Financial Advice for College Grads in Career Limbo

In 2010, job market predictions and financial advice were drenched in doom and gloom for fresh college graduates: Doom for potential careers and gloom for monetary safety. Mounds of debt and never-ending loan payments make small things such as, oh, eating seem like a luxury.

This doom cloud lacked the silver lining many imagined while sitting their final round of tests, and the latest numbers from the Bureau of Labor Statistics are equally dreary: The U.S. unemployment rate sat at 9.8 percent in November, accounting for 15.1 million people nationwide. Yikes. At my alma mater, the gloom was most apparent at job fairs. Sure, a huge number of employers showed up, but more often than not it was to take resumes, give a handshake and promise to be in touch if (not when) hiring took place.

But enough of the horror show. Whether you graduated in spring or walked only weeks ago, keep in mind this whole job hunt thing is a marathon, not a sprint. With forethought and planning, a momentary lull doesn't have to equal catastrophe, even if your finances are fragile. The following are 21 budgeting tips to help carry you through this understandably rough transition period, culled from personal experience and the most solid financial advice available. Some you may already know, others you may have been putting off, but all will prove useful as you move from the academic world to the "real" one.

To avoid further inundating you with bad news, let me say congrats to the final class of 2010. It's a big, wide, monetarily unstable world, but it's ripe for the reaping. Here's hoping the New Year has something promising in store.

1. Know Personal Finance Inside and Out
The idea of "personal finance" is vast and vague, making it hard to pin down exactly what it entails. In general, it means internalizing many of these tips and molding them into your daily life. Over time, the whole concept will develop as you take on more responsibilities, earn a higher salary and find solid financial footing, but it should always center on your well-being. The Internet is ripe with advice on every aspect, from setting a discretionary spending budget to choosing a first mortgage. The site Mint.com is a good starting point, with useful articles and tools (particularly the free iPhone application) that cater to a younger crowd.

Just remember: This isn't college. Your financial safety net is very thin and living within your means is more important than ever.

2. Create and Maintain a Savings Account
This seems so elegantly obvious, but it's not enough to simply throw dough in a basic account and let it sit or, worse yet, pull from it as you would a checking account. Research interest rates, service fees and the various types of accounts, including money market and CD accounts. Most basic bank savings accounts won't grow noticeably, but even a little helps. Put aside 10 percent every month and resist the urge to touch it, unless you're in dire need of help with rent, bills and other pertinent payments.

And never, ever share a savings account with your significant other. Newlyweds should talk this over and decide if it's best, but in general, it's never smart to share all your funds with a loved one. Sounds harsh, but it's fiscally smart.

3. Set Up an Emergency Fund
First things first: An emergency fund is in no way like a checking or savings account. Emergency funds are for absolute hell-on-earth scenarios, such as the loss of a job or unexpected medical bills. As with savings, use an account that earns reasonable interest of 1 percent or more.

One problem many people have is finding motivation to start on an already meagre income. Most experts recommend keeping three to six months worth of regular living expenses in your fund. Even if this is under $5,000, the thought of keeping that much tucked indefinitely under the proverbial mattress can be excruciating. Remind yourself to start small and build slowly, a process that can take months or years. Make it a goal to set aside $10 every month, no matter what. When you feel comfortable, bump the amount incrementally. This slow growth will put you at ease, making it easier to appreciate the benefits of such a valuable fallback. 

4. Be Organized
It's enough to say keep up with payments, bills, taxes and the like: It's quite another thing to practice it. The trick to staying afloat in a sea of bills is to be organized. Digital record-keeping makes this easier than ever, but it's still smart to keep a small file folder of all your important financial records. If your bank or lender allows for it, arrange automatic payments (just be sure your account has enough to handle the charge or be hit with penalty fees).

For the perma-connected, a free app can spur organization. BillTracker Lite for the Apple iPhone and Billski Bill Tracker for Android take all your statements and craft reminders based on when they're due. Of course, these tools are only helpful if you remember to use them.

