Debt + Job Options: Recipe for a Crisis
So, yesterday during our all-day @gradspotguru Q&A extravaganza on Twitter, we heard a familiar story that, unfortunately, doesn't get any easier to deal with in a crappy economy. To paraphrase: I am a temp with a bunch of debt, but just got a full-time offer. Problem is, it pays way less. Teaching pays almost double. What should I do?
Having debt hanging over your head when you're just starting your career is a tough pill to swallow, but there are ways to make it manageable so it doesn't become be the deciding factor in all your major decisions. If you're trying to weigh the pros and cons of paying off your loans versus taking the job you want (and potentially taking a pay cut), here are some things to consider:
Dealing with Debt
Those loans can't be ignored, but they don't have to dominate your life. Unfortunately, a lot of recent grads aren't aware of the options available to them when it comes to paying off debt—most notably, student debt consolidation. Not only does consolidating allow you to streamline various loans from different lenders into one loan with one fixed interest rate, but it also allows you to spread out the payments over time to make them more manageable. The downside, of course, is the longer you're paying off your loans, the more you'll end up paying in interest over time. But the fact is, consolidation is a useful way to make your payments more manageable today, when you're still getting your feet underneath you and looking for the right job. To learn more, check out our Student Debt Overview.
The Temp Life
As we mentioned recently, temping is not something any recent grads aspire to in the long run. That said, it can be a great way to get your foot in the door at a company or to make some money while you're searching for a full-time opportunity. One factor that can make temping a lot more palatable is if the temping agency provides benefits. Having someone pay for your health insurance (and, yes, we do suggest you get insurance even if you're unemployed) can be a big factor in your bottom line each month. Most notably, that money you would be spending on your healthcare premium could go toward paying off debt. Also, remember that while you're temping, you can make extra money in other ways as well.
Taking a Pay Cut
No one wants to make less money. But as a recent grad, more often than not playing the field and gaining new skills and experiences is the best way to find the career that's ultimately going to fulfill you. And that might require forgoing some financial gain in the short run. On his blog, Netscape co-founder Marc Andreessen offers the following Fight Club-esque philosophy on careers:
The first rule of career planning: Do not plan your career.
We agree. Instead of trying to map out a 40-year plan, he argues that recent grads should spend time developing skills and pursuing opportunities. You are almost certainly not going to spend your entire career with the company you work for right out of college (especially a temp agency!), so don’t let it be the reason that you pass on a riskier (but potentially better) opportunity. Furthermore, without kids or a mortgage, you have a lot of freedom to take an “income risk” (a pay cut) and/or “geography risk” (moving to a new city).
Of course, it's tough to take these risks in a climate where everyone's freaking out about finances. But if you're only working to pay the bills, you're going to burn out pretty quickly, and you may lose out on some great opportunities that will help you find the position that you really want down the line.