What To Do With a Boomerang Kid

Many people are using the FaithFi app to help provide the wisdom, community, and money management to stay on track, financially speaking. To date, over 37,000 members are using its digital envelope system, participating in our community forums, and engaging in virtual workshops. And one of the most convenient features is the ability to keep all your accounts in one place for an easy-at-a-glance view. You can choose from one of three options, depending on your management style, and it's available on desktop or mobile.

Go to faithfi.com and click app to get started. Okay, so I said you're not alone if you have a boomerang kid living in your basement. We know that because the financial group Thrivent actually does an annual Boomerang Kids Survey. The latest one, just conducted in May, found that 41% of parents have an adult child currently living with them. The three most common reasons given for this were increasing rent and home prices, 35%, needing additional financial support after completing high school or college, 20%, and job loss, 13%.

No doubt the disruptions caused by COVID have also contributed to the boomerang kid boom, even though employers were desperate for workers in the later stages of the pandemic and employment remains relatively strong. Now, an adult child living at home in and of itself may not be a big drag on parents' finances if you're only providing what's called three hots and a cot, it's when you start picking up the tab for their smartphone, student loans, and car payments that things can get out of hand in a hurry. Many parents are willing to help their kids even to the point of their own detriment, even when it jeopardizes their retirement. In a brand new bank rate survey, around half of parents said they've sacrificed emergency savings and debt payoff efforts to help their adult children.

43% said they'd tapped into retirement savings to help their kids. This inability to cut the financial umbilical cord can have a detrimental impact on both parents and children. The kids may begin to expect regular financial handouts and become dependent on them.

So what to do about it? Well, first is realizing that you should do something about it. You don't want to have an adult child living at home unless there are mitigating circumstances, such as caring for you if you're disabled. Proverbs 10 4 reads, a slack hand causes poverty, but the hand of the diligent makes rich. As parents, we always want to help our children, but at the same time, we don't want to encourage our children to have a slack hand.

Finding the dividing line between helping and hurting can be difficult, and that often leads to tension when spouses disagree on where one ends and the other begins. But it doesn't have to be a question of throwing your kid out on the street or breaking your budget. You can take on this challenge gradually. First of all, you need to set a non-negotiable requirement. Your boomerang child must have a job and be earning income.

The type of job isn't important. Set a deadline. For example, moving out day is two months from now if you're not yet working.

There aren't plenty of jobs available, so this shouldn't be a problem. Once your boomerang kid is earning money, you can sit down with him or her and set up a budget and a financial plan. First and foremost, in that plan will be saving to get their own place. You need to impress upon the child the need to live below one's means so that you can save.

It's key to all future financial success. You can offer to match your child's savings temporarily to accelerate the process. You want your child to save for an apartment but also to save for emergencies. Their budget must allow for that once they're on their own.

Otherwise, something will come up, like a job loss or a major car repair, and they'll be borrowing from you or moving back in. Of course, all of this is much easier if you are a financial role model. There's no better way to teach your children about wise money management than by showing them how to do it. Proverbs 22 6 tells us, train up a child in the way he should go, and even when he is old, he will not depart from it. It's never too late to start teaching your children financial responsibility. And when you do, your boomerang child can once again leave your hand, this time successfully.

I hope that's been an encouragement to you. Hey, before we take our first break, let me remind you about the FaithFi app. It's a great way for you to develop your spending plan. And by the way, it could be a great resource for that boomerang child in your basement.

Perhaps they could use it to set up their own budget, begin to track their spending, get into our digital envelope system, and learn a crucial skill that will pay huge dividends when they're out on their own. You'll find it all on our website at faithfi.com. That's faithfi.com. All right, your calls are next, 800-525-7000. I'm Rob West and you're listening to Faith and Finance, biblical wisdom for your financial decisions. What's most important to you when it comes to choosing your financial advisor? Someone who's aligned with your biblical values?

How about someone who will take the time to explain your options? Certified Kingdom Advisors are professionals who meet high standards in competence and integrity, and have been trained to offer biblical financial advice. To find a Certified Kingdom Advisor in your area, visit faithfi.com and click Find a CKA.

Are you searching for a way to become a better, faithful steward of the resources that God has given you? Well, download the Faithfi app and join the 37,000 others who are already using our app. The Faithfi app will provide you with wisdom, community, and simply help you stay on track with your finances. We have three money management options to choose from, so find an option that fits your unique needs.

