Financial Help for College Grads

According to the Federal Reserve Bank of San Francisco the unemployment rate for college graduates in 2010 was over 8%. According to EPI’s new paper, The Class of 2010, recent college graduates under age 25 the unemployment rate is 9%. Monster.com has a special section on its website for recent college graduates to help them find jobs. USAjobs.com has federal job listings by college major.

According to Pianalto, recent college graduates don’t experience skill and geographic constraints because they tend to be highly educated and mobile. College graduates have suffered worse in this economy than any other group and are having a hard time finding a job. Trying to find employment during a financial crisis can limit total earning potential over the life of a college graduates’ career.

Another factor college graduates have to worry about is the debt accumulated while in school. If they are unable to find a job, they are also unable to pay their debt. When you find a job focus on paying down debt. Here are some financial tips for recent college graduates to help you reduce debt and improve your financial situation.

Housing
1. Stay at home for at least a year after graduation. If you have to live on your own buy an efficiency, studio apartment or loft. You can get a roommate but you have no control over whether they pay their rent or pay on time.
2. Your housing costs should be no more than 35% of your total net income (after taxes).

Auto
1. Skip the car. Don’t buy a car your first year of employment. Catch public transportation; borrow your parents’ car or a friend’s car when needed. If you must buy a car buy a used car.

Paying Down Student Loans
1. Use caution with consolidation. Consolidating student loans combines your loans into one payment but may or may not provide you with a lower interest rate. You may not be eligible for various student loan forgiveness programs if you consolidate your student loans.
2. Pay more than the minimum monthly payment. Your loan accrues the greatest interest in the first 2-3 years of the loan.

Investing (401K's/IRAs )
1. Start with your company's 401K. Contribute as much as you can to your retirement account. You will need at least 70-80% of your income during retirement and will need a minimum of $1,000,000 to retire.
2. Focus on long term growth. You have to be willing to leave your money untouched for the next 5 to 10 years. Otherwise you won't be able to see the benefits of your money growing.

Spending/Budgeting
1. Create a budget. Make your budget flexible to accommodate for unexpected expenses and include savings goals. Include monthly expenses and debt plus your monthly income. This will help to readily see the areas where you can reduce expenses. Create an emergency fund that is enough savings to pay your bills for at least 9 to 12 months.
2. Reduce your credit card debt. Pay more than the minimum monthly payment.

Managing Credit Card Debt
1. Stop spending. Don't spend money you don't have. This will result in your owing more money. Use your credit card for emergencies only.
2. Setup a payment plan. Setup a payment plan with each of your creditors to pay off your debts. Identify any terms and negotiations you would like to make and stick to the terms.

Credit
1. Order a copy of your credit reports at annualcreditreport.com and fix any errors.
2. Get current on any delinquent accounts.

Financial Planning
1. Use a broker or financial advisor to setup your retirement account.
2. Buy insurance. Buy health, life, disability insurance.

NFL Players are Just Like Us When It Comes to Money

Many NFL players go from a low to middle class lifestyle to upper or wealthy lifestyle in an instant and are not taught how to manage their finances and are not sure who they should or should not trust. Many NFL players are taken advantage of because of their financial status. In other instances they succumb to guilt from family and friends to take care of them, peer pressure, impulse shopping, unable to say no to those asking for money, living above their means, trying to impress others, being overcharged, or bad investments which causes them to lose their homes, have their cars repossessed or file for bankruptcy due to their bad spending habits and poor financial choices.

Many players buy things that have no value and have very little assets. Some forget to pay taxes, don’t keep track of their finances, make bad investments, get caught up in scams and lack basic business knowledge. This lack of financial experience and financial literacy education causes NFL players to buy things they can’t afford and try to portray a certain image that is difficult to live up to.

