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College Grads Can Use Proven Money Strategies To Get Aheadby Scott MillerRachel Wolfe of Eureka is a graduate student, a part-time baby sitter, a part-time reporter and a part-time cook, but she's not a financial expert. Still, when the 23-year-old graduates from Illinois State University in August with a master's degree in communications, she'll face a number of financial decisions that will impact the rest of her life. Retirement savings and a $12,000 student loan will battle for priority while new expenses accrue. Right now, her 80- to 100-page thesis leaves little time to plan for the future. Priority No. 1: finish the thesis. Priority No. 2: find a job. "To owe $12,000, have no (full-time) job, have no prospects, have bills coming in ... I guess I'm thankful that I don't have rent yet and all that," Wolfe said. "This is the major discussion that my friends and I have. You go to college hoping that you'll do well for yourself, that you'll be financially stable. You kind of get that idea in your head and when you get to the end of school, that pot of gold isn't there. In fact, it's pretty much empty," Wolfe said. It's the same dilemma most college students face: starting salaries and debt along with the sudden responsibility to save for the future. To help, financial experts have offered advice to ease the financial transition from the dorm to the office. Student loans Like Wolfe, many college students tally thousands in student loans. With interest rates so low, don't rush to pay off student loans. Instead, meet the minimum payment and pay off higher interest debt first such as credit card debt, said Jeff Telling of Family Credit Counseling Service in Normal. Consider consolidating loans to lock in a low interest rate. Currently, the rate teeters between 2.5 percent and 3.5 percent. However, the federal government will likely increase that 2 percent on July 1 so people should consolidate before June 30, said Jim Leisinger, a certified financial planner with American Express Financial Advisors in Lincoln. But, "read the fine print twice. A lot of companies charge consolidation fees. A lot of them front-load interest, so you're only paying interest for the first several years before you start paying on principal," said Mike Reid, a certified public accountant with Bank One Securities Corporation in Romeoville. Also, let student loans benefit your tax bill. Most of them are tax deductible. To check, visit www.irs.gov. Retirement With the ongoing Social Security debate in Congress and the decline of company-funded pensions, retirement savings is becoming a top priority, Reid said. Most companies offer a 401K plan that allows employees to invest a percent of their salary. The employer then typically matches a certain percentage. Leisinger recommends employees utilize the full matching amount but not exceed it. "That's free money. Take full advantage of that right away, even before paying off student loans. If you can pay yourself first, you're going to come out ahead," Leisinger said. Short- vs. long-term debt Short-term debt from credit cards carries high interest rates, Reid said. Long-term debt, however, such as mortgages, carry lower interest rates and improve your credit score, he said. "The sooner somebody feels like they're someplace they're going to be for more than two years, they ought to look at buying (a home)," Reid said. "You can get homes with little money down because of high real estate values. Rents are getting pretty high these days. A lot of times you can get a mortgage payment that's pretty comparable." Fiscal responsibility Maintain a written budget of revenues and expenditures. Advisors said this was the most important, particularly for recent college grads. Those paychecks might not be as big as they seem. "If you don't have that spending plan, you're basically operating in the dark. Savings should cover at least three months of your financial needs. You should set aside 10 percent of your earnings," Telling said. Telling's agency offers free financial courses from 6 to 7 p.m. every other Wednesday, he said. The next course is "Teens and Responsible Credit" on June 29 at the center, 1607 Visa Drive. To enroll, call (309) 452-5500. Article Reprinted Courtesy of The Pantagraph 
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