It's available on desktop or mobile. Simply go to faithfi.com and click App to get started. Welcome back to Faith and Finance. I'm Rob West. It's time to take your calls and questions. 800-525-7000.

Again, that's 800-525-7000. We've got some lines open today and we'd love to hear from you. All right, let's head to the phones.

We'll go to the New York City region. Wanda, thank you for calling. Go ahead. Hi, Rob. How are you doing? I'm doing great.

Thanks for calling today. Yes. So my question to you, Rob, is I'm trying to figure out what to do now that I can't really find my son on my taxes, so I don't know what to put down. That was one of the questions. I'm doing two in one now, so two federal and one state.

So while you think about that, I have my next question. So my next question is, I've never really done any repairs on my home. I've had the home for more than 20 years this year. I only owe a little over $40.

It might even be lower than that, a little $39. But anyway, I've never taken out a loan for the home. I'm 56 years old and I'll be working for the next 10, 15 years or more. I'm already in my retirement job.

So should I take out? What kind of loans should I take out, Rob? Okay, got it.

Well, let's dive into these. First, with regard to your son, you're going to want to first update your tax withholding form that's known as a W-4. It's changed from how it was approached in previous years. It's now more of a formula and they'll step you through a series of questions that you will answer that will result in giving the information. For how much will be withheld from your paycheck, you'll provide, of course, your name, address, filing status, social security number. But you'll also provide any dependents, any other adjustments, you'll indicate whether you have multiple jobs or a working spouse, and then you'll sign and date it and turn it in. And that will provide everything that's needed to determine how much is ultimately withheld from each check. And then when you fill out the 1040, whether you do that yourself or someone does that for you, you would provide dependent information there. But the key is to get the withholding right so that you're paying in the appropriate amount throughout the year out of each paycheck so you don't get a big refund, but you also don't owe anything. So that would be the key. With regard to a major repair on the house, how much are you needing to spend to do that?

I'm not sure. But like I said, I've never done anything. I know I need floors. So I was thinking about at least $50,000.

Okay. Yeah, the challenge is, you know, interest rates are very high right now. And so it's going to be very costly. I mean, typically, what I would recommend is that you get a home equity loan. So you lock in the interest rate, the problem is you're going to be locking it in at, you know, a pretty high rate right now. And if it's a second mortgage is going to be even higher than the prevailing 30 year mortgage rates, which are right now about six and three quarters.

So you could be, you know, you'll be 7% plus could even be north of 8%, which is going to make it pretty costly. Do you have the ability to wait Wanda? I do have the ability to wait because I was thinking that I can wait till I get to that retirement age. And then that way I can use some of my 403b and not have to pay taxes. Well, you know, not be penalized.

Yeah, yeah. So that would be an option. You'll want to look at that in light of your overall income needs just to make sure that, you know, you're not depleting necessary assets that are going to be critical to provide whatever income you need to make up beyond Social Security to cover your bills. I think the key would be I'd probably take your time delay these repairs or renovations as much as you can try to fund as much of it as possible out of current cash flow.

So you don't have to borrow. And if you could delay until next year, we're probably looking at interest rates in the fives next year for 30 year mortgages, second mortgages, like this one would be a little higher. The other option is you could take what we typically don't recommend, and that's a home equity line of credit. The one reason why you might want to consider it now is it would give you a line that you could pull from as needed, but it's a variable rate. So as the rates come down over the next couple of years, you would benefit from that. But I think I'd probably hold off as long as you can. And let's rates come down or consider taking it out of the 403b. But I would look at your 403b in light of how much are you going to need?

To truly offset your expenses in retirement, so you know how long you need to work and how much you need to save. I hope that helps you Wanda. We appreciate you being on the program today. Thanks for calling Winter Haven, Florida. Hi, Cindy, go ahead. Hi, thank you, sir, for taking my call.

I have a question. I'm 65, retired from the government, and I have a TSP. It's only got $30,000 left in it, and it's all in the G Fund, which, as you know, is getting nothing. Would it be wise to move that money out of the TSP or somewhere in it or move it to a Roth IRA, somewhere else, like to e-trade? And the second part of that question is, will it move me to a higher tax bracket if I never touch the money, you know, if it just goes from TSP to Roth electronically? Well, you wouldn't roll it to a Roth, you'd roll it to a traditional IRA, and there's no tax implications to that. That's not a taxable event until you pull the money out.

