.
—
I have thought about this for some time, and came up with the following:
PROS of moving back home:
-
Only cost of living would be transportation, $300/month, giving me $3k+ a month to pay back debt/save
-
By selling/returning everything and terminating my lease I would end up with $16-19k in cash with which I could pay off a large portion of my debt.
-
With this and the money I wouldn’t spend on rent etc, I’d be able to pay back my debt in just a few months, and I could then save/invest aggressively, building up a nice nest egg in 12-36 months.
-
Helping out my aging parents/spending more time with them, time is going by quickly and they are not getting any younger
CONS of moving back home:
- Losing my independence to a great degree
- Living in an objectively worse, much smaller place, with a longer commute and in an area I don’t enjoy as much
- Losing all the comfort and enjoyment that I get from my lifestyle/furniture/items/gadgets.
- Higher stress, being limited in my preferred lifestyle choices/activities, due to lack of compatibility with living at home
- It'll be a great time/energy consuming hassle to move out from here and sell everything, and likewise when I later want to get back on my own
- Stigma/social aspect of going back home (it’s often frowned upon)
I should also add that my job is not very fulfilling and I would like to save up enough to be able to cover living expenses for 3-4 years in the near future (at a much lower COL than my current one) and going off on my own. This would be achievable if I lived at home for 2-3 years.
—
Ideally I’d much rather stay where I am, but I’m finding the financial and future implications (as well as remaining stuck with increasing debt) very concerning.
What do you guys think? Should I just suck it up, cut my losses, move back home and pay back my debt/start saving towards my goal? Would you, if you were in my position?
I realise that I alone can answer this question, but I would highly appreciate any inputs/thoughts, or experiences if any of you have been through something similar before.
Thanks!
//Side note, I don’t live in the U.S., but converted the local currency to USD for ease of discussion here. Also, I live in a country (Scandinavia) with universal free health care, so potential unexpected medical expenses are luckily not a concern//
Submitted December 03, 2017 at 11:03AM by arcticsequoia http://ift.tt/2iclB7O
