If you are like most students, you have dreamed of the day when you start earning your own money. The first thing you’re going to do is to get your own apartment. Then you’re going to buy that sports car and get the clothes you’ve always dreamed of owning, etc. It’s a great dream, isn’t it?
The reality of living the lifestyle you’ve always dreamed of as soon as you get out of college is just that – a dream. This is not saying that you won’t ever get that apartment/home, car or clothes, but it just might take a little longer than you would have hoped.
Let’s take Lucy Sullivan’s situation as an example:
Lucy Sullivan graduated college in 1999 with a degree in business management. She started working as an account manager for a retail chain on the East Coast with a starting salary of $27,500, which after taxes and other payroll expenses equals approximately $1,809.17 monthly or $835 in take-home pay on a bi-weekly basis.
Fortunately, Lucy’s parents were in a position to be able to help Lucy relocate to Charlotte, N.C. from her college town of College Park, Pa. This saved Lucy big bucks. After receiving some graduation money, Lucy wisely tucked it away to help make the first and last month’s payment and the security deposit on the apartment she found.
After Lucy paid her rent, utilities, phone, car payment and allotted food allowance, she is left with approximately $500 for the rest of the month which will go to other expenses such as gasoline, dry cleaning, haircuts and eating meals out. Don’t forget buying clothes too!
As you can imagine, Lucy’s monthly fund is depleting quite rapidly. However, Lucy is a smart young woman. She learned at an early age the damage credit card debt can do to someone’s life. Her parent’s had to declare bankruptcy when Lucy was 10 years old, so Lucy remembers that terrible time in her life.
“My mom and dad were constantly arguing with each other over money,” Lucy states. “Their credit was ruined and it took them about eight years to get back on track. Finally, everything seemed to turn around financially for them in my senior year of high school. But during those eight years my entire family learned how to live on a budget. I learned the hard way the value of a credit report.”
Next to your college diploma, your credit report may be the second most important piece of paper in your life. Pay your bills on time and there’ll be no problems, but skip a few and they’ll come back to haunt you.
Like your diploma, your credit report is your ticket to loans, especially car loans and home mortgages, although you could land (or lose) an apartment or other rental because of your payment history. Employers frequently look at credit ratings when considering whom to hire which is another reason to keep your credit spotless.
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