10 Practical Debt Management Tips for New College Grads

Congratulations! You’ve just completed an important milestone in your life.

So now it’s time to face reality. What will be your next step? If you had financial help along the way, it won’t be long before those you owe come knocking.

The student loan debt won’t pay itself, and many lenders have no sympathy for recent college graduates with limited or no income. So, you’ll need to quickly figure out how you will take care of your monthly obligations once the repayment period starts.

And on top of the loans, what about credit card debt? Have those outstanding balances also spiraled out of control?

Here are a few helpful tips to consider when managing your debt:

1. Do the math

In other words, know what you owe or it will be impossible to develop a practical debt reduction plan. To get organized, Forbes suggests that you:

Compile a list of all your loans, including the name, Web address and contact information for the lender, the loan ID number, the current loan balance, the interest rate and the date the first payment is due. FinAid’s Student Loan Checklist can help you organize this information. Put all correspondence for each loan into its own file folder, labeled with the loan ID number.

2. Come up with a plan of action

Once you have determined how much you owe, create a realistic spending plan that will allow you to take care of your monthly obligations, including student loan and credit card debt. That way, you will have a plan for every dollar, even before it hits your bank account.

When listing your projected expenses, remember that living in the real world is a lot more expensive than the college life you’re used to. Rarely will you find all-inclusive housing. Also, don’t expect to find a free meal when your stomach starts to speak to you and your pockets are shallow. It may be a little tough to adjust at first, especially considering all the new bills, but hang in there.

3. Save

If you are starting off with a decent salary, be careful not to exhaust all of your income each month. Instead, save for a rainy day and allocate any additional disposable income to outstanding debt balances.

What if you graduated debt-free? Save as much as you can because you never know when hard times or new opportunities that require you to spend a little change will come your way.

It is very possible that you could enter the workforce and decide that particular career path isn’t for you. And if you have a little cash to fall back on, you can afford to take some time off to explore other options, relocate or even start a business.

4. Move in with your parents

You may be cringing at the thought of leaving your newfound life of freedom and moving back home, but it may not be such a bad idea if your parents are willing to welcome you back with open arms. Not only will you have more time to prepare for the real world, but you’ll also be able to save a little cash while doing so.

5. Don’t be tempted by new offers

After graduation, you shouldn’t automatically aim to live a more luxurious life unless you have lived in the real world for quite some time and are debt-free with a nice cushion in the bank.

And what are the chances that this is you? Highly unlikely. So avoid the new-car payment, all the many credit card offers that come in the mail, and other offers that tempt you to spend money. Even if you landed a sweet gig, you could find out that you’re a horrible money manager or can’t really afford it because you were unrealistic or laid off.

6. Keep up with your payments

It may be best to sign up for automatic withdrawal so you don’t fall behind on student loan payments. “Not only does this save you on postage and the hassle of writing a check each month, but education lenders often give borrowers who make their payments by auto-debit a small interest rate reduction, typically 0.25 percent or 0.50 percent,” says Forbes.

And if you miss a due date or the account becomes delinquent, you could be hit with late penalties and a rather large ding to your credit score.

7. Negotiate

If you are having a difficult time keeping up, don’t wait until you are drowning to reach out to the creditors and see if they’ll work with you. If you’re desperate, student loan consolidation may be an option.

If you are saddled by credit card debt, inquire about a balance transfer to a new card with an enticing promotional offer or see if your existing issuer will lower the APR and agree to a restructured payment schedule.

8. Steer clear of more student loans

Graduate school is tempting, especially if the job market is dry, but you will only end up with more debt. The other loans won’t go away; they’ll just continue to grow. And once you have earned your second degree, you’ll be right back at square one unless you’ve managed to land the job of your dreams before graduation.

9. Take care of yourself

It’s never wise to forgo health insurance to make ends meet. Sign up for health insurance at your workplace. If it’s not offered there or you’re unemployed, inquire if you’re eligible to purchase health insurance through HealthCare.gov even though open enrollment has ended. There are exemptions that may make you eligible before open enrollment begins again. Or perhaps your parents can add you to their plan.

10. Pick up a part-time job

Are you going through the interview process or still waiting to hear back from prospective employers regarding recent applications? It’s understandable that you may not want to lock into a low-paying full-time position.

Instead, get a part-time job that provides flexibility to search for more lucrative opportunities and brings in a little income at the same time.

Do you have any additional debt management advice for college graduates? Let us know in the comments below or on our Facebook page.

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We welcome your opinions, but let’s keep it civil. Like many businesses, we reserve the right to refuse service to anyone. In our case, that means those who communicate by name-calling, racism, using words designed to hurt others or generally acting like an uninformed bully. Also, comments that include links to email addresses or commercial websites typically aren't posted. This isn't a place to advertise your business.

  • shondell mann

    The words in this caption sound out to me, like someone directly speaking to me, doing professional counseling, my only question would be should I accept a job working under the table to make ends meet, once I have received my associates degree ?