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I’m 34 years old and on the surface, I look like I have my act together. I have a B.A. and a master’s degree from prestigious schools and I work for a reputable nonprofit. I do live with my parents, but I’m also in the process of building my own business. Even my credit score is fairly good. But secretly, I’m in serious credit-card debt and forbearance for my $50,000 grad school loan. It’s like I’m living a double life.
This isn’t the first time I’ve been in financial trouble. When I was in my 20s, I dealt with depression and anxiety by shopping online. It wasn’t shopaholic level — mostly poor money management. I come from an upper-middle class family and was given my own Nordstrom card in 8th grade. After seeing a therapist, I came clean to my parents and they helped me restructure my budget. I spent a few years paying down half my debt, and then my parents gifted me $5,000 and I paid off the rest.
When I turned 30, I decided to go after my dreams and start my own business. I went back to school to earn a professional certificate (my parents paid for it) and simultaneously worked at a nonprofit part-time. But then I was unexpectedly laid off and it’s been a nightmare since. I wasn’t able to find another job until last January, and it’s only part-time and doesn’t pay enough to cover my monthly expenses. I slipped deeper into anxiety and depression and started using credit cards again. All told, I have over $20,000 in consumer debt, plus another loan I took out to get my business started.
I’m in the interview process for a full-time nonprofit job that would pay around $50,000, and despite loving my business, I think it might have to go on the back burner while I tackle this debt. I genuinely feel that if I’m still living at home when I turn 40 I might die. How can I get my finances together? Where do I even start? And what can I do to deal with this overwhelming shame? I haven’t told my parents about this round of debt because they would explode (my father especially, who can be emotionally abusive). At the same time, nothing they’d say could be worse than what I tell myself every day about how badly I’ve messed up. Please help!
This might sound ridiculous, but I’m excited for you. You’ve never experienced the satisfaction of being financially self-sufficient, and believe me — after all this, it will feel like you’ve sprouted wings of weightless gold. You’ve got a lot to look forward to.
For starters, it’s time to quit self-flagellating. You’re hardly even an outlier: In 2016, 15 percent of 25- to 35-year-old Americans were living with their parents, and I guarantee you that plenty of them are smart, capable non-losers just like you. Meanwhile, another survey found that one in three adults under 45 currently accept some kind of financial help from their folks. This isn’t good or bad; in fact, I wouldn’t attach any moral value to it at all. It’s a complex social trend that’s rooted in economic and cultural factors that no one fully understands. However, I do know that lumping yourself into a dumb cliché about living with your mom and dad won’t serve you in the least.
You might think that your shame will motivate you to change, or that it’s the punishment you deserve for failing to launch. But it’s actually a big, painful, and potentially expensive waste of energy that probably drives some of your stress-shopping. You need it about as much as whatever random things you bought with your credit card last month, which is to say not at all.
Meanwhile, I get the impression that a small, desperate part of you does want to come clean to your parents and allow them to bail you out again. Do not do that. You must tackle your money issues yourself this time, not only because you’re an adult, but more importantly because you have to prove to yourself that you can. Getting out of this pickle for the long haul isn’t about finagling a better budget or discovering “tricks” for saving money like giving up lattes and brown-bagging your lunch. It will require an aggressive, two-pronged offensive, psychological and financial, and it’s imperative that you do it under your own steam.
Fortunately, you have every reason to be confident in your ability to live independently from your parents. First of all, you really want to — don’t underestimate your drive. And secondly, remember that you were well on your way to doing so in your 20s, the first time you got into — and out of — trouble with this pattern of behavior. I know your parents meant well when they gifted you that $5,000 to pay off the remaining half of your debt (and I certainly don’t blame you for taking it), but I also think it was an awful thing for them to do. Scrimping your way through the rest of those bills would have been a drag, but crossing the finish line on your own two feet would have been a invaluable lesson in self-efficacy — the belief that you’re capable of learning something new and hard, which is a crucial ingredient in financial well-being. Your parents robbed you of that chance, and basically taught you not to bother trying.
Still, you did get halfway. The competency is there. And you also learned what tools worked: A therapist and a plan. Can you go back to your previous therapist, or find someone who specializes in money issues and can help you find healthier coping mechanisms than shopping? (You could try the national database of financial therapists, here.)
