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Cashing In
$towing money isn't as difficult as it $ounds.
By Barry
Schultz
Reality
Bytes
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Photo by Barry Schultz |
Knowing what you have to pay for can leave money left over for what you want to buy. |
College graduation has come
and gone, and the real world has hit like a freight train. Between
the credit card that got maxed out in the undergraduate years,
and the new car sitting in the parking lot, money has disappeared
quickly. Life has begun anew for the college graduate and
times ahead may look difficult.
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With the fun years a distant memory, the time has come to buckle down and make the appropriate adjustments for a brand new lifestyle. You can no longer survive on beer and leftover Chinese food. It's not as easy to bum rides to work or to parties. The risks are higher, but the rewards are greater. While the temptations of new clothes, a new apartment, and a new image are tempting, it is important to fight them off and structure a budgeting system. The first, and possibly easiest way to keep the dollar signs out of the red is to avoid credit cards if possible. According to www.collegecreditcounseling.com, 95 percent of graduate students have credit cards as of the year 2000. Of that percentage, the average graduate has four credit cards, and an average debt of over $4,000. Twenty percent of graduate students are in debt between $6,000 and $15,000. Six percent of graduates in debt over $15,000.
Collectively, only 1 percent of graduates have no credit history, and 4 percent of graduates have some sort of credit history, but no credit cards. While they seem to have appeared instantaneously during college, credit cards can eat up a person's paycheck. There is an advantage to having credit cards, but for those already in debt, it should still be avoided. Several experts have recommended having credit cards available for emergency situations. Art Rosen, a certified public accountant and certified financial planner in Manalapan, N.J., suggests having one credit card solely for emergency situations. It should not be used for everyday purchases, he advises. |
"If you're driving, and all of a sudden your car breaks down on the side of the road, a credit card can help you out because you may not have cash for a tow truck or repairs," says Rosen. Outside of this sort of emergency, a credit card should not be used for buying extras, such as CDs, DVDs, or clothes, especially if money is already tight. The second hint to a positive bank balance is to plan ahead. Look at the expenses that have already accumulated, and look at those that have yet to arrive. Decide whether or not there is enough available funding to pay off the bills, and then see if dining out is still a plausible option. Rosen emphasizes that one of the financial problems facing the recent crop of graduates, is that they have never been financially responsible, and as such, cannot properly handle money or balance books. He says, "College students have never been fiscally responsible for anything. They're becoming responsible without the experience. Students don't sit down and plan for the future. They plan maybe as far as next Friday, rather than next month or next year. They don't realize how fast debt can add up, and in a bad economy, that can be dangerous."
It's a good idea to learn planning skills early on, says Christy Watkins, a mortgage loan officer at the Indiana University Credit Union. "Parents need to teach their children good budgeting skills. If a parent explains to a child that money doesn't grow on trees, and that you have to work for money, the child might get the sense of what a dollar can buy. If the child learns budgeting skills, he can pass them along to his children as well.". |
This brings up another of the key points to financial freedom. Learn how to save money, and learn early. Many graduates are paying back debt that they aren't even presented with the opportunity to try and save something. If debt is a problem within the realm of solution, take care of it and then begin saving money from each paycheck. In a poor economic state, salaries aren't necessarily as high as imagined so don't spend every cent that gets earned. Put some away for emergencies. Brian Friedman of the IU class of 1995 says it's important to save something. "I knew that right after graduation I would have to realize my expenses. You realize what your paycheck actually is, and your goals change. The biggest hurdle is that first year of living on your own. After the first year you can really just tweak how you want to live," he said. Friedman speaks from years of experience. After college, he gave up his car, moved into a small apartment with a roommate, and managed to find low cost or free ways to date. Through it all, he continued to put money aside, and now lives in his own apartment with his family in Manhattan. |
The suggestions from both professionals and those who have "been there" are few and simple:
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If the thought
of being 40 and broke makes you cringe, check out www.youngmoney.com.
Make money and keep it while you're still, well, young.
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How do you hold
on to your dollars? Email Reality
Bytes with suggestions.
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