Fabulous Financial Advice for College Grads

                                       

There over 1 million college graduates every year.  According to degreecentral.com, the number of college student bankruptcies filed each year is 9,300 and the average college student’s debt after graduating is $23,700.
 

Many college graduates are stressed due to difficulty paying back debt, finding a job or finding a full-time job.  The longer it takes to find a job the longer it takes to pay back any debt owed. Your potential salary earnings are directly proportional to your ability to pay back college debt and live a comfortable lifestyle.  Here are some financial tips for recent college graduates to improve your financial outlook.

Housing

1. Stay at home for at least a year after graduation. If you have to live on your own buy efficiency, studio apartment or loft, rent a room or get a roommate.  Unfortunately you have no control over whether your roommate will pay their rent or pay it on time.
2. Your housing costs should be no more than 35% of your total net income (after taxes).

Auto

1. Skip buying car your first year of employment.  Catch public transportation; borrow your parents’ car or a friend’s car when needed.  If you must buy a car buy a used car.

Student Loans

1. Use caution with consolidation. Consolidating student loans combines your loans into one payment but may or may not provide you with a lower interest rate. You may not be eligible for various student loan forgiveness programs if you consolidate.
2. Your loan accrues the greatest interest in the first 2-3 years of the loan so pay more than the monthly payment.

Financial Planning

1. Start with your company's 401K. Contribute as much as you can to your retirement account. You will need at least 70-80% of your income during retirement and will need a minimum of $1,000,000 to retire.
2. Use a broker or financial advisor to help you setup your retirement account.
3. Buy health, life, disability insurance.
4. Create a will.

Spending/Budgeting

1. Create a budget and make it flexible to accommodate for unexpected expenses and include savings goals.  Include monthly expenses and debt plus your monthly income. Create an emergency fund that is enough to pay your monthly bills and expenses for at least 9 to 12 months. 
2. Reduce your credit card debt.  Pay more than the minimum monthly payment.
3. Reduce spending by 30-50% each month to help pay down debt.
4. Comparison Shop. Consider quality of the product, price, warranty, and compare with stores or websites.

Managing Credit Card Debt

1. Order a copy of your credit reports at annualcreditreport.com and fix any errors.
2. Get current on any delinquent accounts.
3. Don't spend money you don't have. Use your credit card for emergencies only.
4. Setup a payment plan with each of your creditors to pay off your debts.
5. Request a financial hardship if you cannot afford to send the minimum monthly payment.
6. Avoid filing for bankruptcy.
7. Setup a debt payoff plan to prioritize your bills.  Start by paying off the smallest bills first, then use the money paid towards a previous bill and apply it to the next bill and continue this process until all your debts are paid.
8. Pay more than minimum monthly payment. Try to send extra towards your balance each month.