Don't Drive Without Auto Insurance

Graduating from college is exhilarating - you are officially an adult with a world of possibilities ahead of you. You have a new real job, perhaps a place of your own for the first time, and what better way to celebrate your new status than with a new car? But graduating brings with it a lot of other responsibilities, too - many students graduate with an average of $3,262 in credit card debt alone. Ten percent of graduates owe more than $7000 in credit card debt. On top of this, students are graduating with student loans ranging from $10,000 to $52,000 or more.

How do students come to have such a high rate of credit card debt? One of the reasons is that credit card companies set up kiosks on college campuses, tempting students with free pizzas, t-shirts and other freebies to sign up. David Roush, CEO of, explained: "The problem is many college students do not have the income or financial knowledge to manage a credit card - a problem that is leading students into a lifetime of financial despair."

Most students take on these debts in the belief that they will be able to pay off all they owe quickly once they get a job and start to make real money. But too often they don't have a good grasp of what the true cost of living is until they sit down to write a budget. Suddenly that new salary, which seemed like so much money, has shrunk as you factor in costs such as health care, car payments, rent, utility bills, credit card payments, student loan repayments, income taxes, 401K deductions, and auto insurance.

"After you graduate and land your first job, you do not think about having to pay for all of these expenses," one graduate said, "Unfortunately, reality sets in pretty fast and you realize you do not have the money to make ends meet - it is a hard lesson to learn!"

When financial reality sets in, it can be tempting to cut corners to try to balance the budget. One of those corners can be to risk driving without auto insurance. Don't do it! Driving without insurance is illegal, dangerous and can leave you in a much more precarious financial situation.

"Driving without auto insurance is illegal in all 50 states, however, many young adults elect to go without auto insurance because they think they cannot afford to have it," stated Roush. "A scary thought when 15.3% of all automobile accidents are caused by drivers between the ages of 20 - 24."

If you are thinking of driving without auto insurance, consider the costs you could face if you are caught by the police - or worse still, involved in an accident. "Imagine if you had to pay the medical bills of someone who gets injured in car accident when you are at fault - suddenly paying for car insurance does not seem so bad," says Roush.

The Penalty of Driving Without Auto Insurance

Penalties for driving without auto insurance can vary from state to state, based on the percentage of uninsured drivers, according to the Insurance Information Institute. In Massachusetts, driving without insurance can result in from $500 to $5,000 in fines and a one-year jail sentence. In Florida, Louisiana, Connecticut and New Jersey, drivers who don't have at least the state required minimum insurance will have their vehicles impounded. It can take some time to retrieve a vehicle from the pound. Imagine the cost and inconvenience added to your daily life without the car, as well as the cost of getting the vehicle out of the pound - costs that could easily run into the thousands of dollars.

You can find out the minimum auto insurance required for your state by logging onto the Department of Motor Vehicles website.

How to Budget For Auto Insurance

It's a good idea to shop around and compare prices before choosing auto insurance coverage. Be sure to ask about any discounts that may be available. Some companies offer alumni discounts, so check if your college or university is eligible. At this stage in your life, you can use all the help you can get in managing your budget, and many insurance companies offer 6 month or 12 month payment plans so that you can still be covered by auto insurance but pay for it in smaller amount each month rather than in one lump sum.