Three Big Financial Decisions for College Graduates

May 24, 2009

Recent college graduates have some important money choices they have to make soon after graduation.  Some articles in the New York Times and on MSN Money Central take a look at a few of these big financial decisions.

Buy a Home vs Rent an Apartment

The subject of the New York Times article, Madison Nipp, is a recent college grad who earned a degree in financial planning.  She warns graduates to look past just the price of buying a home and to keep in mind the costs of upkeep, taxes, and insurance.  Typically young professionals are on a pretty limited income since they’re just starting out so if they base their estimated expenses on their projected mortgage payments and a bunch of other expenses crop up they could run into a cash flow shortage.

MSN Money reminds graduates that if they go the rental route they need to check into renters insurance that can provide coverage not only for stolen or damaged property but also for liability.

Of course, grads can always move back in with their parents to avoid mortgage payment, rent, or renters insurance.

Where to Find Health Insurance

How to bridge the insurance gap between graduating and getting a job that provides insurance is always a question for college grads.

MSN Money points out one thing that newly hired graduates may not be aware of, that some companies have probation periods before health insurance coverage goes into effect. That, of course, assumes a graduate has a job. In today’s economy, unless you have a degree in engineering or accounting you may be on the job hunt for a while.

Finding health insurance for college graduates means weighing the options of buying short-term health insurance, extending their parents’ coverage short-term under COBRA, or getting interim coverage through their alma mater.

How to Build or Repair Credit

Many college graduates are faced with one of two credit problems, having no credit history or having bad credit history. 

No Credit History

Madison Nipp, from the New York Times article didn’t have a credit card in college and when she went to rent an apartment after graduation the management company wouldn’t rent to her without a co-signer on the lease since she had no credit history.

Bad Credit History

There are other people that did open student credit cards in college, used them foolishly, and are now saddled with credit card debt.

Improving Credit Scores

Students with credit problems can always go to their parents for assistance, ask them to be co-signers on a lease or a line of credit.

Another option is to use secured credit cards or a secured loan to get credit in their name.  Since these secured options reduce the risk of lending, lenders are more willing to offer these forms of credit.  Once their credit score has improved, they may then be able to apply for some of the best credit cards for college graduates and young professionals.

The first step any credit troubled graduate is to get their free credit report and check on their credit history.  If they are responsible with credit and can take steps to improve their credit score then over time their credit history will become more favorable to lenders.


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Ben Edwards, the founder of Money Smart Life, saved up enough to buy a Nintendo back when he was 12 years old. When he used the money to buy shares of Wal-Mart stock instead, he knew he wasn't like the other kids... His addiction to personal finance has paid off for his family and now he's helping you to afford the life that you want. Check him out on the web at Google Plus, Twitter and Facebook.

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