College student in so much debt, tips for post grad goals?

[teresa16]

Hi everyone, I am 24 years old and graduating from an engineering school with a degree in computer science. I currently intern with a company as a software engineer and have been there for 2 years, hoping to secure a job with them when I graduate in May but I am currently applying to other jobs as well.

On to the less good: I have a lot of credit card debt, I drive a car thats pretty close to the end of its life, and a decent amount of student loans.
My car will probably only make it to the end of the year, I live in Colorado so I would hope to be able to get something that could get around in the snow.
I learned the hard way to not lend money to family, I gave my dad close to 10,000 over the past 2 years to help pay for things (and is a long story at this point). The whole time I've been in school he's talked very optimistically about paying for my student loans and helping me buy a new car, which was a nice thought but ended up not being possible as he is pretty close to losing everything he owns at this point. It's certainly been an emotional rollercoaster, as my family has never been financially stable and has caused me a lot of stress since I was a kid. I'm starting to panic a bit thinking about how I am going to navigate my financials post grad and would really appreciate some advice on what to prioritize paying back.

Credit card debt: aprox $9000 with rates between 18%-22%
Student loans: $42000 but don't have to start paying them until November
Currently, I make $27/hr and work 15-20 hours per week until I finish school in May
I'm predicting to get an offer from my job between 75k-80k, or hopefully a similar offer from another company I apply to
One of my struggles is shopping with my credit cards, I'm pretty close to cutting them up at this point so that the temptation is gone
I live at home still so I don't have to pay rent, I do pay for my own food and gas

This is my current plan: aggressively pay back my credit card debt when I start a full time job, hopefully around 50% of my paycheck (est 2000) per month. Use the rest to pay for food/gas/other and save half (1000) every month so I can buy a decent car in a few months. Stay at home while doing this, and hopefully move out around October, 6-7 months from now.

I'd really like some advice if this sounds like a good plan, I feel very fortunate that I will be in an industry that I can get a good paying job in and have worked hard for. I also know that I am very naive and haven't learned much financial responsibility in my life, and I'd really like to become financially independent and debt free as that has been one of the biggest stressors in my life from a young age. I'd like to know if these are good feasible goals, or maybe any tips for handling finances when starting a first job.

Thank you so much if you've made it this far! :)

[plog]

1.  Define 'home'.  With your father?  Is he going to pressure/guilt you for more money from now until you move?  If so, move asap.

2. Financial plan sounds good--but is it practical?  You have a budget that supports your back of the napkin math you posted above?   Start planning and living it now. 

3.  Don't buy a new new car, buy a new to you used car.  Pretty sure that's what you meant, but just clarifying.

4.  Dave Ramsey might be the way to go for you.  List debts smallest to largest, pay the smallest with intensity and minimum on all else.  His method gives you a feeling of achievement along the way so you can see and feel your progress. If you struggle emotionally with paying it off--feeling helpless, like you'll always have this mess, etc., his method helps.

[JamBaguettes]

Congrats on being near completion with your degree, while holding down a 15-20 hour a week job! You are going to be okay because you are paying attention and making plans to earn and spend intentionally going forward.

Your plan sounds mostly fine but is lacking relevant (to you) details. What does your monthly/yearly spend look like? What are you spending on that is unfulfilling and what improves your quality of life. You must understand your spending over time in order to create balance between expenses, debt pay off, and saving. Budgets work for some people; avoid deprivation and spend intentionally.

Your credit card debt is a concern and your current relationship with money/credit needs work. Therapy can go a long way if your feel deeper underlying issues are a cause; setting boundaries with yourself, family and others do not come naturally to most of us! Additionally, you might consider consolidating your credit card balance with a 0% introductory rate (usually 12 months, adds 3% to balance). Only a good idea if you are certain you will not accumulate more debt and can pay off the balance by the end of the introductory term. This will allow you to get organized, save for known expenses and maintain an emergency fund (CC debt= emergency at current rates). Another vote in support of vehicle minimalism- a fancy new/mostly new suv is not a need.

Cheap is not synonymous with optimal. Renting a room with supportive roommates may help break old habits and ultimately help you find financial freedom faster. Prioritize debt payoff, but take care of yourself physically, emotionally and mentally. Live life, enjoy yourself (find inexpensive hobbies and friends now!) and give yourself room to grow. Enjoy the remainder of university and the next season of life :).

[Tass]

1. Absolutely cut up your credit cards. This situation is manageable, but only if you aren't digging yourself deeper with one hand while you try to climb out with the other.

2. Can you guarantee you won't give your dad any more money? It sounds like a complex and difficult situation, as you are still relatively young and (it sounds like) dependent on him. You deserve support managing this and if you are comfortable sharing, that's something else this forum can offer.

3. Consider posting a Case Study. They will want to know more details than you have shared here, like the interest rate on your student loan, how much you spend on food and gas, etc.

4. Do not wait until you get a full time job to begin addressing this situation. Asking for help here is a good first step in that direction! This is a time to build the habits that will carry you to success once you have a larger income. How big of a dent can you make in that credit card debt before you even finish school? If you work 15 hours/week at $27/hour, and the Colorado tax calculator I just googled is accurate, you should be bringing in over $320 per week (or more, for 20 hour weeks). In the 6 weeks before May, you'll make almost $2000, or even a little more. If all you are buying is food and gas, can you put $1000 toward that credit card debt? It will be a huge victory if you can prove to yourself that you are capable of making changes no matter your circumstances. :)

EDIT: My partner is from Colorado, a software developer, had to learn most of his financial sense as an adult, and graduated with twice as much student debt as you. We are seven years out of college now and he is debt free and well on his way to FIREing young. It can be done, and you're in the right place. You've got this.

