MONEY & ENTERTAINMENT

While in college, most students live in a kind of financial vacuum. No matter how much you have been saving your whole life, no matter how needy you can show yourself to be to the student loan gods, you never seem to have enough money. You will beg borrow and steal from any possible source you can with the philosophy, of “I’ll deal with it when I graduate.”

Unfortunately, it is in college that many of us develop our initial financial habits, and the first few years after you graduate will be when you experience the backlash of those freewheeling college spending years. When you hit college, student loan folks are tossing money at you and credit card vultures are on every campus, pedaling their buy-now-pay-later culture to a rapt audience. The fallacy of financial management while in school is that you don’t have to worry about repaying your student loans, and in many cases, even the interest on student loans, until a few months after you have graduated. You don’t get a true understanding of what it is going to be like to repay those loans while trying to put some money into your new life and your future—until graduation hits.

Debt
The worst thing that you can do when you graduate is avoid your financial situation and just hope it will go away. It won’t. In fact the longer you wait, the hungrier and more angry it will get, and it will hunt you to the ends of the earth, fat, bloated and reeking of interest penalties. The other mistake that many graduates make is thinking that they are not responsible for keeping track of where they have loans, keeping their loaning institutions up-to-date with their current addresses and educational status, and how the repayment schedule works.

After 8 years of school, I had so many loans with so many different banks that I completely missed one of them. I was then completely outraged when they contacted me a year after my graduation, demanding I pay everything I owed them for the past year (with compounded interest) in a lump sum. It was my first lesson (but certainly not my last) in the consequences of grossmb20051031.html fiscal irresponsibility.

In order to help you out, it is important to keep fairly clear financial records of where each of your loans is and with what financial or lending institution. This can be as simple as keeping a running list that you simply add to when you get each loan that lists the lending institution, the totally amount of the loan and the length of the grace period between graduation and repayment. If you are really organized keep a file on each loan (one of those accordion filing cases is great for just shoving papers in so you don’t lose them).

When you graduate, you will probably have about 3-6 months of grace period before you have to start repaying your loan. In this time, your lending institution will contact you with the amount of your loan, the repayment schedule and possibly a lump sum representing the amount of interest you will accrue during that grace period (even though you are not repaying your loan, you are still accumulating interest).

Use this grace period to drop some cash on your other outstanding debt, like credit cards. The lower you can get those balances before you have to start repaying student loans, the less your total monthly payments will be. If you realize that you will have payments from various lending institutions coming out at different times of the month and you are having trouble keeping track of them, or you are finding your student debt on top of your credit card debt unmanageable, talk to your lending institutions about debt relief on student loans, or consider consolidating your debt into one single loan.

The most important thing to remember is that once you have graduated, financial hand holding is over. You will be held responsible for every penny you have borrowed, and the sooner you face it, the better your credit rating will be.

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Career
Your job hunt should begin a couple of months before you have graduated with your dandy new degree. You want to have things in place before you have to face facts that debt collectors couldn’t care less that you being paid minimum wage, they are not going to wait for their money. Many faculties have recruiting built right into their system by providing students with networking or internship opportunities. Take whatever you can get and do as much research into planning what your career goals are.

Once you have graduated, you will most likely be immediately faced with the age-old job satisfaction/financial need quandary. Under the pressure of accumulated student debt, you will have to make a decision about whether you want to take a lower-paying, more rewarding job doing something that you enjoy or cash in your skills to make the maximum amount of money as quickly as possible. The latter is very tempting as you face your daunting debt, and to be fair, you deserve to make a little dough for yourself after all of the sacrifices you have made to get through school.

The danger of taking the high-paying, low satisfaction job is that, if all you love about your job is the little financial leeway it gives you, you will probably lose interest in the job, and possibly the field of work, very quickly. It is worthwhile to consider taking a lower paying, entry level job in a field that you can see yourself sticking with so that you do not waste the education that you will be paying for for a long time by burning out on unsatisfying work. I can attest to the fact that there are few more bitter pills to swallow than working three jobs to pay for a degree that you aren’t even using.

Purchases
As a graduate, you will be offered various deals on big-ticket items like cars or electronics. The philosophy behind this is related to that of the credit card sharks who circle freshmen with their wares. These companies take advantage of your recent-graduate feelings of freedom, celebration, and perceived financial mobility. They know you deserve a new car for all your blood, sweat, and tears. And they want to make that very easy for you, because if they can catch you in that sweet grace period when you are making good money and not paying a cent in debt repayment, they can convince you that you should (and could) be sporting a ride that represents your new state of upward mobility.

Once you graduate, unless you have the cash to cover them, put off any major purchases until your grace period is up and you have a true sense of how repaying your student debt is going to affect your lifestyle. Do not rack up any more debt until you have a clear picture of where you currently stand. If you find you have some extra money every month, it is much more prudent to stick it into investments or RRSPs (you can’t start too early). Saving for a house is also a much more prudent move, financially, than leasing a brand new car, and in fact, financing or leasing that car may impede your chances of getting a mortgage.

Graduating from university or college is a major life achievement. There are things that you deserve for the work you have put in, but there are also fiscal responsibilities that you may be truly facing for the first time in your life, and for which you will be solely responsible. This is a time when you can either get a handle on your finances and start planning for your future, or keep avoiding it, and face a financial crisis later as your more realistic friends are tasting the fruits of their labour.

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