Author Topic: Advice for college graduate?  (Read 4116 times)

nanu

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Advice for college graduate?
« on: June 01, 2015, 08:34:24 AM »
I'm graduating from college this Friday and my girlfriend and I will be moving to Jersey City, NJ to start our first real jobs (in NYC).
What advice do you wish someone would have told you when you were in my position?

Obviously (being that I try to follow the ways of the mustache) we will try and live frugally and max out retirement savings (401K, HSA, IRA),
and we're not planning on buying a gas guzzling tank either (or any car for that matter, at least for the time being).
But what advice would you still give to a recent college graduate who's real life experience is mostly limited to college life?

MountainManMustache

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Re: Advice for college graduate?
« Reply #1 on: June 01, 2015, 08:42:52 AM »
Continue to live like a college student (financially) relying on as little income as possible to fund your recreation and new lifestyle. 
Set a date by which you want to be FIRE. 
Make a plan to get there
Save as much of what you earn in retirement accounts. 
Buy a house and pay down the principal as often and early as possible.
Save some more
Don't get caught up in work peers' lifestyle of spending
Volunteer
Save some more
Have FUN!
Enjoy life!

Above is what I did and made it to FIRE a few months ago, well ahead of my corporate peers who are still Spendy McSpendersons and have huge debt and will likely never be or feel FI

Guizmo

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Re: Advice for college graduate?
« Reply #2 on: June 01, 2015, 09:13:48 AM »
I agree with MountainManMustache, except don't worry about a house yet, if ever. I just a bought a house in Colorado, but here rent was more expensive than owning so it made sense. It might not make sense around NYC.

If you max out your retirement savings now you will be way ahead of your peers.

nanu

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Re: Advice for college graduate?
« Reply #3 on: June 01, 2015, 09:44:36 AM »
I appreciate the advice so far, though I don't plan on buying a house just yet - we aren't planning on staying in that area for long (hopefully only 2-3 years) so I doubt home ownership would be preferable to renting.

Anything else?

nereo

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Re: Advice for college graduate?
« Reply #4 on: June 01, 2015, 09:51:13 AM »
I agree with MountainManMustache and would just add:
1) figure out what skills your industry is looking for an actively start training yourself.  Take an online course, read some books, learn the programing language, whatever.  It should be pretty obvious when you look at a few dozen job postings and they all ask for certain advanced skill(s).
2) network and keep your name on the minds of future employers.  who you know can become as important as what you know.  Even if you have a job that you like right now, you should always be thinking of where you might go next and keeping a dialog open.  Jobs can go downhill fast (change in management, budget cuts, etc) and the best time to look for a job is when you don't need one.

MsPeacock

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Re: Advice for college graduate?
« Reply #5 on: June 01, 2015, 10:13:10 AM »
Try to move  to a LCOL area in the country (e.g. not in/around NYC) as soon as you can. High COL really cuts into your ability to save. Put in the few years you need to get your career started and then get to the Midwest or south where it is cheaper to buy a house, etc.

Save, save, save. I wish I had been more educated by retirement savings in my 20s.

marcela

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Re: Advice for college graduate?
« Reply #6 on: June 01, 2015, 10:16:33 AM »
Don't stop learning! It can be tough since you've just wrapped up 16+ years of formal education, but make sure that you continue to acquire new skills and certifications. If your employer offers any sort of tuition assistance or conference fees etc, take them up on it. This will help open new doors for you professionally through both the news skills and the networking you can do within the classes.

little_brown_dog

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Re: Advice for college graduate?
« Reply #7 on: June 01, 2015, 02:02:14 PM »
if you are planning on living together, watch out for lifestyle inflation and the 2 income trap. it is so easy to think "we have 2 incomes, we can afford to pay more for this apartment/car/etc"  even if you are mustachian with your daily spending, the lifestyle inflation regarding fixed costs can still surprise young couples. this is where we almost went off the rails after graduate school - it was so easy to justify spending $200-300 more a month on renting a slightly nicer apartment when we really truly would have been perfectly fine in the less expensive place.

 if you can live on the equivalent of one income while saving the other half, do it. this doesn't mean making 1 person pay for everything, but maybe try to each only spend half of your incomes to support yourselves. this will not only put you in a great position to save, it will give you so much more freedom if one of you loses a job, wants to go back to school or change careers, or a myriad of other things that happen all the time in your 20s.

mandy_2002

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Re: Advice for college graduate?
« Reply #8 on: June 01, 2015, 02:22:09 PM »
Live in as small a space as you can.  I had two bedrooms for 8 years in 3 different locations and actually had visitors who used the 2nd bedroom for less than 45 days.  It is not your job to supply a location for all your friends and family to sleep.  I die a little inside when I figure out how much I spent on that wasted space.  If you have too much stuff to fit in a smaller space, get rid of some of your stuff.  That's the stuff that will tie you to your location when what you really want to do is backpack in SE Asia, or wherever. 

