Tondalah Stroud never imagined that as a 37-year-old married mother she'd be sleeping in her childhood bedroom in suburban Chicago. But when she and her husband, Walter, 46, found themselves upside down in their mortgage and saddled with more than $20,000 in credit card debt, mounting medical bills, and two monthly car payments totaling $1,400, moving in with her mother seemed like the most cost-effective option. "We were pretty much living paycheck to paycheck, and we were tired of that,†says Tondalah. "We wanted to invest in our business and pay down debt.†The Strouds' 9-year-old son, William, and two dogs, a black Lab and a beagle-shepherd mix, also live with them. The Strouds, who moved into two rooms in Tondalah's mother's house in Dolton, Illinois, last July, have joined the growing number of professional adults who share a home with their parents or other relatives because of economic hardship. Denise, Tondalah's mother, who is 56, says she never expected Tondalah to return home because she had been financially independent for years. But she's delighted to have her daughter's family there. "I get a chance to do more mothering, especially with my grandson here. We're all willing to compromise to do what we need to, to beat the economy.†Referred to as "boomerangers†or "boomerang kids,†these adults are mostly between the ages of 25 and 34, although it's not uncommon to have older adults in this category, says Rich Morin, senior editor for the Pew Research Center and co-author of the 2009 report, Home for the Holidays ... and Every Other Day, about boomerangers. The study finds that 13% of parents in the U.S. with grown children say that one of their adult sons or daughters has moved back home in the past year. The study also shows that 10% of surveyed adults age 18 to 34 say the poor economy has forced them to move back in with their parents. While this is the first time that the Pew Research Center has conducted this type of study, Morin says U.S. Census Bureau data confirm that fewer young adults between ages 18 and 29 live alone now than before the recession, dropping from 7.9% in 2007 to 7.3% in 2009. The Census Bureau also noticed similar declines immediately after the recessions in 1982 and 2001. In black America, the phenomenon is more pronounced. Of African American parents age 45 and up surveyed in an AARP study, African American Experiences in the Economy: Recession Effects More Strongly Felt, 18% reported that they welcomed their (Continued on page 2) adult children back into their homes for financial reasons, compared with 13% of all U.S. parents who are taking in their adult children. "What you're seeing here is the impact of the recession and the fragile state of black workers across the board,†says Algernon Austin, director of the program on race, ethnicity, and the economy at the Economic Policy Institute. What's driving these adults back into the arms, or rooms, of their parents? High unemployment, growing foreclosure rates, and young parents who need to take on multiple jobs while needing childcare are among the top reasons, says Manisha Thakor, a chartered financial analyst and co-author of Get Financially Naked: How to Talk Money with Your Honey (Adams Media; $12.95). "Prior to the recession, moving back in with a relative typically involved one person. Now, whole families are moving back in, especially because of high foreclosure rates,†says Thakor. Making Ends Meet The Strouds weren't facing foreclosure, but they were saddled with a mortgage that was more than their house was worth. So they seized the opportunity when a recruiter for the U.S. Navy responded to a rental ad they had posted online. She contacted the Strouds about renting their home for three years for about $2,400 a month, providing a small profit off their $1,845 monthly mortgage payment. In four weeks' time, the family sold nearly everything that was in their four-bedroom, three-bath home in Country Club Hills, Illinois, and settled into smaller quarters at Denise's home. When the tenant's three years are up, the Strouds intend to rent out their home again. They don't want to sell, because the house, which they bought in April 2005 for $214,000, is now worth only $150,000 and they don't want to lose their $70,000 down payment. They'd like to hold onto it until it goes back up in value. "It's not easy,†says Tondalah. "We're in a room and that's pretty much where we stay. We'd like to have company and are used to socializing and having other couples over. Our social life has come somewhat to a halt.†The Strouds' living situation isn't one that most adults would want for very long. Boomerangers need to adjust their lifestyle to their needs in order to meet their financial goals and leave the nest for good, says John C. Anderson, certified financial planner and president of In Sight Financial Management, and financial consultant with AXA Advisors. "Avoid unnecessary spending,†he advises. "Instead, focus on the staples.