Hey HF Team,

I’m a recent college graduate that just accepted my first full-time job offer. I will be making $60,000 per year and moving to a city I’ve never lived in before. I’m overwhelmed with all of the decisions I have to make in the coming months (where to live, should I bring a car) and I also am bringing along with me $30,000 in student loan debt and right around $5,000 in credit card debt that I racked up while on books and supplies this past year. My new job offers a 401(k), but I don’t know anything about investing and I don’t know what I should be doing with my money once my paychecks start coming in. Looking to you guys for some help!


First off, congratulations! Graduating from school and starting a new job is a huge milestone that you should be proud of. You are in a similar boat as millions of Americans. In fact, the average recent college graduate in America leaves school with nearly $40,000 in student loan debt, and the average American has nearly $7,000 in credit card debt! The important thing is that you can take steps in the right direction to get the support you need to improve your finances. Below, I will lay out a step-by-step plan for you to follow so you can to put yourself on the path to being not only debt free, but on track towards retirement, (which I know sounds crazy since you just graduated from college, but young adults have a huge advantage when it comes to investing and retirement planning, more on that later)!

Setting Up a Budget:

It may seem simple, but the first and arguably most important step to take to ensure you are on the right track is to set up a budget and track your spending. The vast majority of adults completely skip this step, and in doing so, don’t really have a true idea of where they are headed, financially. Without a budget, you don’t know exactly how much money is coming in and how much money is going out. For example, imagine if you were training for a marathon with a target time in mind, but when you trained you never kept track of how far you were running or how long it would take. You are less likely to make meaningful strides to meet your goals if you aren’t tracking progress. When it comes to your finances, it all starts with setting up a budget.

If your salary is $60,000, then you should bring home between $3,500 and $4,000 each month, after taxes are taken out (post-tax salary). For simplicity, let’s say your monthly post-tax take home is $3,750. While setting up the perfect budget depends on your unique situation, most of us can start with this simple rule: 50-30-20. Essentially, 50% of your post-tax income goes towards your “needs,” like rent, transportation, groceries, bills, etc., 30% goes towards your “wants” which can include going out to eat, shopping, saving for a vacation, etc., and the last 20% goes towards savings and paying off debt.

If you were to stick to this rule, roughly $1,850 should go towards your “needs” with $1,100 going towards “wants” and the final $800 going towards savings and debt elimination. Most Americans, especially young adults, blow their budget in a few select categories, like housing, transportation, and going out to eat. In order to cut back on housing costs, consider 2 or 3 bedroom apartments and find roommates, and avoid the most expensive neighborhoods. To cut back on transportation costs, take advantage of public transportation in the city if possible and only bring a car if you absolutely have to, and whatever you do, DON’T BUY A NEW CAR! Having a car in the city can be extremely expensive, not only because of your car payment, but because of higher insurance costs, parking fees, parking tickets, maintenance, etc. Finally, try to limit going out to eat or ordering delivery to once or twice per week, avoid daily trips to coffee spots, and never spend above the amount you set aside each month for this category.

Student Loan Options:

While paying off $30,000 in student loans is certainly a daunting task, you are by no means alone. As tuition has skyrocketed over the past decade, so has the debt of new college graduates. However, there are some options that can potentially ease the burden, and depending on your line of work, you can possibly even half tens of thousands of dollars forgiven!

For instance, if your new job qualifies as a public service role, you might be eligible for the federal Public Service Loan Forgiveness, or PSLF, program. This program allows employees in eligible lines of work to have the remainder of their student loans forgiven after making 120 on-time payments, (i.e. payments for 10 years). In order to take advantage of this program, you must be sure to keep diligent records of your employment, and make sure you follow the strict guidelines set by the federal government. Learn more here.

In addition, if you are working in the education sector, you might be eligible for other loan forgiveness programs offered to teachers, such as Teacher Loan Forgiveness. This program would allow you to have up to $5,000 or $17,500 of your student loans forgiven (depending on the subject you teach). Check here to see if you qualify.

Finally, even if you are working in the private sector, there are still options to consolidate and refinance your loans to potentially take advantage of lower interest rates, some as low as 2.5% to 4%. You can also check with your employer as some provide student loan repayment assistance benefits for their employees with student loans. Check out a list of those employers here.

Attacking Credit Card Debt:

Once you’ve set up your budget and started to track your spending, my advice is to turn all your attention to eliminating your credit card debt as fast as you can. In the world of debt, there are inexpensive debts (interest rate is less than 8%), like a mortgage or student loans, and there are expensive debts (interest rates above 8%).

Credit card debt is expensive debt. While mortgage interest rates and student loan interest rates are often between 3% and 10%, credit cards often have interest rates around 20%, with some going as high as 25%! Let’s say your $5,000 credit card debt has an APR (interest rate) of 20%. That means that each year, you are paying $1,000 to the bank just in interest! Many people see a minimum payment of $50 as an easy way to only pay a small amount towards their existing balance, but what they don’t realize is that if you pay off $50 towards your balance, and $100 is added because of interest, you are actually increasing your debt, even if you didn’t use your credit card that month.

From your budget, you should have around $700 to $800 each month to dedicate towards savings and investments. If you have $400 left over after you make your student loan payments, you can knock out your credit card debt in about a year if you stick to your plan. Also, and most importantly, stop using your credit card! Take it out of your wallet and disconnect it from online retailers.

Create a goal:

Tracking and setting a goal allows you to prioritize your financial goals and reach them. Like the analogy of training for a marathon, without a goal, how will you know what you’re working towards?

Maybe this plan is too ambitious, and you want to pay off your credit card in 18 months instead of 12 months? That’s a great target to keep in mind as you work on you think about your other goals, like traveling for a trip or paying back your student loans.


While you may feel stressed about your credit card and student loan debt, you are definitely not alone. Be proud of your recent graduation and your first full-time job! As long as you create a budget, track your spending, minimize your student debt burden, set some goals, and eliminate your credit card debt as soon as possible, you will be well on your way to improving your financial health.

If you would like additional resources including financial education modules and budgeting tools, check out Holberg Financial’s learning center by creating your account here!