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10 Ways to Save Money After Graduation

November 5, 2019

If you’re just graduating from college, the job market is an unfriendly one. It seems like every job post wants 5 years of experience, a Master’s degree, and pays just $28,000/year. As if you don’t have enough to worry about, you can’t seem to get away from the advice about saving for retirement and the value of buying a house over renting. How are you supposed to do either on a $28,000 salary and a bucket of student loans that coast at least that much? You have to get creative with your savings. To kickstart your thinking, here is ELFI’s list of 10 creative ways to save money after graduation.

 

When it comes to saving money after graduation, there are two methods: save more of what you make and decrease spending. Find what works for you based on your bills and habits. Also, don’t feel like you have to follow all 10 tips. Implementing even one of these tricks for saving money after graduation can help you be more financially savvy. 

 

1. Use Direct Deposit to Save 10%

Direct deposit isn’t just for eliminating a paper paycheck. It can also be your best friend for saving money after graduation if you request to have your employer automatically send 10% of every paycheck to a separate savings account. On that $28,000 salary, you could save $2,800 a year, which is only about $110 per paycheck. If you set this up as soon as you start that first job, you will never miss the extra money. If you already have a job, it’s never too late to set up a “rainy day” fund. 

 

2. Install “Round-Up” Apps

The same way your grocery store clerk asks you to round up to the nearest dollar for charity, you can use round-up platforms like Acorns to set aside leftover change from purchases you make. With the Acorns debit card, the spare change from each purchase is placed in an investment account of your choosing. And when you shop via the Acorns app or Chrome Extension at 350+ retail partners, a percentage of your total purchase is contributed toward your investment accounts.

 

3. Negotiate Bills & Eliminate Unused Subscriptions

You likely have a dozen or more automatic monthly payments coming out of your checking account or linked to a credit card. Some banks or apps like Truebill and Trim can help you find and cancel subscriptions that are unused or that you forgot you signed up for in the first place. These apps can also help you negotiate some services like your cable and internet or even your cell phone bill to help you get lower monthly rates.

 

4. Make New Rules for Eating Out

From coffee runs and grab-and-go lunches to happy hours and GrubHub deliveries, millennials eat out an average of five times a week. If you can eliminate just one of these outings, you can save a minimum of $5/week (that’s $260/year). Try setting unwritten rules for yourself—or if you’re a “write down your goals” person, use a dry erase marker and your bathroom mirror. Try rules like only eating out only on Fridays and Saturdays. Or only eating out only with friends. You can even make weekly cash-only envelopes, and when you’ve run out of dollars, you have to eat in for the rest of the week.

 

5. Make New Rules for Eating In

Sometimes, splurging on fancy groceries makes eating at home feel more fun. But you have to be careful at the grocery store or your bill can end up just as expensive as all those meals out. Consider rules for eating in, like Meatless Mondays. By eliminating costly animal-based proteins just one day a week, you can help save the planet and save money after graduation.

 

6. Keep Impulse Buys Out of Your Cart

Do you always find yourself tossing extra items into your cart at the store? There are several tricks to avoid impulse buys to save money. The first, and easiest, is to never shop hungry. This keeps those extra tasty, and rarely healthy, items out of your shopping cart. Also, consider only shopping online. This helps you keep to your list. You can clearly review your cart before checkout, and you don’t have to feel guilty for making employees restock your regret items.

 

7. Wait 24 – 48 hours Before Hitting the Checkout Button

Shopping online has many perks. The excitement of variety and good deals can hook even the savviest of shoppers, but practicing restraint and making yourself wait 24 to 48 hours before finalizing online orders can do wonders for your money-saving efforts. After a day or two, you can really think about if you “want it” or if you “need it.”

 

8. Don’t Buy Anything New

Our eighth way to save money after graduating from college is to go retro and buy everything used. Buying second-hand isn’t what it used to be. In the past, shoppers had to roll the dice at garage sales or Goodwill stores, but in the days of Craigslist, Next Door, and Facebook Marketplace, you can be picky about your second-hand items. If you have patience, you can find everything practical like dishes and clothes, as well as everything unpractical like skis and AirPods. 

 

9. Freeze Your Credit Cards, Literally

Another “old school” method of saving is to freeze your credit cards…in a block of ice. You might not literally need to freeze your cards, but putting them in an inaccessible place or by simply not having credit cards, you keep yourself from racking up debt that comes with costly interest rates. Keeping yourself on a cash-only system will limit you to using money that’s truly yours. In case of emergencies, there’s always hot water.

 

10. Refinance Your Student Loans

We can’t end this list about saving money after college without advocating for recent grads to consolidate or refinance their student loans. Student loan refinancing is the process of consolidating your loans (you can consolidate federal loans, private loans, or both) and obtaining a new loan at a new interest rate. People typically refinance with the goal of obtaining a lower interest rate or lowering their monthly payments to make paying their loan more manageable. Keep in mind that when you consolidate federal loans, you’ll lose access to certain benefits and protections such as income-driven payment plans.

