I could fill a book with nuggets of wisdom I've picked up in the nine years I've been out of college (first, where on earth did I put my gosh darn dentures?). But there's one piece of financial advice that would have made a huge difference in my life.
I thought I'd share that with you, the most important piece of financial advice for college graduates:
Stay Out of Credit Card Debt, No Matter What
Here's how my post-college life started. Graduating cum laude in 2004 with a degree in politics and a relevant job in my field upon graduation set me up for success. Many of my classmates didn't have any jobs lined up, and the economy, which was so strong when we started college in 2000, was not looking good. But that didn't matter to me. No. The 22-year-old version of myself was unstoppable. I was excited, and I got to work on a campaign. Looking back, I never could have kept up that pace of working 100 hours a week, walking door-to-door, asking voters for their support in November. But I thought I could propel myself toward a more lucrative, more powerful political job in Washington, DC.
The Conversation I Wished I'd Had
Let's say someone older, and wiser, took me aside. Not my dad, because what 22-year-old listens to their dad? Definitely not the ones who know everything and feel that every good thing can come their way. Let's say a professor took me aside. “Kathleen, there's something you should know,” she'd say, and I'd be all ears.
“You have a good head on your shoulders, an amazing work ethic, and the drive to do anything you want. The problem you have is your optimism gets in the way of reality sometimes. So, here's what I'd like you to promise. Wait until you earn a paycheck or two before you spend it. Bills will come with regularity, and so too will your paychecks. But never, I repeat, never ever, use your credit card to pay for something you can't afford.”
I didn't have that conversation. Nobody told me not to view credit card limits as a challenge. To pretend that my credit cards were like debit cards. To shred those “convenience checks” instead of filling one out and helping a friend of a friend invest in his business to the tune of $20,000. My optimism believed that friend of a friend when he said that I'd get the money back before interest started accruing.
Everyone's get-into-debt story is different, but so many start right after college, when you spend more money than you earn. Sometimes it's little by little. Sometimes it's a huge amount. I think part of the reason it happens is because when you get that first job offer, you don't really understand that $40,000 in salary is really more like $33,000 after taxes. You can get mad at the taxes all you want. But if you get into credit card debt, you're the one who has to pull yourself out. No one else.
If you can manage to keep ahead of your credit cards in your early years, you will be one step ahead of everyone else. You can work toward paying off your student loans, start saving for a down payment, and yes, even drink until last call every once in a while.
But no matter what, make sure you are always paying off your credit cards.
Own your finances. Do not let the credit card companies own you.
What financial advice for college graduates would you give?