Financial Standing After College

[Tyler]

So, I'm nearing the end of my collegiate career and I'm trying to be smart about my finances. I'm trying to be realistic here so if you have any input let me know. I'll have about a total of $30,000 in student loans, which I believe will be ~$350 a month for 10 years to repay. I have a car payment of $420 which will have 3 years left when I graduate. I have no credit card debt. I have an iPhone which is $92 a month. My dad pays for my car insurence for me while I'm in college (part of our deal I guess). So my thing is, how many of you have ~$30k in student loans? Would it be better to move back in with my dad for a year, get a job and pay my car off completely before trying to get my ideal job or should I go straight for my ideal job? If I get the job I want, teaching at TCC as a full time professor, it pays ~37-40k a year before taxes, full benefits. I'm not sure how taxes work so lets say I'll take home ~32,000 after all that jazz. That gives me ~2,700 a month to live off of. I would like to pay my car off as quickly as possible so that it frees up the $420, which could almost be a mortgage payment on a good starter condo/townhouse in Tallahassee (80k range for a 2/2).

So basically, any recent college grads in a similiar situation? Ideas? Advice?

[thecoalition]

I have 50k in student loans plus all the other bills and utilities of living in an apartment. No car payment (paid it off a few years back). I work 40 hours a week and make 17 an hour on contract. The thing I will recommend to you is this - Income based repayment for your student loan. My minimum payment is $33.00 a month because I called up the student services and was like I can't afford this payment of 600 a month. They had me fill out some paper work and fax it in and then I got a bill saying payment is 33.00 until the next tax season when they will readjust based on what you are making then. Also, with my particular setup its over 25 years (if I don't pay more than the minimum - which I don't). If after that 25 years I have any remaining balance - it gets wiped/forgiven by the government and I don't have to pay back.

Also you need to remember if you get a teaching job you will be paying union, supplies, benefits and something else I am forgetting. Personally, I am one of those people that I think people who move home so they don't have to pay for anything are pussies. But that's me. I look at it like if you make more than 25k a year - you can easily make it if you know how to budget and don't go blowing money on dumb shit you don't need. I set up a Mint.com account a few months back and it showed me where I was spending too much money and where I should cut back. It also showed me which credit cards I was getting raped on interest and what not. Very cool once you set up everything. The best thing to do is pay off what you can without breaking your wallet. If you have some outstanding credit card balances you should attempt to either pay them off or transfer them to 1 card with the lowest interest rate.

Overall - you may have to live a little poor, but I am sure you can find things to cut out to save money. My biggest money saver was cutting out eating out for lunch 5 days a week. Saved me over 200 a week and I started bringing lunch in to work everyday. Plus with a proper budget you can set aside fun money into your savings so if you want to blow it on a video game or w/e you know ok I have some set amount I can blow this month and I won't be strapped to pay bills either.

I find that the people I know who live at home after college just work and spend all of their money on crap. One of my friends bought 2 sets of rims for his car that cost over 4k. Just because he wanted winter rims and summer rims. That was about 3 months of rent in my eyes. If you honestly think you can save money while living at home - good for you - it may be the best way. However, with the way my parents were - I would have had to abide by all of their rules I dealt with in highschool. Oh plus .... im going to assume its hard to get some girl to come over to mom and dad's when your a grown man.

[Tyler]

Hmm, I didn't know about the income based repayment, but it sounds like one of those things that could be bad for your credit? I think my primary concern is trying to get a mortgage loan with my car payment showing up as so high. Is there a way to re-finance a car loan lol? So you think I'll be just fine making ~30k take home then?

[Chreees]

Oh my gah... I think when I get debt that high, I'm gonna shit my pants...

I give you guys MAJOR props... This is probably the major deterrent of me going to grad school after I graduate....

Tyler, with how smart you are, I'm sure you're gonna figure it out the best way of doing it.

[thatonethere]

If you go straight for your ideal job, you're going to have to factor in utilities, food, first month's rent w/deposit (if needed) , and furnature (assuming you move into an apartment that isn't furnished). You can get a personal loan with a lower interest rate for your car payment, and you can get yourself a cheap cell phone for the time being. Get a room mate if you can. The important thing here is to not live beyond your means. Find out how much money you spend on entertainment or "fun". Get creative with how you save money. It'll be no picnic, but you'll feel better once you look back on what you've done, and it'll prepare you for handling finances in the real world.

