Author Topic: Recent college grad advice  (Read 4770 times)

ariapluscat

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Recent college grad advice
« on: April 13, 2016, 09:53:14 AM »
I'm a recent college graduate who is just starting full time work.

Advice would be great for setting career goals and starting ~real~ finances!

I'm working at a university so I get free courses towards either a masters where I work or applying to a program.

I'm going to be picking out a health care plan soon and am not sure how to best ask what is covered / likely copays for expected costs such as visits to the doctor, prescription refills, etc since I got used to using university health center.

Also, since I can no longer rely on my university for a constant flow of free stuff and sharing, how do real grown ups with real jobs approach reuse / sharing along with the limited time availability for picking up said free stuff?

robartsd

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Re: Recent college grad advice
« Reply #1 on: April 13, 2016, 10:21:29 AM »
Congratulations on graduation and joining the workforce. Read the whole blog from the beginning if you haven't done that already.

Finances: Do you have a budget? How much are you currently able to save? If you aren't tracking your expenses start doing that right away. Post a case study if you don't know where to make improvements.

Health care: Assuming you are healthy and have a decent savings rate, you want a health plan that protects you from big expensive stuff, but keeps premiums low by having you pay more of the less expensive stuff. If you can save more than you can shelter in available retirement accounts (401(k)/403(b), IRA, etc.) then a high deductible health insurance plan would qualify you to open a health savings account (HSA) to save even more tax sheltered (could be a good idea even if you can't max your other retirement accounts as any of it that you use for medical expenses is completely tax free - when you reach retirement age you can use the money like a traditional retirement account).

Stuff: Use craigslist and/or thrift stores. Sure your schedule might mean you miss out on the best FREE stuff, but you can still save a bunch by buying used. Yes it does take time, but that gives you time to know if it really is worth getting.

ariapluscat

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Re: Recent college grad advice
« Reply #2 on: April 14, 2016, 08:19:58 AM »
I've read the mmm blog, but did so a while ago. I think I'm go to re-read some of the classic articles. especially for choosing savings plans.

I do have a budget, but will be updating it soon based on my recent hiring.
I think I'll post a case study soon, but the changes I can make are limited because of lease terms. Basically, my major expense is rent and I'm locked in on both the lease and the roommate for several months.

I know i should be putting as much as i can into the 401k now. My current job doesn't match my contribution for the first few years (and I expect I'll be heading to grad school before meeting the time).
Is there anything I should ask about the 401k if I'm expecting to be changing jobs in a few years?

Sadly, I have regular health expenses that add up to a lot, so a high deductible plan is unlikely to work for me. I do intend to use a pre-tax savings plan in addition to a full coverage plan. Who would I ask about coverage for specific medications? The HR team, the insurance company, the prescriptionist?

Related: I got a real shock when I went to pick up a daily prescription in the month I'm between health insurance plans. The drug companies really know how to get you! Dang.

Also I think I'm going to try the uber frugal month challenge on the frugalwoods old posts. http://www.frugalwoods.com/2014/04/09/uber-frugal-month-challenge-yourself/


robartsd

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Re: Recent college grad advice
« Reply #3 on: April 14, 2016, 10:59:12 AM »
Someone in your HR department probably is responsible for employee benefits. They will be knowledgeable about what plan options your employer provides, but may not know much about specific things those plans cover. The insurance company providing coverage would be best to inform how a specific medication will be covered. The pretax Flexible Spending Account is a "use it or lose it" account, so don't allocate more than you're sure you'll spend to it; but does allow you to get a bit more of your health costs taken care of before taxes.

When you leave your employer, any of your contributions and earnings on those contributions in the 401(k) plan can be rolled into an IRA. The employer's 401(k) may also let you keep the account. Up to $5500 of earned income can be put into an IRA. IRA can be more beneficial than employer's 401(k) depending on the 401(k)'s fees; but IRA contributions are after you get your paycheck, so they do not factor into your tax withholding. (With a 401(k) you have less taxes taken from your paycheck, with a traditional IRA you get a bigger tax refund instead.)

