The Ultimate Layoff Survival Guide

iStock

Paul Catala, a 53-year-old entertainment reporter in Lakeland, Fla., knows firsthand about the struggles of unemployment. He was the victim of massive layoffs at a Tampa-area newspaper in December 2012. The result? A severance package of about $1,500.

“I was pretty much financially panicked,” Catala told MagnifyMoney, who also lost his health insurance. “All I had was my severance and nothing more than a couple thousand dollars in savings.”

As a single guy, he didn’t have a spouse’s salary to fall back on, but he made it work. During the year and a half that followed, he patched together a steady income by picking up a string of odd jobs and side gigs (more on this in a bit) before eventually securing a full-time job.

In 2017 alone, at least 255,000 planned job cuts have been announced, according to a report put out by the firm Challenger, Gray & Christmas. (The bright spot, however, is that the report also found that job cuts are on the decline.)

If you’re newly unemployed and not sure how to move forward, this ultimate layoff survival kit is for you. Here’s everything you need to know about weathering the storm.

What to do when you lose your job

Step one: Don’t freak out

If the financial implications and the stress of having to find a new job have your head spinning, you’re not alone. The longer you’re unemployed, the more likely it is to take a toll on your psychological well-being. According to a 2013 Gallup survey, roughly 20 percent of Americans who’ve been unemployed for a year or more have been affected by depression.

But while it’s certainly wise to make a plan, don’t take such a long view that you’re overwhelmed by the enormity of unemployment. As the old saying goes: “Inch by inch, life’s a cinch. Yard by yard, life’s hard.”

Do one thing at a time to avoid “analysis paralysis” (aka feeling so overwhelmed that you take no action at all).

Step two: Exit your current job with grace

Getting laid off hurts, but think twice before storming out in a blaze of glory.

“Anything you can do to leave on a good note is a good idea,” career coach Angela Copeland tells MagnifyMoney. “Thank-you notes and goodbye lunches all help to give positive closure.”

The last thing you want to do is burn bridges on your way out. When applying for new jobs, Copeland says you’ll be asked for references the hiring manager can call, which will likely include your previous employer. It’s in your best interest to keep these relationships positive.
Negotiating your severance package before hitting the road may also be on your to-do list.

“Some people have been able to negotiate an extra month of severance because they’ve been there longer and can quantify what they’ve brought to the job,” said Shannah Compton Game, certified financial planner and host of the “Millennial Money” podcast.

“Try and correlate it to something positive, like revenue or growth you’ve been able to do for the company,” she said. “Keep good records of the successes you’ve had because you just never know when you’ll be able to use that.”

On a similar note, you might be able to use rumors of impending layoffs to your advantage. Game says that it’s usually the people in the early rounds of layoffs who get the better severance packages. If you’re likely to be on the chopping block, volunteering to be let go sooner rather than later could be used as a bargaining chip to secure a better severance package.

Step three: Get your finances in order

iStock

Before you panic, sit down and do a thorough audit of your financial situation. List all your monthly expenses, from fixed costs like rent and utilities to discretionary spending like entertainment costs. Then factor in any income you still have, like unemployment benefits (we’ll dive into how to apply in a minute), a severance package, and any cash you have coming from side gigs or passive income streams.

Now for the obvious question: What does your savings account look like?

“The goal marker is to have three to six months’ worth of fixed expenses saved in your emergency fund,” said Game.

To help curb temptation, she recommends parking it in an interest-bearing savings account that’s separate from your regular bank. (We’ve rounded up the best online savings accounts here.) If you’ve got an emergency fund, getting laid off is as good a time as any to dip into it — that’s what it’s there for. Of course, the idea is to make your savings last as long as possible. This is why Game suggests retooling your budget right out the gate.

“Is there anything in there you can cut, or at least make better?” she asked. “Can you negotiate a better cellphone or internet plan? Are you overpaying in some areas? When you’re unemployed, every dollar helps.”

Another thing to think about is your 401(k). Getting laid off makes you ineligible to take out a 401(k) loan, according to Game, but you can withdraw from it — for a hefty price.

“If you pull out of your 401(k) and you’re under 59½, you’ll have a 10-percent penalty, plus whatever you take out is added to your taxable income, so it could shock people if they took out a sizeable amount,” warned Game, who also recognizes that sometimes you don’t have any other choice.

Tapping your nest egg should be an absolute last resort. If it comes to that, Roth IRAs are a little more appealing because you can pull out your contributions at any time without tax or penalty (It’s just the appreciation you can’t touch until you’re over 59½). If you’re financially stuck between a rock and a hard place, a Roth IRA could serve as an extra backup emergency fund.

As for a 401(k) from your old job, Game says you have a couple of options. Some companies will let you do a direct rollover, which is a hands-off option that’s way easier than rolling it over yourself. This way, you won’t get a check for that cash.

“If you do, you have to have it deposited into your new account in a short time period so you don’t get taxed on that amount, which is why it’s better to do these things electronically whenever possible,” said Game.

No emergency fund or Roth IRA to tap into? You’re not out of options. Read on for more ways to access cash during unemployment.

Step four: Rev up your job hunting efforts

iStock

“One of the biggest mistakes I see from people who’ve been recently laid off is that the experience is so stressful that they want to take a break,” said Copeland. “They think, ‘I need a few months to take some time for myself.’ What they don’t understand is that the longer you wait, the harder it becomes.”

Begin by dusting off your resume and updating it with any relevant new skills, accomplishments, and/or trainings you’ve completed. Do the same for your LinkedIn profile, which includes adding keywords that potential employers may be searching for (To get an idea of what these are, Copeland suggests browsing job postings you’re interested in). You’ll also want to follow companies on LinkedIn and connect with influencers within those organizations.

When it comes to references, Copeland adds that asking folks to leave you a written, public recommendation on LinkedIn can do wonders. Future employers are going to be looking at your profile. Seeing that people you’ve worked with have positive things to say is going to make them much less suspicious that something negative happened at your old job.

