4. Find a Place to Live
Deciding where to live is tied to many variables, including your job, family and personal preferences. But finances are the top consideration.
Depending on where you live and how much you earn, you probably can’t move into your dream home right away. This is especially true if you work in a high-cost area. For instance, the cost of a studio apartment in a major city could be the same or even more than that of a 3-bedroom, single-family home out in the country.
Be realistic about how much you can afford. As a rule of thumb, you generally can spend up to a third of your monthly net pay on housing. If your starting income is modest, you may have to pay a higher percentage of your take-home pay.
When you have enough money for a down payment, consider buying a condominium, townhouse or single-family home. Interest rates are currently near historic lows. Plus, home ownership still offers tax benefits, especially if you expect to itemize deductions on your tax return after a purchase.
Warning: The Tax Cuts and Jobs Act (TCJA) limits itemized deductions for mortgage interest and property taxes for homeowners for 2018 through 2025. The state and local tax (SALT) limit is most likely to affect taxpayers in states with high tax rates and/or those who have significant taxable income.
Other options, such as sharing an apartment with a roommate, may allow you to save more money until you can afford a place of your own. Alternatively, if you can, you might live with your parents for a while and accumulate even more savings until you’re ready to move out.
5. Get Your Wheels
Depending on where you live and work, a vehicle may be a necessity or a discretionary purchase if you can get from place to place by walking, bicycling or using public transportation. Often, recent grads can’t afford their dream cars right away. So, some may lease; others choose an economical vehicle that they can finance at a reasonable interest rate. To facilitate a car loan application, follow these steps:
- Check your credit to ensure that you’re entitled to a favorable rate.
- Obtain quotes for loans. Get at least three rates at banks, credit unions and car dealerships.
- Find a willing co-signer, such as a parent or grandparent, if your credit rating is subpar or you haven’t established any credit yet.
If you end up financing through a dealership, mainly because it’s convenient, you may decide to pay off the original loan rate later with a loan at a lower rate. If you choose this path, make sure the original loan doesn’t include any prepayment penalties.
When budgeting for a new or used vehicle, remember that expenditures extend beyond the original purchase price. That is, you’ll have to pay for auto insurance, gas, maintenance and repairs. These costs can quickly add up — and may eat away at your savings.
From credit scores and retirement to housing and transportation, there are a lot of major decisions to make soon after graduation. Fortunately, your financial advisors can mentor you as you enter the workforce and later as you progress in your career and personal life.
For guidance, contact one of our professionals at 315.701.6350 or email@example.com.