"I Can't Get Started"

Striking out on your own takes a well-laid plan.

By Stacy Rapacon, Reporter

From Kiplinger's Personal Finance magazine, May 2009

Thao Tu hopes a new career will help her earn enough to pay her debts and live on her own.

Figuring out what you want to be when you grow up is hard enough, but record unemployment rates are making it even tougher for Generation Y. The unemployment rate for 20- to 24-year-olds was 13.8% in February, up from 9.5% the year before. For 25- to 34-year-olds, the rate rose from 5.3% to 9.8% over the same period. (See How Grads Can Compete)

Facing such a harsh job market, many young adults realize there's no place like home. Thao Tu has been reconsidering her future from the comfort of her parents' Los Angeles house. And while she craves independence, she's making the most of her parents' extended generosity. "I'm fortunate to have parents who support me," says Tu.

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After spending 12 years working all kinds of jobs, from selling ice cream on Venice Beach to brewing lattes at Starbucks, she finally earned her bachelor's degree in biotechnology in 2006, when she was 30. That field didn't suit her, so now she's setting her sights on accounting. She's back in school to earn an associate's degree, and she works two unpaid gigs that give her experience in the field.

Career consultant Vickie Causa says doing volunteer work is a great way to beef up your resume. "It shows that you're continually giving back and keeping busy," says Causa. She also suggests that college students and recent grads take advantage of school networking events. If you're nervous about throwing yourself into a crowd of strangers, "go with somebody else you know," says Causa. "You don't want to attend a party by yourself."

As rewarding as unpaid work might be, bringing in some cash is also important. For now, Tu needs to find work that won't interfere with school. She has applied for more than 100 office positions since last July and gotten only three interviews, so she needs to broaden her search and consider, for example, brushing up on her barista skills.

Because Tu's parents are covering her living expenses, she could use the income from a part-time job to make a dent in the $15,000 of debt she has amassed on eight credit cards, all of which are currently inactive due to her spotty payment history. "I just made stupid mistakes," says Tu. "But I would love to be debt-free on my credit cards. That's my first priority."

To get there, Todd Mark, of Consumer Credit Counseling Services of Greater Dallas, recommends that Tu first check her credit report for the status of her debts and pay for a copy of her FICO credit score to see what damage has been done. She should call the lenders to figure out a repayment plan and meet with a credit counselor for a free assessment. Because her credit cards are inactive, Mark also suggests that she find additional credit -- difficult as that might be with today's crunch -- to show she can use credit responsibly.

On top of the credit-card debt, Tu is carrying $50,000 in private student loans. As a current student, she's filed to defer payments, although interest will continue to accrue. (You may also be eligible for a student-loan reprieve even if you're not in school now.

Once Tu cuts her debt down to a more manageable size, she can start using her money in other ways. First, she needs health insurance. She can look for policies that cost as little as $60 per month at eHealthInsurance.com.

Next, she'll want to build up savings and an emergency fund. At www.fnbodirect.com, she could open a savings account with just $1 and earn 2.15%. Or she could try starting an account with SmartyPig.com, where she can earn 3.25%, specify a goal for her savings, and open her account to donations from friends and family.

HERE'S HOW YOU CAN LAUNCH YOUR START

RELATED LINKS
	The Complete Starting Out Guide
	2009 Career Center
	How Grads Can Compete

Career consultant Vickie Causa says 80% of jobs are acquired through networking rather than through a headhunter or on the Internet. But Causa does recommend hitting the Web to take advantage of the professional-networking site LinkedIn, plus college networking programs and events.

To make sure your credit is up to snuff, check your credit reports and FICO score. At AnnualCredit-Report.com, you can get a free copy of your report from each of the three credit bureaus every 12 months. For $15.95, you can order your FICO score at myFICO.com. As for student loans, you may qualify to defer federal education loans -- even if you aren't in school -- because of unemployment or some other economic hardship. Contact your lender to find out what repayment options you have.

Not having a job often means not having health insurance, either. But coverage for young, healthy adults doesn't have to be exorbitantly expensive. You can shop for moderately priced individual policies at eHealthInsurance.com, or find a local agent at www.nahu.org.

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"I Lost My Job."
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"I'm Buried in Debt."

Listen to our Covercast: Surviving the Recession for a candid chat with our writers.

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