Graduates are using Installment Loans to Fund Mishaps

The college student of 2010

Many college graduates are using installment loans to make ends meet. Angela Trummell, college graduate in 2010, said, “A lot of my friends are planning on going back home because they can’t afford post-college life. I really don’t want to do that.” Trummell is like a lot of students. They build up debt going to college and have a difficult time envisioning financial independence in their near future.

What students need to know now

College students need to know that they are going to have problems if they don’t plan ahead. Sure, parents will be there, but a lot of parents are as financially strapped these days as their children. For college graduates it’s going to take a commitment to managing money wisely from the beginning to ensure a good future.

One of the best ways to spend wisely is to follow the 60 Percent Rule. Basically, this tells a consumer to keep their expenses to 60 percent of their income. That includes rent, taxes, car insurance, food, shelter, clothing and utilities. The next 10 percent should go to retirement savings. The rest should be used for emergency account funding, repaying student loans, short-term savings and entertainment.

Discipline and college graduates

The best thing to learn is discipline when it comes to finances and budgeting. If students are finding they have problems with sticking to the 60 percent Rule they need to look at their options and make some smart decisions. Here are some of the biggest things to look at with any budget:

1. Residence

Likely this will be the biggest expense people have for a good portion of their lives. The good news is that there are some ways to cut back. Getting a roommate can be one solution, or renting a room from a family member. Students can also consider moving back in with parents for a short period of time to save.

2. Transportation

This is another huge issue with a budget. A huge car payment can wreak havoc on any budget, much less the limited budget of a recent graduate. Consider downsizing to a smaller car or car-pooling. Another option is public transportation. When it comes to repairs, consider using small installment loans to pay cash up front, rather than putting them on credit. With credit, there are interest fees to pay off. With short term loans, there is a small fee, but it doesn’t affect credit.

3. Utilities

There are a lot of ways to save regarding utilities. Young people can get a roommate to share the bills, or just be wiser. Turn off lights, turn down the heat/air, and weatherproof windows to save money. Cell phones are also big money draws. Do some online searching and find plans that are more reasonable.

4. Personal spending

This is a big one and most people, graduate-age or not, overspend here. The best practice is to use a notebook and write down everything spent over the course of one month. That means everything from cigarettes to coffee. Once the list is there, consumers can cut out, or at minimum cut back, on overspending.

All four of these areas can mean the difference between a balanced budget and a wildly out of control one. College graduates need to start good practices early on and this is a great way to do it.

Installment loans come to the rescue

College graduates sometimes try as hard as they can to stay within budget but still miss the mark. An unforeseen bill or emergency can mess up a budget pretty quickly. Installment loans are one way to overcome immediate need, but it’s best to get right back on the plan. Turning to credit can cost. Just read the credit card fine print and see how quickly fees can add up. In the end, having a good plan is the only way to ensure a healthy financial future.

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