Action Line: Financial tips help college grads get into 'real world'

Not even counting student loan debt, recent college graduates face a slew of financial dangers, and those inexperienced with money and personal finance have just a short time to understand them before they cause lifelong problems, said Margo Mitchell, president and CEO of Credit Counseling Centers of Oklahoma in Tulsa ( tulsaworld.com/cccsofok).

Budgeting: "Living on a budget and managing money are things recent grads should learn to do right away and not by their mistakes. Mistakes they make now can have costly, long-term consequences," Mitchell said. "Saying 'I didn't know' is no protection from the penalties for making late payments or overdrawing checking accounts.

"Make a budget and put every dollar in place. Start with your net income - your income once taxes, health care and retirement are taken out. Don't underestimate expenses. Track your spending for a month or two to understand your expenses and where your money goes."

See the National Foundation for Credit Counseling's archived blogs on budgeting ( tulsaworld.com/NFCCbudgeting).

Saving: Bill Hardekopf, CEO of LowCards.com, says grads should begin saving immediately from every paycheck, even a small amount. Open a retirement account at work or your own IRA. Time and compounding interest will help a small amount grow into significant savings.

Emergency fund: Open a separate savings account to save for an emergency fund - at least three months of income needed for bills should you lose your job or have sudden, unexpected expenses. The fund must not be used as your mad money stash. It is your safety net. Using loans to pay for an emergency just adds to the cost of the emergency.

Timely bill pay: Pay bills on time. Late payments cause significant drops in your credit score. Set a payment schedule. If you are not disciplined in paying bills, it is easy to misplace a bill or pay it late. This can be punished by late fees and lower credit scores. The easiest way for young people to pay bills is online with scheduled reminders for payments.

Credit cards: Pay off your credit card debt as soon as possible. If you carry a balance on your card, do not put new purchases on it. If you can't pay cash, you can't afford it. So don't buy it. Monitor your credit history with free credits reports (tulsaworld.com/acr) from the credit agencies Equifax, TransUnion and Experian (one each per year). Credit scores replace test scores, and you need to work hard to build good credit scores. Lenders use these scores to help determine how likely you are to pay loans when they're due. The higher your score, the lower your perceived risk of default and the lower the interest rate you'll be charged.
Original Print Headline: Financial tips help grads

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Source: http://www.tulsaworld.com/site/articlepath.aspx?articleid=20120729_15_E2_bDearA216548&rss_lnk=15

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