 


 

Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.

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2019-11-20
5 Ways to Declutter Your Life in 2020

We’re all busy and feel overwhelmed from time to time. Balancing a job, family time, friendships and finances can take a pretty major toll. Taking control of the space around you and getting a grasp of your financial situation can take a burden off and help you feel at ease. Here are some tips for decluttering your life and your finances. 

 

1. Learn to Say No

When it comes to simplifying your life, one of the best tactics is to cut off your clutter at the source – in other words, learning to say “no” to things you don’t need . This also applies to the voice in your head that tells you to hang on to old furniture, keepsakes, family belongings, and everything else that you stuff away or put into storage. The truth is, holding onto everything of monetary or sentimental value just isn’t logical. Knowing when to say no, when to donate, and when to let things go will be a big help in simplifying your life. It’s been found that the average American thinks about decluttering at least six times per year, but only ends up decluttering about three times each year. Holding onto too many things can create a great deal of stress.

 

Try taking photos of your keepsakes and family furniture and file it away. By doing that, you’re able to hold onto the memories without holding onto the items that cause clutter in your home.

 

2. Clean Out Your Closet

Having a surplus of clothing can cause cluttering nightmares. While we like to hold onto novelty t-shirts from every 5k race, or think we’ll be able to squeeze into the jeans we last wore ten years ago, eventually things can get out of hand. If you struggle with overloaded closets and dressers, here’s a trick you might want to try – turn all of your clothes inside-out. After 9-12 months, reassess your clothing inventory and see which clothes are left inside-out. You now have a clear-cut idea of which clothes you wear, and which you don’t. If it’s left inside-out at the end of that time period, consider donating it to a good cause. If this doesn’t work for you, try sorting through them a few times each year and getting rid of the items you know you don’t wear.  

 

3. Cut Down on Food Waste

Our refrigerators get cluttered too. The main reason? We simply don’t eat everything we buy. If you’re the type that ends up with a full cart at the grocery store after going in for one thing, you’re probably dealing with an overloaded fridge as well. A study found that Americans consume only about 50% of the meat, 44% of the vegetables, 40% of the fruit and 42% of the dairy we buy. What doesn’t go to waste takes up precious space in our pantry and refrigerator. After all, who knows how long that bottle of salad dressing has been sitting there? Look into meal planning or even getting an affordable meal subscription (just don’t let it fall into the category mentioned below). What’s great about meal subscriptions is they’re perfectly portioned and will go far in cutting down the amount of food you waste or store away.

 

4. Cut Out Unnecessary Subscriptions

Ever checked your monthly bank statement to find that you’re paying $4.99 for a random app that you no longer use? A new study that surveyed 2,500 U.S. consumers found that they spend an average of $1,900 in subscriptions that are unaccounted for. These can include anything from TV and music streaming services to subscriptions to your local car wash. Getting your subscriptions under control is a great way to simplify your finances and decrease month-to-month spending. 

 

There are a variety of budgeting apps that help you track your finances, but Clarity Money® is great for managing subscription services in particular. After connecting your bank account, it will provide you with a list of your recurring subscriptions, and even allows you to cancel them right from the app. 

   

5. Refinance Your Student Loans

If you’ve graduated from college, you may be paying back student loans. Some people can find themselves paying back several loans that all accrue interest at different rates, and have differing payment due dates. Refinancing your student loans may make repayment more manageable because it consolidates your student loans into one monthly payment with a single interest rate. Not only could you have the flexibility of choosing a repayment term that fits your financial goals, but you could also lower your interest rate or save money over the life of your loan. 

 

We hope these tips help put your mind, your finances, and your life, at ease. By following these tips, 2020 could really be “new year, new you”. Stay tuned for more helpful tips from the ELFI team.

 
  Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.
2019-11-15
The Importance of a Good Debt to Income (DTI) Ratio

It is evident to most people that having more income and less debt is good for their finances. If you have too much debt compared to income, any shock to your income level could mean you end up with unsustainable levels of debt. Every month you have money coming in (your salary plus additional income) and money going out (your expenses). Your expenses include your recurring bills for electricity, your cell phone, the internet, etc. There are also regular amounts that you spend on necessities, such as groceries or transportation. On top of all of this, there’s the money you spend to service any debts that you may have. These debts could include your mortgage, rent, car loan, and any student loans, personal loans, or credit card debt.  

What is the Debt-to-Income Ratio (DTI)?

The Debt-to-Income Ratio (DTI) lets you see how your total monthly debt relates to your gross monthly income. Your gross monthly income is your total income from all sources before taxes and other deductions are taken out. Below is the formula for calculating your DTI:

DTI = (Total of your monthly debt payments/your gross monthly income) x 100

  Example: Let’s suppose the following. Your gross monthly income is $5,000, and you pay $1,500 a month to cover your mortgage, plus $350 a month for your student loans, and you have no other debt. Your total monthly payments to cover your debts amounts to $1,850.  