One other thing: Fine tune your elevator pitch so you’re ready to comfortably, and confidently, talk about yourself at a moment’s notice. After that, step away from your computer and get yourself out there (literally).

“A lot of people are told to apply online — ‘If you’re a good fit, we’ll call you ‘— but very rarely is that true,” said Copeland.

“It’s one-on-one personal connections that are going to help you find a job, and those people will be most helpful and empathetic very soon after you’ve been laid off.”

Let your network know you’re actively looking for work, attend industry events, and reach out to people for informational interviews. In some cases, this might mean cold emailing a colleague of a colleague and asking to pick their brain over coffee. They could always say no, or even ignore you, but Copeland says that when up against unemployment, this isn’t the worst thing in the world.

Step five: Protect yourself against the worst-case scenario

If your job hunt stretches past the one-month mark, you could end up draining your emergency fund faster than anticipated. According to the U.S. Department of Labor, the number of long-term unemployed workers (i.e. people who’ve been out of work for at least 27 weeks) held steady at 1.5 million as of December 2017. This makes up 22.9 percent of the unemployed.
If you find yourself in this boat, you’ll need to go beyond cutting cable and scaling back your entertainment budget to make ends meet.

“Can you call your student loan servicer and defer your loans for a few months?” suggested Game. “Remember, you’ll still be accruing interest when you do this, but it might help you out for a few months.”

Looking for other high-impact ways to free up cash? Game also suggests considering:

  • Taking on a roommate or renting out a room on Airbnb.
  • Getting a part-time job.
  • Taking out a short-term loan from a family member.
  • Using balance transfer offers to lower your credit card interest rates by moving debt to a 0% APR card.
  • Researching a personal loan. Going into debt is never advised, but if your situation’s getting dire, it may be your best worst option (It’s sure better than getting evicted or defaulting on your car payment).

This is precisely why Game says it’s so important to get your financial house in order while your career is going well. Flash forward to being laid off: Having a solid credit score is what’s going to enable you to get the best rate on a personal loan. The same goes for locking down a low-interest credit card, if it comes to that.

4 tips to help stretch your finances when you’re unemployed

How to apply for unemployment

Taking advantage of unemployment insurance can help stretch your savings and soften the financial blow of a layoff. Whether you qualify depends on a number of factors, one of the top ones being where you live; every state is different.

As long as you’re looking for work — and meet the qualifying criteria below — most states allow participants to collect benefits for up to 26 weeks (about six months). Just keep in mind that a severance package could impact how much you qualify for, depending on the state you live in.

  • Losing your job was out of your control: Being laid off generally ticks this box, but if you were fired or quit voluntarily, you’ll be ineligible.
  • You worked long enough and earned enough wages to qualify in your state: Every state’s threshold is different, but applicants must meet requirements for wages earned or time worked during an established time period in order to collect unemployment. You can research your state’s rules here.
  • You were laid off from a W2 job: In other words, you weren’t a freelancer or independent contractor. Since employers don’t pay unemployment taxes for these folks, benefits are typically off the table.

That said, there isn’t a one-size-fits-all answer when it comes to how much money you’ll actually get. What you were earning, where you live, and whether or not you received a severance package may all come into play. Your best bet is to contact your state unemployment office to start untangling the details.

How to apply for food stamps

Applying for the Supplemental Nutrition Assistance Program (SNAP), aka food stamps, is also a state-specific process. In order to qualify, you must meet resource and income requirements (SNAP provides this handy pre-screening eligibility tool to help clarify whether or not you qualify). Eligibility varies from state to state but is largely determined by your:

  • Resources: Things like bank accounts and vehicles fall into this camp. Some resources are generally off limits, like retirement plans and your home.
  • Income: You have to meet the income requirements outlined here. Some exceptions — like having an elderly or disabled person in your household, for example — may make it easier to qualify. Just keep in mind that any unemployment benefits you’re collecting will be factored in here.
  • Employment status: If you’ve been recently laid off, this one’s a biggie since SNAP eligibility is hinged, in part, on meeting work requirements. They include:
    • Registering for work
    • Not voluntarily quitting a job or reducing your hours
    • Taking a job if one is offered
    • Participating in your state’s employment training programs
    • If you’re an able-bodied adult without kids, you’ll also be required to either work or participate in a work program for a minimum of 20 hours per week to receive SNAP benefits for longer than three months in a 36-month period.

Ready to apply? Find your state here to get the ball rolling.

How to get help with a job search

There are a number of federal government programs in place to help see you through a stint of unemployment. CareerOneStop (backed by the U.S. Department of Labor) is packed with free job search assistance and training resources. Here you’ll find everything from job openings and resume guides to salary data and interview and negotiation tips.

COBRA might also make sense for newly unemployed folks. The program allows you to keep your employer-sponsored health plan after getting laid off. Before pulling the trigger on enrolling in a new health plan, be sure to check if COBRA makes sense for your health care needs and budget.

Pick up part-time work

Another way to unlock cash is to think of out-of-the-box ways to make money. Before Catala secured a new full-time job, he picked up a ton of side hustles to fill in the missing income. This included everything from tutoring at a local community college to cutting lawns to booking music gigs (He happens to be a pianist.). The takeaway? Look beyond your 9-to-5 skill set to pay your bills.

“At one point, I was doing like five different things and just making money,” said Catala, who earned too much from the gigs to collect unemployment.

“If you’re creative and willing to hustle, you’ll be fine. Even if it’s just $50 a week, that’s better than nothing.”

The post The Ultimate Layoff Survival Guide appeared first on MagnifyMoney.

How The Simple Act of Negotiating Helped Us Save $40,000

iStock

You don’t have to be an expert negotiator to leverage the power of persuasion — and ultimately save big. Alison Fragale, negotiation expert and professor of organizational behavior at the University of North Carolina, tells MagnifyMoney that a little preparation can go a long way.

“Any time you have goals you need to achieve, and you need someone else’s cooperation to make those goals happen, that’s a negotiation,” she said, adding that coming to the conversation prepared is often a game changer.