Start making the necessary steps now, so you'll know what to expect.

I once ate nothing but instant oatmeal for lunch while I was in debt from a medical bill. I would bring a tupperware full of quick oats, brown sugar, butter and vanilla extract to work everyday, and use the hot water dispenser on the coffee machine. Sometimes I'd bring 2 of them (one for breakfast, and one for lunch). People would comment , but I would tell them that I was trying to get out of debt. I did that for 6 months, plus I saved all of my change, and avoided the vending machines. I didn't go out or spend any extra money. I would only put $15.00 worth of fuel in my gas tank. All extra money went towards my debt. I even sold some of my cds through e-bay from time to time. Let me tell you, it really sucked ass, but it was worth it because I'm a whole lot smarter when handling money and making purchases. The only debt I have now is my home loan. I paid for my car with cash $2500.00, and I can fix it on my own if needed. If I decide to go to a mechanic, I have the money to do so.


If you decide to go live with your parents, don't fall into the trap of buying crap. Think about it like this: why have a whole bunch of stuff when you have no pot to piss in. Get your own pot, and then get the nice stuff.

If it were me, then I wouldn't go back to live with my parents, especially if they decided to charge me rent. If I'm paying to live somewhere, then I should be able to make my own house rules. Edited May 3, 2010 by thatonethere

[Oggie505]

I got about 70K in student loans, my wife has about the same. Just remember pay the amount due on time. when you start to go with ways that lessen your payment due to salary or other things it looks bad. Also most lenders will give you a lesser interest rate after 3 years of successful payments. Just do not live beyond your means and you should be fine to make all payments, if that involves living with parents, no cell phone, internet...etc at least you can make your student loan payments. Miss one of those and it can really hurt you in getting some jobs.

[delSol_si]

I'm not out of college yet, but I am getting very close. I have one more semester before I graduate. I am thinking about going back for one more semester after that so get enough hours to sit for the CPA exam, but haven't decided yet. Main thing that is holding me back is the money.

That being said, here is my situation: I am currently $2,000 in debt, all student loans. I took out about $4,000 or $5,000 in student loans my first year of college (I think). I dropped out, took a year and a half off to get my head out of my ass and make some money. I lived at home for the first year, and then moved out the for the last half year. During this time, I paid my loan down to $2000. At first, I always just paid the minimum payment until I realized that out of my $50 minimum payment, around $30-$40 of it was going toward interest and around $10-$20 was going toward principal. Then I started making extra payments and all that.

My car is paid for, I don't have any long term debt except my $2,000 student loan. I have a credit card I pay off every month. I have enough cash in the bank to pay for next semester of college and have a little left over, not a whole lot, but a little. Pretty given my current financial standing, I will be about $500 deficit. But that would be provided I didn't spend anything or make anything in the next 6 months, which isn't going to happen. If I go to school another semester, I will be taking on another $3200 of debt. Then if I go do the Becker Review course, thats another $2,500, then the exam itself is $1000 a pop and it has a 40% pass rate, which means I will more than likely have to take it 2-3 times before passing. That means without the CPA license, I'm looking at a deficit of $500, if I try for the CPA license, I'll be about $8,200 deficit, give or take a little.

My parents pay my cell phone and insurance which I will probably have to take over when I am out of school. I bought my car with $3100 cash and can do most repairs myself if needed. I even change my own oil to save money.

Here is my advice to you:
1. Get rid of your car and get something cheaper. You don't need a nice expensive fancy car. Cars are one of the biggest money pits EVER. Yes, they are nice, but don't throw money into it unless you have extra money you can piss on.

2. Get rid of that phone and get something cheaper. You don't need an nice expensive fancy phone. A phone serves a few functions: calling, texting, alarm clock, calculator, calendar....pretty much every phone can do that for you.

3. Live at home for a little, but set a date that you will move out by and stick to it. Maybe like "Okay, I will live with my parents for 1 year to save money and then I will be out." nothing wrong with that, thats what they are there for, just DONT take advantage of it, no one wants to be 30 and living at home (unless your parents need you there). But, like I said, set a specific date and stick to it. If my girlfriend and I stick together, I plan to live with her after college, if we break up, I'll probably chill at home for a bit until i can get enough money for a good down payment. Will it suck? probably, but I think it will be worth it. Is it a shot to my pride? yes, but i still think its worth it.

