How do I survive until I get my first paycheck?

Isaac wrote recently with a question about how to make the transition from college to the Real World. He has a good degree, but it'll take him time to find a job, especially since the economy is still sluggish. He's worried about how he should handle is finances in the meantime. Here's his question:

I recently graduated from college with a degree in electrical engineering. I'm currently living at home with my family while I search for a job. I'm concerned about my first month or two once I find one, though.

I have no savings, and I'm not sure how I will be able to buy a car (and insurance) to get to and from work, rent an apartment, or even buy necessities for my first few weeks while I wait for a paycheck. I know that some jobs will give a signing bonus or relocation package but I don't want to count on that. My parents are in deep credit-card debt and live paycheck to paycheck, so I can't borrow money from them.

Any advice? Should I get a short-term bank loan? Or maybe borrow from better-off friends?

This is something that I struggled with almost 20 years ago; my transition from college to my first job was rough. A lot of my trouble was self-induced, though. As soon as I found work, I bought a brand-new car, a new wardrobe, and all sorts of new toys. So, instead of waiting until my first paychecks started coming in, I spent money I anticipated having…eventually.

My story is all too common; I know a lot of folks who have done the very same thing. Looking back, these mistakes seem obvious, but they weren't so obvious at the time. I think there are at least three things that Isaac can do to gain more control of his situation.

Accumulate Cash

It doesn't sound like Isaac is doing any sort of work now while he's looking for a job in his field. I think he should — and I don't think he should be picky about it. One way to ease worries about where he'll get money to tide him over until his first paycheck is to actually earn that money in advance.

Some people don't like taking short-term employment, especially if the pay is low. They think it's beneath them or that it looks bad on a job application. Hogwash. It's always better to have some income — no matter how small — than to be earning nothing. Every little bit helps. So, I'd recommend that Isaac look for work in a restaurant or a retail store, or maybe even seek the help of a temporary agency. (I waited tables at Red Robin while hunting for my first job; I also did odd jobs through a temp agency.)

Moderate Spending

Meanwhile, Isaac should be cautious with his spending until he's found a job and a place to live. That means no big indulgences, but it also means that Isaac should be wary of committed expenses. I can't emphasize this enough: When you're just starting out, you should take on as few recurring expenses as possible. And those you do take on should be kept as low as possible.

  • Keep your rent low.
  • If you don't have to take out a car loan, don't. (Buy a cheap beater if you have to! Better yet, bike or take the bus.)
  • Don't subscribe to newspapers and magazines.
  • Don't sign up for cable TV.

When you get out of school and move out on your own, it can be tempting to buy all the things your parents had, or the things you've always wanted. There'll be plenty of time for that in the months and years to come. Isaac's goal now should be to take care of the essentials so that later he can afford comforts and luxuries without having to go into debt.

Negotiate Benefits

Isaac is going into a field that could require him to relocate. When he's hired, there may be some sort of signing bonus or relocation package. But here's the important thing: Even if there's not, Isaac should negotiate for this sort of benefit. (Here's a GRS article from last year about how to negotiate your salary; the same principles apply to negotiating benefits.)

By preparing now to negotiate this benefit, Isaac can increase the odds that he'll receive it as part of a job offer. For more details, Isaac should check out Jack Chapman's site on salary negotiations.

Note: In his question, Isaac asked if he should consider borrowing money from a friend. I really dislike this option. Borrowing and lending money with friends is a recipe for disaster. Sure, most transactions probably go fine, but the potential for catastrophe is so large that it's almost always better to look at other options.

What Would You Do?

I'm sure that Isaac's situation is common. Many folks graduate from college (or leave home) and find themselves without any cash to get by while they wait for their first paycheck to come in. Some rely on debt to get by. (That's what I did, and I regret it.) But surely there are other options.

How did you bridge the gap between the time you left home and received your first paycheck? What worked? What didn't? What would you do if you were in Isaac's situation today?

Update: Isaac left a comment below to let us know that he does have a part-time job, but that he'll look at other possible ways to make money. So, there's no need for additional “get a job” suggestions!

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