Graduating from college is the easy part. Landing that first job, creating a budget, securing the first real-world apartment, paying off those student loans and somehow managing to stash cash in a retirement account? That’s going to require more than a degree.

6 building blocks for fiscal fitness
  1. Find a job to earn steady income.
  2. Prioritize debt payments.
  3. Consider consolidating loans.
  4. Pay on time every month.
  5. Invest for retirement.
  6. Get professional financial advice.

For the generation of grads just entering the job market, the debt outlook is bleak. According to FinAid.org, the average student graduates from a four-year institution with about $22,500 in student loan debt. Tack on the $4,100 credit card debt that, according to Sallie Mae, the average student leaves campus with, and the typical college graduate is looking at a mountain of debt before sitting down at the desk at the first job.

With such hefty economic obstacles in their path, it’s crucial for recent graduates to manage their debt wisely and take active steps to create a healthy financial future.

Plan ahead

The best way to get a leg up on debt is to start earning capital as soon as possible. Graduates with federal Stafford loans have a mere six months after school ends to become financially stable before that first loan payment is due, and those with federal Perkins loans have a nine-month grace period. Students with private loans, however, may need to begin repayment immediately upon graduation or risk falling into delinquency.

To ensure that there’s money coming in before you start sending money out, Anya Kamenetz, author of “Generation Debt: Why Now Is a Terrible Time to Be Young,” recommends preparing for the job market before you leave campus. “When it comes to the job hunt, you can’t start too early,” she says. “It’s a good idea to try some internships and gain real-world experience, doing as much research as you can in the field.”

Studies show that students who complete internships or cooperative learning programs land jobs faster and have more negotiating power when it comes to their salaries than students without training or experience. The National Association of Colleges and Employers reports that more than one-third of the new college graduates companies hired in 2008 came from their internship programs. In addition, more than 60 percent of employers said they offer higher salaries to new-graduate hires with co-op or internship experience than they offer to those without.

Prioritize your payments

Tamara Draut, author of “Strapped: Why America’s 20- and 30-Somethings Can’t Get Ahead” and vice president of policy and programs at Demos, a public policy research and advocacy group, points out that many recent graduates don’t realize that not all debts are created equal. “The problem is that there’s so much pressure,” she says. “There’s a lot of competing priorities, paying the rent, paying the student loan bill, paying the credit card bill. It can be overwhelming and frustrating.”

While many students tend to focus on paying off their student loan first, Draut says that it’s fiscally advantageous to prioritize your debt, placing credit cards and car loans with high interest rates ahead of student loans with lower or capped rates. Students with significant credit card debt should also consider asking their student-loan lender about deferring or lowering their loan payments until the credit cards are under control.

Consider consolidation

One way to reduce those monthly payments is to consolidate your federal loans, trading in multiple loans for one, longer-term loan with lower payment increments.

“If students have a lot of different loans and they’re making multiple payments, it makes sense to consolidate those loans and make one monthly payment,” says Staci Schiller, marketing program manager for Wells Fargo Education Financial Services. “It’s a good way to get organized if you’re trying to get yourself established.”

Schiller says that rather than focusing on shortening the overall length of the loan, recent grads should instead work with their lender to create a sensible payment plan, one that can consistently be met each month without neglecting other financial obligations.

“Starting out with a lower monthly payment is a good option for somebody who is just entering the workforce,” she says. “As they move up in their jobs, grads can throw more money at that loan since (federal) student loans don’t have a prepayment penalty.”

Graduates should think carefully about consolidating. One can consolidate only once unless a new loan for more education is initiated or a loan was left out of the original consolidation. Thanks to a new law enacted in 2006, however, borrowers can now choose to consolidate their loans with any lender. Previously, the “single-holder” rule meant that borrowers had to consolidate their federal student loans with the same lender that originated the loan.

Graduates with private loans have to be careful. While consolidating private loans can lower monthly payments, consolidation also resets the terms of the loan, and borrowers could miss out on some, or all, of the benefits they originally banked on.

