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Apr 9, 2007

Life After College

How many times have you said to your friends, “I can’t wait to be able to afford all those things we can’t afford now”? The prospect of earning a “real” salary, buying a new car, and getting a new wardrobe is really exciting, but don’t forget that this new lifestyle is also going to include having to pay bills at the end of each month.

Once again, having a plan in place will help you deal with the new financial challenges you’re about to face. This time the plan is called a budget. It’s not easy to anticipate all the expenses your salary will have to cover, so putting the data on paper will help you see where your money goes. Here are some things to consider.

Credit Card Debt
Banks make getting credit cards easy. Credit cards make spending easy. But sometimes easy is not so good. Credit card companies market extensively to recent graduates because there is a great deal of money to be made in that market: Interest rates vary from card to card and may range anywhere from 10 to 20 percent yearly. It’s very easy for a new graduate to get caught in the credit card trap.

Before you accept or use your new credit card, make sure you carefully read and understand the fine print and can pay at least the monthly minimum balance. If at all possible, pay off your credit card debt as soon as possible. If you have a savings account or have received money as a graduation gift, you should consider paying off your credit card bills before you take that expensive trip you’ve been dreaming about. “Pay now, buy later” is a good rule of thumb at a time when your income is limited.

Repaying Student Loans
Most students are troubled by the prospect of repaying their student loans. They’re not sure of the who, what, when, and where of the system. Here are a few things to remember:

* All students who took out loans and signed promissory notes during their undergraduate study now have a legal obligation to repay that amount and any interest associated with that loan.
* Know the addresses and phone numbers of all your lending agencies.
* Know all of the loan repayment options that are available to you, such as loan consolidation, standard repayment, and graduated repayment. Choose the option that will best fall within the limits of your budget.
* A deferment is postponing the repayment of a student loan. As a borrower, you have a legal right to exercise this option if circumstances merit.
* Forbearance options are also available, where the lender agrees to extend your payment schedule to avoid a default situation. Contact your lender immediately if you are having problems with your repayment schedule. On certain occasions, lenders may be willing to temporarily change your repayment schedule.

A word of caution is needed here about credit ratings. Anytime you are late with a payment, whether it be a credit card payment, car loan payment, telephone bill, or rent, it most likely will be reported to a credit bureau. This bureau will be contacted when you try to get a mortgage or want to borrow money to make any kind of sizeable purchase. It’s very important to remember that your buying and spending habits now may have major repercussions in the future.

Buying a Car
Making any major purchase requires lots of research before the transaction is completed. The process of buying a car is time consuming and takes lots of patience.

The first step is to decide whether you want a new or used car. More and more people are buying used cars, since the initial cost of buying a used car is usually a good deal lower than the purchase of a new car.

Then, you should spend time prioritizing the extras you want. Can you really afford a sunroof or that stereo system that has spectacular sound? It’s true that such items will increase the resale value of your car, but they will also increase the purchase price.

Know the cost of insurance for the car before you buy a new car. Investigate several insurance companies and learn what services they provide, how much deductible you will have to pay, etcetera.

When it’s time to pick up your car, you will have to sign all loan agreements, have a certified check for your down payment, and have a check to cover the costs for the registration of your car. You will need some sort of verification from your insurance company to indicate that the car is insured.

Ultimately, you should consider all options before committing to costly payments each month, and remember, if you’ve made the wrong choice, you can always go to Plan B or even Plan C if necessary.

Building a Professional Wardrobe
Now that you’ve got that job, what kind of clothes will you need and, just as important, what impact will buying these clothes have on your budget?

Dress codes vary greatly, depending on the industry and management team at the helm of a business. If you’re not sure you’re dressing right on the job, look around you and notice the attire of the managers and others who are the decision makers. Meanwhile, wear your more conservative clothes until you get a sense of what’s appropriate.

But how do you manage to buy a wardrobe for your new work situation, while you’re living on a very tight budget? Once again, you’ll need to devise a plan.

You really don’t need to buy a great many clothes. Start with the basics and add new components and accessories from there. The mix and match rule will help you recycle the same outfits until you can afford to augment your wardrobe.

Also, check out discount stores and resale shops for apparel, at a fraction of the retail price. Think of buying clothes that are “classic” and not in a style that will be out of fashion next year. An expensive suit that you can wear for five or six years is a better investment than a poorly made bargain that looks shabby after you’ve worn it for a year or two.

If you put some time and effort into planning your wardrobe, you can look like a successful, big-time career person, by only using a small-time budget.

From: Reality 101: The Ultimate Guide to Life After College, by Fran Katzanek

i really enjoyed this book. this is an excerpt from this great novel. i recommend anyone reading this who is stepping out of college and fresh into the working world. considering i am one of those people, i had to pick this up at Barnes & Noble. Glad I did! This book is great. Besides, its nice to have a "smart read" once and awhile.