Steering Clear of Credit Chaos After College

Immediately after graduation, many college grads are concerned with finding a job, a place to live, and setting up their new lives. Unfortunately, very few people dedicate time to their financial futures. This lack of initiative results in the accumulation of debt, personal loans, and other unfavorable fiscal circumstances.

Don't Accumulate Debt

After graduation be careful not to accumulate debt

Most debt is accrued in the process of finding housing, securing transportation and gaining employment. In some cases, individuals are even forced to utilize a debt management program to manage their debt.

Fortunately, there are ways to bypass this step and avoid taking on debt altogether. In the crucial years following graduation, be conscious to avoid these mistakes.

1. Don’t Increase Your Standard of Living

Most college students are used to living with a roommate, buying second-hand furniture, and driving a used car.

While getting a good job means that there may be more disposable cash on hand, too many people assume that they can afford everything they desire. In the process of this foolish spending they take out loans and struggle to make the payments.

The most common mistake among graduates is buying a car out of their price range. It’s undeniable that the allure of a new car is enough to break the bank but buying a car out of your budget is a costly mistake that can jeopardize your credit score.

Oftentimes, if the payment isn’t made within a certain period of time, the bank or other lender will repossess the vehicle. Then you’ll be left with no money and no ride.

Instead of financing or taking out loans for a new car, opt for a pre-owned car with a smaller price tag. It might not be the car of your dreams, but it also won’t put you in a financial hole.

2. Don’t Neglect Your Student Loans and Debt

Most student loans come with a six to nine month grace period before having to start making payments. After this period is up, you will have to make payments regardless of whether or not you can afford it.

Make every effort to save the minimum amount of your loan payment each month before the payment is due. This will get you accustomed to making payments, and you’ll have a nice cash cushion to start off your professional life with within a few months.

If you lose your job, you can even use this money to pay the most urgent bills. Think of it as a safety net.

If you’re already struggling to pay back student loans, get help immediately before the problem gets worse. Look for a debt management program, like Consolidated Credit, or really work on making budget cuts that will permit you to pay them off on your own.

3. Don’t Apply for Every Credit Card in Sight

Once you start a professional, full-time job, you’ll probably be inundated with offers for credit cards and other loans.

While having one or two cards that you pay off at the end of each month can be a good idea to build a good credit history, don’t fall into the trap of applying for every card that gives you a store discount or a bonus for signing up. They may seem worthwhile at first but they’ll just create problems for you down the road.

4. Protect Yourself

While it can be very tempting to opt for the cheapest insurance policies or to simply not buy any insurance, this can lead to disaster later on.

Make sure to at least have a good car insurance policy (that will cover your vehicle and a victim in the case of an accident), health insurance, and renter’s insurance. Without these, a single disaster, such as a car accident, sudden illness, or fire could completely wipe out everything you own and force you to start over again with nothing. It might cost a little more each month, but good insurance will help you in the long run.

All-in-all, be weary to steer clear of these post-graduation mistakes. With your new diploma in hand, enter the world with as little debt as possible by carefully managing your expenses.

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