4. keep track of your interest rate. If it gets too high, pay off your loan ASAP. If it stays low, let it go, but make you payments. My loan's interest rate is down to 3.5% now. I was planning on paying it off asap, but at 3.5%, it would be impossible to get a loan that low again, so I plan to keep it outstanding as long as i can. It would be silly to pay off my $2000 loan at 3.5% and go out and take out another loan at a higher rate (i think the market is around 5-6%?)

5. get the career started that you want. don't mess around with bullshit jobs, just go with the one you want now. The sooner you start, the faster you can get experience under your belt and start advancing.

These are just my opinions, nothing more.

[Tyler]

Well this is what I've worked out so far:

If I get an 80k townhome/condo (2/2) after downpayment of 5k, a 75k at 5.5% for 30 years, PMI .5%, PT, 2.5% would put me at 535.22 a month.

Condo fees: 35 a month.

Cable/internet: 108

Utilities, I'll just say 300

Which totals 978.22

Then add student loan, 350
car payment 420
cell 100
insurences, 90
gas 150

grand total is 2088 for a month

if i get a roommate I can cut that by 489

bringing me to 1600 a month to pay off all my bills

19200 a year in bills, leaving me 1066 a month for food/fun/ect

this all is based on a 32000 takehome.

I think I could swing that?

[delSol_si]

sounds like you are pretty set on keeping you cell and car...i think its not very smart, but thats me, i hate debt.

Might and see if you can get a cheaper rate on just internet. You don't really need tv. Actually, if you can steal internet from neighbor, you could cut that out entirely, however if your job relies on the internet, i don't recommend that. I only recommend stealing the internet if you are only using it for fun.

[delSol_si]

oh, and don't forget to budget for life's bullshit either. If you think your bills will only total 19200, you will probably have at least a good $2-3000 worth of life bullshit, if not more. Lets say your car needs an entire new brake job. If you can do them yourself, you can probably get by with about $500 or so. If you want to let the shop do it, you will be looking closer to $1000. have a blow out and need a couple new tires, another $150 pop. I'm sure you know this though.

[Rani]

[quote name='Tyler' date='03 May 2010 - 10:14 AM' timestamp='1272906842' post='466489']
Well this is what I've worked out so far:

If I get an 80k townhome/condo (2/2) after downpayment of 5k, a 75k at 5.5% for 30 years, PMI .5%, PT, 2.5% would put me at 535.22 a month.

Condo fees: 35 a month.

Cable/internet: 108

Utilities, I'll just say 300

Which totals 978.22

Then add student loan, 350
car payment 420
cell 100
insurences, 90
gas 150

grand total is 2088 for a month

if i get a roommate I can cut that by 489

bringing me to 1600 a month to pay off all my bills

19200 a year in bills, leaving me 1066 a month for food/fun/ect

this all is based on a 32000 takehome.

I think I could swing that?
[/quote]

You are aware that in this economy, that the average [u]gross[/u] starting salary for recent graduates (in almost all disciplines) is in the mid-30's? And if you don't put aside 10% of your take-home into some sort of emergency saving, you're quite frankly an idiot. Your cell pone bill is high. Unlimited plans are available for about half that. Also you should be aware that even Tier 1 credit ratings are generally requiring a minimum of 20% down on real estate. Which is $16,000 rather than the $5,000 you're thinking of. (You'll need upkeep as well.) And all lenders are finding reasons to charge sub-prime rates because risk factors are way up even for those same Tier 1 customers. Personally, I'd suck it up, and move home until you have reason to move in with someone (girlfriend/wife/family member) meanwhile stashing every single dime you can while paying minimum on your student loans after reduction for income and then hit it up with big chunks after tax refunds, etc. You'll be glad you did in the long run since you're not someone who's looking to run out and bring home a different girl every night. And until you have a minimum of 8 months of all expenditures sitting in the bank waiting for emergency need, you have zero common sense if you go out on your own. You're risking more than you know. You have the rest of your life to live on your own. Be smart in the meantime. If you do't believe me, read Suz Orman. She'll convince you in a hurry - if the recently homeless thanks to the economy don't convince you beforehand. Take what you think you need including putting aside that 10% off the top, add 35% for life's incidentals, and then you'll have a more realistic view of what living on your own really entails. I know I sound like a hard ass, but really, it's a lot harder than you think it is.