Approximately 40% of NFL players end up bankrupt after retirement. According to MSNBC approximately 380 players of the total 1,700 players live paycheck to paycheck. The average rookie salary is $320,000. When players get paid, after they pay taxes, pay their agent, publicists, accountants, lawyers and others on their payroll, pay for their lavish lifestyle with a home, multiple cars, jewelry, clothing, helping family and friends they have very little left.

Some NFL players are borrowing money from friends due to the lockout. Some players are getting payday loans called “lockout loans” provided by lending agents. Lockout loans for more than $60,000 can have interest rates as high as 36%. The NFL Players Association in advance of the lockout advised players to save at least 3 game checks and find additional ways to make money but many did not follow this advice. The NFL Players Association also provides financial seminars and classes for players who do not heed the advice provided or may not understand the advice provided.

Many players get caught up in the media frenzy and hype and want to give the appearance that they are wealthy when some are just one paycheck away from bankruptcy. Some players retire and don’t realize they are in financial ruin and need help until they retire.

Many players feel guilty by pressure from family and friends to take care of them financially which can cause a heavy financial strain on players. Family and friends see players on television and don’t realize how many expenses players have each month due to their lifestyle.

Many rookie players try to keep up with the spending habits of some of the veteran players and end up filing bankruptcy or foreclosure on their homes. In many instances players are taken advantage of by lawyers, accountants, agents and others who steal or do not keep their clients informed about their spending habits. In other cases, clients are advised about their poor spending habits but continue to spend until all their money is gone. The NFL Players association, lawyers, accountants, publicists and all who are on the payroll of the players as well as the players themselves are to blame.

My advice to all NFL players, read all books written by Warren Buffet who has lived in the same house for 50 years, drives himself everywhere, does not have security or a bodyguard, never travels by private jet, does not socialize with high society, makes popcorn and watches television, does not carry a cell phone, does not have a computer on his desk, buys clothes from the department store and is an expert in managing his money. You are experts when playing on the field, now it is time to be experts in managing your money – you owe it to yourself.

10 Tips to Manage Your Money

Everyone fears the word budget but don't be afraid. A budget is your lifeline to financial peace. A budget helps you know how much money you earn and spend each month. A budget is called many different names but the main goal of a budget is to help you live below your means. Nothing stays the same forever which is especially true today. Here are 10 helpful tips to help you manage your money.

1. Needs vs. Wants – buy more needs vs. wants to help reduce expenses.

2. Reduce spending – buy in bulk, on sale, at discount stores, online or use coupons, buy generic brands. Try websites such as groupon.com, coupons.com, freecycle.org, ebay.com or craigslist.com to find bargains.

3. Groceries – don’t go shopping when you are hungry, buy items on the lower shelves and ask about specials, join store clubs to get alerts on discounts.

4. Banking – open accounts with little to no fees, ask about discounts and specials, and establish a relationship with the branch manager to get alerts about specials and new products and services that could save you money. Don’t use check cashing stores or cash checks at the liquor store.

5. Driving – buy gas in the morning, combine nearby trips on the same day, keep the trunk empty, keep tires at the proper pressure level, get regular maintenance on your car, look for the cheapest gas and buy a gas efficient car, ditch the gas guzzler. Drive the speed limit to also save money on gas.

6. Medical – buy at least basic medical insurance for you and your family, get a prescription card and fill prescriptions at discounts stores such as Wal-Mart or Walgreens to save money, negotiate medical services to save money and ask about programs for uninsured or low-income patients.

7. Insurance – buy insurance for health, life, disability and your home. Buy bundled services to save money, buy homeowners and car insurance with the same company and ask about discounts.

8. AAA – triple AAA offers lots of discounts with partner companies that are not advertised, ask each company you do business with if they give discounts to AAA members.

9. Compare – Comparison shop before making a purchase to get the best deal. Use sites like bizrate.com, nextag.com and pricegrabber.com.

10. Clothing – shop at discount stores, buy clothes in off-season, check out discount racks at stores and ask if stores if they honor competitor coupons. Buy a few jackets and mix and match pieces to stretch your wardrobe.