11 Financial Tips for Recent UC Davis Graduates

Happy Money Monday, Tandem fans.  Many of Tandem’s resident have recently graduated from UC Davis. Whether you’re leaving Davis or staying, Kerry Hannon over at Forbes, has a great list of 11 Essential Money Tips For New College Grads. Here’s just a sample.

4. Steer clear of debt. As my eight nephews and nieces know, this is one of my favorite mantras: “Debt is a dream killer.”

If you’re not saddled by debt payments, you’ll be more nimble and able to pursue a wider array of career opportunities.

Debt can stop you from taking a job you might love because the salary won’t be high enough to meet your monthly obligations.

It can even shut the door on a job offer altogether, because an increasing number of employers are checking prospective employees’ credit reports as part of their due diligence.

I admit this anti-debt advice will be tough for many new grads to follow. A recent Fidelity Investments study found that a stunning 70% of the class of 2013 is graduating with an average debt of $35,200.

And 42% of Millennials polled say their debt is “overwhelming,” according to a new Wells Fargo Retirement report, twice the rate of boomers who were surveyed.

5. Reduce your debt load as quickly as possible. If you have hefty college loans, “reframe the way you think about your debt,” says Ken Ilgunas, author of Walden on Wheels: On the Open Road from Debt to Freedom. “Don’t think of your debt as a monthly bill, think of it as a sworn enemy. You need to hate your debt,” he adds.

Ilgunas, 29, speaks from experience. He managed to pay off $18,000 of his $35,000 student loan debt in one year.

But if you can’t match Ilguna’s fierce resolve, force yourself to pinch, pinch and pinch some more. Lowering your spending will raise the amount available to pay off your debt.

Adding an extra $25 to your monthly repayments can shorten the life of your student loan and save you interest. Making the payments through automatic debits from your bank account can reduce the interest rate, too, according to student-loan servicer Sallie Mae.

6. Top priority: an emergency fund. The rule of thumb from financial advisers is to try to set aside the equivalent of three to six months worth of living expenses. (Personally, I prefer a year, but that can take time to build.) Make this a personal goal.

A money market mutual fund or a bank savings account are smart places for your rainy day fund.

No matter where you are in life, the rest of her Forbes article is definitely worth a read.