Graduating to a new level of financial responsibility

Thousands of college graduates recently found themselves awash in a sea of student-loan debt and other serious financial responsibilities. These tips can help new graduates, and their parents, attain a measure of equilibrium.

By Compiled by LAURA T. COFFEY

© St. Petersburg Times, published July 30, 2000

1. Make a budget. Track your spending in writing for one month, then devise a spending plan. Be on the lookout for opportunities to reduce expenses.

2. Count all the costs. When developing your spending plan, remember other costs in addition to your major bills. These include entertainment, clothes, phone calls, haircuts, Internet service providers, sports equipment, medical and dental fees, and insurance.

3. Evade credit card debt. As you adjust to juggling all these expenses, avoid saddling yourself with debt or overextending your budget by relying on credit cards. Instead, opt for a debit card, which is limited by the amount of money in your account.

4. Parents, avoid co-signing. Graduates with no job and no credit history may ask you to co-sign an apartment lease or car loan. Look into every other alternative before agreeing to do this at a time when children should become financially independent.

5. Manage your liability. New graduates and their roommates should understand that the person whose name appears on the lease and utilities is liable for the bills. If you have roommates, ask your landlord to put more than one name on the lease so the responsibility can be shared.

6. Decorate inexpensively. Furnish your first apartment with items from garage sales, classified ads and used furniture stores.

7. Insure thyself. Secure interim health insurance to cover the time between graduation and when you start working. Buy your own car insurance policy, and snatch up a good disability-insurance package if your employer offers it.

8. Pare down student loans. According to the American Council on Education, graduates of public colleges owe an average of $11,950, while graduates of private schools owe $14,290. Devote any extra money to paying down the loan with the highest interest rate or the one that starts accumulating interest first. If you're entering a field where companies are hungry for qualified workers, ask your prospective employer to help you pay off your student loans.

9. An elementary deduction. The tax-deduction issue may crop up if a graduate is supported by his or her parents for a portion of the year and is self-supporting the rest of the year. The parents are entitled to claim the exemption if they paid for more than half the child's cost of living that year.

10. Start saving and investing now. It can be difficult to think about saving when you're confronted with so many major expenses at once. Still, try to save even $10 a week, and participate in your employer's 401(k) plan or a Roth Individual Retirement Account.

Sources: American Express (http://www.americanexpress.com); MoneyCentral (http://www.moneycentral.com); and the Baltimore Sun.

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