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May 30, 2009

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My advice to a new grad? That diploma you're so proud of doesn't mean squat if you don't work your butt off to prove to your employer that you earned it. It's not an entitlement that says you deserve a high paying job, just because you have it.

"What would you tell a new grad?"

Make a rough plan of what you're going to do with that salary, rather than a wait & see approach.

Realize that life is a tradeoff: if you want to spend more on one thing, cut back on another. Overall, it's good to have your priorities in mind.

I don't know about you but last time I looked at a credit card contract it might as well have been in Chinese. Most of this stuff is a no brainer but it all comes down to who follows the rules.

I just want to say that paying for college with student loans (acquiring debt) is worth it if you are 100% sure you are in a program that you will find work. If you are attending college to please your parents or simply "just cause" then that debt will really weigh you down in life. Let's say you don't find work in the field. Well guess what? The company you are in debt to doesn't care. You have to some how make your mothly payments.

The temptation when you graduate and get your first job is to go out and party hard.
Ironically, I found I actually had more disposable income during school than when I graduated and got a job, but I still kept up the same level of socializing.
My advice would be to go and have fun, but leave the credit card at home when you go out.

"but the mortgage debt people are certainly quiet these days."

I believe mortgage debt can be a good thing. Although some people should not own homes, and some do not want to, for many homeownership is great. You must look at time line, lifestyle, income and utility. In my case family is important and we are very happy with the city we live in and plan on staying here forever, we have a small child and a second on the way and really enjoy the space, street, schools and lifestyle our home provides. Our income is also above average and we enjoy a nice tax break with the mortgage and property taxes. Not owning a home pretty much means you will be moving every few years on average and as you age you will not have a secure place to live without the threat of increased rent and fees. Many are suffering due to the drop in real estate, but it has been no worse than stocks over the past year and a half, if you had a 500k house with 450k of debt two years ago and now own a 375k home with 430k of debt you are fine as long as you make your payments. If you owned 250k in equities a couple of years ago, chances are they are worth 175k now.

I would ask them to consider who they are.

Why did you go to college? What are your ultimate goals? Spend time being really clear on that.

Why is that so important?

Because, IMO, when you are clear on your values and goals, it makes it easy to make smarter decisions.

Example. A student might say that she went to school in order to be a doctor ultimately. Why? To help sick people and to support her (eventual) family. I don't think these conversations are beyond the ability of most grads.

If she's clear on her values, it makes it easier for her to see how her spending/life style either supports those values or conflicts with them.

Be clear on values FIRST. It makes the spending,saving,investment, lifestyle questions easy to answer.

FWIW

No matter what spend LESS than you earn!
Never charge what you cant pay off on the next bill.
There is NO get rich quick scheme.
Get a mentor.
Start saving consistently, even if its ONE dollar.
If you have a deferred comp plan 401K,403B etc invest in it.
Join a credit union.
Debt=loss of freedom choose it wisely.
Read Your Money or Your Life by Joe Dominguez
Be grateful for the opportunities you have been give.
Respect yourself.

These are great tips for those just graduating from high school or college. As they step out into the "Real World," they could use all the advice they can get. Thanks for sharing.

Don't recall where I read this... A prof used to give this advice to all grads passing out of college:

From your first salary onwards, create a "Go to Hell" Fund. This should allow you to say these words to your boss if you are being asked to something immoral or unethical that you disagree with. The last reason for accepting that command should be that you are tied to a salary from the job...

Pay your debts off first.
Invest in the overall market; trust me, America won't fail
Live below your means - i.e. used car, cheap apartment, cook for yourself

Follow these rules, and anybody can be a millionaire by the time they retire.

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