At that point, whatever you pulled out would be added to your taxable income, and a portion of that could bump up into a higher tax bracket without question. I think the key for you is what's the right investment mix? So you said you're 60 years old, is that right?

65. If you stayed in the TSP between the C and the S and the I Fund, the common stock, the small cap and the international, that would make up probably 35 to 45%. And then you'd have the rest in the F with the smallest portion in the G, if any, and the fixed income would give you a bond exposure. Or you could roll it out to an IRA and then build the portfolio yourself, or get some help at soundmindinvesting.org. You probably doesn't sound like you have quite enough to hire an investment advisor. The nice thing about the TSP is there's, you know, you've got some great investment options, but there's not an unlimited number of choices there. There's really just five investments, which keeps it fairly simple.

Now, if you're wanting to take, you know, far less risk, even than what I'm describing with maybe 35% in stocks and 65% in bonds, then, you know, you could go almost all bonds, but I kind of like that growth factor in there if you don't need this money, so that it can keep growing and be there for you down the road. Okay, well, obviously, in the G Fund it is not growing. No, there's not a whole lot going on in the G Fund. Yes. Okay. All right.

All right. And one question, silver coins. Should I just hang on to them, or is this a good time to take them to the jewelry shop or wherever and trade them in?

They're doing nothing here in the house. Yeah, I mean, that's up to you. Precious metals are great to buy and hold, and the downside is they don't have any income generation, obviously, as they're sitting in your drawer. Gold's done better than silver, but, you know, if you want to hang on to them just as something to have down the road, I don't think there's anything wrong with that. I like that it's diversified for you away from the stock and bond market and should do well over time, and it's a store of value and a safe haven if things were to get, you know, more difficult in terms of economically.

So I don't think there's any urgency to sell them unless you wanted to and, you know, put that money to work where it could be more income generating. Okay. Appreciate your advice. All right. Thank you for calling today. Hey, just after this break, we'll be back with a lot more of your calls and questions.

Stay with us. This is Faith and Finance. We are grateful for support from Praxis Mutual Funds.

Praxis Mutual Funds has seven impact strategies that are designed to create positive real world change. Welcome back to Faith and Finance. I'm Rob West. Back to the phones we go here in our final segment to Geneva, Illinois. Hi, Steve. Go ahead, sir. Thank you, Rob. Appreciate you taking my call.

Sure. My question is, I've been working on trying to get my credit up to the excellent level in the last four or five months, and I'm a member of Credit Karma, so I get to look at my TransUnion and Equifax whenever I want to. And last month I was three points from being in the excellent range on both of them, just three points away from 750, and they suggested that I take my Capital One credit utilization onto 10%, and that would knock me up into the excellent level, so I did. I took my credit utilization down to 5% on the Capital One, and I know that Capital One reports on the 20th each month to the credit bureau, so I got on there the 21st to see if I made it to the excellent level. TransUnion bumped me up into the excellent level, and it said see what changed.

I clicked on that. It said Capital One balance decreased. But on the Equifax one, it dropped me 26 points, and I clicked on see what changed, and it said Capital balance decreased, and everything else was the same from the first.

Yeah. I'm like, have you ever heard that where you dropped 26 points and you did the right thing? Well, yes, only because there's so many factors here that play into this credit score, and nobody knows truly what the algorithm looks like.

It's kind of like the Coca-Cola secret. I mean, we know kind of the big pieces of it for sure, but exactly how it works, there's just a number of factors there, so it could have been that based on, and some of these may not apply, so I'm just throwing out some ideas, but based on the fact that you're using other cards, the reported balance before you pay it off, if you're using it for budgeted expenses and paying down to zero, it may have pushed another card up in terms of credit utilization. Often there's a hard inquiry where you allow somebody to pull your credit. There could be errors on your credit report, which is why we need to regularly be pulling your three bureaus at annualcreditreport.com from Experian, TransUnion, and Equifax. If you closed an account, those would be typically the reasons where if nothing has changed, you have a drop in a score, it would be one of those, closing an account, utilization, hard inquiry, or an error.

Apart from that, it's probably just somewhat of an anomaly. I just kind of keep monitoring it. I suspect it'll bounce right back. The key is you're doing the right thing. You're getting your utilization down, you're paying on time, you're not out there seeking new credit, authorizing people to pull your credit, and opening new loans. Those are all the right things, and you'll be rewarded over time.

