Millennials have gotten a bad rap for their habit of moving in with their parents after post-secondary school. There's even a disparaging term for the phenomenon — "failure to launch syndrome."
But some financial experts say we've got it all wrong. In an era of sky-high tuition and soaring housing costs, they argue the group known as Generation Screwed can help unscrew themselves by moving home to pay off debt.
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"For these graduates, the biggest financial advantage they have is living at home and taking the rent part off of the table," argues Christine Romans, chief business correspondent for CNN in New York.
In her new book, Smart Is the New Rich: Money Guide for Millennials, she advises cash-strapped young people that retreating home is the best economic move they can make.
A shameful move?
The vote of confidence would have helped Katelynn Langer when she moved home in October to pay off her student debt and get her life in order. At the time, the 25-year-old worried that other people would judge her. So she referred to her mother as her "roommate" in conversations.
"I always tried to tiptoe around the fact that I lived back at home with my mom," says Langer, who shares an apartment in New Hamburg, Ont., with her 50-year-old mother, Marjorie.
Langer was embarrassed because of the bad press surrounding the boomerang generation. According to Statistics Canada's 2011 census, 25.2 per cent of young adults between the ages of 25 and 29 were living at home, more than twice the percentage in 1981.
In a recent blog, financial commentator and TV personality Kevin O'Leary told young adults, "Bunking in with your folks when the going gets tough deprives you of the chance to realize your potential."
Just weeks ago, a commentary in the Chicago Tribune informed millennials that living at home was hurting the economy, because it cut down on their spending.
Moving home to get ahead
It's all nonsense, according to Romans. "If they move out, they don't have the money to move the economy forward anyway," she argues.
She contends it's better for the economy and for debt-plagued millennials if they move home and save up. She says, typically, new grads don't have the cash to invest and are working low-paying jobs because they haven't launched their careers yet. So, "the only lever they have is the housing lever. It's the only thing they really have to move forward."
Langer believes moving home has definitely helped her move forward.
She lived on her own for a year after getting two diplomas, in recreation and leisure and drug and alcohol addiction counselling. Even though she was working two waitressing jobs, she found she could barely make a dent in her approximately $28,000 in student loans.
Despondent about her future and looming debt, she moved in with her mother.
"[My loan] was too big not to make the decision to move back home," says Langer. She continued working two jobs and, without the burden of big rent bills, managed to cut down her debt by $8,500.
Speaking from experience
Langer's positive experience has led her to stop feeling ashamed about her living situation. "Now, I just kind of own it. It's helped me, it's helped my happiness and I feel like I was able from October to now make a huge dent in my student loan."
Financial writer Krystal Yee in Vancouver is also a fan of exercising the home advantage. "That sacrifice to move home and kind of swallow your pride is worth it," she says.
The 32-year-old is speaking from experience. After finishing her studies at age 24, she found herself saddled with just over $20,000 in student loans and other debt.
"I was really scared," she says. "I thought, how could I start my life as an adult if I've got all this debt hanging over me?"
So Yee stayed home with her folks for a year after school and worked doggedly to become debt-free. "For me, it worked out perfectly," she says.
Let's make a deal
But she cautions that the move home must involve careful planning. She says young people have to recognize that this is a temporary living arrangement where they need to meet concrete financial goals.
"You're not there to mooch off your parents. You're there to become a better adult, get yourself on your feet."
Romans recommends two years at home. She advises millennials to sign a two-year contract with their parents that includes a mutual one-year out if anyone isn't keeping up his or her end of the deal.
Of course, there's another party involved in that deal — the parents. O'Leary told millennials in his commentary that moving back home is "crippling your parents financially."
Yee says that problem is easily solved by contributing to household expenses. While she isn't charged market value, Langer pays her mother $200 in rent and helps with household bills.
So her mother Marjorie says her daughter is actually a financial help rather than a strain. "Being able to share food expenses and household [costs] is great," she says.
The only problem with Langer's living situation may be that both she and her mother are so content with it. Langer admits she has no exit strategy yet. But she promises it will happen soon, perhaps when more than one-third of her student loan is paid off.
"I've moved back home to get my financial state in order and I think the taste of freedom is too fresh not to have the aspiration to move out again," she says.