In Part 1, we explored the basics of creating a budget after graduation and focused on issues related to accruing and repaying student debt. Now weíll turn our attention to two of the biggest factors that will impact your everyday life: your job and your housing situation.
Find the Job You Need
Thereís a good chance you wonít have a well-paying, full-time job lined up immediately after graduation. If your program of study included an internship, itís worth checking whether that organization has any open positions related to your experience. Even if you need some additional training for the role, having an established relationship with hiring managers and other employees can be a major benefit and may increase your chances of getting a job offer.
If your college or university has a career services program for students, they may also offer career counseling and other tools for a certain amount of time after graduation. If you werenít already taking advantage of those benefits as a student, post-graduation is a great time to start.
Career counselors can help you build a solid foundation for entering the job market by identifying your strengths, assisting with finding opportunities, reviewing your application materials, and practicing interview skills. You may have the education and experience necessary for a fulfilling position in your field, but if you donít know how to identify job openings, present yourself well, and navigate the interview process, you wonít stand much of a chance.
Even if youíre fully prepared, it can take months or even years to find a job that is relevant to your degree, skills, and the field you want to build a career in. Donít give up hope, but you may need to find something you can commit to for now and keep looking for that golden opportunity. Since most student loans only stay in deferment for six months, that looming payment may force you to speed up your job-seeking process.
Look for the Job You Want
If possible, keep the job you need, but also find some way to participate in the field you want to be in. This might involve volunteering or taking on temporary or part-time work in addition to your day job. Of course, by doing this thereís a risk of stretching yourself too thin, but the extra time you put into doing something you actually care about can be fulfilling and may help you gain valuable experience or find a better opportunity.
You might also make a point to attend conferences or guest speaker events relevant to your desired profession. Sometimes simply staying involved with those communities is enough to give you insight into a path forward, and you may even make a personal connection with someone who can help you out later on. If you arenít able to attend physical events, a vast number of online communities can provide digital networking opportunities where you can connect with professionals in your field.
Consider that your dream job might exist, just not where you live now. Donít close yourself off to moving to another city in order to find something youíll really enjoy doing. Even if you have to take a pay cut in order to get an entry-level position, if you can realistically afford to make that leap into a relevant position, you will have an easier time getting the experience youíll need to work your way up.
Find a Home You Can Afford
Perhaps you already have an apartment that you can keep beyond graduation. Keeping a realistic budget in mind, thereís no reason everything needs to change at once. Taking some time to decompress from years of study can be important. If youíre already exhausted, staying put for a while can help you gain a better perspective for your next move.
For some, on-campus housing is part of their entire college experience. Itís not likely the school will let you continue to live there much longer after graduation, which means you may need to line something up ó and fast. Hopefully, youíve created a plan well before graduation, as it may take months to locate an apartment and work through the application process.
If you have friends you can stay or share an apartment with, this can offer a great temporary or long-term option. Just be careful, as living with friends is much different than just spending time together having fun. You may not agree on the way a home should function, which could put a strain on your relationship. To give yourself the best shot at success, have a long talk about your expectations for bills, cleaning, pets, loud noises, having company over, and anything else you think could be an issue before you move in together.
Itís not a terrible option to move in with your parents or another family member. This is actually a growing trend among younger generations. Problems within global and local economies make it much harder to buy or rent a home of your own much more difficult than past decades. Staying, potentially rent free, for a few years can allow you to save money and begin paying off any debt youíve accrued while in college.
Finally, to look at a different perspective, perhaps youíve been saving money, or youíve managed to find a great job and you feel youíre ready to invest in a home of your own. Buying a home with student loan debt can be a major obstacle, whether youíve recently graduated or even years later. Holding a large amount of debt can greatly reduce the chance that a lender will be willing to take on a mortgage on a house.
The major factors lenders will consider before approving your mortgage are your credit score, the amount of your down payment, and your income compared to your debt.
Credit: Making full payments toward bills and other debts over time is the best way to build good credit, which will allow you to qualify for different types of home loans as well as lower interest rates overall. This could save you thousands of dollars in interest over time. Because of this, it may be beneficial to wait until youíve improved your credit before buying a house.
Down Payment: The amount you can pay immediately will also help determine which types of loans you qualify for. Most conventional mortgages require your down payment to be 20 percent of the homeís selling price. Other options exist, but you may have to pay for mortgage insurance as well, and your interest rate and monthly payments could be larger. However, in some cases, making a smaller down payment and taking on mortgage insurance is seen as a more secure transaction by lenders and might offer a lower interest rate, saving you money over time.
Debt-to-Income Ratio (DTI): Even if you have good credit, lenders want to make sure you donít have more debt than income before allowing you to borrow money for a home. If your total monthly payments are very close to your income, itís less likely youíd be able to afford a house payment as well. To lower your DTI, look at completely paying off high interest credit cards and other debts as soon as possible. If you have several types of student loans with different interest rates, you might also consider refinancing them in order to get a lower interest rate, thus a lower monthly payment.
Paying off student loans as well as making a house payment can stretch your budget extremely thin. This can be hard on you both financially and emotionally. Although it may seem like getting your dream home is the best thing to do, itís important to be able to save money for emergencies. Being comfortable and safe financially could actually offer more peace of mind until you can truly afford to make this major purchase.
Youíll face many financial challenges throughout your life, and making the transition from the life of a student to that of a working adult can be a particularly vulnerable time. It may take a while, but with plenty of patience, you can find the right job and housing arrangement to meet your personal and financial goals. Making the effort to educate yourself about the resources available to you is another major step in successfully navigating a complex realm of finances.