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The Rules I Made as an Underemployed, Freaked-Out College Grad

Kristin McGrath

July 26, 2013

Did you graduate from college in May? If you’re like a lot of new grads, this summer has been a tough one of job searches and inconsistent (or non-existent) work. According to a July 6 article in the Miami Herald, recent grads are learning the hardest lesson that personal finance courses can’t convey: How much life really costs.

The Miami Herald article is full of good advice about not only how to stay afloat, but how to make strides toward a healthy financial future — asking for a free consultation with your parents’ financial adviser, for example, and putting a few bucks at a time into an emergency savings or retirement account.

That future-oriented advice is important, and young people should follow it if they can — but, if this year’s grads are anything like I was, they’re too freaked out about the present to even consider the fact that there’s life beyond the next month. At this point in my summer after graduation in 2006, I was lucky enough to be temping part-time and getting a small but weekly paycheck. Saving wasn’t on my radar — but staying afloat was. That mindset is reflected in the three “frugal living” rules I made for myself that summer — rules that I wrote down and hung up near my door.

1. After the 15th of the month, rent has to be in the bank: The words “in the bank” were underlined multiple times. The rule was simple. After the 15th of each month, my bank account balance had to be equal to or greater than my rent. It was not allowed to dip a penny under that.

Because I was sharing a one-bedroom apartment, my rent (which included utilities) was $300. That seems blissfully low. Yet, the second month after moving in, I found myself with rent due and $270 in the bank. My roommate covered me, and, luckily, my bank account didn’t have any minimum balance requirements. I was determined not to let this happen again. After I made the rule, if it was after the 15th of the month, and my bank account had $300 or less in it, I said “no” to dinner invitations and spent nights at home. The biggest perk of doing this was that I often found I had a little extra in the bank account by the end of the month.

2. Pay bills right away: This was seven years ago, so I was still getting paper bills in the mail. It was so easy to put the cellphone bill or the Internet bill in a drawer, go out with friends the next couple weekends and then find my account uncomfortably low when the bills were actually due. Sometimes I forgot to pay them entirely and had to pay late fees.

So I started tucking the envelopes with my bills into the top row of my computer’s keyboard, where they annoyed me until I paid them, nearly always within a few days of them arriving. Paying the bills immediately lowered my account balance — and that lower balance reminded me that I really couldn’t afford regular nights on the town.

3. Take a walk: My roommate was in the same boat I was. When we found ourselves bored and restless and tempted to spend money, we took walks. When our neighborhood got boring, we’d drive 10 minutes and walk around a different one. Just being on busy streets, taking in the scenery and being around the bustle of our city was enough to re-set our brains into frugal mode.

By the time summer ended, I’d gotten a full-time job offer. Yet I still followed these rules strictly for a few years. In fact, I still haven’t turned off the email reminder that shows up on the 15th of every month, prompting me to make sure rent is in the bank.

If you’re looking for more tips on the post-grad life, the personal finance blogosphere is full of them:

Frugal Toad advises against making any long-term financial obligations too soon after graduating, even if you have an income. Don’t get a new car and don’t consider home ownership just yet. Instead, if you have any extra money, put it into a 401(k) or an emergency savings fund.

In a guest post on iHeartBudgets, Jason from personal finance blog Work Save Live, emphasizes how important it is for recent grads to build their credit. Even if the only credit card you qualify for requires a deposit and provides no rewards, take it and use it wisely.

John from Frugal Rules recommends paying whatever you can toward your student loans, even if deferment is an option. John writes in his blog that he deferred his loans, and the interest that piled up when he deferred put him in a worse situation.

In a post for Forbes, personal finance writer Kerry Hannon proposes something many recent grads may balk at: moving back in with Mom and Dad. It may seem like a retreat, but if it’s an option, the money you save by not paying rent can help you pay down student loans and bulk up your emergency savings. When you do move out, you’ll be miles ahead financially than your struggling peers.

Once you do get that first post-grad job, sign up for your employer’s 401(k) even if you think you can’t spare a cent out of your paycheck. Shannon, blogger at The Heavy Purse, has been a financial adviser for 21 years, and she writes that no client has ever regretted investing in a 401(k).

Grads, what are you doing to stay afloat? Tell us in the comments. As for those of you who left behind the post-grad life long ago, what helped you survive that first summer?