'Rani

[thatonethere]

It's also a very good idea to keep some emergency funds on hand. One day, you might get pulled over, or need to make an expensive car repair. Keep about $1000.00 on hand just for emergencies. If you can't swing $1000.00, keep at least $500.00 on hand. You never know when you'll need it.

Good luck with whatever you decide to do. Life can be a bitch sometimes,

[Dr. B]

he fucking loves Suze Orman. YOU CAN NOT AFFORD IT GIRLFRIEND!
Turn your money over to me, I'll manage it for you. Ask Jay, I'm good at this stuff.

In all seriousness, Rani, as usual, has a very valid point. For starters if you wanna mortgage your home (why so eager to own?) You'll need to pay >20% to avoid points and MI. You don't have to move home, but have you considered a flop in the midtown areas with a few buddies? personally I think it'd be a blast if owning wasn't feasible. Home ownership tends to be cheaper even when you account for the real rental rate, but you need you realize that it takes a lot of cash outflow and a significant buffer to arrive at the savings.

You're young enough live going for broke but smart enough to do it with class. Your spending habits and budgeting, from what I can infer, aren't too superfluous; but you'll need to scale down your expectations until you're approaching 30. Condo = apartment, car != BMW, etc. You need to take care of preexisting debt before you think you'll be able to up your spending. Imagine living like you do but pulling in your ideal 32k net - think of what you can pay off! After all debt (aside from student loans) is managed, THEN think about livin the high life.

There isn't a lot of advice I can give that hasn't been said, but when you wanna talk about managing cash inflows after adjusting your paradigm we can talk.

[Tyler]

Yes I plan on keeping my car, when I graduate I will have 2 1/2 years left on it to pay off an I will have a car that I get free repairs off, is a nice car, and something that I can depend on, plus I will have it paid off vs. buy a "nicer" car in the future I will already have that part out of the way.

[delSol_si]

[quote name='Tyler' date='05 May 2010 - 02:39 AM' timestamp='1273045157' post='466731']
Yes I plan on keeping my car, when I graduate I will have 2 1/2 years left on it to pay off an I will have a car that I get free repairs off, is a nice car, and something that I can depend on, plus I will have it paid off vs. buy a "nicer" car in the future I will already have that part out of the way.
[/quote]

the older a car gets...the crappier a car gets (except classics), so more than likely you will end up buying a nicer car later regardless. but you are welcome to do what you want, I just don't think cars are a good outlet for spending money.

[Tyler]

[quote name='delSol_si' date='05 May 2010 - 11:26 AM' timestamp='1273073190' post='466784']
[quote name='Tyler' date='05 May 2010 - 02:39 AM' timestamp='1273045157' post='466731']
Yes I plan on keeping my car, when I graduate I will have 2 1/2 years left on it to pay off an I will have a car that I get free repairs off, is a nice car, and something that I can depend on, plus I will have it paid off vs. buy a "nicer" car in the future I will already have that part out of the way.
[/quote]

the older a car gets...the crappier a car gets (except classics), so more than likely you will end up buying a nicer car later regardless. but you are welcome to do what you want, I just don't think cars are a good outlet for spending money.
[/quote]


Well as of right now my KBB value for my car is 4000 more than what I owe for it. When I pay it off it will be worth a static value of roughly 12000 meaning if I wanted to get a new car, that would be a lovely trade in/downpayment. Good cars are always a worthwhile investment, a mediocre/low end car is not.

[thecoalition]

as far as the income based payment goes - no its not bad for your credit. im 24 and my credit score is above 800. I did this through the Direct Loan Servicing (where i got my school loans). All I did was call and say I can't afford to pay back this high of the amount. They were really helpful and apparently they get this all the time.