†(Continued on page 3) Supporting the Strouds is Walter's income of about $75,000, which he earns as an associate director in the finance department at a large corporation. Tondalah no longer works full time because of sarcoidosis-related health issues. She focuses instead on the couple's business, F.O.G. (Faces of Glory) Cosmetics, which grossed roughly $60,000 in revenues last year, up from $35,000 in 2008. The Strouds, who developed their own cosmetics line, don't take a salary from the business yet since it is still getting established. They've decided to live with Denise until 2011 and have put themselves on a strict financial diet, investing only in their business, reducing debt, and purchasing just the bare necessities. Tondalah, for instance, says she sports low-maintenance hairstyles or has friends do her hair; Walter and William stretch out the time between haircuts. The family also packs lunches and nixes unnecessary shopping. "Now we have money going into a savings account, about $400 a month,†says Tondalah. "It's important to pay yourself too as you're paying off your bills, in case you have to exit sooner,†Walter advises. Within the first six months of moving in with Denise, the couple used cumulative savings, including an income tax refund, to pay off $16,000 in debt, including four of their five credit cards, and $3,500 in medical bills. Tondalah and Walter agreed to share grocery shopping responsibilities with Denise and pay her $550 for rent, about half her monthly mortgage. Denise pays the utilities and occasionally babysits William. The situation, though hardly ideal, is win-win for both parties: Denise has paid off her car loan, and the Strouds have saved about $3,500 since moving in with her. Setting Ground Rules Yoli Marie, CEO of Financial Fitness Media and author of Financial Fitness For Young Adults (Financial Fitness Media; $17.99), says it's important for boomerangers to nurture a wealth-building mindset. "It's important to make up your mind that you want to experience financial freedom,†she says. Like Tondalah and Walter, other boomerangers should contribute to the household to help keep the peace. "Whatever you can do to contribute monetarily, do it, even if it's a token amount. That discussion needs to be had day one or before you move in,†Anderson advises. He says that contributing will help boomerangers feel less like freeloaders, and will also ease worries among relatives that their new houseguest is a potential moocher. If you're unemployed and living with relatives, consider accepting a job you wouldn't normally take until you can get something better. "Where I've seen that situation work well, the dialogue has been up front, open, and honest.†Anderson points out, though, that in the African American community honest conversations about wealth building don't often happen. (Continued on page 4) Anderson says it's important to set a realistic time frame for moving out and to communicate that intention to your relatives. "If you get a job on Friday, don't move out on Monday. Make it clear that although you are now employed, you still want to pay the discounted amount so you can save more and not have to move back in.†Anderson advises everyone to save between six and 12 months' worth of expenses. Thakor agrees. She says, "There is no magic bullet. You must figure out a way to save, invest, and protect. You've got to keep within budget to make sure you don't slip into a financial hole again.†Adults in their 20s and 30s should save 15% of their gross income–5% for near-term needs and 10% for retirement, Thakor suggests. "Anything less than 10% won't work.†Back in the Nest When Rebecca Roussell, 25, found herself moving back home to New Orleans in October 2007, she had been laid off from her reporter job at the St. Louis Post-Dispatch, where she earned $35,000 annually. She assumed she'd be at her parents' house for a year but stayed eight months longer. When new job opportunities didn't surface, Roussell took a $9-an-hour sales associate position at Banana Republic, a clothing store. "Because I felt I had done what I was supposed to do–I graduated, moved out–I felt I was regressing by moving back home. I knew it was going to be different because I now had my own set of rules,†says Roussell, noting that she didn't pay rent and that her parents paid her monthly car note and car insurance bills of $394 and $128, respectively. Eventually Roussell landed a $30,000-a-year position as an admissions recruiter with her alma mater, Dillard University. About six months later she decided to pursue her graduate degree in integrated marketing communications at Roosevelt University in Chicago. Roussell put her student loans of about $250 monthly in forbearance and used her Dillard paychecks to pay expenses associated with graduate school. Although