I know it’s frustrating to feel like you’re relapsing, but you’re not starting over — and you should ditch that black-and-white mentality, anyway. When I brought your case to Megan McCoy, a family therapist and adjunct faculty member at the financial therapy program at Kansas State University, she recommended more attention to nuance: “You seem to have an all-or-nothing mindset, where things are either a success or a disaster,” she says. “You need to see every micro-step as financially healthy, rather than thinking you have to fix everything at once, or be able to afford all the same things as your parents.”
McCoy also noted that, in the grand scheme, your debt is not that bad: Of Americans who hold credit card debt, the average amount is $15,482 — not much less than yours. What you owe is not small potatoes, but there are ways to do pay it down strategically (see here), especially if your credit score is decent and you don’t have to worry about rent. (And yes, concentrate on getting rid of your consumer debt before you set your sights on moving into your own place.)
Which brings us to the deeper, stickier problem of extricating yourself from your parents’ economic sphere. There’s no way to sugarcoat this: You will have to cut your spending. If you’ve lived your whole life in your parents’ world, shopping at Nordstrom and going to fancy schools because it’s expected of you, then this transition will take time, training, and more than a few sad moments of saying no even when you really, really want to say yes. Your parents might not be too keen on your pared-back lifestyle either, no matter how much they want to support you. Based on your priority of keeping up appearances, I’m guessing your family likes to project success. And sometimes that’s fine! Presenting yourself as the person you want to be can be a powerful and positive thing. But if you don’t feel good enough unless your life’s trappings meet certain exacting standards — and those standards happen to be expensive — then you’ll remain stuck where you are today: living beyond your means just to seem like you’re not falling apart. And as you already know, that’s a losing battle.
The word “codependency” gets thrown around a lot these days, but have you ever considered that your parents are enabling your spending habits (providing a place to live, paying for additional degrees, paying off your debt, etc.) because they need to be needed by you? “I have a lot of clients in their 60s, 70s, and 80s who have dependent children, and it’s very clear to me that the parents are setting up this dependency so that they can feel necessary, even if it’s subconscious,” says Georgia Lee Hussey, a certified financial planner and the CEO of Modernist Financial. “It’s easy to blame the children — and for the children to blame themselves — but it’s the parents who never made boundaries with their children, or have created a story where the children can’t be financially independent.” The only way out of this is to see through it. “I don’t think this is about getting a budget. This is about having an awareness of one’s own psychology,” says Hussey. “If you try to change or control your behavior without understanding why it’s happening, it won’t work.” But if you get more clarity on the function of money in your relationship with your parents, then you won’t feel so helpless.
McCoy occasionally does an exercise with her patients where she takes a photo of them and then uses aging software to help them visualize their older selves in five, ten, or 20 years and beyond. Hussey uses a similar tactic with with her clients where she asks them to describe who they want to be at different future ages. She also encourages intergenerational friendships. “If you have friends in their 50s and older — genuine friends, not just people who your parents hang out with — you’ll find that they deal with plenty of the same confusion and uncertainty that you do,” she says. “Nobody ever has their act together completely, but sometimes people panic when they think they aren’t where they’re supposed to be by a certain age, and older friends can give you more perspective.”
Speaking of which: You mentioned that you “might die” if you’re still living with your parents at 40. So, where do you want to live instead? What will your bedroom look like? What will you have for breakfast there every morning? How much will it cost? Be specific. You’re so focused on the ways you’ve messed up that you’re losing sight of what you actually want to do.
Also, be realistic. Getting a handle on your spending habits and paying off your credit-card debt are excellent two- to five-year goals, followed by moving out of your parents’ place. However, your student debt might be more of a ten- or 20-year project. As for your career: I think you should take that full-time job, and commit yourself to it. There’s nothing wrong with cutting back on your business for a while, or shelving it entirely — pressing pause doesn’t discount the work and passion you’ve put into it so far. What’s more, there’s no point in “following your dreams” of entrepreneurship if it makes your life unbearably chaotic. You are in charge of deciding what your dreams are, and tweaking them when you need or want to. “Having a vision is important, and having a plan is important, but adapting as you move toward that vision is what will make or break you,” says Hussey. “That’s where the real work is.”