5. Know Your Loans
Chances are you've already reaped the benefits of loan money (after all, you just graduated), so there's little reason to explain the general types. Like accounts, intimate knowledge of loans can make the payment process work for you, not against you. The basic rules: Never skip a payment, never pay late and avoid consolidation. Your fledgling credit can't handle such costly setbacks, the smallest of which could potentially ruin your chances with future loans, leases and even jobs.

Back in March, President Obama tacked several higher ed provisions onto the Health Care Reform Act, one of which allows for a more lenient grace period to repay debt. Unfortunately, the rules don't take effect until 2014. In the meantime, all students have 25 years to pay back student loans before the government forgives their debt. This isn't a free ticket to sit and make minimum payments: Hammer away at large loans aggressively. Most lenders recommend a 10-year plan with payments of no more than 8 to 10 percent of your monthly income.

Study the terms of your particular loan -- whether direct or student-parent, subsidized or unsubsidized -- and be aware of minimum payments, interest amounts and deferment schedules for each. See if your university works with the National Student Clearinghouse to arrange electronic deferments for recent grads. If a masters program is in your future, you may be able to put off payments until you're done. It doesn't solve the debt problem, but you could break ground on a career in the meantime and have a bigger cushion.

6. Have Credit Smarts
Along with booze, credit cards are the bane of many a college student's existence. They're like magic money you never knew you had (and, in reality, don't). Like the Midas touch, they give a false sense of wealth when used frivolously. This isn't all your fault, as banks have turned credit cards into disasters waiting to happen. The government stepped in several months ago and implemented new rules across the board, such as capping penalty fees at $25 each and limiting arbitrary APR rate increases. Read the full Credit CARD Act for more info.

If, however, you already find yourself in debt, get the hell out of it. The first step is to stop using your card, period, and adhere religiously to a payment schedule. The second is to approach the situation intelligently. Talk with people you trust about your plan to get on track, whether parents or a financial professional. Many banks allow clients to meet with advisers for a free initial consultation.

7. Study Retirement Accounts
Retirement seems years away and, for thirsty 20-somethings entering the real world, it is. Yet it's never too early to be educated about the range of retirement accounts available, from 401(k)'s and 403(b)'s to the various types of IRAs. The financial advice site MsMoney.com shows how any form of investment before age 26 is beneficial, no matter the compounding rate.

An angle many young people don't consider is how important retirement options become when weighing job prospects. A position that looks mediocre salary-wise may come with an incredible benefits package. If you know the ins and outs, you'll be better equipped to weigh options intelligently.

8. Consider a General Credit Union
The perks of credit union membership are numerous. Not only do these non-profits have better interest rates and fewer fees (great for the aforementioned savings accounts), they're also more secure from your worst financial enemy: yourself. Pulling cash from a credit union account takes a tad more thought and effort than finding the nearest ATM, forcing you to consider if a weekend splurge is in your best interest.

A hurdle recent grads face with credit unions is membership. Most require you to apply through an employer, church, service union, or other exclusive group. If this is the case, don't forget your parents. Almost all credit unions allow family members to join without requiring a joint account. This gives you freedom plus the benefits only your parents can access. There are, however, numerous general membership unions. Visit the Credit Union National Association consumer website for info on eligibility requirements, how to join and where to find local branches.

9. Career Hunt Wisely
Hopefully you took some steps toward a career while still in college, such as holding an internship, building a resume, creating a LinkedIn account and more. Now that college counselors and resources are behind you, it's largely your duty to stay thirsty in the job hunt. Create a list of 10 to 15 prospective employers and connect with them through LinkedIn or e-mail, then check news and job postings weekly. Hop on anything promising, no matter how minuscule the chances of being hired.

Another route is to check the newest Forbes list of promising employers and towns for young professionals. While salary is obviously a big issue, weigh the cost of living against what you'll make, both in terms of cash and fulfillment. Does a marginally interesting entry-level job in New York City really beat a dream job in Minneapolis? Many emerging companies, especially those based on the Web, allow for telecommuting and are just as legitimate without the feel of a nine-to-five grind.