[nereo]

+1 for a case study. This is not a simple question with one problem to solve - you have family issues, a person relationship with money that needs changing, debt from “previous you” and several major life changes in the near future.

I’ll echo what Tass said - you are in the right place and asking some good questions. You’ve got this.
Also, there are quite a few of us here who graduated within the last five years and have tackled sizable debt loads while navigating new careers. It may seem insurmountable right now but you can make amazing progress in 2-4 years by having and sticking to a sound plan.

[Dee18]

Start with some basics now.  No need to wait until you graduate since you have an income.  Decide you will not buy anything until after graduation, except gas and food to prepare yourself.  The "other" category is probably where you get into trouble.  Put some money into an emergency fund, so you will not have to use a credit card for something like a car repair, and put all the rest toward your credit card debt.  You might find it helpful to keep track of things with your own journal on MMM where people will cheer you on.

[SunnyDays]

Another idea for the credit card balance:  call up the CC company and ask for a lower interest rate.  It can be done.  Just keep talking to the next person up the pipe until you get a "yes." 

Also, do you have a plan in mind for the possibility that your father "loses everything" (I assume that means his housing as well?) before you are ready to move out?  Would you then have him to support too?  That could throw a major wrench into things.  You may want to consider using every extra cent to build up an emergency fund instead of paying more than the minimum on your credit cards.

[Catbert]

If a balance transfer might help, check out the Slate card:
https://creditcards.chase.com/a1/slateedge0?CELL=6MC4&jp_cmp=cc/Slate_Brand_Exact_Slate_SEM_US_NA_Standard_+Test/sea/p68241650281/Slate&gclsrc=aw.ds&ds_rl=1250291&gclid=Cj0KCQjw29CRBhCUARIsAOboZbJ1qVSo3lLbLIk2Hf26UoMV2Ee654-X9LF1wo33DkvnQ__h5ach8GMaAmITEALw_wcB&gclsrc=aw.ds

Be sure to read all the fine print since often (always?) banks will only take balance transfers from other financial institutions and not their own.  Likely need a decent credit score to get.

I suggest moving out ASAP or start paying your father (parents?) some rent.  Maybe that will ameliorate the guilt when they hit you up for money.  The 10K you've given your father already would have paid a lot of room rent elsewhere.

I agree with the suggestions of others (e.g., stop using credit cards, start now only spending on necessities, maybe counseling).

[LifeHappens]

You've gotten tons of good advice. In addition to everything above, I highly recommend reading Your Money or Your Life. The investment advice was terrible (I think it's been updated since I read it), but the exercises and the philosophy behind the book are great.

I also suggest reading Mr. Money Mustache's blog, especially the first 4 to 5 years of content. Read the pinned posts on the forum about investment order, the 4% rule, grocery spending, etc.

Finally, start a journal here if you want to track your progress and engage in the community. We don't bite (much!).

[Askel]

Another thing to consider: When setting up your post-graduate life (new job, new place to live), try to set one up that doesn't depend on a car.  Not always possible, but if you can swing it you'll knock those debts out in no time. 

[MDM]

This is my current plan: aggressively pay back my credit card debt when I start a full time job, hopefully around 50% of my paycheck (est 2000) per month. Use the rest to pay for food/gas/other and save half (1000) every month so I can buy a decent car in a few months. Stay at home while doing this, and hopefully move out around October, 6-7 months from now.

If you are eligible for an employer match on any 401k contributions you make, that is more valuable (e.g., a 100% or 50% or even 25% match) than "only" 18%-22% on the credit cards, so get that employer match first.

Then, yes, get rid of that CC debt ASAP.  See Investment Order for general advice that is probably applicable to your situation.  Good luck!

[oneday]

Finally, start a journal here if you want to track your progress and engage in the community. We don't bite (much!).

You have got a lot of good advice here.

If you do start a journal, put a link in this thread. I would love to cheer you on your journey!

[ToTheMoon]

Finally, start a journal here if you want to track your progress and engage in the community. We don't bite (much!).

You have got a lot of good advice here.

If you do start a journal, put a link in this thread. I would love to cheer you on your journey!

Yes, this!

There are lots of us on here that only wish we had a resource like this at age 24. Use it to its fullest!

TTM

[LightStache]

It's certainly been an emotional rollercoaster, as my family has never been financially stable and has caused me a lot of stress since I was a kid. I'm starting to panic a bit thinking about how I am going to navigate my financials post grad and would really appreciate some advice on what to prioritize paying back.

You don't need to panic because your financial situation is totally manageable. Just realizing that your parent's financial habits are garbage and making the conscious decision to act differently by 24 will put you on the right trajectory.

I think a case study is a good idea, but as long as you put 25% of your take-home towards wealth building (i.e. paying down debt or saving) you'll be good. If you can push that up to 50%, you'll be surprisingly wealthy in ten years.

Speaking from experience, I started off nine years ago with over $100K in debt (probs ~$20K on credit cards) but a high-paying career. I probably averaged only 25% savings over that time and now have no debt and a net worth over $600K.

It's deeply shitty that your dad borrowed money from you under those circumstances. Managing that relationship is probably going to be the hardest thing on your path to financial wellness. It's an unfortunate story that pops up on this forum with too much frequency.

The most important thing is to not let money dictate your happiness. Make sure you create a plan that lets you build wealth while also enjoying the rewards of your hard work! You got this.