Graduated College? Heres How You Stay Out of Debt

By Maurie Backman Markets Fool.com

Congratulations! After years of studying and far too many all-nighters to count, you're finally walking away with your hard-earned degree. But now that you have one major accomplishment under your belt, it's time to embrace your next challenge: adulthood.

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Going from student to working professional can take some adjustment, but if there's one thing you want to steer clear of as you navigate your new reality, it's debt. Granted, there's a good chance you already have your fair share of student loans to contend with, but here are a few steps that can help you avoid digging yourself into an even deeper hole.

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1. Move back home until you land a job

According to Money magazine, it takes the average college graduate three to nine months to find a job. And that's a long time to be paying rent somewhere without an income. Awkward as it might be, one of the best ways to avoid debt early on in your career is to move back home until you secure a steady paycheck. And if you do, you'll be in good company.

According to the Pew Research Center, a larger number of 18-to-34-year-olds are living at home now than ever before. In 2014, an estimated 32% of millennials were living with their parents, and last year, 36% of graduating seniors said they planned to live at home for at least a year. Moving back home is a good way to keep your living expenses to a minimum as you attempt to find full-time work for the first time.

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2. Network aggressively until you get an offer

The sooner you get hired somewhere, the sooner you'll have money coming in to pay for, well, just about everything you might need. While responding to online ads is a good starting point for your search, most professionals will tell you that the best way to find work quickly is through networking.

This means reaching out to your friends, professors, neighbors, and former internship supervisors, and putting the word out there that you're looking for a job. Don't be afraid to be a little pushy (within reason) and follow-up with potential leads, because for every week you remain unemployed, you stand a greater chance of racking up debt.

3. Create a budget based on your take-home pay

Once you do get hired, your next step in avoiding debt involves examining your paycheck and creating a budget based on your take-home pay. Remember, the money you actually wind up with each pay period might be considerably lower than expected based on your tax rate. And while you might think you won't lose too much of your income, what with your entry-level salary, keep in mind that a single tax filer earning between $37,950 and $91,900 with no other deductions will fall into the 25% federal tax bracket.

Once you get a handle on how much disposable income you'll actually have, create a budget that allows you to live below your means. This way, you'll have wiggle room to start building some savings, which can help you avoid debt when unexpected expenses arise.

Don't forget to account for your student loan payments when mapping out that budget. In fact, if you're able to work in some flexibility that allows you to make extra payments toward those loans, you'll eliminate that nagging debt sooner.

4. Use your credit cards wisely

Though credit cards tend to get a bad rap, they can actually be a useful financial management tool -- provided you use them the right way. As a general rule, you should never charge more on your cards than you can afford to pay off by the time your billing cycle closes. If you always pay your credit card bills in full, you'll avoid the hefty interest charges that come with carrying a balance.

A good way to keep your credit card usage in check is to get a secured card, which is backed by a deposit you fund with your own money. Because the amount you put down to secure your card will generally equal your card's limit, you'll have cash available to pay off your balance if it winds up getting out of hand. Though you probably won't have a secured card forever, it often pays to use one early on in your career when you're first getting used to having a credit card and managing your own money.

Avoiding debt is a good way to set yourself up for a lifetime of financial security. Follow these tips, and you'll manage to stay out of debt as you acclimate to your new career and lifestyle.

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