As we round the corner into spring quarter and enter into the final stretch before summer, pants will turn into shorts and dresses, and sweaters will turn into shirts and tank-tops. This is good news. But even better news is that some of you will finally graduate at the end of the quarter and bestow upon the world your skills: nunchaku skills, bow hunting skills and maybe even computer hacking skills. Remember, girls only want boyfriends who have great skills.
As you jump headfirst into our plentiful job market, that student loan and/or check from Mom and Dad will turn into a hard-earned paycheck, written in your own sweat and blood. And while there is nothing like a hard earned paycheck — minus taxes — unfortunately, your sweat and blood is probably not valuable enough to write you a six-figure annual income, at least not yet.
You have lived like a college student for the past four or five years. Now you are going to have to learn to live like a recently graduated college student. While this can mean upgrading some of the things in your life, such as moving up from Vons-brand vodka to Smirnoff, other things are going to require your continued ingenuity and self-control.
Your entry-level engineer, planner or scientist salary is not going to afford you the lifestyle of middle management. However, there are choices you can make to ensure some stability and security as you start making your way. You have worked hard to arrive at the bottom of the totem pole. In a few years, you will be raking it in. In the meantime, here are a few ideas for you — the recent college graduate — to consider as you enter into the cold and cruel world of reality.
Student Loans. It is time to pay the piper. You will want to choose a repayment plan that works for you in the long run. Understand how much you will make now and in the future, and choose a plan that causes the least amount of hardship. Also, understand there are several loan forgiveness programs out there, such as a public service program, which will erase loan balances after a period of time. Seeking the help of a professional adviser to assist making these decisions is important and time well spent.
Credit Cards. Knowing or learning how to use a credit card can be beneficial in many ways. Of course, credit cards are quick and easy to use, but they also protect from fraudulent charges, and most credit cards will insure certain items purchased. Also, always repaying your credit balance on time and in full will help to raise your credit score.
Credit cards can also help to track what you are spending hard-earned money on, and if you get a rewards card, you might even end up with a free flight or hotel stay at the end of the year. Being a big boy or girl means knowing how to use plastic and make it work for you.
Budget. Use those Excel skills you have mastered to create an itemized calendar (monthly) budget. Wrack your brain and categorize everywhere your money goes. Next, calculate how much money you take home every month after a contribution to a retirement plan and taxes. Then, make sure the net between those two is positive, or figure out what you need to cut to create a positive balance. Finally, after allowing a slight buffer — for your savings account at the end of the month — the hard part begins. Monitoring yourself and staying within that budget is where most fail.
Housing. Wherever you end up, check in with the regional or local housing authority, and apply for moderate income or workforce housing. The housing authority will give options when it comes to voucher- and tenant-based affordable housing; housing that is subsidized by tax dollars. And no, it will not be some “housing project,” rather, many newer apartment complexes are now required to set aside units for low- to moderate-income and workforce tenants. It is worth a shot. If the waitlist is long, or you do not qualify due to a criminal history, you have probably survived the past few years with roommates and can handle a few more. The money saved, and freedom earned by not going back to live with your parents, will be worth it.
Food. Just like going back to the third grade with a My Little Pony lunchbox, brown bag a lunch to work. Throwing down $10 every afternoon for Macho Combo burritos can add up. Invest in a Costco card, buy in bulk and prepare your meals for the week on a Sunday evening.
Bills. Pay them in full, and on time. This includes such things as your cell, Internet, gas, electric, water and trash bills. Just like paying your credit card balance off on time every month, doing so will save you on any interest or late charges.
Television. Cut your cable. Killing your television will do wonders to your life. If you need to watch a sporting event, go to a bar. If you need to watch a movie or television series, register for a DVD delivery service. All of this is much cheaper than sticking with cable.
Transportation. This is where you are just going to have to nut up and hop on the bus or light-rail. The benefits of a $60, monthly transit pass against driving are too numerous to list. As a large number of those graduating will end up in urban areas with a semi-functional transit system, you will be in luck. Sure, keep your car for fun, but during the week, throw on your headphones, grab a book or magazine and enjoy the sights and sounds of public transportation.
Banking. Some banks still offer some form of a free checking and/or savings account. For instance, Wells Fargo offers a free checking account if you agree to automatically transfer $75 monthly from a checking to savings account. This only creates a slight inconvenience in making sure that you have at least $75 every month to transfer, and the minute it takes to go online and transfer that money back over to your checking account. The banks are making money off your money, if a bank is charging to hold onto money, choose a new one. A credit union is a great option to switch to if you have not already done so, and many credit unions offer free checking accounts.
Health Insurance. As a healthy, non-geriatric, non-smoking, non-preexisting condition 20-something, believe it or not, you can still get a decent price on an individual health insurance plan. Some companies will also pay a sum of money if you opt out of their group plan. Weigh the cost and benefits of dropping off your employer’s plan against going it alone. You might end up with a few extra dollars by doing so.
Other Insurance. On the topic of insurance, you will also probably be insuring your car and rental unit. Shop around for the best deal. You might be surprised how much you save by switching to a new insurer. In addition, since you are taking public transportation, consider insuring your car as a “pleasure” vehicle to lower the rate you pay. Also, you should now qualify for a rate discount as a college graduate.
None of these ideas should put too much of a strain on you or create a dramatic lifestyle change. With less than three months before summer, consider slowly incorporating these ideas into budgeting efforts.