I am stealing this post from Newly Corporate, courtesy of Dan. You can click through to get his expansive reasons for each.
1. Start a Roth IRA for retirement.
When I graduated college one of the first things I can remember doing was starting a Vanguard Roth IRA. I put my money into the Target Retirement Fund 2045 and funded it 60% of max upfront to make sure that I was on the path to contribute the maximum for the year. I used a large portion of my signing bonus to do so. I did contribute the maximum that year, and boy has it lost a lot of value since. But, I think the important takeaway was getting into the habit of sending money to Vanguard. What do you all think? Are you sticking mainly with a traditional?
2. Buy a used car.
I have a 2004 Hyundai with about 85,000 miles. It is running great right now and I have not had any maintenance problems other than the normal wear and tear stuff. A few large-scale preventative maintenance measures are dawning on me but the $1,000 it will cost will surely outweigh a car payment. BUT when it eventually dies my every intention is to buy a 2-3 year old car (probably a Camry, Civic, Accord, Altima or something along those lines). I have been considering a new car with all of the sales going on right now and will write a post on that in the near future.
3. Keep renting, for a while.
With my company the rate of promotions is correlated pretty strongly with an ability to relocate. With that being said I want to stay flexible with my location… so I do not see myself buying a house in the near future. There is also the fact that I live with a roommate right now and only pay $450/month in rent. Living in a cheap city makes this a very wise decision. One thing people do not look at when comparing renting to owning is that owning has a lot of maintenance and repair costs. Renting is like paying a service to have other people do it for you! But, I am human and I live in America and I have had the urge to buy a house, of course. I will write a post on this as well!
4. Start a rainy-day fund.
AKA an emergency fund. I have it funded to cover about a year of expenses at my current spending level ($1,200/month). If I were laid off or if something serious happened I have looked at my budget and can trim my monthly expenses down to about $900/month which would give me another 2 months of living expenses. One year is pretty conservative, but I figure with the current economic climate you can’t be too safe. Is everyone else thinking along the same lines? Or have you found that recession-proof job?
5. Maximize your employers contribution to your 401(k) at work.
I was originally going to just do the maximum until my company stopped matching. That would have meant I contribute 4% and they contribute 2% plus another 2% for my pension (which is contributed regardless of my contributions). However, I decided I would rather get the compounding interest and upped it to 8% on my end. With the stock market declining even further I have changed it to 12% to keep cost averaging in. On the downside I have had to stop looking at my portfolio value… instead I look at the inverse graph and watch as my shares keep going up and up :)
6. Keep living cheap.
This is probably my number one money saving aid at no effort of my own. I thought I was living just fine in college. You know what they say… ignorance is bliss! And maybe ignorance ain’t so bad if it keeps my retirement fully funded! In fact, my rent is now cheaper than when I was in college. I do not need a big fancy one bedroom apartment in the middle of the city. I share a room with another person my age with the same living habits (no crazy parties on the weekdays!). We split utilities. It gives me company and extra money. However, I am very easy to please. Some people cannot stand living with someone else… to each his own.
7. Build your network.
I need to work on this more. I still have a few professional contacts at other companies when I coordinated events for my business school. I am bad at staying in touch with people for the most part, though. However, the possibilities are endless when you effectively utilize your network.
8. Build your story.
I think I have a pretty decent story. I got through college with no debt working 20-40 hours per week the whole time. I did this while still maintaining good grades, an officer position in a club, and a social life. The jobs which I have held since the age of 15 entailed many different skills. I have bicycled across many countries in Europe and backpacked across many more. All of these added to personal and professional growth. If you sat down to an interview and they asked you that one question “Tell us something great that you have done…” do you think just getting a degree from an Ivy League is ‘Great?’
9. Get a better credit card.
Upon graduation I had a Chase Freedom card and a BOA Student card. My first order of business was to get the rates lowered by calling them. I had a good payment history, so that worked. My next step was to get a new credit card. Credit cards have differing benefits for everyone. The AMEX blue cash rewards is a pretty popular card, as is Miles by Discover (good for travelers!). On a personal note I pay off my credit cards in full EVERY month, thus credit cards with good rewards are a good tool for myself to utilize.
10. Set goals, stay active.
Me and my boss discussed where I want to be in five years and how that can be accomplished. I will make sure to stay on top of my own destiny. I own my career. That is something important for everyone to say: “I own my career.” … “I own my happiness.” …. Stay in touch with what you need to succeed.