One thing that I've started doing (after moving into a house with a roommate) is that I save a small portion of my savings - my rent is $1100/month less than before - and if needed I can use that for people who want to visit the bay area.  I can offer to get them a room for a couple days at a hotel.  Most would probably say no, but the money is there in case someone says yes.

Axecleaver

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Re: Advice for college graduate?
« Reply #9 on: June 01, 2015, 02:37:49 PM »
Exciting! Here's a sample of the advice I gave little Axecleaver before she graduates from High School in a few days.

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Save half of what you make. As you advance in your career, your savings accelerate. Doing only this and nothing else, you can retire forever at 39.

Take advantage of tax deferred retirement like 401k plans, right away. Maximize the company match so you do not leave money on the table. Increase this to the maximum as quickly as possible. Every dollar you put into tax deferred accounts is less money you send to The Man.

Open a Roth IRA and contribute 5500 a year to that, which will grow tax free. Reassess this as your earning power increases, it may make sense to switch to a regular IRA every year. Take advantage of the saver's credit.

Start saving 20% down for a house. Don't buy a house if you do not expect to live somewhere for at least 3-5 years. Consider buying a SFH and renting rooms out to pay your mortgage.

Savings rates above 50% are very possible and accelerate your timeline even faster. Money at the beginning of your career, due to compounding, is much more meaningful than money you make at the end of your career.

It's never the right time to start a family.

Always be looking for a better job.

Maintain your professional contacts, speak to everyone you know at least once or twice a year.

On Risk: Nothing ventured, nothing gained. Your ability to evaluate risk/reward will improve until you are in your late 20's. As you age, you'll become more risk-averse. Always evaluate the risk vs. the reward, and learn to take the high percentage/medium payoff or low percentage/high payoff risks.

forummm

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Re: Advice for college graduate?
« Reply #10 on: June 01, 2015, 02:40:12 PM »
Plastics.

nanu

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Re: Advice for college graduate?
« Reply #11 on: June 01, 2015, 02:53:06 PM »
Thank you everyone for your advice so far! I really do appreciate it.

Try to move  to a LCOL area in the country (e.g. not in/around NYC) as soon as you can. High COL really cuts into your ability to save. Put in the few years you need to get your career started and then get to the Midwest or south where it is cheaper to buy a house, etc.
We do want to live in the Midwest (close to her family) or Pacific NW (we really liked Seattle), but definitely not NYC area. Too urban and populated for our taste.

Live in as small a space as you can.  I had two bedrooms for 8 years in 3 different locations and actually had visitors who used the 2nd bedroom for less than 45 days.  It is not your job to supply a location for all your friends and family to sleep.  I die a little inside when I figure out how much I spent on that wasted space.  If you have too much stuff to fit in a smaller space, get rid of some of your stuff.  That's the stuff that will tie you to your location when what you really want to do is backpack in SE Asia, or wherever. 

One thing that I've started doing (after moving into a house with a roommate) is that I save a small portion of my savings - my rent is $1100/month less than before - and if needed I can use that for people who want to visit the bay area.  I can offer to get them a room for a couple days at a hotel.  Most would probably say no, but the money is there in case someone says yes.
Thanks for the advice! We rented a one bedroom apartment with a large living room/open kitchen and the girlfriend's parent are getting us a sleeper couch. Not planning on getting an extra room just for visitors.

Take advantage of tax deferred retirement like 401k plans, right away. Maximize the company match so you do not leave money on the table. Increase this to the maximum as quickly as possible. Every dollar you put into tax deferred accounts is less money you send to The Man.

Open a Roth IRA and contribute 5500 a year to that, which will grow tax free. Reassess this as your earning power increases, it may make sense to switch to a regular IRA every year. Take advantage of the saver's credit.
Will do! Might not maximize 401K and such this year because of the late start, but will definitely maximize 401K and HSA next year. Girlfriend will probably do a traditional IRA and I'll do a Roth (I wouldn't be able to deduct a tIRA)

Bracken_Joy

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Re: Advice for college graduate?
« Reply #12 on: June 01, 2015, 03:16:17 PM »
Choose your friends and hobbies wisely. They will greatly influence how much you spend and how fulfilling your life is.

pagoconcheques

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Re: Advice for college graduate?
« Reply #13 on: June 01, 2015, 04:17:11 PM »
Might not maximize 401K and such this year because of the late start

I suggest miximizing the 401(k) all the way out, not just to the employer match but all the way to the annual limit.  Do that by December, then do it again for the first 6 months of next year and spend the second six months piling the same amount of money into other investments.  Live on what's left at the most, this will set the tone for how you need to live to get where you want to end up, and the savings now will have decades to compound.  Seriously, every cent saved now is worth so much more than any cent you save 5, 10, or 20 years from now.