We caught up with a handful of folks who did just that. From talking down debt, to negotiating salary increases, these everyday people successfully haggled their way to some big financial wins — to the tune of $40,000 worth of savings.

Here’s how they did it.

I shaved $7,400+ off my student loan balance.

As of 2014, the average college graduate wrapped up their studies with nearly $29,000 in student loan debt, according to The Institute for College Access & Success. But your balances aren’t always set in stone.

Danielle Scott, a 30-year-old public relations professional in New York City, used some persuasive bargaining skills to save thousands on her private loans. The inspiration? After several years of just paying the minimum monthly payment and calling it a day, she was discouraged to see that her principal balance was relatively unchanged, thanks to super high interest rates.

“One was as high as 15 percent, and my total loan balance was about $80,000,” Scott told MagnifyMoney.

She called her loan provider, Navient, and cut a deal — if they agreed to lower the interest rate on her loans, she’d up her monthly payments from $400 to $1,500. They agreed, lowering her rate to 1% on one of her two loans, and Scott put everything she had into paying down the debt over the next five years. She paid much more in the short term, but she saved big over the long haul since she was shortening the life of the debt and putting way more toward the principal balance.

Earlier this year, when her balance had gone down to $15,000, her loan servicer reached out to her with a deal of their own. They were willing to reduce her balance to $9,000 if she could pay it off in two lump payments. Scott countered.

“I asked them how low they could go if I agreed to pay it all off in one payment,” she recalls. “At first, they said no, but after pushing back a little, and being put on hold for 20 minutes, they came back with $7,600 as their final offer, but I had to make the payment that day.”

Scott dipped into her savings to pay it and, just like that, was debt-free.

While you might have some wiggle room negotiating private student loan debt, federal student loans are a different story. If you’ve defaulted on federal loans and they’ve been sent to collections, you can use one of the following standard settlements to make good with the U.S. Department of Education, according to student loan expert Mark Kantrowitz:

  • Pay off the current principal balance plus any unpaid interest; collection fees are waived.
  • Pay off the current principal balance plus 50 percent of any unpaid interest.
  • Pay off a minimum of 90 percent of the current principal balance and interest.

Just keep in mind that settlements are generally due in full within 90 days. (FYI: There’s also a chance you’ll have to pay taxes on whatever is forgiven.)

I talked my way out of $20,000 of medical debt.

In 2010, Robin, a Tampa, Fla., lawyer, was involved in a major car accident that almost cost her her life. The road to recovery was a long one and included multiple surgeries and hospital stays. Despite having health insurance, her bills eventually reached a whopping $197,000. But it wasn’t until she really pored over the statements that she noticed some major errors.

“A mix of in-network and out-of-network medical providers were billing me for whatever my insurance company wasn’t paying, even after I’d met my deductible,” Robin, 57, told MagnifyMoney.  She requested that we not use her full name because she’s still negotiating down her debts.

In many cases, she was getting treated by in-network hospitals, but by medical providers who, she later learned, were out of network. This led to tons of surprise bills; a phenomenon known as balance billing, which isn’t always legal in her home state.

“I called each and every medical provider, in some cases threatening to report them to the attorney general,” she recalled. “Some bills were forgiven more easily than others; some took years to resolve, but nothing was ever sent to collections.”

All in all, Robin has wiped out about $20,000 of her medical debt by directly challenging providers — a wise move considering that the Consumer Financial Protection Bureau reported that medical bills make up over half of all debt on credit reports.

I negotiated a $15,000 raise and promotion.

When it comes to nailing down a raise, getting a pay bump of 2 percent per year is the average, according to the U.S. Department of Labor. But you might be able to get more if you’re willing to negotiate.

Ariel Gonzalez, a 33-year-old front end development engineer in Orlando, Fla., has successfully negotiated multiple pay raises over the years. The latest got him a $15,000 pay bump and promotion after a year of working in a junior position.

“My demeanor is typically calm and confident, but firm,” he told MagnifyMoney. “I hate talking about money, but I know what I bring to the table as an employee.”

Gonzalez is a big believer in coming to salary negotiations as prepared as possible, researching comparable salaries on sites like Salary.com and Glassdoor. Referencing positive client testimonials in past negotiations has also proved fruitful. He landed his last raise in 2016 by showing up to the meeting with an air of respect and transparency.

“I came to my boss with my number, hat in hand, and said that it was what I needed to be comfortable and that I didn’t want to do the whole back-and-forth thing,” Gonzalez said, adding that the promotion and raise he was asking for were in line with his performance and proven results as an employee.

The preparation and confidence paid off; his boss had no problem granting his request. The takeaway? Do your homework ahead of time and ask for what you deserve.

Some expert negotiation tips to follow

Whether you’re looking to score a raise or buy a new car, Fragale suggests pinpointing the following three terms before beginning any negotiation:

1) What are you trying to achieve? This should be a clear aspiration that’s grounded in reality, given your circumstances.

2) What’s your walk-away point? Before going in, clarify the point at which you’ll abandon the deal. Fragale said knowing this beforehand is empowering because it discourages an “I’ll take what I can get” mentality.

3) What’s the alternative? In other words, if you don’t get what you want out of this deal, what’s going to happen? If the stakes are high and your alternative is terrible, you’ll be more inclined to settle for less than what you want. (Case in point: You’re more likely to settle for a low salary if your alternative is unemployment.)

“If you have the luxury, try and make your alternative as good as possible before negotiating,” says Fragale. “That tends to lift the whole boat.”

The post How The Simple Act of Negotiating Helped Us Save $40,000 appeared first on MagnifyMoney.

The Benefits of Living Debt-Free

When it comes to debt, most of us have outstanding balances of one kind or another. Indeed, a whopping 80 percent of Americans are living in the red, according to a 2015 Pew Charitable Trusts report — eight in every 10 U.S. adults.

It goes without saying that debt can majorly impact your financial freedom. At one point, Simone Dennis, a 29-year-old health policy analyst in Baltimore, was shelling out in excess of $1,000 a month in minimum payments alone on a combination of auto, student and medical debt.