Why your score bounces around 25 points here or there, there's often no rhyme or reason, so I would just continue to watch it, and I suspect next time you pull it, it'll come right back. Okay, thanks. Yeah, I tried to call Equifax, but it's impossible to get a library map. Oh, yeah. Good luck with that.

I'd just stay at it, but I would, if you haven't recently, pull a copy of each of those three credit reports just to make sure there's not any erroneous or incorrect information. Thanks for calling, Steve. We appreciate it.

To Pennsylvania. Hi, Seth. Go ahead, sir. Hey, Rob. How are you? I'm doing great. Thanks for calling.

Thank you. So, my question in a nutshell is, is I have about $7,000 in a brokerage account, and I also have credit card debt of about $15,000 and a car loan for just under five. So, what I'm wondering is, would it make sense to use that money to pay off the car loan and wait on the credit card or put that towards a credit card debt?

And I'll say this, too. The car loan is about $350 a month, and part of the reason for the credit card debt is with costs rising, we've been using them more. So, freeing up that $350 a month, I think, would be good, but I wanted to get your advice on that. Yeah, so you said a brokerage account. It's just a taxable account.

It's not a retirement account. Is that right? Right. All right. And is it currently invested in stocks?

About half of it is. Okay. So, it's down, or has it recovered some? It's down.

I mean, it recovered some, yeah, but it's down overall. Okay. And if you were to get rid of this $350 a month, would that right-size the budget such that you wouldn't have to use the credit cards anymore?

Yes. Okay. But things would still obviously be tight because $350 is not much, so it sounds like you guys are kind of right up to the edge, huh? There's five kids in the family, so yeah, I mean, with three grocery costs alone there. I get it. I get it.

Costs through the roof. Do you have any other savings, or is this it? I do have about $3,000 in other savings, and that's, I mean, that's kind of earmarked for taxes and other things, so it's not really accessible. All right. And do you have some retirement accounts? I do, yep. Okay. All right. Yeah, the challenge is, you know, this is all the liquid savings you have that's not earmarked for something else because we wouldn't want to use savings that you have for taxes, and although it would help you balance the budget, and that's key, it, you know, it doesn't sound like you'd have anything left, so you're solving for a deficit.

It's not like you're able to make ends meet, and now you'd have an extra $3.50 to replenish the emergency fund because if that emergency fund essentially goes from seven to two, and then the unexpected comes, we're right back into the credit cards, which is what I want to avoid. So I think you need to do a couple of things immediately. One is we need to right-size that budget as best you can. Let's get in there, and I realize you've got a lot of mouths to feed. That's great.

They're a blessing from the Lord. Expenses are up, but let's do everything we can to cut expenses. You know, if it's not food or the house or the utilities or the car, it's up on the chopping block, right?

And even food. Let's look at ways to dial that back as best you can so we can right-size this budget. And if you were able to do that and demonstrate to yourself that you could avoid those credit cards, then I'd say, all right, let's consider wiping out the car loan and then take that $3.50 a month or something close to it, whatever you have left, and then really start rebuilding that emergency fund. And then let's get that $15,000 into a debt management program through christiancreditcounselors.org. Get those interest rates down. You'd have one level monthly payment that fits into your budget, and you'll be able to pay that off 80% faster. I realize you've got one at 0% I think here based on my notes for another year.

You could hold that one out, and that would keep it open. But I think the key is to get a longer-term strategy that you know that is going to get you on a track to get these paid off once and for all without the balance transfer gain. So I think that's where I'd go from here. I'd just be careful about chewing up all that liquid savings because that's all you got. And so really, this is going to come down first and foremost to what can you all do to get as close to right-sizing that budget as possible. Then we consider paying off the car loan, but we've got to have some margin because really you need to get up to three months expenses, and then you need to start thinking about saving for the next car so you can buy it with cash. So listen, all the best to you.

I'd contact christiancreditcounselors.org, see what they can do to help, and then maybe go from there. Thanks for your call, Seth. Well, once again, our time went by way too fast. But tune in next time, and we'll do it all over again. Before we go, I'd like to thank our incredible production team, Amy, Devin, Jim, Robert, Brandi, Rob, and Ben. Couldn't do it without them. Have a great rest of your day, and I'll see you again next time for another edition of Faith and Finance. Faith and Finance is provided by Faith Buy and listeners like you.