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Advice For Recent GradsJun 28 '00 Write an essay on this topic.So now you’ve graduated … now what?! You are tens of thousands of dollars in debt or more. You don’t have a job. How will you get out of debt? How will you get your new life on track? Well, I found myself in this position many years ago. The day after graduation, I was overwhelmed to discover that I didn’t have a job or a place to live. My savings account was dwindling. I received a liberal arts degree that prepared me for graduate school only. My prospects for employment, due to the horrid state of the economy in 1992, were bleak. I collected myself and got about the business of officially being in the real world and being an adult living on my own. Employment and Housing I signed up with several temporary employment agencies in the area. Within a week, I landed an assignment that paid a little over $10/hour and last for over 3 months. Employment was secured. I used the university housing board to locate an apartment. I moved into a house with several other recent graduates where I had my own room. Housing found! My rent was less than $450 a month for a nice room in a house. I brought my college furniture, but everything else (like pots and pans) was already supplied by my roomies who didn’t mind sharing. I had a steady stream of income and a place to live. I was on my way! Real World v. College Life What I soon discovered was that I was ill prepared to truly begin my life. I had grown accustomed to many things being done for me – the grocery shopping and cooking to begin with. I was accustomed to cleaning up after myself (a rarity for many college students) and working while taking classes. What I was not prepared for was the cost of living on my own. I had a job and could afford my new lifestyle, but I quickly found that my money would be gone only a few days after I was paid. I was buying relatively expensive lunches everyday and eating dinner out at Chili’s, Pizza Hut, Friday’s, etc. I was going shopping every week and buying CDs and other things I did not need. My credit card bills were out of control. Worse yet, my student loans were coming due in six months. What could I do to get my finances in control?! Getting in Control The first thing I did was to create a budget. I made a chart in Excel to document my expenses and my income. I kept track of every dime I spent and every dime I earned. What I soon discovered was that most of my income was going to buy things I didn’t need. After keeping track of these expenses for one month, I was able to trim the fat. I started taking my lunch to work. I started making my own dinners. I started buying used CDs when I bought them at all. I stopped going shopping unless it was for something I really needed. When I bought food and other items, I used coupons and looked for sales. Credit Card Debt As for my credit card debt, I looked at my interest rates and discovered that I was being shafted, like most students. I called each company and asked that they lower my rates. To my great surprise, they all complied. Once the interest rates were significantly lowered, I began to make a dent in the principal, instead of just paying interest. I stopped making the minimum payment and started paying off as much as I could afford each month. If I had paid the $20/month suggested by the companies, I would still be paying off that debt now that I am in law school. Furthermore, I found credit card companies with those teaser rates. I took them up on the offers and transferred my debts. With my interest payments at a minimum, I was able to pay off my debt within a few years. Three years after graduating, I had my credit card debt in control. I had been offered every kind of card imaginable while a college student. When I graduated, I had six cards. By the time I got my debt under control, I only had two – a Visa and an American Express. I learned quickly to never accept store cards. The interest rates are at least 18% and they are usually non-negotiable. My advice about credit cards, resist them. They are tools to get you ensnared in debt and to control you for the rest of your life. Student Loans Then came my student loans. I took that debt very seriously. I refused to ever make a payment late. I doubled up on my payments and was able to get this paid off in four years. The loan officials had suggested I pay the minimum which would have kept me paying off that debt for 10 years, most of that being interest. Say no to that! In ten years, my debt would have almost doubled, just from interest alone. First Jobs I was able to do all of this because I was able to get good job assignments through the temp agencies I signed up with. I recommend that recent grads without meaningful job prospects look to temp agencies and your school’s alumni connections for your first jobs. Also, working on campus is a good idea. You will work with people who can provide great references and who always know of other opportunities or the people who do. Though these jobs may not pay what you think you’re worth, they do provide a good starting point to gain skills to increase your future salaries. Saving Money Also, saving money is of great importance at this time in your life. Try to put away in a savings account at least $20 a week or $50 a month. Nothing is too little. After you have a few hundred dollars, try to open a mutual fund account or something similar. If you get a job with a 401K, use it. One of my first jobs had an excellent 401K plan that matched employee contributions by 50% and fully vested (I could now claim their matching funds) within one year. I worked there for over 2 years and I left with over $10,000 as a result! This is no joke! Use it while you can and take full advantage of it. In conclusion, after the shock wears off, get your behind in gear. Get a decent job, something to help you pay your bills. Put away the credit cards. The less you use those, the better. American’s credit card debt is frightening. If you must use your credit cars, don’t just pay the minimum, unless you can only afford to do that. Pay off as much as you can as quickly as you can. Avoid any additional debt if you can. Never use your credit cards to pay your bills. Next, save as much as you can. Start with a little and increase it was you can. Never say that you’ll begin saving once all your debt is paid off. You won’t. Do it as soon as you can and a little thing called compound interest will make it worth your while. If you don’t like risk, use a savings account (at a credit union vs. a traditional bank) or a certificate of deposit. The most important thing to remember is that you can’t have it all right now. Take your time and it will come. If buying something right now will put you in debt, wait until you can afford to buy it without the added strain of debt. Also, follow your parents’ commonsense advice. Learn to do things for yourself, like cooking and cleaning and laundry. These little expenses quickly add up. And my best advice, enjoy life and take it slowly. Take advantage of freebies, coupons, sales, clearance, etc. These can all be found on the web! Do these things and you will be out of debt and enjoying your life in no time!  |
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