3 Pieces of Advice for 20-Something College Grads

Exuberant and Woefully Naive

Congratulations, you have earned a college degree and landed that first job.  Now what?  For starters, don't screw it up.

The author has three pieces of advice to help you 'not screw it up'.

1. Get a room mate
2. Don't take on new debt
3. Stop buying things you cannot afford

"Get a room mate? Why on Earth would I do that!?" you say.  Money.  A simple fact of life is that feeding and providing shelter for one person is quite expensive, but doing these things for a second person under the same roof does not add as much cost as the first person.  If a one bedroom apartment costs $700, and a two bedroom apartment with twice the square footage costs $1100 - then living with someone else and splitting the rent saves you $150 a month.  Remember that two bedroom apartments typically have larger common areas such as bathrooms, kitchens and living rooms.  But who should you move in with is a topic the author wouldn't touch with a 10-foot pole, you need to figure that out for yourself be it a: coworker, girlfriend, wife or friend.

Lenders See You as Prey

Don't take on new debt, that sounds easy - it isn't.  Upon graduation you are now considered prey by lenders, sales men and credit card companies.  Salesmen see you as a recurring stream of payments into their company, nothing else.  There is a seemingly endless flow of 'free money', but it isn't free.  Buying a new car turns into a $400/month payment until you're thirty years old.

Money isn't given away for free, everything that is purchased on credit is saddling you with a new monthly payment that isn't going away.  Key point: don't take on new debt and put your money into paying off student loans.

The third piece of advice is to stop buying things you cannot afford.  What does this mean in practice, you ask?  It is simple, if you cannot afford to buy it in cash, today, don't buy it.  Purchasing things on credit is selling your future to be happy today.  Cut up those credit cards as they are not needed to purchase things that you can afford.  If you are down to your last $300 but want to purchase a new 70" 3D television - you cannot afford it.  If eating out to the tune of $20/night ($140/week - $560month) is going to make it hard to pay the rent, stop eating out.

The Average American has $15,216 in Credit Card Debt

Back to the big picture, how will these 3 pieces of advice help you out?  Imagine this, it is your 30th birthday and you are debt free; Student loans are paid off and you have a big savings account ready to purchase the home of your dreams.  Now, think of the flip side: You have a six-year-old car with $400/month payments, $50,000 in debt with student loans and credit card bills and struggling to pay the rent.  Which sounds better?  You decide.

-Axle