Tips For A Debt Burdened New Graduate

dollahMany new college graduates are starting their new lives burdened with a mountain of debt, especially student loans.  To avoid financial pitfalls going forward you need to get a handle on your finances and start planning for future financial security.  Debt can very quickly and easily get out of hand unless you take steps to rein it in.

First you need to embrace a nasty word “budget”.  Some people are immediately turned off just by the term budget so it may be easier to think of it as your spending plan.

To set up your spending plan you need to list all of your fixed monthly expenses such as rent, car and student loan payments, insurances, etc  Subtract this figure from your net monthly income.

Then you want to determine how much is available for discretionary spending  like groceries, clothing and entertainment.  To reach a realistic figure it may be a good idea to track your spending over a period of time.  It is likely you will have to do some soul searching in order to cut down on these discretionary expenses to fit into your income.  For expenses which are fixed but only paid quarterly or semi-annually be sure you put aside funds each month to accumulate so they are available when these expenses are due to be paid.

Even though your funds are probably tight now is a good time to learn to save regularly from each and every paycheck.  Even if the amount you save is minimal it will establish a habit of saving.

Now that you have finished college it is important to carry your own insurances and that should include health insurance, car insurance and renter insurance (if you rent a home).  You never know when the unexpected emergency can happen.

Speaking of emergencies it is important to strive to build some emergency savings to cover unexpected expenses (this is in addition to your basic regular savings) so you do not have to resort to credit cards with their high interest rates.

If you have credit card debt try to pay those down and once this is done then only charge what you can pay off each month.  You need to pay your credit obligations on time each month even if you make only minimum required payments.  Making a late payment  can have a big negative effect on your credit score points.  A low credit score may cause you to not be able to rent an apartment or buy a car and can hinder your employment opportunities.

Of course, the most important issue for the new graduate is to be employed.  No financial strategy can be workable if you don’t have income.  If you haven’t been successful in finding employment you might want to try working for a temp service or perhaps workings as an intern.  In many cases both of these avenues have been known to lead to the offer of full time employment.