You're fresh out of college and into your first real job – a position that affords you more than your weekly ration of Ramen noodles and macaroni and cheese. That's good news.

But if you are like the average American college graduate, over the last four, okay five, years you have slowly racked up about $19,000 worth of student debt (sometimes far more than this).

Meanwhile, you've also amassed X amount of dollars in credit card debt. (The average student graduates with just over $2,000 in credit card debt). Adding to your financial pressures, you have valid fears about Social Security running out before you even reach retirement age, and many of the companies you interviewed didn't even offer 401K plans, pensions, or any other form of retirement planning.

How can even begin to invest in your future?

Take on more debt. Mortgage debt.

President Bush has talked over the last several years about individual retirement plans and the importance of homeownership, noted by one White House Press release way back in 2004, "The President believes that homeownership is the cornerstone of America's vibrant communities and benefits individual families by building stability and long-term financial security." It also notes, "Americans should have the option of managing their own retirement."

Step back and assess this situation. You have thousands of dollars worth of debt. You are just starting out and you have no savings -- and your parents, coworkers, and even the President are telling you that you need to look into homeownership for long term financial stability, and stocks, bonds, and other investments for now and later.

But before you can buy a home, you must begin some sort of personal debt management.

Loan Consolidation
Depending on who you consolidate with, you may be able to do so free of charges. Consolidating means taking all of your eligible loans and putting them in one large loan with a lower, fixed rate. You should end up with a lower monthly payment and possibly a lower payout over the life of the loan. The downside -- you will probably be paying on the loan for longer, but for someone on a budget, this all makes sense.

As another word of caution. Be sure to check if there are penalities for early payoffs on your loans. With all types of -- loans, student, personal, mortgage -- it is possible for the lender to charge you penalty fees for paying off a loan early.

Credit Counseling
If your finances are especially tangled, then consulting a credit counselor can be a good investment in your future. They will be able to steer you in the right direction for you.

Taxes
Do not forget about deductions. Depending on your profession, a multitude of expenses can be deducted from your taxes. That is more money in your pocket to put into savings or to pay down a loan. Next year at tax time, be sure to hire yourself a professional who can advise you on all the ins and outs of this process.

Budget it Out
Living by a budget is not as hard as it seems. It requires organization and discipline. First, divide all of your expenses by due dates, and then by paycheck. (e.g. rent is due by the 3rd of the month, so you'll need to pay it with the paycheck you recieve on the 1st of each month.)

Start with the necessities (rent, electricity, car payment, etc.). After you see what items you MUST pay for, you can evaluate what you may be able to save or pay extra on loans.

Kill the Credit Cards
If you haven't discovered this yet, credit cards are the "devil." Some carry as much as 30 percent interest rates. That said, pay off the higher interest rate cards first. Get rid of cards that have annual fees. And don't simply pay the minimum each month -- that means you're only paying the interest.

If you are truly desperate to get rid of a ridiculous rate, consider this trick. New credit cards sometimes come with 0 percent interest for the first 6 months. Pay off your higher balance credit card with the new 0 percent interest card and then close and cut up the higher rate one. This will give you more time to pay down the balance, without throwing away money for interest.

Pay Yourself First
This statement never made sense to me -- until I got out of college. Yes, you have a ton of debt that needs to be paid back to people, but if you can set up a system for saving money -- in your budget -- then the extra money you have can be put into a savings fund. The rule of thumb for savings is this: save at least 10 percent each paycheck and try to have an account with enough money to pay 3 months worth of bills.

Sweat the Small Stuff
It's an old cliche that is really true, "A penny saved is a penny earned." Every penny, dime, and dollar counts. It is your money. Do you really need the Grande Frappuccino when you could get the Tall. Or how about brewing your own coffee at home? Small expenditures add up quickly, especially if you are living on a tight budget.

Debt Management can be a winning battle. Simply take an honest look at your finances, because it will be crucial in the coming years for you to have a strong foothold with which to make investments, create a retirement, and buy a home.

Published: December 31, 2007

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