10. Don't Snub Hourly Jobs
Nary a student can make it through college today without holding an hourly job. If you haven't yet quit, hold onto yours for several more months. If your situation doesn't allow for that -- say, you're moving home or you held a student-only position on campus -- don't assume all is lost. Many city and state governments hire seasonal employees throughout the winter. Such jobs have a known expiration date, true, but they'll keep you afloat. As always, Craigslist is a fount for job-seekers.

11. Think Long term...
Long-term planning doesn't only apply to stodgy things like career goals, investing and saving. It also applies to that weekend Vegas binge or the little puppy you want: All require considerable thought before taking the plunge. In the simplest terms possible, create a budget for both long and short term goals and stick to it. Play around with this free online budget sheet to get started.

12. ...But Don't Overlook the Short Term
While long-term planning is vital, for every point there is an equally valid counterpoint. (See, college composition did come in handy!) Don't let financial woes and worries overtake your life. What most people won't tell you about budgeting is that it needs to be constantly evaluated and, if necessary, changed to suit new needs. You want a puppy? Look at your current budget. If it allows for one, adjust your discretionary spending in other areas and go for it. I did.

But here's the caveat: A little waffling never hurts, but when it becomes the rule and not the exception, it's time to step back and reevaluate. Easier said than done, I know, but at 20-some-odd years old, self-control and awareness are valuable skills.

13. Keep Yourself Busy
After graduation, you may find yourself in a strange position: Without homework, tests and school, your time suddenly feels very open -- almost too open. Rather than blow it on sleeping  or bar hopping, look into hobbies that pull double-duty as enjoyable pastime and career builder. If you're a graphic designer or writer, look into freelance work. Again, stay in constant communication with professionals in your chosen field through LinkedIn and other avenues. Volunteer work may not pay, but it rarely costs a thing and can lead to a valuable recommendation.

14. Be Smart with Housing
At this time in your life, the key to affordable housing is roommates; whether they be parents, friends or random people is your prerogative. If you forgo moving home, chances are for the first time ever housing expenses are entirely upon you. Roommates can cut the cost of rent and bills in half, third or more. Remember to carefully review all terms of a lease and be aware of what's included before signing. A cheap lease can be exponentially more expensive when amenities like gas, trash and utilities aren't included.

Now, this may violate your comfort levels, but don't be afraid to find roommates on Craigslist. This isn't to say you should go with the first person you meet, but you're young, flexible and able to cope. Nightmare roommates only need to last several months, at most.

15. Enjoy the Perks of Your Degree 
Say it out loud: You have a college degree. While this is your eventual ticket to a career, enjoy even the fringe benefits of that paper. Explore previously exclusive job options, particularly if you have a knack for teaching. Most states allow anyone with a degree to apply for a substitute teaching license.

In a similar but international vein, numerous outfits contract recent grads to teach English in foreign countries. This option isn't for everyone, but if you don't mind uprooting for two or three years, check postings at the site ESLJobs.com. Reputable programs require little upfront costs and often provide housing, a salary and assistance while abroad. Be careful and sensible when applying.

Don't forget to work your degree into freelance efforts. Advertise on your personal website, Facebook profile or LinkedIn as a graduate. It's not guaranteed to boost prospects, but it never hurts.

16. Bike Everywhere You Can
Admittedly, I didn't get into biking until I moved to college. Today, I bike everywhere possible. I found a single-speed on Craigslist for $70, replaced the chain for $10 and couldn't be happier.

Biking is also stellar exercise for those who've been spoiled by free campus rec centers and suddenly find themselves facing sky-high membership fees at local gyms. Admittedly, bench-pressing a bike does little for your pecs, but it's top-notch cardio for free. Wait to buy a membership until you have solid financial footing.

