‘I truly feel lost in life as a result’: I have $220,000 saved but can't afford to move out without wrecking my finances. How can I balance independence with financial security?

Hi Money Minder,

How can I assist you today?

So, I just hit 28 and since finishing college about five years ago, I’ve been living at home and stashing away almost every dollar I make, except for essentials like food, gas, and car insurance.

I want to move out, but after crunching the numbers, it would run me about $3,400 a month to live solo (not keen on roommates; my parents are basically the best roommates). I’m pulling in around $4,200 a month, so moving out would slash my savings rate by nearly 80%. Right now, I’m saving/investing around $3,900 a month.

House prices have blown up in the past few years, and my degree doesn’t exactly bring in the big bucks, so I’m feeling super stuck. I’ve got around $220,000 in savings and about $12,000 left in student loans, but my income feels so limited that owning a home seems impossible around here (even if I paid in full, property taxes plus insurance would chew up about 25% of my take-home pay).

I feel totally lost. I want to date and maybe start a family someday, but I’m feeling trapped because moving out would wreck my savings. Should I stay home and pick up a second job to boost my income? Should I go back to school for a better degree? Or should I just say screw it and move out anyway? I’m seriously lost and could use some advice from Money Minder.

Seeking Advice

Response from THE MONEY MINDER:

Hello There

First, congratulations on your diligent savings and disciplined approach to financial planning. It’s impressive and commendable, and it certainly puts you in a better position than many others in similar circumstances. Yet, I understand why you feel stuck despite your substantial liquid assets and frugal lifestyle. Your concerns about moving out, the cost of living alone, and the potential impact on your future goals like homeownership and starting a family are valid and typical issues many face.

Your current strategy of living at home and saving significantly has undoubtedly contributed to a strong financial base. However, the feeling of being “trapped” and unable to progress can be disheartening. Given your situation, a balanced and practical approach might help you move forward while maintaining financial health.

Firstly, consider evaluating your career prospects. You’ve identified that your current degree limits your earning potential. Looking into further education or certification in a higher-earning field could be a smart move. This path may require an upfront investment in both time and money, but it could significantly enhance your income potential, making independent living and homeownership more attainable.

Meanwhile, since you have a substantial amount in liquid assets, think about diversifying your investments to yield higher returns. With $220,000 in savings, working with a financial advisor could help optimize your investment strategy to grow your wealth more efficiently. Ensuring your money works harder for you means you might reach your financial goals faster.

Regarding your immediate housing situation, although you prefer not to have roommates, considering a short-term compromise—such as finding a coworking friend or a like-minded individual to share a place with—could help reduce costs and ease the transition to living independently.

If the thought of roommates remains unappealing, another option could be renting a smaller, more affordable place or seeking living arrangements slightly outside your preferred area where housing might be cheaper. This smaller compromise could balance your desire for independence and your financial prudence until your circumstances change.

Lastly, combining these strategies with a meticulous budgeting plan can help you gradually move towards independent living while continuing to build your savings. Tracking all expenses and tweaking your budget where possible can ensure you’re making the most of your income and savings during this transition.

Your situation isn’t easy, but with careful planning and a willingness to adapt, you can start to carve a path that leads to both financial security and personal fulfillment.

Wishing you all the best as you navigate this challenging period.

THE MONEY MINDER