“I wrote that number down and looked at it every day,” she told MagnifyMoney. “I wanted to escape a life where I was burdened by debt and unable to change my situation because I needed the income.”

In other words, every financial decision she made revolved around her debt. But then she took charge and set her sights on becoming completely debt-free. At the starting line, she owed $65,000 in student loans, had $14,000 left on her car loan and had to contend with another $1,000 in medical bills.

Earlier this month, she reached her goal, wiping out $80,000 in just three years. (We’ll dive into how she did it in a bit.) These days, she’s excited to kick off a life where her income goes toward funding her long-term goals — not the creditors.

The benefits of living debt-free are often life-changing. If your current debt management style is making minimum payments and calling it a day, you might want to perk up and pay attention. Here are all the reasons why living a debt-free life should be your top priority.

What are the benefits of being debt-free?

More funds for your future goals

Unshackling yourself from debt frees up cash that was previously going toward paying down your balances. That means keeping more of your take-home pay. In some cases, it could mean breaking the cycle of living paycheck to paycheck.

Instead of being beholden to creditors, you can use this money to further other financial goals, like building up your emergency fund, kicking up your retirement contributions or whatever else comes to mind. Dennis is using that $1,000 of newfound cash to increase her 401(k) contributions for the employer match. She’s also planning a Mexican vacation to celebrate her accomplishment.

Marissa Lyda and her husband, Jacob, recently crossed the debt-free finish line after paying off $87,000 in student loan debt over a two-and-a-half-year period. This means they finally have some real saving power; getting out of debt has unlocked $750 a month that went toward minimum payments.

“We want to have a full emergency fund and start saving for a good down payment on a house,” Lyda, a 23-year-old accounting specialist in Portland, Ore., told MagnifyMoney. “We’re also putting more toward our retirement accounts.”

You’ll save money in the long-term

You’ll really feel the impact of getting debt-free if you carry any high-interest balances. Let’s say, for example, you have a $3,000 balance on a credit card with an 18 percent interest rate and a $125 minimum monthly payment. If you pay just that minimum, our handy debt payoff calculator reveals that it’ll take you 30 months to get to zero — and you’ll pay $747 extra in interest. These numbers are compounded even further if you have multiple balances and interest rates, which could cost you big time in the long run. (You’re essentially paying creditors to be mired in debt.)

In addition to the immediate financial freedom you can achieve, living debt-free can also majorly supercharge your retirement efforts. Think about it: If you took $400 you were spending each month on debt and redirected it toward a Roth IRA, it would grow to more than $485,000 over the next 30 years, assuming 7 percent annual returns. This mentality could make your golden years a lot more comfortable.

Your health might improve

Another interesting tidbit is that living debt-free may very well be good for our health. Money is the No. 1 stressor in the United States, according to the American Psychological Association’s 2015 Stress in America survey.

Chronic stress can suppress our immune systems and disrupt everything from our digestion to our sleep to our reproductive systems, says the National Institute of Mental Health. There’s also a link between long-term stress and depression and anxiety. It stands to reason that eliminating your debt worries could actually be good for your health.

Risks of debt-free living: How extreme is too extreme?

Conventional wisdom tells us that living without debt is the healthiest way to manage our finances, but this doesn’t mean swearing off credit all together. Doing so, in fact, can work against your financial fitness, according to certified financial planner and senior CFP Board ambassador Jill Schlesinger.

“If you live an all-cash life, then the moment you actually need a loan, you may be in trouble,” she told MagnifyMoney. “It’s highly unlikely you’re going to be able to buy a large asset, like a car or a house, in cash.”

When the time comes to apply for a car loan or mortgage, getting approved — and getting the best rate possible — is wholly intertwined with your credit score. A number of factors go into determining this number. Fifteen percent of your FICO score, for example, is determined by the length of your credit history. New credit makes up another 10 percent; having a mix of credit counts for another 10 percent. In other words, actively using credit responsibly accounts for 35 percent of your credit score. Going completely credit-free translates to a thin credit file that can impact important financing options down the road.

“I totally understand the anxiety of not wanting to live with debt, but going too extreme can be shortsighted,” said Schlesinger, who suggests one of two pathways for maintaining a robust credit score:

  • Use credit cards responsibly: This means paying off your balances in full every month and never carrying a balance. Your credit utilization ratio (i.e. how much of your available credit you’re actually using) makes up nearly one-third of your FICO score. Our experts recommend keeping your credit utilization ratio under 30 percent.

    Reaching for a credit card instead of cash or a debit card to pay for regular living expenses, like gas and groceries, is a great way to use credit to your advantage, so long as you’re paying off the balance in full every billing cycle. (If you can rack up rewards in the process, all the better.) Making on-time payments also shows future lenders that you know how to handle your credit.

  • Consider a secured credit card: Don’t trust yourself with a credit card? Thankfully, there are other ways to keep your credit score alive and well. Enter secured credit cards. These require the cardholder to put down a cash deposit, which determines their credit line, right off the bat. From there, you can use it like a regular credit card without the fear of digging yourself into a debt hole. Not carrying a balance and making on-time payments is key to boosting your credit as your activity is reported to the credit bureaus.

Eliminating debt: How to start

Pick a strategy

Making the minimum payment across all your open accounts isn’t the most effective way to pay down your debt. Dennis used what’s known as the snowball method to get debt-free as fast as she did. This means she continued making the minimum payments on all of her accounts, except for the one with the lowest balance, which she hit extra hard with bigger payments.

Once the lowest balance is paid off, you take whatever you were paying on that bill and apply it to the next lowest balance. It has a compounding effect, plus you can see your accounts closing one after the other, which can make you feel like a financial rockstar.

“I made monthly ‘mega-payments’ of about $2,700 on the debt with the smallest balance and repeated this method until all my debts were paid in full,” said Dennis. “The quick wins of the debt snowball method motivated me to keep going.”

One side note: While you’ll end up paying more in interest over the long haul, this tactic works wonders when it comes to keeping up motivation, according to The Journal of Consumer Research.