17. Buy Quality Used, Not New
Speaking of bikes bought and bartered on Craigslist, just about anything used can be found online relatively cheap and in good condition. Bikes, modern furniture, movies on DVDs, supplies for your kitchen collection -- it's a wide world with a little research. If a buyer doesn't supply pictures, ask to see the goods in person before promising payment. This gets tricky when the seller lives far away or is unwilling to compromise, but with the vast number of deals available, you'll rarely have to settle. It's their loss.

Used household items are one thing, but cars are entirely different. You may be tempted to take out a loan or fork over cash for a brand new car, figuring your first major investment should be done wisely. Hold onto that thought, squeeze it tightly and kill it. Cars depreciate faster than just about anything on the market, losing a sizable chunk of their value within the first few months. Look instead for a reliable used vehicle and always, without fail, test-drive before agreeing to buy.

18. Scope the Sales
Buying used is an obvious way to cut corners, but you can't deny the fact fresh, unworn clothing is more satisfying than used and infinitely more impressive as you enter the professional world of interviews, meetings and first impressions. However, if you have the impulse shopping habits of a Beverly Hills starlet, now is time to break them.

The easiest way to save cash is to comparison shop online, whether you plan to buy in-store or over the Web. This forces you to evaluate prices, sales and, most importantly, whether you really need that particular item. It also allows you to search for online coupons, free shipping codes and loads of other discounts you may miss at the mall. Don't forget to follow you favorite merchants on Facebook and Twitter, as many post deals exclusive to their social media accounts.

Once you have practice keeping your inner spend hound leashed, read through our "Best Time to Buy Guide for 75 Products and Services." It covers everything from clothing and linens to video games and gym memberships.

19. Evaluate Your Cell Phone Plan...Seriously
This will arguably be the hardest option for a lot of young adults, myself included. I just recently bought a smartphone and data plan after being stuck with the same phone for five years and man, it's practically heaven. I literally think it's saved my sanity more than a few times. Although my new plan is more expensive, I chose wisely and carefully reviewed all portions of it beforehand. I then waited for my coveted phone to go on sale and matched it with a new-signers rebate. In the end, the phone was free. If you have bad (or no) credit, it may be best to hop on a family plan for several months with parents or friends you trust. You'll receive a better rate and can transfer to an individual account once back on your feet.

In the blossoming era of smartphones, one simple way to shave monthly bills is to cut texting from your plan, as most carriers charge upwards of $10 per month for the service. Blackberry, iPhone and Android all have free messenger apps that allow you to text others with the same program (kind of like AOL IM of old, mobile-style). They can save loads for perennial finger-talkers, but there's one major downside: In general, none are cross-platform, meaning the iPhone app can't communicate with the Android one. For iPhone, Textfree with Voice is the most reliable. The winning platform for Android is chompSMS.

20. Think About How You Eat
No, losing weight isn't the key to financial solvency; it's simply a fringe benefit. Convenience is the draw of expensive fast food and sit-down restaurants in the first place. Evaluating how you eat and creating a grocery budget will take time, but it's time that pads your pocket. I was shocked the first time I visited the grocery store with a reasonable budget and spent more than $100. However, that food lasted nearly a month (without surviving off Ramen for the final week). Compared to the cost of eating out over the same period of time, I easily saved five times more.

Although the growing season is dormant, come early spring many community gardens and Community Supported Agriculture farms will begin planting and preparing for the summer. Consider joining or volunteering with one of these grassroots outfits, found in cities, suburbs and small towns alike. Not only do many offer free food in exchange for work, the selection of veggies and fruits will force you to cook creatively and discover unexplored tastes. After all, experimentation doesn't end with college.

21. Cut the Cable
On-Demand, HBO and Showtime are all sweet, but not when you can barely afford rent. Cable and Internet bundles start reasonably cheap, but once the promotional rate runs out, consider which of the two are more important. For most, Web access wins out over television, particularly if you're job hunting from home. If you really need an entertainment fix, the new streaming-only Netflix plan runs $8 per month. Oh, and don't forget basic channels are broadcast for free.

Photo by CubanRefugee