Financial fitness not out of reach for debt-burdened grads

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By JEAN ORTIZ / Lincoln Journal Star

New college graduates are stepping into a financial picture that isn’t quite what it was five or 10 years ago, says Bob Fitzsimmons, a Lincoln-based certified financial planner.

With student loan debt, credit card bills mounting and other hills graduates today have to climb, the decisions they make beyond their college years can be critical to settling into some smart financial habits, he said.

Fitzsimmons and the Financial Planning Association offer the following tips to get off on the right foot financially:

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Budget — Have a handle on expenses and income and resist the urge to overspend.

Invest — At the bare minimum, sign up for your company’s 401K plan if its offered as soon as you’re eligible.

Plan for emergencies — Create an emergency fund that can sustain your basic needs in the event of the unanticipated, including losing your job. Fresh graduates, who are more likely to get rehired quickly, should aim for enough savings to cover about two or three months of expenses. Keep the money separate from a checking account to resist the temptation to spend it.

Become a moonlighter — Consider the possibility of a second job right out of college, something that works around your day job schedule and can make it easier to save.

Keep your credit in check — Don’t go wild on the credit cards, which can be a fast path to financial troubles, Fitzsimmons said. Keep it to one or two cards and stick with the major ones, he recommends.

Check your credit — Order a credit report and make sure your accounts are in order. With the rise of identity theft, it wouldn’t hurt to begin a pattern of regular checks.

Go used — Hold off on buying a new car. With most new grads emerging from college with student debt, a new car loan won’t make the situation any better. Opt for a quality used car that you can pay off quickly.

Insure, insure, insure — The days of piggybacking on mom and dad’s health insurance are likely drawing to a close, so make sure you sign up with your new employer or find some temporary benefits to cover the gap before your benefits kick in. Re-evaluate your car insurance needs, including ensuring that you have deductibles you can afford in the event of an accident. Don’t cut corners with renter’s insurance or disability insurance. A break-in, fire or accident could lead to major financial troubles.

Pay it down — Tackle the costliest debt first. That may mean clearing out high-interest credit card debt while making only minimum payments on student loans. To lower the student loan payments, consider consolidating your loans, which can extend your payoff period, but remember you’ll end up paying more interest over the life of the loan. The single payment, however, may make it easier to manage.

Reach Jean Ortiz at 473-7107 or jortiz@journalstar.com