she paid off a $1,500 IKEA bill and more than half of a $2,000 Banana Republic credit (Continued on page 5) card balance, she admits she spent as she went. While staying with her parents, Roussell shopped and lived paycheck to paycheck. Since leaving her position at Dillard last July and heading to graduate school the following month, Roussell has cooled her shopping habit and focuses instead on completing her master's degree next May. She also landed a graduate work-study post, at which she earns $3,438 annually plus a graduate assistantship that pays $1,300 annually. In addition, she has a $3,875 grant that goes toward her $15,500 annual tuition; other grants and student loans cover the balance. Roussell's parents, who are in their early 60s, extend financial help when their daughter needs it. Her mother, Althea W. Roussell, took out a personal loan to help pay off a $2,000 balance Roussell owed Roosevelt at the end of her first semester. "Yes, I will be more than happy when she can take over her car note and car insurance and those types of things,†says Althea, who admits she loved having her daughter home. Althea expects that some adjustments will have to be made in the future, since her husband, Donald is retiring in July. While Thakor echoes the African proverb, "It takes a village to raise a child,†and points out that many people of color embrace multigenerational family living, Anderson notes that African Americans often feel that they don't have a choice. "Multigenerational living in the African American community typically indicates an inability to leave the nest. Looking at Americans in general, if we can leave, we do. When we don't, it's not because we want that connection with parents–it's because we can't leave. In other cultures, multigenerational living is more the norm.†Thakor says that in her experience, most boomerangers stay with family for roughly six to 18 months. If the stay lasts longer than three years, there's a problem, Thakor believes. Either the person isn't trying hard enough to find a job, or he or she may be financially irresponsible. "If in three years as an adult you're still holding on to the life preserver of extended family, there are some other issues at play,†she suggests. She adds, however, that some circumstances, such as the need for childcare, give boomerangers good reasons to remain home longer. (Continued on page 6) Tips for Getting Out of the Nest 1. Develop a budget and live below your means. If you're spending more than you earn, the only way you can make up the difference is through debt. If you have to borrow money to make ends meet, the odds of being stuck in a boomerang situation are high. "It's the single biggest mistake I see people make,†Thakor says. 2 Commit to a financial plan. You must develop a financial plan and stick to it in order to achieve financial independence. Just wanting a financial plan isn't enough; you must put that plan in writing–and then into action. 3 Don't copy someone else's poor financial habits. It's human nature to compare yourself with others, says Thakor. "But what other people are doing in America is living beyond their means through debt,†she warns. 4 Don't expect to live like your parents right out of school. Most parents lived very humbly during the early years of their marriage and built their wealth over time. "Now we expect to live at the same standards that it took our parents 20 or 30 years to achieve. We want it 20 or 30 days after graduation,†Thakor says. Tips for Parents: Keeping Your Finances Intact While Supporting a Loved One Put all your cards on the table from day one. If you know clearly what moving in will cost, you must determine what your adult child is going to contribute, advises Anderson. "There needs to be some type of conversation to address the situation and come up with solutions.†Don't offer your child a bailout in the form of a reverse mortgage or cosigned loan. Encourage your adult children to seek financial help through organizations such as Consumer Credit Counseling Service (www.cccsatl.org), which can help them with basic budgeting and credit management. "Too often parents offer more support than they can afford. Helping your adult children to help themselves will build upon their life skills and help them to rebound financially and not repeat the same mistakes,†Marie offers. Don't dip into your retirement account. It's one of the worst things a parent can do. Retirement funds accumulate over time and are difficult to replenish. Your adult children, on the other hand, have years of working ahead of them. "Sometimes the best help you can give your kids is to let them clean up their own financial mess,†Thakor advises. Set boundaries. If you're financially able to do so, you may consider matching a portion of what your adult child saves. "That may motivate him or her to carry their own weight and meet goals,†Marie suggests.