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4 tips to make sure you don’t get into debt in the first place
By Adam | May 6, 2007
4 tips for college kids to make sure you don’t get into debt in the first place
What should be the top priorities for college graduates who want to set their financial lives on the right track? Here are a few tips.
• Save. You may think you need to pay off debts before contemplating saving, but experts disagree. They maintain that the first priority is to save, particularly for those who are offered a 401(k) plan at work. Why? The vast majority of large employers offer 401(k) plans, which allow workers to save up to 15 percent of their pay in tax-favored retirement accounts. Most offer “matching” contributions, too.
• Manage your student loans, but pay off the credit cards.
Although all debts chain you to monthly payments, some are much more costly and dangerous than others, Silver said. Credit cards, for example, often charge interest rates of 20 percent or more and allow the card issuer to hike your rate at virtually any time. This should be the first debt the graduate pays off.• Set goals. After two decades or more of being taken care of and told what to do, you are now in charge of your financial destiny. “If you think about long-term goals, you are probably going to be willing to give up some of the things you want in the short term for the things that are really important to you in the end,” Coleman said
• Budget. There’s no shame in driving an old car or living at home when you’re first out of college. Your first car should be three years old, Sullivan contends. That will probably save you 50 percent of the price of a new model without dramatically increasing repair bills.
Kristof: A few simple money lessons for new college graduates (Houston Chronicle)
Millions of college seniors are interviewing for their first full-time jobs in preparation for stepping out of the hallowed halls of education and into the real world. And with it comes a world of debt.
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