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BillSavings.com BlogThings I Wish I Had known When I GraduatedPosted By Sarah
BillSavings.com Brief:
It's a great time for grads to celebrate their college accomplishments. However, each ending is a new beginning. Take some time now to also plan out a strong beginning to your financial life.
This is the time when those of us with more life experience feel the urge to share our mistakes and learnings with the younger folks in the hopes that we can help you avoid doing the same wrong things, and do some of the right things. I know it's a futile exercise because everybody has to find her own way, but indulge me. You need to make more than the minimum payment on your credit cards. If you're like the average college grad, you owe about $3,000 in credit card debt. I felt invincible and optimistic about my future earnings growth when I graduated. That led me to spend more than I made at times (for an expensive European vacation or other fun thing) and carry a balance on my credit cards because I believed I could more easily pay it off in the future. Instead, I was stuck with thousands in credit card debt that was very difficult to pay off and cost me hundreds extra in interest fees. You can negotiate your credit card debt and payments: Visit msnbc.com for Breaking News, World News, and News about the Economy Credit card debt can become a snowball that gains size and power as it rolls down the hill and creates an avalanche in your financial life. Learn from some folks who are in way over their heads and should have known better. This woman is $60,000 in debt and says she has nothing to show for it. Another couple is $80,000 in debt with a new motor home and other purchases. Your credit score trumps your SAT score. It's not what you know, it's what you do with what you know that counts. In the real world, how you've handled your finances, reflected in your credit report and score, will determine your interest rate for a mortgage, credit cards or student loans, and even your ability to rent an apartment or get a job. Yes, they do check your credit as part of applications for these things. Saving money is a road to freedom. By spending less money than you earn and keeping it in savings, you can handle unexpected emergencies and also take advantage of great opportunities when they come along. It's a great feeling to have enough money in the bank to be able at any time to tell your boss to "take this job and shove it." Compound interest is highly underrated. If you calculate the value of regular savings deposits with simple compound interest, you will be amazed at how your money can grow in little increments over time. It's not a sexy, hot stock to invest in, but you can sleep well at night and smile at your money savvy. The stock market is a form of legalized gambling. If you own individual stocks you are entering a risky business and you need to understand the game before you accept the risk and potential rewards. The stock market is driven by things many that you can't control: investor emotions, information that you don't have access to, and economic trends that influence all companies, good and bad. Knowing what you own in your 401(k) and the associated costs, and risk implications is just as important as opening one. When I started my first job, I signed up for my company's 401(k) and that was a great idea. However, I elected to put all of my contributions into my company's stock and "aggressive" investment options. My company's stock took a dive, and I later realized I was putting my retirement money into mutual funds with outrageously high fees. You can save money on almost everything. Now that I've had the chance to know some self-made multimillionaires, I've seen that these people are often considered "cheapskates" by their peers. Rather than always throwing around money and buying the best and most expensive stuff, they are value shoppers and very frugal. There are lots of ways to save money — you can find lots of tips and ideas on BillSavings.com and by doing research online. For example, there are more than 60 tax credits and deductions for things ranging from going to graduate school to paying off your student loans to putting solar panels on your house. It's fashionable to be frugal in these tough economic times, and it can also be fun if you make a game out of seeing how cheap you can live. Category: Credit Cards 6/23/2009
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