Alternatively, you can tackle your debt by prioritizing the accounts that have the highest interest rates. From a black-and-white, numbers perspective, this is smarter than the snowball method since you’ll ultimately get out of debt sooner and pay less in interest. Not sure which method is right for you? Our Snowball versus. Avalanche Calculator can help you make sense of your options.

You can accelerate your debt payoff journey even more by using balance transfer offers. These let you transfer high-interest balances over to new, lower-interest accounts with super-low promotional rates. These typically come with a 3-4 percent transfer fee, but if you can get a 0 percent card and pay off the balance within the promotional period, you can save big time in the long run.

Learn to budget

The key to accelerating your get-out-of-debt timeline is freeing up extra cash that you can throw at your debt. This, of course, requires sticking to a budget. Begin by listing out all your incoming money (income) for the month and subtracting all your outgoing money (expenses), which should include monthly contributions to your savings account. (Don’t worry, you can pay off debt and save at the same time. More on this shortly.)

What’s left represents how much you have to allocate toward your debt. If you come up with a negative number, it means you’re running in the red and need to make some lifestyle tweaks to avoid going even further into debt, which brings us to our next point.

Live within your means

Are there any ways to decrease your expenses? Dennis downgraded her cable package and cellphone plan, stopped paying for garage parking, and cooked meals at home in order to direct more money toward her debt. On a more extreme note, Lyda and her husband sacrificed their personal space and moved in with her parents to kick their debt repayment into high gear.

“We felt very suffocated by debt,” she said. “We weren’t making much, our rent was a lot, and our debt was enormous.”

In addition to lowering your expenses, think of out-of-the-box ways to increase your income, like picking up a side gig. Dennis tipped the scales by selling gently used household items on Craigslist and eBay. She also took on a part-time gig at a local yoga studio in exchange for a free membership.

How to maintain a debt-free life

Once you cross the debt-free finish line, celebrations are certainly in order, but you have to be intentional about not backsliding. Ask yourself how you got into debt in the first place. The way you answer is personal, but pay attention so you don’t repeat past mistakes.

Redirect debt payments toward savings goals

To keep you moving in the right direction, Schlesinger suggests immediately taking whatever you were putting toward your debt and redirecting it to some sort of savings vehicle, whether that be beefing up your emergency fund or upping your retirement contributions.

“It’s a great way to prevent falling back into those bad habits, and the more you can automate it, the better; out of sight, out of mind,” she said.

Top off your emergency fund

If you have nothing in your savings account, you’ll likely rack up new debt to see you through unexpected pop-up expenses. Set your sights on socking away three to six months’ of take-home pay in your emergency fund.

This, along with sticking to a budget, living within your means, and using credit responsibly, plays a major role in breaking the debt cycle once and for all. In some cases, your emergency fund could save you from financial ruin. The good news is that you don’t have to wait until getting debt-free to get your savings off the ground.

Debt versus savings: Which comes first?

According to Schlesinger, there’s a common misconception out there that competing money goals represent an either/or situation. But she says that it’s all about changing your mindset so you can fill more than one bucket at the same time.

“When people ask, ‘What should I do: pay off my debt, establish my emergency fund or contribute to my retirement account?’ my answer is always is the same: Yes!” said Schlesinger. “These big goals require some multitasking.”

If you’re actively in debt-payoff mode, press pause and focus your energy on setting the foundation for your emergency fund. Our insiders suggest setting a starting target of $1,000. Once you hit that milestone, go back to focusing on debt until it’s knocked out, at which point you can switch back to building your savings up to the three- to six-month mark.

Retirement savings don’t have to be put on hold, either.

“If you have 22 percent [interest] credit card debt, it’s hard not to make that the priority, but if you have a 401(k) match, you should put in enough to at least get that match; we shouldn’t be leaving free money on the table,” Schlesinger added.

The takeaway? You don’t want to be so laser-focused on paying off debt that you rob your future self of a comfortable retirement.

What you should do when you’re finally debt-free

Now is the time to ratchet up your savings goals. After bolstering your emergency fund, the next rung on the ladder, according to Schlesinger, is dialing up your retirement contributions — which is exactly what both Lyda and Dennis are doing. Schlesinger said the goal should be to max out your accounts.

Once that’s on track, you can start focusing on other savings goals like travel, saving for a down payment on a home, or saving for your children’s college education. Investing should also be a top priority at this point. We’re not talking about individual stock picking. Instead, the sooner you can zero in on low-cost index funds, the better. This will position you to really maximize your investment returns.

The path to getting, and staying, debt-free is rarely a linear one, but staying the course definitely pays off. The key is to strike a balance between using credit responsibly and sticking to a plan that lets you contribute to your other overarching financial goals.

The good news? A debt-free life is totally doable.

The post The Benefits of Living Debt-Free appeared first on MagnifyMoney.

What Happens to Debt When You Divorce? 

what happens to debt when you divorce
iStock

For every two to three new marriages in 2014 there was at least one divorce, according to the latest Centers for Disease Control and Prevention data — a grim statistic that could easily kill deflate your inner romantic.  

Breaking up a marriage is hard to do and it’s made all the more difficult by the financial implications. 

The average price of a divorce, from start to finish, lands at around $15,500 (including $12,800 in attorney’s fees), according to a 2014 survey put out by Nolo, a publisher specializing in legal issues. If the legal expenses are one side of the coin, figuring out what to do with your joint financial assets and debts is the other.  

We’ve talked about what happens to debt after you’ve married. Now it’s time to ask what happens to debt when you divorce. 

Here’s everything you need to know, plus some tips for protecting your finances when a marriage ends. 

Where you get divorced 

When it comes to splitting up debts, the state you live in can sway the outcome in a big way. A majority are considered equitable distribution states, where the judge uses his or her discretion to divide up debt in a way that’s deemed fair and evenhanded. 

Each state has its own set of laws and procedures, but Vikki S. Ziegler, a longtime matrimonial law attorney licensed in multiple states, says the court generally has more leeway in an equitable distribution state.  

