On graduation day, I had a fancy cap, a pretty degree bearing my name, no hint of a full-time job, a summer internship, and $532 to my name.
Scary right? Terrifying.
If you’re in this place right now, take a breath. You’re not alone. Not by a long shot. Newsweek reported in June 2015 that 13.8% of 18-29 year-old adults are unemployed, which is a far cry from the overall unemployment rate of 5.4%.
Let’s talk about what to do.
The best action you can take is to get your full financial picture and create a budget. If you need more guidance on this topic, make sure you’re signed up for our mailing list for future posts on this topic.
Once you know what you owe, what you spend, and what you make, you can get your game plan in place and set some goals. If you have modified your budget and you still can’t make the income greater than the expenses, I would encourage you to immediately find another income stream.
For me, I worked two, sometimes three jobs, even after I had secured a good paying full-time job. I’d encourage you to do the same – even if it’s a only a few extra hours a week. It’s not easy, but it’s worth it.
Be creative. Find something that won’t drain you. For me, I tried refereeing youth basketball games, coaching a high school golf team, and selling drinks on a local golf course beverage cart. Some are more profitable than others.
Maybe you’re more resourceful than I. Your side income stream could look like freelance design work because your degree is in graphic design. Or maybe you babysit for the same family every Friday night to create consistent income. If you’re really motivated, you’ll create an online presence and sell something worth value: like a book, eBook, course, or blog.
Now, having your budget defined, tracking your income and expenses, and identifying new income streams are the best actions to take to get control of your new found adulthood.
#Justbeinghonest – Making extra income to pay down debt is awesome except if you spend your money on stupid things.
Here are a couple of the biggest spending mistakes you can make as a new graduate with debt.
Buying a car on credit.
There are some exceptions to this, but so often I see young adults get their first full time job out of college and they decide to go buy that shiny new (insert fancy car here), even though they are thousands of dollars in debt.
If you can take public transportation or share a car – that’s the best option.
If not, find the most reliable and affordable car you can. Hear me: I once bought a car for $1,000 and it only lasted a year. Terrible investment. Find a car you can pay cash for that will last you at least 6-7 years.
Cars are a depreciating asset (translation – it loses value every year you own it). New cars are the worst depreciating asset because they lose 11% of their value as soon as you drive it home from the dealership. Don’t get me started on a car lease – just say no.
If you have no other choice but to buy a car on credit, negotiate your interest rate and buy a used car. Don’t take the first rate the dealer offers you. If they won’t give you a lower rate, walk away. Contact local banks and credit unions to find out what interest rate they could give you on a personal loan to buy the car. This could save you hundreds, if not thousands. Find more tips for purchasing a car here.
Making unwise housing decisions.
This one is abstract because unwise is different for every person. Millennials are bashed for moving back in with their parents after college, but I actually encourage others to do so if they are intentional about taking the amount they save in rent or mortgage and apply it to debt. It’s one of the quickest ways to free up cash to tackle your loans.
If you’re fresh out of college, get used to adulthood before buying a house. A big mistake millennials make when buying a house is to buy more house than they need or more house than they can afford.
Hear me!! When you go to the bank to get pre-approved for a home loan, they WILL try to pre-approve you for the largest number they can. Ignore them! Decide before you go to the bank the maximum amount you can afford to pay and stick to that amount.
If you’re married, I always advise to buy your house as if you only had one income. You could lose your job tomorrow. The last thing you want is a hefty mortgage payment due when you are not bringing in any cash. Avoid the temptation to buy more than you need.
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