Big Purchases, Small Bank Accounts

I’m graduating soon, and I’m already worried about my finances. One thing that I keep thinking about is the fact that I have some big expenses coming up that are going to be unavoidable. If I go where I expect to for work, I need to rent a place to live, buy a car, and get stuff like furniture ASAP. On top of that, my girlfriend and I are planning to get engaged very soon, which means I’m going to have to spend big on an engagement ring. All of that is really going to add up, and I don’t plan to have a ton of money anytime soon. How can people make big purchases with small bank accounts? I don’t want to end up in a ton of debt!

It’s not always easy to get started after college on a tight budget. But it’s very important that you avoid unhealthy types and amounts of debt early on, because financial trouble can grow quickly, and starting off on the right foot is key. Let’s examine some strategies for managing large purchases on small budgets. Keep in mind that different strategies are going to apply to different expenses! Once we’ve covered that, we’ll wrap things up with some reminders of what not to do.

Let’s start with the obvious: you need to budget carefully. Living within your means right after college can be tough, because we’re conditioned to think that “adults” live a certain way in the “real world.” But most of the adults you grew up around took years to achieve their lifestyles! When it comes time to put money down on an apartment, think carefully about what you can afford--not just month-to-month, but also right now in the present, when you’ll be hit with the security deposit, application fee, and possibly other fees as well.

Of course, there are situations where you will have to take out some kind of debt. Getting a car you can afford right now may require you to take out a car loan. Having bad or no credit isn’t necessarily the end of the world, say experts in consumer proposal auto loans. You may be able to get better loan terms if you have a parent or other trusted person with good credit who is willing to cosign your loan. Regardless of what route you go, remember that staying within your budget is key; car loans aren’t inherently unhealthy debt, but they can add to financial problems if they’re not managed properly.

Then there are expenses you need to defer and budget for. Putting money down on an apartment and a care may be non-negotiable, but your other expenses should be considered carefully. You’ll have less cash on hand after paying rental fees and putting a down-payment on a car. And you’ll have a monthly expenses now in the form of rent and car payments. Now is the time to budget and save! You may need a bed right now, but can you live without a bookcase for a month while you pocket the cash you need for it? Your individual decisions will be up to you, but between deferring these costs and choosing budget solutions, you may be able to get by until you have reaped enough cash from your new job to start purchasing what you need.

Only you can decide which of these bits of advice best suits your engagement plans. It’s probably not a good idea to borrow money to buy a ring, but the other two options--putting off the purchase for now while you save, or simply buying a less pricey ring--are both good ones. There are a lot of ways to get an affordable engagement ring, say experts who sell engagement rings in Brisbane, and there truly are options at every price point.

Now you know some of the things you can do. Let’s talk about what not to do. Your primary concern early on after college is to avoid bad debt. That means debt that you can’t afford, including any type of loan in which the amount is too high. It also means any amount of debt with too-high interest rates. You should not allow credit card balances to roll over month-to-month, because credit card interest rates are quite high. You should avoid toxic short-term debt like payday loans, too. It’s better to live without a TV for a month than to live with debt for years to come!

Post-college life isn’t instantly glamorous, but it doesn’t have to be stressful. Be careful with your cash, and you could set yourself up for a wonderful life out in the “real world!”

“A budget is telling your money where to go instead of wondering where it went.” -- Dave Ramsey

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