Simply put, the judge has the freedom to take multiple factors into consideration. This might include everything from one spouse’s income to another’s employment status.  

The situation could play out much differently if you live in a community property state. These states are listed below, and in them, debt is viewed a bit differently. 

  • Alaska* 
  • Arizona 
  • California 
  • Idaho 
  • Louisiana 
  • Nevada 
  • New Mexico 
  • Texas 
  • Washington 
  • Wisconsin 

*Alaska has an optional community property system. 

Community property states typically split all marital debt right down the middle, regardless of who actually accrued the debt. This means that if your spouse racked up hidden balances during the marriage, you’ll likely be on the hook for half. In community property states, the divorce process is typically more cut and dried than subjective. 

“The most important thing for someone leaving a marriage to understand is how the law applies in each state that they are getting divorced in,” Ziegler told MagnifyMoney. “How are you going to allocate debt, and who’s going to be responsible for what?” 

An experienced divorce attorney can help fill in the blanks. 

The type of debt 

The type of debt you have is another biggie. Let’s first zero in on secured debt, like a mortgage or car loan.  

According to John S. Slowiaczek, president of the American Academy of Matrimonial Lawyers, whichever spouse decides to keep certain assets — such as the house or a car — will also assume whatever debt is left over.  

“Debt associated with an asset will ordinarily be allocated to the person acquiring the property,” Slowiaczek tells MagnifyMoney. 

Your mortgage: The loan will likely be the responsibility of both parties equally, unless it’s only in one party’s name. If you both co-borrowed the mortgage, you’ll have to decide who will keep the loan and who will exit if one partner wants the house. One way to get one name off a mortgage loan is to refinance the debt and put the loan under just one person’s name.  

The equity built up in the home usually belongs to each party 50/50 as long as the title is held as joint tenants with right of survivorship or tenants by the entirety; don’t be intimidated by the legal jargon. All this means, essentially, is that you legally own the home together.  

If you decide to sell the house, either the couple or the court will likely compel that process, after which you can divide the proceeds equally after paying off the debt.  

If you’re planning on staying in your home, refinancing your mortgage before you divorce can help ease the financial blow. With divorce being as costly as it is, finding ways to trim your budget can better prepare you for a single-income lifestyle. Refinancing could do just that, lowering your monthly payment and potentially your interest rate, assuming you have good credit.  

A lower bill may also make it financially possible for you to stay in the house, if that’s what you want. Plus, if you apply before splitting, you’re more likely to get approved since a combined income will likely make you more attractive to lenders.  

Your car loan: The same usually goes for car loans — if one spouse wants to keep the vehicle, he or she could refinance the loan under his/her own name. Or you can sell altogether and divvy up the cash. As Slowiaczek mentioned above, remaining debt follows the asset, so whoever keeps the car will assume the debt. 

Credit debt. The way nonsecured debts, like credit cards, are handled goes back to individual state laws.  

In a community property state, Ziegler says the courts usually take a 50/50 view of marital debt. But equitable distribution states typically look at who contributed to the debt, how much money each party makes, and other statutory requirements that allow them to potentially allocate the debt differently. In other words, things aren’t as black and white, and the courts have more interpretive wiggle room.   

Barbara, a 36-year-old sales professional in Tampa, Fla. is eight months into the divorce process. Florida is an equitable distribution state, meaning the debt she and her husband accrued could end up being split any number of ways. One of the toughest parts of her experience has been the $35,000 of credit card debt she says she shares with her ex. 

“It was mostly accrued by [my husband], but mostly in my name,” she told MagnifyMoney. The couple also have a $202,000 mortgage, and deciding who will assume the mortgage (and the equity in the home that comes with it) has been a point of contention.  

Ziegler says Barbara probably has more leverage than if she lived in a community property state.  

When you acquired the debt 

One bit of good news: no matter where you live, Ziegler says premarital debts are off limits. Where divorce is concerned, the court is only interested in debts that were accrued during the marriage. The same generally goes for debt acquired post-separation.  

How the debt was used 

Every case is different, but the reason behind the debt can sometimes be argued. If, for example, debt was taken on for one spouse’s personal use, the other spouse might argue against being on the hook for it, depending on the property laws in the relevant state. 

“Credit card purchases to buy groceries or make a car payment are obviously marital, but what about debt that was racked up for personal use, like [cosmetic surgery] or gifts for someone your spouse was having an affair with?” asked Ziegler. “It can be argued that those expenses are not marital debt and should be assumed by the individual.”  

This underscores the importance of parsing out individual versus marital debts. To help make it easier, Ziegler recommends that couples maintain two different types of accounts: joint for marital expenses, and individual for personal spending. It’s also wise to keep your statements handy.
 

How to financially protect yourself during a divorce 

Divorces don’t usually come cheap, but there are steps you can take to soften the blow. 

Sign a prenup

Prenuptial agreements aren’t as taboo as they once were. According to a survey released by the American Academy of Matrimonial Lawyers (AAML) in 2013, “prenups” are on the rise; a whopping 63 percent of divorce attorneys cited an increase in recent years. This is because they serve as a loophole against state rules, dramatically simplifying the fight over debts and assets. 

“Most prenuptial agreements say that if the debt is in either party’s name, it’s separate debt that cannot be allocated or redistributed for payment,” said Ziegler.  

If you’re already married, it isn’t too late to protect yourself. As of 2015, 50 percent of AAML members reported an uptick in postnuptial agreement requests. 

Safeguard your credit

Take steps to safeguard your credit before you divorce. As soon as you begin the separation process, do yourself a favor and make a list of all your individual and joint debts to get an idea of what you’re dealing with. Are you or your spouse listed as authorized users on any accounts? If so, cancel those straight away to avoid accruing any new joint debt. To make sure you don’t miss anything, pull your credit report and take a thorough look at your open accounts. 

Ziegler also suggests making it clear in the divorce agreement who’s responsible for which debts — but that doesn’t always protect you. 

“The reality is, if your name is still attached to the account, and your ex-spouse defaults on payments, it’s going to negatively impact your credit,” she warned.  