Your DTI is (1,850/5,000) x 100 = 37%

Here’s a
handy calculator to work out your DTI.  

Why is Your DTI Important?

Your DTI is an important number to keep an eye on because it tells you whether your financial situation is good or if it is precarious. If your DTI is high, 60% for example, any blow to your income will leave you struggling to pay down your debt. If you are hit with some unexpected expenses (e.g., medical bills or your car needs expensive repairs), it will be harder for you to keep on top of your debt payments than if your DTI was only 25%.  

DTI and Your Credit Risk

DTI is typically used within the lending industry. If you apply for a loan, a lender will look at your DTI as an important measure of risk. If you have a high DTI, you will be regarded as more likely to default on a loan. If you apply for a mortgage, your DTI will be calculated as part of the underwriting process. Usually, 43% is the highest DTI you can have and likely receive a Qualified Mortgage. (A Qualified Mortgage is a preferred type of mortgage because it comes with more protections for the borrower, e.g., limits on fees.)  

So, What is a Good DTI?

If 43% is the top level DTI necessary to obtain a Qualified Mortgage, what is a “good” DTI? According to NerdWallet, a DTI of 20% or below is low. A DTI of 40% or more is an indication of financial stress. So, a good rule of thumb is that a good DTI should be between these two figures, and the lower, the better.   

The DTI Bottom Line

Your DTI is an essential measure of your financial security. The higher the number, the less likely it is that you’ll be unable to pay down your debt. If there are months when it seems that all your money is going toward debt payments, then your DTI is probably too high. With a low DTI, you will be able to weather any financial storms and maybe even take some risks. For example, if you want to take a job in a field you’ve always dreamed about but are hesitating because it pays less, it will be easier to adjust to a lower income. Plus, debt equals stress. The higher your DTI, the more you can begin to feel that you’re working just to pay off your creditors, and no one wants that.  

DTI and Student Loan Refinancing

Your DTI is one of several factors that lenders look at if you apply to refinance your student loans. They may also assess your credit history, employment record, and savings. Refinancing your student loans may actually decrease your DTI by lowering your monthly student loan payment. This may help you, for example, if you want to apply for a mortgage. ELFI can help you figure out what your DTI is and if you are a good candidate for student loan refinancing. Give us a call today at 1.844.601.ELFI.  

Learn More About Student Loan Refinancing

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Woman holding a smartphone
2019-10-15
Best Apps for Budgeting in College

Managing money is hard, but budgeting in college? That’s a whole different ballgame. For a lot of students, you have so much to worry about with classes, work, and other involvements that finances often slip your mind. So how do you hold yourself to a budget when you can barely remember to feed yourself dinner? Luckily, we live in an age full of apps to help you get a jumpstart on budgeting and money management. Here are a few of our favorites.   Mint®. Mint is a free mobile app where you can view all of your banking accounts in the same place. It automatically updates and puts your transactions into categories so you can see where all your money is going - and where it’s coming from. It also recommends changes to your budget that could help you save money. Its features include a bill payment tracker, a budget tracker, alerts, budget categorization, investments, and security features.   PocketGuard®. Like Mint, PocketGuard allows you to link your credit cards, checking, and savings accounts, investments and loans to view them all in one place. It automatically updates and categorizes your transactions so you can see real-time changes. PocketGuard also has an “In My Pocket” feature that shows you how much spending money you have remaining after you’ve paid bills and set some funds aside. You can set your financial goals, and this clever app will even create a budget for you.   Wally®. This personal finance app is available for the iPhone, with a Wally+ version available for Android users. Like other apps on this list, it allows you to manage all of your accounts in one place and learn from your spending habits. You can plan and budget your finances by looking at your patterns, upcoming payments and expenses, and make lists for your expected spending.   MoneyStrands®. Once again, with this app, you’ll have access to all the accounts you connect. Its features allow you to analyze your expenses and cash flow, become a part of a community, track and plan for spending, create budgets and savings goals, and know what you can spend without going over budget.   Albert®. A unique feature that Albert emphasizes is its alert system. When you’re at risk for overspending, the app will send you an alert. The app also sends you real-time alerts when bills are due. Enjoy a smart savings feature, guided investing, and the overall ability to visualize your money’s flow and create a personalized budget.   Before you download any budgeting app, make sure you check out the reviews and ensure it’s legitimate. Because a lot of apps ask for your personal financial information, it’s essential you verify their legitimacy before entering your account number. Listen to what other people have to say and then choose the option that works best for you, because not every app will be perfect for everyone. Budgeting in college may be hard, but downloading an app is just one way you can make it easier. Maybe you don’t want to use an app at all. If you’re in that boat, you can check out some other approaches to budgeting here or here.   Note: Links to other websites are provided as a convenience only. A link does not imply SouthEast Bank’s sponsorship or approval of any other site. SouthEast Bank does not control the content of these sites.