How is everyone else doing on these 10 things?
I'm MLR. After graduating from college debt free, I decided to write a blog encouraging people to adapt responsible and sensible personal finance rules.
February 24th, 2009 at 8:21 pm |
Not a bad list, although I think many of items could be started during, or even before, your college term. Starting a Roth IRA during high school, even if you can only put in $100 or so a month, would give you nearly a half decade of more time for your money to compound.
As for myself, I’ve done many of these things; I have a Roth (I feel that it’s a better value in the long-term, as tax rates are likely to be higher when I retire in three or four decades), own a used car (paid for in cash), and have an emergency fund (which I’m currently tapping, since I was downsized last year). I wish I had done more to build a network, especially now that I find myself job hunting, but alas, it’s a rare person who has absolutely no regrets, right?
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February 24th, 2009 at 11:57 pm |
Roger –
You bring up a good point about starting earlier. I wish I had been given proper guidance in high school in regards to personal finance. I would have had the money to do $1-200/month into a Roth IRA but I just didn’t know about it. And as you said, the compounding would have been magnificent.
I agree with you in re: to the advantages of the roth. For me, the fact that the tax rate may be higher (as you mentioned), the fact that I will probably me in a higher income earning bracket anyways, and the ability to use my principal without penalty are what make me choose the roth.
Job hunting is rough, what kind of work do you do?
Thanks for stopping by!
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Roger Reply:
February 25th, 2009 at 9:40 am |
I’m in biochemistry; unfortunately, the pharmaceutical industry (the major source of employment in my field) has been hemorrhaging jobs since even before the current downturn, so it’s a tough situation all around. I’m competing for entry level jobs with people who have half a decade or so of experience (who in turn are fighting for jobs at their level with people who have a decade of experience, and so on).
I should be able to earn a decent income when I land a job (my last position earned something like $40k a year, and that was with essentially no related experience), but getting a job with both the broader economy and my field being down is rough.
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March 2nd, 2009 at 8:34 pm |
I graduated last week, and I already have a used car, a bit of an emergency fund, and a couple of good credit cards. I like to think I even have a good story already! I plan to keep renting and to open a Roth when it becomes feasible.
I think I will always live cheap, too!
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March 3rd, 2009 at 6:53 am |
@ Roger — It seems that situation you just mentioned is being played out in industry after industry. Do you have any other skills that could land you a job in another field for the time being?
@ Stephanie — Congrats! I was so psyched when I graduated! :) Did you land a job or is the economy treating you rougly?
I have been looking at replacing my car and have been considering the cost of going against this typical PF advice of buy used. The prices are amazinggg right now!
You definitely seem to have a good plan and the will to keep in your ways. I expect to see that Networth IQ on your page start climbing up steadily!
Thank you both for stopping by!
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March 3rd, 2009 at 11:58 am |
Well, I’m currently working part time at my old university, tutoring students in organic chemistry. I’m pretty good at teaching, but have a relatively narrow range of subjects I’d be good at explaining to others (mostly science ones), and with only a Bachelor’s degree, it’s all but impossible to get any teaching gigs.
Other than that, my biggest skill is the the fact that I’m a young, reasonably fit guy and can, in theory, do plenty of labor intensive work.
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May 18th, 2009 at 11:43 am |
Nice list. The point about keep renting for a while is a good one, I think…. especially if you haven’t found a mate yet and aren’t ready to settle down anyway – he/she might need to move somewhere else, too. I think Roger can probably get more teaching gigs than he thinks….. tutor high school students, for one… and it’s awesome you’ve done some travelling. I did too, but it’s nowhere near “out of my system” as they saY.
MoneyEnergy’s last blog post..The Real Costs of Graduate School
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MyLifeROI Reply:
May 19th, 2009 at 7:34 am |
@MoneyEnergy,
Renting is a very “college” idea. So many people graduate and think they are above that! I don’t get it… it saves me about $7,000 every year. I’ll take it.
Roger is a smart dude, he can definitely get more teaching gigs! Craigslist is FULL of them (my g/f just graduated grad school for teaching, but found a few jobs for side income that way).
Where have you traveled and where else do you want to go?
MLR
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October 11th, 2011 at 12:07 am |
hmmm not a bad list. and it’s nice to know you are pointing that it would be better to start earlier. i’m currently working and still having a part time job. this will help me save more money.
april14344´s last blog ..Cheap Student Car Insurance
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November 22nd, 2011 at 2:41 am |
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