If your ex agrees to pay off any debts, you can protect yourself by transferring the balances fully into the former partner’s name. 

The post What Happens to Debt When You Divorce?  appeared first on MagnifyMoney.

How My Emergency Fund Saved My Finances

iStock

In 2012, Heather Vernillo, then 33, learned she had kidney cancer. The Tampa-area nurse had emergency surgery days later. While her health insurance covered 100 percent of her care, the experience left her unable to work for 15 weeks. This translated to more than four months of missed income, plus a $1,100 monthly bill for COBRA, which kept her health coverage intact during her involuntary hiatus.

Vernillo’s emergency fund turned out to be her saving grace through an ordeal that cost her roughly $7,000.

“The situation pretty much wiped out my savings, but it was worth every penny,” she told MagnifyMoney.

Vernillo’s experience underscores the vital importance of keeping a cash reserve on hand. Still, two-thirds of Americans would struggle to cover a $1,000 emergency, according to a 2016 poll conducted by The Associated Press-NORC Center for Public Affairs Research.

Vernillo is no millionaire. As a nurse, her annual income fluctuated between $95,000 and $50,000 before her diagnosis. (She took a pay cut when she moved from New Jersey to Florida in 2012.) Nonetheless, she says her approach to building her rainy day fund was simple: She set up automatic monthly withdrawals from her checking account to her emergency fund, treating it like any other line item on her budget. It took about two years to build up a fund sufficient enough to cover the expenses she incurred during her medical crisis.

Now, she is focused on rebuilding her fund. This wasn’t always financially easy, she admits, but after her health scare, it was a top priority.

“I’ve been able to partially replenish [my savings] and currently have about two months’ worth of expenses tucked away, just in case,” she says.

Choosing your best worst option

When people don’t have cash on hand for emergencies, they’re more likely to turn to alternative borrowing methods that could wind up costing them much more down the road. (Hello, payday loans.) Sometimes, it can feel like a painful choice from an array of bad options.

If you’ve exhausted all your best options for cash — you’ve emptied your bank account and asked friends and family for loans — then it’s time to look at your next best alternative. And at this point, it’s about choosing the option that will cost you less in the long run.

If you’re overwhelmed with medical bills, for example, ask the doctor or hospital to put you on a payment plan. Or consider a personal loan or a low-interest credit card — whichever option carries the lowest APR. Check out our ranking of the 10 best options for cash when you need it fast.

“If you don’t have any other options, then using a credit card or personal loan to pay for an emergency is better than defaulting on a bill, which can negatively impact your credit score,” Natalie Colley, a financial analyst with Francis Financial, tells MagnifyMoney.  “You’ll pay more in the long run with interest, and ultimately you’re setting yourself up for financial instability and getting caught in a debt cycle.”

The key is to use these methods as a last resort and create a plan to pay down the debt as soon as possible.

Thanks to consistent monthly contributions, Marvin Fontanilla, a 35-year-old marketing professional in San Jose, had $8,000 tucked away in his emergency fund. It was enough to cover three months’ worth of expenses, and it came in handy back in August, when the battery on his hybrid car called it quits. A replacement cost $2,200, and an additional $622 for a rental car to use during the repair.

“It didn’t make a huge dent in our savings because my fiancee and I live way below our means,” Fontanilla says. “We’ve actually already replenished it by taking money we normally use to make aggressive student loan payments and redirecting it back into our savings account.”

While we certainly can’t anticipate every financial emergency that lies ahead, he adds that the death of his car battery didn’t come completely out of the blue; he knew when he bought a hybrid that the battery would likely have to be replaced once he hit 200,000 miles, so the expense was already in the back of his mind.

How much should you save?

Just as there’s no way Vernillo could have predicted her cancer, it’s impossible for any of us to really know what financial twists and turns are in our future.

“We can plan until we’re blue in the face for what lies ahead financially, but no matter how great our planning is, emergencies happen,” says Colley.

She tells her clients to live by a basic rule of thumb for savings: Save for at least three to six months’ worth of expenses.

“That’s a large number, and it’s going to take years to get there, but the important thing is to establish the habit of putting money aside every month and having it automatically transferred from your checking account to your savings account,” she says.

How much you contribute each month depends on a number of factors, not the least of which are income and expenses. After accounting for fixed bills and variable expenses like food and entertainment, what’s left should be divvied up between your financial goals. If your emergency fund is at zero, Colley suggests starting small and focusing solely on the first $1,000; a safe cushion in case of a minor setback.

Once you hit that milestone, you can begin redirecting some money toward other financial goals (like paying off  high-interest debt, dialing up your retirement contributions or saving for a down payment on a home) while continuing to build your emergency fund. Everyone’s goals are different, but the main takeaway here is that it isn’t an either/or situation. Rather, it’s all about saving for multiple goals at once.

Where to stash your savings

Where you keep your emergency fund matters. Colley likes the idea of keeping it at a bank that’s separate from a regular checking account. (Out of sight, out of mind.) She recommends going with an online, high-yield account, like Capital One 360, Ally or Synchrony. While a traditional savings account at your local bank will likely only pay 0.01 percent, these online accounts dole out 1.20 percent with no minimum balance requirement.

Another plus is that it typically takes three days to transfer money into your checking account, which reduces the likelihood of impulsive withdrawals. The idea is to build an emergency fund that’s liquid, but not so liquid that you’ll be tempted to dip into it when the mood strikes.

For smaller pop-up expenses that leave you needing cash on the spot — a flat tire or overdraft protection, for example — Colley says it’s not a bad idea to keep a few hundred dollars in a traditional savings account that can be tapped immediately.

“Having a fully funded emergency savings doesn’t happen overnight, and it also shouldn’t be your one and only focus,” Colley says. “If you do that, all your other goals will come to a grinding halt while you build your savings account.”

The post How My Emergency Fund Saved My Finances appeared first on MagnifyMoney.

