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.

15 Essential Money Tips for College Grads

Congratulations! You graduated from college and received your degree. Graduating college is a huge accomplishment because many drop out before finishing. Now you have to face reality and face the real world.  First, get a job. The unemployment rate for college grads in 2012 was 6.3%.  Monster.com has a special section on its website for recent college graduates to help them find jobs. USAjobs.com has federal job listings by college major.  

Another factor college graduates have to worry about is the debt accumulated while in school.  If you are unable to find a job, you are also unable to pay your debt.  When you find a job focus on paying down debt.  The average starting salary for college grads has decreased over the years which makes it even more important that college grads effectively manage their money. 

If you are unemployed and have federal student loans sign up for unemployment deferment which will pay the interest on your student loans until you become employed.  When you become employed you can setup graduated payments based on your income for federal student loans. 

Figure out what to do with your money but don't spend it all.  Forty-percent of Americans live paycheck to paycheck and 70% of Americans live above their means. It can be tempting to buy everything you want and spend your money on everything you see but slow down and pace yourself.  Here are 15 essential money tips for recent college grads.

1. Pay with cash. Pay for purchases with cash. If you pay for an item with a credit card you end up paying 2-3 times the original cost of the item due to interest and finances charges if you don’t pay the balance at the end of the month.
2. Debt. Setup a debt payoff plan to prioritize your debt.  Get current on past due bills 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. Send extra towards your balance each month by sending a payment with each paycheck.
3. Retirement. Sign up for your company's retirement plan as soon as you are hired for your first job. Do research to see what plan has the best options to help you achieve your retirement goals. Also consider setting up your own IRA.  You have to be willing to leave your money untouched for the next 5 to 10 years; otherwise you won't be able to see the benefits of your money growing.
4. Buy insurance. Buy health, life and disability insurance. Many Americans go into debt due to medical bills and lack of insurance. Disability insurance will help if you get sick while working and will ensure you can still pay your bills during recovery. Life insurance is helpful if you have your own place and have debt, especially if you parents have co-signed for a loan or credit card.
5. Student Loans. Start now paying back student loans. The greatest interest accrues during the first 3 years of your loan so pay as much as you can on your loans during that time.  Consider using student loan forgiveness programs at finaid.org.
6. Budget. Create a spending plan or budget to track spending and manage your money. Reduce spending by 30%. Create an emergency fund that is enough savings to pay your bills and monthly expenses for at least 9 to 12 months.   
7. Clothing. Share clothes with friends who wear the same size. Shop at outlet stores, discount stores, consignment or thrift stores.    
8. Shopping. Don't spend money you don't have. Shop at discount stores.  Buy generic versus name brands.  Use coupons, rewards cards and buy items on sale as you need them. Create a shopping list and spending limit and stick to it.
9. Decorations. Don’t buy everything at once. Buy furniture and decorations for your home or apartment in stages.  Shop at discount or wholesale stores.
10. Save.  Save on a regular basis. Save at least five dollars a week if you make a modest income.
11. Food.  Prepare low cost meals that are easy to fix are: tuna fish and crackers, soups, casseroles, stews, stir-fry, meatless meals, and cold or hot sandwiches. Take your lunch to work and eat breakfast at home. Eating out adds up quickly.
12. Housing. Stay at home for at least a year after graduation. If you have to live on your own buy an efficiency or studio apartment, loft or rent a room.  You can get a roommate but you have no control over whether they pay their rent or pay on time. Your housing costs should be no more than 35% of your total net income after taxes.
13. Skip the car.  Don’t buy a car your first year of employment.  Catch public transportation or borrow your parents’ car or a friend’s car when needed.  If you must buy a car buy a used car. Consider car sharing services such as Zip Car, Uber, Supershuttle or SideCar.
14. Credit. Order a copy of your credit reports at annualcreditreport.com once a year and fix any errors on your credit report. Dispute errors online or by postal mail with supporting documentation.
15. Career.  If you have bad credit disclose that information during the interview or on your job application. Find the most senior person in your office and learn everything they know. Take employer offered classes. Keep your skills up-to-date. Volunteer for additional work or large projects. Volunteer to work overtime, late hours or on the weekends. Don’t be afraid to ask for a raise. Join a professional organization or attend networking events.