Aug 17th, 2012 by Jennifer Lynn
Frugality. Prudent money management. Savings. Investing. No debt.
My financial foundation.
But given the caricatured scenario above, I can’t help but wonder how well college students and graduates are handling their finances.
This cartoon certainly depicts M., a computer engineer, who received his Bachelors diploma—and nearly $60,000 worth of debt—from a state university five years ago. It’s stressful for us, but I’m helping M. tackle those balances aggressively. He’s on a fifteen year repayment plan right now (ridiculous!) but, potentially, we can eradicate this debt in two or three years.
When I spoke briefly with a random group of peers (all in their twenties, all in college) for a candid snapshot of their finances, I was particularly interested in their debt to savings ratio, and a little disheartened by their answers.
Jaime is a 26 year old working in non-profit and pursuing a Masters. She has nearly $10,000 in student loans, less than $2,500 in savings and currently lives at home.
Lisa is a 20 year old part-time waitress struggling to pay off $7,000 in credit card debt, with $200 in her savings.
Jay is a 27 year old renter who just blew most of his savings on a trip to NYC. He is hoping to save $25,000 over the next year for a down payment on property.
Sherry is 23 years old and grateful for her auntie, who is helping to pay for tuition. Recently Sherry decided to take advantage of this by plopping $375 into savings.
Little to no savings and, in most cases, a butt load of debt.
Sigh. My strategy has been to;
Save a few bucks of money received, always. Always. This ‘savings’ is the foundation which eventually will morph into ‘investments’ generating passive income (through dividends, rental income, capital gains, etc.)
And the secret is NOT to get into debt. Stop being buried further in debt and find the balance between investing in the future without becoming enslaved.
Be one of those birds not meant to be caged.
Also currently reading:
* $600,000 in mortgage debt, but wants to be a stay-at-home mom
* Rejected: “I was denied a bank account!”