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| Credit Answers > Debt-Management-Articles-2008 > Recent Grads Face Bleak Economy |
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Recently, many young adults have graduated from college and are getting ready to make the transition from college life to the "real world." Unfortunately, a recent data report from
Demos, a public policy organization, indicates that this generation of young adults may be the first not to surpass the living standards of their parents. Factors such as declining
incomes, growing debt, the high cost of homeownership and healthcare costs all impact this prediction.
Below are some tips for young adults as they begin to make important financial decisions in the current economy. If you are a recent graduate, congratulations and we hope this
information helps you launch the next chapter of your life. As for parents, use these tips to guide your son or daughter in the right direction or pass this article on to
them.
Find a place to live. Although it may not be an ideal situation, you may consider living at home temporarily until you are able to save enough money for your own place.
Your job location will also influence where you live. If you must rent an apartment or a house, this cost will probably consume the majority of your income. According to a study from
the Center for American Progress, more young people are considered "housing burdened" because they are paying more than 30% of pre-tax income on rent.
Realize that living on your own not only involves rent and housing costs, but you will also have to pay for items such as food, cleaning products, and other incidentals that you may
have taken for granted while living at home. Consider renting with roommates or friends to defray some of the housing expenses. As a renter, you may want to obtain renter's
insurance, as many leases require it. Landlords usually have insurance on the building, but not your personal belongings.
Develop a plan to pay student loans. According to statistics from the National Postsecondary Student Aid Study, the average student loan debt among graduating seniors is $19,237.
Because many students defer payments while attending school, this may be the first time that they see how much their education really costs. Although it may take time to pay off your
student loans, you may have options if you are not able to make payments. Contact your lender immediately to see if you qualify for a forbearance or deferment. Avoid defaulting on
your student loans because it may result in wage garnishment or the inability to obtain additional student loans to further your education in the future.
Transportation has hidden costs. Many young grads are eager to purchase a new vehicle. Be careful not to take on more of a car payment than you can afford. If you are under 25, you
will probably pay premium insurance rates because of your age. Also, some apartment buildings and cities require you to purchase parking passes. You may want to consider public
transportation if it fits into your work schedule. It may not be as convenient as driving your own car, but it may help you to save money on gas, insurance, and car payments. In
fact, in large metropolitan cities such as Chicago and New York, owning a car may be more of a disadvantage.
Obtain health insurance. Because you are no longer a full-time student, many health insurance plans will not cover you under your parent's insurance. If you secured a job with a
company that offers health coverage, consider joining their group plan. In most cases, it is less expensive than an individual plan. Keep in mind that most companies have a
designated probationary period before you are eligible for health insurance. In the meantime, you may want to contact a local insurance agent for more information on temporary or
short-term health coverage.
Control credit card debt. According to Truth About Credit (www.truthaboutcredit.org), a student public interest research group, college students are graduating with an average of
close to $4,000 in credit card debt. If you have obtained a student credit card(s) during college, consider establishing a plan to reduce your debt. Refrain from using credit to
charge expenses such as food and gas, unless you are able to pay the balance in full each month.
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