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The Economics of Post-Graduation

In Economic Justice, Misc. on June 13, 2006 at 10:46 am

The New York Times recently ran an article listing some tips for recent college graduates on how to budget themselves and save for their future. This is a group that sometimes gets overlooked when talking about debt, economics, credit, etc, so its nice to see an article directed towards them. After all, the combination of starting wages (or no wages due to long/unsuccessful job searches), loan payments, and being cutoff or reduced from previous funding soures (i.e. parents) can hit a person hard. Plus, these tips can work for everyone.

Here are a couple of my favorites from the article:

  • "Train yourself to use the A.T.M. only once a month. Take out enough cash to get you through the month, and when you run out of cash near the end of the month, stop spending"
  • "Set aside 10 percent of your paycheck in a savings or brokerage account separate from where the rest of your money goes."
  • Take advantage of a 401k plan (if your job offers it to you). The article states "Say you withhold $375 a month for your 401(k). In 40 years, you'll have $750,000."
  • And finally, make your own coffee and cook for yourself instead of constantly buying beverages and eating out.

The article also links to some supposedly helpful budgeting calculators, however the links seem to be down at the moment. Hopefully those will come back.

I only wish they gave us a few more statistics on how bad the economic situation for recent college graduates really is. It would be interesting to see some numbers on their average debt or average yearly income.

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  1. Demos has the most thorough and reliable info on this. Tamara Draut has done an amazing job culling countless sources to create a series of studies documenting the ways debt has impacted the people in the US — most importantly, she has looked at these complex issues from an economic justice perspective, bringing it beyond just the "this is how to balance your checkbook" approach.

    Draut recently released "The Economic Challenges of Young People" and has looked at economic security issues through a number of different lenses in the past, including by class, race, and age. For young people, it's worth checking out the 2004 Demos report called, "Generation Broke."

    "Generation Broke", the second in a series of Borrowing to Make Ends Meet Briefing Papers, reports a 55% average increase in credit card debt among America's young adults from 1992 to 2001. Key Findings:

    Young Adults (25-34 years old)

    * Average credit card debt among indebted young adults increased by 55 percent between 1992 and 2001, to $4,088 (2001 dollars).

    * The average credit card indebted young adult household now spends nearly 24 percent of its income on debt payments, four percentage points more, on average, than young adults did in 1992.

    * Among young adult households with incomes below $50,000 (2/3 of young households), nearly one in five with credit card debt is in debt hardship — spending over 40 percent of their income servicing debt, including mortgages and student loans.

    * Young Americans now have the second highest rate of bankruptcy, just after those aged 35 to 44. The rate among 25-34 year olds increased between 1991 and 2001, indicating that Gen Xers were more likely to file bankruptcy as young adults than were young Boomers at the same age.

    The Youngest Adults (18-24 years old)

    * The youngest adults saw a sharper rise in credit card debt — 104 percent — to an average of $2,985 (2001 dollars).

    * The average credit card indebted household in this age group spends nearly 30 percent of its income on debt payments, double the percentage spent on average in 1992.

    * Among the youngest adult households with incomes below $50,000 (2/3 of younger households), nearly one in seven with credit card debt is in debt hardship.

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