I have a take home atm of about 30k after taxes. I pay rent/utlities/gas/student loans. As long as I don't spend all my money on useless crap I am clear. Rent runs about 500 and because of credit card purchases I have about 900 in credit (I won't call it debt because I can pay it if I want I just dont pay them off all at once). It's really easy if you budget yourself. However, if you have no furnishings or anything its really hard to start out. I moved out of the dorms and into an apartment when I was in my 2nd year of school so I have been able to acquire items over time. My first place consisted of a bed from walmart that I had mattress that I asked for my birthday. All of my roomate's and my furniture was from the thrift store. You feel pretty homeless at first but if you eat cheap and what not you're ok. As with the oatmeal man, I ate grilled cheese. ramen, and cereal for the first 6 months I lived on my own. I only drank water or w/e was free at parties/restaurants etc.

Looking at your expenses and what you think you'll be able to put down on a townhouse - i think you sire need to live at home for a while to save some money. You DO NOT want to have to live paycheck to paycheck. I like to keep a cushion of what I call "Oh Shit" money. Usually between 800-1000 extra in my acct that I don't go below. Good for situations like when I was in between contracts for month. I basically sat around saying oh shit while i watched that money get used on rent and bills. Its tough coming back from a smaller loss like that, imagine you have something happen like down payment - then emergency right on top of it. Bad times. Edited May 6, 2010 by thecoalition

[delSol_si]

[quote name='Tyler' date='05 May 2010 - 02:13 PM' timestamp='1273086804' post='466814']
[quote name='delSol_si' date='05 May 2010 - 11:26 AM' timestamp='1273073190' post='466784']
[quote name='Tyler' date='05 May 2010 - 02:39 AM' timestamp='1273045157' post='466731']
Yes I plan on keeping my car, when I graduate I will have 2 1/2 years left on it to pay off an I will have a car that I get free repairs off, is a nice car, and something that I can depend on, plus I will have it paid off vs. buy a "nicer" car in the future I will already have that part out of the way.
[/quote]

the older a car gets...the crappier a car gets (except classics), so more than likely you will end up buying a nicer car later regardless. but you are welcome to do what you want, I just don't think cars are a good outlet for spending money.
[/quote]


Well as of right now my KBB value for my car is 4000 more than what I owe for it. When I pay it off it will be worth a static value of roughly 12000 meaning if I wanted to get a new car, that would be a lovely trade in/downpayment. Good cars are always a worthwhile investment, a mediocre/low end car is not.
[/quote]

I can see that good point, and at least you know the history of the car you already have. I'm just saying if you want to get your payments down, thats one great way to do it. I bought my car for $3100 at 168,000. Now it is up to still running strong. my buddy bought a truck for $500 and has been driving it for a good year now. But hey, if you can afford a nice car, more power to you brotha

[Rani]

People tend to him him up about his car because he's a college student with a Beemer, but you know...... Keeping it to the 10 year mark is the smartest thing he can possibly do. Quoting Suze Orman again, but even she says she keeps her cars a minimum of 10 years. And that BMW is most likely going to make it the whole 10 years without much of a hitch. So I'm thinking keeping it is the smartest thing he can do. Especially since the end of the loan is in sight.

'Rani

[Dr. B]

to his credit i was referring to something he mentioned in chat about getting a new bmw by trading in his old one: not selling his current bmw to downgrade.

[Tyler]

And btw, it literally just hit 50k today

[porksandwich9113]

Man that blows.

I only have 6,900 dollars in debt after two years, but my tuition is only 10.5 a year.
My deal was my parents would pay 2/3rds of the tuition and I would cover the last 1/3rd.

I live in a house with a bunch of guys, working 40+ hours a week to cover my rent, cell phone, insurance, gas, and food.

I see all you college guys living with nice cars, iPhones, all sorts of shit and it drives me nuts.
Just gotta cover the basics and make enough money to party and enjoy the college experience,

[Tyler]

[quote name='porksandwich9113' date='02 June 2010 - 01:22 PM' timestamp='1275499369' post='470314']
Man that blows.

I only have 6,900 dollars in debt after two years, but my tuition is only 10.5 a year.
My deal was my parents would pay 2/3rds of the tuition and I would cover the last 1/3rd.

I live in a house with a bunch of guys, working 40+ hours a week to cover my rent, cell phone, insurance, gas, and food.

I see all you college guys living with nice cars, iPhones, all sorts of shit and it drives me nuts.
Just gotta cover the basics and make enough money to party and enjoy the college experience,
[/quote]


I would love for my parents to pay for anything for me.