WhoDey

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Re: Recent college grad advice
« Reply #4 on: April 14, 2016, 06:57:10 PM »
If courses to further your education are free - TAKE ADVANTAGE OF IT.  I just finished up my master's last year and luckily my employer provided full tuition assistance.  There are so many people around the office that are like "oh man I wish I would've taken advantage of that" - I call it laziness, but maybe they don't have the time.  You might hate it while it is happening, but it feels so good to know that you have a graduate degree for any future endeavor - and it was free.

As for your 401K, start contributing immediately - Especially if there is a match.  You would be leaving free money on the table.  The best advice I ever received was when I got my first "big boy job" that paid benefits - OPEN A 401K.  I've now been contributing for 10 years and getting close to my early retirement.

I would contact your HR department for benefits discussion.  They should be able to tell you everything. 

DebtFreeBy25

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Re: Recent college grad advice
« Reply #5 on: April 14, 2016, 10:33:54 PM »
Sadly, I have regular health expenses that add up to a lot, so a high deductible plan is unlikely to work for me. I do intend to use a pre-tax savings plan in addition to a full coverage plan. Who would I ask about coverage for specific medications? The HR team, the insurance company, the prescriptionist?

To answer your specific question about finding out if specific medications are covered, both the insurance company and your pharmacist would know. It's probably easier to call and talk to the pharmacist and ask if a plan you're considering covers your current medication. The summary of how much each plan covers towards prescriptions is included in your benefits summary. HR would give you that if you haven't already received one.

In regards to your general questions, are you currently in debt? If so, how much debt do you have? If you have any existing debt, your first priority is going to be to pay down those balances in order of their interest rates.

If you don't have any debt, your goal would be to save. First, save up an emergency fund that equals at least 6 months of your basic expenses. Then you're going to be saving according to your priorities. If you want to buy a home, you'd be saving a down payment. If you need to replace your car, you'd be saving for that. If you either already have or don't want/need those things, then you'd be saving for retirement. Presuming you're not in the middle of a debt emergency (credit card debt, unpaid medical bills, etc.) you should be putting money away for retirement regardless of your other goals.

ariapluscat

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Re: Recent college grad advice
« Reply #6 on: April 20, 2016, 07:44:19 AM »


As for your 401K, start contributing immediately - Especially if there is a match.  You would be leaving free money on the table.  The best advice I ever received was when I got my first "big boy job" that paid benefits - OPEN A 401K.  I've now been contributing for 10 years and getting close to my early retirement.


So they don't match contributions to the 401k until you have worked w them for 2 yrs.
I am hoping that in 2 years I will be going to graduate school at a different institution.

So it sounds like the best plan is to put money into the 401k so long as I can easily take it with me, put money into a Roth (up to $5500), and put money into a pre-tax saving plan (but not too much since it goes away annually), and follow up about what prescriptions are covered.
Have I understood the advice here well? Bc thank you so much for giving it.

The health insurance is soooo confusing. there are generic, preferred, and non-preferred prescriptions which are covered by a sub-provider of the plan that I'm considering. it's such a weird convoluted mess for a maintenance drug that i *need*. not to mention that it's a shot in the dark to calculate the costs since the med price can change at any point. just, ugh.

ariapluscat

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Re: Recent college grad advice
« Reply #7 on: April 20, 2016, 07:54:30 AM »



In regards to your general questions, are you currently in debt? If so, how much debt do you have? If you have any existing debt, your first priority is going to be to pay down those balances in order of their interest rates.

If you don't have any debt, your goal would be to save. First, save up an emergency fund that equals at least 6 months of your basic expenses. Then you're going to be saving according to your priorities. [...] Presuming you're not in the middle of a debt emergency (credit card debt, unpaid medical bills, etc.) you should be putting money away for retirement regardless of your other goals.

