The Reality of Your Student Debt

There are very few people who can afford going to college without taking out a student loan. Higher education is expensive and by the time a student graduates after four years, there is a sizeable debt to repay. The average student loan debt is now at around $25,000. Repaying this debt should be of the highest priority for graduates. The quicker the loan is paid off, the cheaper it will be in the long run. This is because interest rates on loans tend to be fairly steep and if not repaid quickly, this can add thousands of dollars in interest over the life of the loan.

Watch Your Rating

When graduates do not make regular payments on their loan, they can develop a bad credit rating. This means that they may not be able to get a regular credit card and they may have to resort to obtaining bad credit credit cards. There are companies that offer these cards and make it possible for people with outstanding loans to obtain financing.

It is important to pay off at least the interest on the loan during the time the student is still in school. This helps to avoid negative amortization and will help the student to pay off the debt sooner. Many students work part time and this is a good way to reduce debt and reduce the amount of loan that has to be taken out to cover school costs. It may not be easy to work a job and engage in studies, but it will give the student a better head start.

Graduating and having large amounts of student debt is very stressful for the new graduate. Graduates are just starting out in their career and, therefore, will not be earning as much as the more seasoned professionals in their field of study. Paying off this debt should be a priority, or it could well be something that the student carries around for a decade or more. Students who take their doctorates have even higher debt amounts because they are in school several years longer than the average student.

Budget Well

The cost of student loan repayment is added to the cost of rent and utilities, as well as any credit card debt and other loans that may be outstanding. Graduates with loan debt should sit down and figure out their monthly budget. Once a job is obtained, there will be a steady inflow of cash and this should be weighed against the monthly cash outflow. It may be necessary to forego items such as coffee at the upscale coffee shop, in order to save extra money.

The graduate, serious about getting a handle on the debt, should try to put as much money aside every month as possible. Making a detailed plan on how much money needs to be paid down to clear the loan quickly is a good idea and can greatly reduce the number of years it takes to pay off the student loan. Instead of looking at the whole loan amount and panicking, it is wise to focus on how much can realistically be put aside every month to make the most impact on debt. Once this is worked out, it is then a matter of regularly and systematically paying off the loan.

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Starting Off on the Right Professional Foot

There are lot of things to think about when you're in your twenties and juggling a million thoughts at once. One moment you can be looking up a storage unit in Chicago so your band can store its gear while you look for jobs, the next moment you're considering how to pay off the credit card debt you built up buying the gear.

A big question many young people, especially graduates, begin to ask themselves when they first emerge onto the job market is whether they should take a menial entry level job with a good company or an exciting job with a mediocre company. The best way to illustrate this dilemma is by comparing an entry level bank job with a posh waiter job at a good restaurant.

Do You Prefer Mental or Physical Challenges?

The bank job will take up a lot more time and mental energy and may even pay less money, but there is a lot more opportunity for upward mobility and lateral career movement. On the other hand, the restaurant job will contain a lot of messy grunt work and won't be very glamorous, but at least you'll have time to develop your core interests, whatever they may be.

Where Do You See Yourself in 5 Years?

The main factor that should influence your decision is what your long-term career plans are. If you plan to work in the financial sector, or in some form of administrative capacity, the bank job will be an excellent stepping stone and will look great on your resume when you're applying for other similar jobs in the future. Taking the restaurant job, in this instance, would only be a set-back. However, if you plan to pursue a different career path, a more creative one or something completely different than banking, the bank job is only going to distract you from your true passion. You might be able to save some money, but you may also find yourself feeling trapped.

How Will You Be Investing Your Time?

Another factor to consider when deciding between the bank job and the waiter job is how much time you'll be investing. The bank job may give you a better hourly rate but will likely require considerably more hours. Most shifts at restaurant jobs are no more than five hours and if it's a nice restaurant with a healthy clientele you stand to make more money in that five hours than you would in a whole day at the bank.

Ultimately you have to look at your own situation decide what's best for you. Are you looking to develop a career or are you just looking to save up some money while you wait for life's next adventure?


Investing On A Small Salary

Often it seems like investing and market information is relegated to the wealthy. Most news about fluctuations in the stock market are tailored to upper class and for obvious reasons—they're the ones who are responsible for major cash infusions. Information about safe mutual funds and cheap stocks with good dividends may reach the ears of mid-range salary workers. But it seems that valuable financial news that is targeted towards low salary investors is limited to free insurance quotes and the latest credit card offerings. Does this mean that Wall Street doesn't want you to invest if you're not rich? No, it just means you're on your own. So here are a few tips and things to consider before investing on a low salary:

Don't invest with the intent of making a lot of money quickly. Think about why you are investing. If your intent is to get rich quick, you're cruising for a bruising. The market can be brutal in the short term and most major gains are made over time, years or even half a decade. If you're not willing or able to keep your money in the market for that long, you're wasting your time investing in the first place. Hopefully, you're investing to become more knowledgeable of the market so that you can take advantage of future fluctuations. Your first foray into investing will not necessarily make you a lot of money. Keep that in mind.

Be organized and smart. Have a game plan for what kind of companies you want to invest in—green technology, manufacturing, etc. Research the major performers in these industries. Look for patterns over many years. If you see a company whose stock has consistently been very high which has recently taken a hit, now may be the time to jump onboard.

Don't scoff at penny stocks. If you're investing on a low salary, you may find yourself overcompensating by not even considering penny stocks. But penny stocks can be great investments over the long run. It all goes back to research. Research what some of the big growth sectors of the near future and then find small, startup companies in those sectors that have good infrastructure and alliances with bigger players. If these companies hit the big time, your shares of its once penny-wise stock could be worth millions. As an added bonus, many penny stocks offer great dividends.

Wading into the stock market is tricky for an investor of any salary level, but it's especially tricky for lower income people who can't afford to take major financial risks. That's why it's important you do your due diligence by researching the market, practicing patience, and looking carefully at penny stocks.