June 6, 2017

WTOP Interview: Financial Tips For College Grads

Listen Now: As college grads go from starving students to working adults, parents can help their financial independence.
Dawn Doebler, MBA, CPA, CFP®, CDFA®, Senior Wealth Advisor

For more tips and resources, read the entire article: FINANCIAL TIPS & RESOURCES FOR COLLEGE GRADS

Interview Transcript:

SHAWN: It is 5:11 on WTOP, yes it is. Its cap and gown season and these college grads move from starving students to their fledgling careers with paychecks and benefits. There is a lot that parents can do to help them establish financial independence.

HILLARY: Joining us in studio, Dawn Doebler; Senior Wealth Advisor at Bridgewater Wealth in Bethesda and cofounder of Her Wealth. Good to see you Dawn.

DAWN: Yes, thanks for having me.

HILLARY: Thanks for being here. Aside from having their college grad move back into the basement, what can parents do to help their kids get a good financial start?

DAWN: First, shout out to parents who are celebrating graduation, my daughter graduates tomorrow.

SHAWN AND HILLARY: Congratulations.

DAWN: Thank you. So I suggest that any parent pull up our article today, when we were talking about financials for college graduates, there are really three main areas: mamaging your debt; building credit and budgeting correctly.

  1. MANAGING DEBT: Last year, the average student had $37,000 of college debt. We know there’s a lot written about that, so we want people to be focusing on this with their students, they do need to begin repaying their debt six months after graduation. The interest rates are fairly high, so you do want to make sure that you protect your credit rating and you pay those often, but also prioritize those loans.
  2. BUILDING YOUR CREDIT: I actually while my kids were in college had them have a credit card but nominal amounts monthly. Most banks will allow you to pay it off automatically from your checking account to establish their credits. So if you haven’t done that while your kids are in college, you do want them to have their own credit card right now and to set that up.
  3. BUDGETING: We've talked about this, people don’t like to budget, but it’s really very important. And when you have students, you really need to sit down, work out a budget with them and make sure that they’re aware that they need to start paying off those loans within six months.

SHAWN: Not many grads will have the opportunity to save for retirement for the first time and they're told that they should, but why should they start now when they have all these other bills; you mentioned the loans, other expenses and not a lot of money really?

DAWN: Right, it is important to prioritize the things that we just talked about, but also you don’t want to miss the advantage of compounding by using the company retirement plans. And one thing here is to go through these plans with your students and take a look at whether the plan has a match, most of them do and now there's literally free money. If you contribute up to the level that the employer matches, they equal that amount and you really want to make sure you’re taking advantage of that. So however challenging that might be, you really want to prioritize that savings. And most parents have participated in one of these plans, so they really should sit down with their student who is now employed and go through the plan, explain it to them and emphasize why it’s important. And if they have money left over after paying debts and this, also take a look at Roth IRA. It’s a little bit complicated, so you want to look at our article, but you can use a Roth to save if you're going to go to graduate school, so that’s something to keep in mind.

HILLARY: Already, thanks Dawn. That’s Dawn Doebler; Senior Wealth Advisor at Bridgewater Wealth in Bethesda, cofounder of Her Wealth.


Shawn: Now you hear all kinds of deals about leasing cars, how can you negotiate a better deal if you want to lease?

Nina: Okay, well many people don't realize that they can actually negotiate the sticker price on a leased car in the same way that you would do that if you're buying a car. And since when you lease -- when you're, you know, your lease payments basically cover the depreciation, the difference between the sales price and the residual value. So it's definitely in your best interest to try to reduce that sales price as much as possible because then you'll pay you know, smaller dollars over the life of the lease. Make sure you pay attention to the down payment at the lease signing. And so here's an example, you might see an ad that says you know, lease payment is only 1.99 a month and that sounds like a great deal for thirty six months. The catch is, is that it might require a $3,600 down payment. So, if you amortize the down payment, then actually that 1.99 special, becomes 2.99. So, you really have to kind of look at total costs. 

And then lastly, dealerships use the term, money or lease factor, when they're calculating your financing costs and a lease factor is not the same as an interest rate. So, you have to make sure the dealer converts that lease factor into a comparable interest rate so you know what your financing charges are. 

Shawn: At the end of the day, does one method wind up being more expensive more often than the other, or can we tell that?

Nina: You know what, it really depends on how long, if you're going to hold the car for a long time, you're better off buying. But if you know, and if you're not, if you just really enjoy driving and you want to have a new car, then go ahead and lease. I mean, there's pros and cons to both, to be honest with you, it's not one size fits all.

Shawn: Alright Nina, great. Happy Thanksgiving to you. Alright, Nina Mitchell is with The Colony Group, for more go to wtop.com and search Her Wealth.

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Dawn Doebler, MBA, CPA, CFP®, CDFA®, Senior Wealth Advisor

Dawn’s experience spans more that 25 years providing wealth management, financial planning and corporate finance solutions for clients. As an MBA, CPA, Certified Financial Planner (CFP®), and a Certified Divorce Financial Analyst (CDFA®), she is uniquely qualified to understand the challenges and financial needs of clients from executives to entrepreneurs, as well as single breadwinner parents. Dawn is a weekly contributor to WTOP radio.