Two choices... Two paths in life... (Detroit, Cove: apartment, car insurance, mortgage)

[ksoviero]

Imagine you are a 20 year old living with your parents (and you get along great with your parents), and you obtain a stable job in the technology sector where you are making nearly six figures...

Now which of the two following paths do you choose?

1. Rent an apartment right away, or
2. continue to live with your parents for a few years to save your income for a down-payment on a house.

This is the decision I have come to, and I would like some input from those who have been there before.

[RoadWarrior12]

That one is an absolute no brainer.

[Trainwreck20]

Eh, I had a co-worker (female) that lived with her parents during college and then got a job where I work. She continued to live with her parents for, dunno, five years? Then her and her bf got married and bought a house. Worked well, I doubt they had to even finance much. It can work, just not for a lot of people.

[G Grasshopper]

The way that I have lived this was from the parent's side. Our son lived at home for almost 5 years after college. We get along great and we really love having him around, but as parents, we wanted to see him get on with life. Its important to be independent. He has been out of the house for 2 years, but we still see him often. The good part: we have built a really great adult relationship with him. We really value that. (My dad died when I was in my 20s, and I still regret that we never made that change in paradigm, since I moved to CA as soon as I was out of college.) The bad part: we were nervous (and so was he, I think) about the long lack of independence, of making his own life. If you have a good job, which is part of having an independent life, I think its OK to live with your parents for a while, as long as it is agreeable to all. Just don't look at it as a long term set-up. I would recommend having a goal for when you are going to leave, either with regard to savings or time. Talk with your parents about this so that every one is on the same page. And if it isn't working, change the plan and move out. 20 is still pretty young. I mean, lots of people live on their own earlier than that, but it isn't inappropriate to live with your parents at that age if it is helping you to meet your life goals. I have a good friend whose son finished college and got a great job as an engineer, but lived at home to save money for a while. A few years later, he got married and was immediately able to buy a house with his wife with all the money he had saved. This is a tough economy, and sometimes arrangements like that can give you an advantage.

[hts]

stay with the parents (and commit to saving like crazy--i mean 75% of your net) for a few (2-3, not 4-5) years. that is all.

[ksoviero]

Originally Posted by hts

stay with the parents (and commit to saving like crazy--i mean 75% of your net) for a few (2-3, not 4-5) years. that is all.

My current plan:

6% - 401(k)
74% - Savings Account
20% - Checking Account

I might invest a few thousand here and there in conservative ETFs and mutual funds I trust, but not enough to negatively affect my savings too much if it goes sour.

I also plan to get a credit card to use for gas ONLY, so that I can build credit prior to getting a mortgage.

[Trainwreck20]

Wait, you are going to live at home and let your parents pay ALL your expenses? Car insurance? Mobile phone? Food? Entertainment?

[Gorfml]

wow if my adult child had a job like that theres no way they be living in my house...

some parents have trouble letting go...i'm the opposite...

[Eastcoasting]

What I did after college (about 24 years ago, yikes!).

Pulled together some money and bought a large crumbly 5 bedroom 2 bath house.

Rented out rooms to friends and friends of friends on a 6 month basis, probably never had more than 4 rooms occupied at the same time. Covered the mortgage (sometimes a double payment) and plowed the rest into upgrading the house which helped keep a positive vibe with everyone living there. "Hey look the dishwasher works!"

Great times, great memories, huge parties and 2 day Wiffle ball tournaments!

The party lasted about 4 years and then everyone started getting lost in Newgirlfriendland, getting engaged and such so things kinda organically came to an end...sold the house at a tidy profit and started the next chapter.

Outside of housing markets like Detroit I don't even know if this would be possible today.

[RoadWarrior12]

Originally Posted by ksoviero

My current plan:

6% - 401(k)
74% - Savings Account
20% - Checking Account

I might invest a few thousand here and there in conservative ETFs and mutual funds I trust, but not enough to negatively affect my savings too much if it goes sour.

I also plan to get a credit card to use for gas ONLY, so that I can build credit prior to getting a mortgage.

Pretty good plan. Couple tweaks I'd make in your shoes:

Increase the 401k to max out employer contributions, if you haven't already.

You'll need more than one trade line on your credit report. If you've also bought a car or something similar, that'll add one. Otherwise, you're going to need to do something like that.

Student loan if any? Pay that sucker off.

Get a little more aggressive in your investment strategy. You're early enough to absorb a negative hit or two. For example, I bought Qualcomm stock at $8/share way back in the day (only put $2K into it), caught the dotcom stock boom and sold it for $65K. Had a few other investments that didn't do as well or lost entirely, but still came out way ahead. That $65K was a down payment on my first house at age 25.