Pay on time, all the time

Think missing a loan payment is no big deal? Think again. Missing or sending in just one student loan payment late can cost you thousands in fees, penalties and terminated loan benefits; it could also affect your credit score.

Grads who miss their payments by more than a few days, 270 days for federal loans, are considered in default and face even harsher consequences, including wage garnishment, garnishment of federal and state income tax refunds, withheld Social Security benefits and severe credit repercussions.

Anya Kamenetz says that while in default, the interest payments grads aren’t making get tacked on to the principal amount, forcing broke graduates to foot an ever-increasing loan bill. “Let’s say that you owe $26,000 for your education with a federal student loan that’s gone into default. Once it goes into default, in two years it could increase up to $100,000 with capital interest, penalties and fees,” Kamenetz explains. “Since you can’t get rid of student loan debt through bankruptcy, that’s a debt you’re going to be carrying your whole life.”

Knowing the terms of your loan, staying on top of your payments and communicating openly and honestly with your lender can prevent you from falling into a debt trap you’ll be paying for decades after you’ve left campus.

Pay yourself too

Managing your student loans is only one part of the financial equation. To truly set up for a healthy, long-term fiscal future, grads also need to pay themselves, storing approximately 10 percent to 15 percent of their salary in a long-term savings or retirement account, says Doug Charney, senior vice president of Wachovia Securities in Harrisburg, Penn. “The number one mistake recent graduates make is they don’t participate in their employer’s retirement plan,” Charney says. “Most 401(k)s have employer matching on their first 6 percent. Not participating is kind of like saying, ‘I don’t want a raise.'”

Norbert Mindel, Certified Financial Planner, or CFP, and partner at Forum Financial Management in Lombard Ill., agrees, stating that 401(k)s not only offer significant tax breaks, they also offer better returns than most savings vehicles available to recent graduates. “If you put a dollar in, you might save 25 cents in taxes. If your employer matches by another 10 cents, you have a 35 percent return on your money,” he says. “A 401(k) is free money.”

Saving enough to pay off student loans and to begin contributing to a retirement fund means living simply, says Draut. If young people really want a solid financial start, they should consider becoming a boomerang kid: one who graduates from college and then moves back home to save money.

“More and more students are doing that,” Draut says. “It’s lost its stigma and is a good way to get on good financial footing. If you grew up in a major urban area, can live with your parents and can get started on that career, it’s the best financial decision you can make. Live with your parents for a year or two, pay down the credit card debt, make headway on student loans, and create savings.”

For those who can’t do that, it’s a more difficult task. Draut has some hard advice for them too: “Lower your expectations. Know that you will be offered a starting salary that will be too low to live on. Don’t spend a lot of money on your car.”

Mindel encourages recent grads to evaluate their major purchases prior to buying, carefully thinking about each purchase’s potential return. “A car, for instance, is a waste asset,” he says. “It doesn’t go up in value. You buy it and it depreciates, so if you’re going to buy, get something safe that’s not going to eat your budget.”

He also recommends investing in low-cost, high-return items such as basic health insurance and avoiding high-cost, low-return purchases such as flashy cars or luxury entertainment items.

Find Your Financial Teammates

Grads can, but don’t necessarily have to, attack the world of money management alone, says Charney. A personal financial adviser can help you create a manageable investment strategy that will keep your debt in check.

“A financial adviser can help you maximize your 401(k), help you set up your IRA, set up investment accounts for emergency spending, and understand the vehicles that can help you get ahead,” Charney says. He notes that investors between the ages of 20 and 30 can benefit because typically those are the years when investors have the fewest fiscal responsibilities, the most disposable income and the most time on their side when it comes to long-term investments.

The drawback to having a personal financial planner is that they cost money, usually a flat fee of $75 to $200 per hour or 1 percent to 3 percent of the value of your invested assets. For those who prefer to attack the money management beast on their own, personal finance software such as Quicken or Microsoft Money can help recent grads create a monthly budget. Also, using an automatic online bill-pay system can ensure that all major expenses get paid before you have time to blow it on a night on the town.

Freelance writer Christina Crouch is based in Richmond, Va.

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