So I don't have much debt. Yay!
I have less than $2000 in credit card debt which I've been paying off even while working part time. Most of it was incurred bc of a family problem along with the stress spending from said family problem. So I don't see it going up. Even as a student, it basically stayed at that flat number. Hopefully I will be able to pay that off in the first 4-6 mo of full time work. once I see how my paycheck looks, I can work out a better time line. I've already paid off about $500 of it, even with the costs of starting work. It feels really good to see the flat number slowly going down.

I also have $3000 in student loans from the Feds. I am still in the first 6mo so I don't have to pay yet. I'm hoping to save up a considerable amount to pay that off quickly.

Ok, to make sure I understand:
So once I pay off the credit card debt and student loans, I'd want to save up 6 mo of expenses which is about $15000.
Is that correct?

That's like 1/3 of my yearly salary - so sad, so poor ;<
I don't have a car and I don't want a car.

NoStacheOhio

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Re: Recent college grad advice
« Reply #8 on: April 20, 2016, 08:18:06 AM »
So I don't have much debt. Yay!
I have less than $2000 in credit card debt which I've been paying off even while working part time. Most of it was incurred bc of a family problem along with the stress spending from said family problem. So I don't see it going up. Even as a student, it basically stayed at that flat number. Hopefully I will be able to pay that off in the first 4-6 mo of full time work. once I see how my paycheck looks, I can work out a better time line. I've already paid off about $500 of it, even with the costs of starting work. It feels really good to see the flat number slowly going down.

I also have $3000 in student loans from the Feds. I am still in the first 6mo so I don't have to pay yet. I'm hoping to save up a considerable amount to pay that off quickly.

Set aside a small cash cushion for true emergencies (like $1,000). Last thing you want is to get into more credit card debt because something shitty happened.

Try to knock out the credit card before your student loan payments are due, then take the money you were using for the card and put it on the loan.

ariapluscat

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Re: Recent college grad advice
« Reply #9 on: April 20, 2016, 11:18:43 AM »

Set aside a small cash cushion for true emergencies (like $1,000). Last thing you want is to get into more credit card debt because something shitty happened.

Try to knock out the credit card before your student loan payments are due, then take the money you were using for the card and put it on the loan.

Perfect! I already have about $800 in my savings and am hoping to get that up to $1000 by the end of the month. It's amazing how fast shit can get real and real expensive.

Ok! A well developed plan of attack :D

robartsd

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Re: Recent college grad advice
« Reply #10 on: April 21, 2016, 01:55:45 PM »
What rate are your student loans at? If the rates are low and fixed, you may want to consider paying them over time if it means more savings in taxed advantaged accounts. I paid off all my 5%+ student loans, but I'm paying the minimum on the others (the're all below 3%). Of course in addition to the fiscal impact, there is a great emotional impact to being debt free, so some people choose to eliminate even low interest debt. People more optimistic about the investment market might choose a higher threshold between pay off loans vs. invest; but the big gap between my loans over 5% and my loans under 3% made it an easy cutoff in my planning. I agree that you want to be as aggressive as possible on your CC debt and a goal of getting that taken care of before your student loan payments are due sounds like a great one to me.

forummm

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Re: Recent college grad advice
« Reply #11 on: April 22, 2016, 08:32:35 AM »
Plastics.

ariapluscat

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Re: Recent college grad advice
« Reply #12 on: May 10, 2016, 12:41:37 PM »
Just wanted to update that this thread was really helpful.
I've already brought the credit card debt down to $1200 from $2000. And I still have $500 in savings.

I subscribed to my new employee benefits. The health insurance is so helpful for costs. I just got my flexible savings account debit card for pre-tax medication purchases!

I received my first student loan statement. I'm financed at 5% with $40 monthly payments. I can and likely will pay more than that each month. It's a federal loan so I'm not going to refinance it because I'd lose benefits and protections. I'm also going to see if a grant program for foster care alumni can help with payments towards the loan.