How I Bought My Dream Home for No Money Down  

Source: iStock

Like many young professionals, 31-year-old Brittany Pitcher thought her dream of homeownership dream would never quite line up with the reality of her financial outlook. Pitcher, an attorney in Tacoma, Wash., earns a good salary, but a large chunk of her take-home pay goes toward paying down her debt from law school, not leaving much room to save for her dream home — especially when most experts recommend coming up with at least a 20 percent down payment. 

“With my law school student loans, I could have never saved 20 percent down for a house,” Pitcher told MagnifyMoney. “Twenty percent is an outrageous amount of money to save.” 

But Pitcher managed to find a more affordable solution, and in 2015 she was able to purchase her dream home for $0 down.

Here’s how she did it:

A loan officer suggested Pritcher look into securing a grant from the National Homebuyers Fund (NHF), a Sacramento, Calif.-based nonprofit that works with a network of lenders nationwide to make the home-buying process more affordable, offering assistance for down payments, closing costs, mortgage tax credits and more. She applied and was awarded an $8,000 grant, which covered her down payment and closing costs. 

Each lender that works with the NHF to offer downpayment assistance has different eligibility requirements for borrowers. In Pitcher’s case, she had to earn less than $85,000 annually to qualify for the grant. She also had to take an online class driving home the importance of paying her mortgage. 

There were other stipulations, too. She was required to use a specific lender and agree to a Federal Housing Administration mortgage with a rate of 4.5%. Since FHA mortgage loans require only a 3.5 percent down payment, the grant fully covered her down payment.

But like all FHA mortgage holders, Pitcher soon learned there was a price to pay for such a low down payment requirement — she had to pay a monthly mortgage insurance premium (MIP) on top of her mortgage payment, which added an additional $112 per month.  

With the grant, Pitcher successfully purchased her first home in 2015, trading up from a one-bedroom rental to a three-bedroom house. And even with the added cost of MIP, her monthly mortgage payment was still roughly $100 less than what she would pay if she continued renting in the area.  

“When I bought my house, with my student loans, my net worth was like negative $120,000 or something horrible like that,” says Pitcher. “Now my house has appreciated enough to where my net worth is only negative $60,000. It’s been an incredible investment that’s totally paid off.” 

After she moved into her home, she came up with a strategy that would ultimately get rid of her MIP and secure a lower interest rate. Within a year, her house had increased in value enough for her to refinance out of the FHA loan and into a conventional loan, which both lowered her interest rate and eliminated her mortgage insurance premium. 

Pitcher’s experience highlights how the 20 percent down payment rule of thumb might actually be more myth than a hard-and-fast rule.  

“Historically, the typical first-time homebuyer has always put less than 20 percent down,” says Jessica Lautz, Managing Director of Survey Research and Communications for the National Association of Realtors (NAR).  

According to NAR’s 2016 Profile of Home Buyers and Sellers report, the typical down payment for a first-time homebuyer has been 6 percent for the last three years.  

How to get a house with a low down payment  

There are plenty of programs out there that can help first-time homebuyers get approved for a mortgage without needing a 20 percent down payment.  

Type of Loan

Down Payment Requirement


Mortgage Insurance

Credit Score Requirement

FHA


FHA

3.5% for most

10% if your FICO credit score is between 500 and 579

Requires both upfront and annual mortgage insurance for all borrowers, regardless of down payment

500 and up

SoFi


SoFi

10%

No mortgage insurance required

Typically 700 or higher

VA Loan


VA Loan

No down payment required for eligible borrowers (military service members, veterans, or eligible surviving spouses)

No mortgage insurance required; however, there may be a funding fee, which can run from 1.25% to 2.4% of the loan amount

No minimum score
required

HomeReady


homeready

3% and up

Mortgage insurance required when homebuyers put down
< 20%; no longer required once the loan-to-value ratio reaches 78% or less

620 minimum

USDA


homeready

No down payment required

Ongoing mortgage insurance not required, but borrowers pay an upfront fee of 2% of the purchase price

620-640 minimum

The U.S. Department of Housing and Urban Development, for example, has a tool where homebuyers can search for programs local to their area. 

“There might be programs there that first-time homebuyers could qualify for that either allow them to put down a lower down payment or help them with a tax credit in their local community, or even property taxes for the first couple of years after purchasing the home,” Lautz says. “Those programs are available. It’s just a matter of finding them.” 

Case in point: Maine’s First Home Program provides low, fixed-rate mortgages that require a small, or sometimes zero, down payment. Similarly, the Massachusetts Housing Partnership, a public nonprofit, boasts its ONE Mortgage Program. The initiative offers qualified homebuyers low down payments with no private mortgage insurance. 

Generally speaking, where low- or no-down-payment loans are concerned, potential homebuyers have a number of options. An FHA mortgage loan, funded by an approved lender, is perhaps the most popular. Folks whose credit scores are 580 or above can qualify for a 3.5 percent down payment. That number goes up to 10 percent for people with a lower credit score. The catch is that you’ll have to pay an upfront insurance premium of 1.75 percent of the loan amount along with closing costs. 

Veterans, active-duty service members, and military families may also be eligible for a VA loan, which comes without the burden of mortgage insurance. They do charge a one-time funding fee, but no down payment is required, and the rates are attractive. 

Check out our guide to the best low down payment mortgage options > 

Christina Noone, 34, and her husband Eric, 33, bought their first home in Canadensis, Pa., in 2011 with a USDA loan. USDA home loans are backed by the U.S. Department of Agriculture. The couple put 0 percent down for a $65,000 loan with no private mortgage insurance requirement. 

“Putting money down makes your payments lower, but this specific type of loan, designed for rural areas, is manageable,” Christina says of their $650 monthly payment, which includes their mortgage and taxes. “I might have liked to wait until we had money to put down so we could have bought a nicer house for the same payments, but with zero down, we were able to get into a house easily.” 

The biggest downside for Eric and Christina, who own a local restaurant, is that their house is “a big fixer-upper,” something the couple hasn’t financially been able to tackle yet. This is precisely why Steven Podnos, M.D., a Certified Financial Planner and CFP Board Ambassador, stresses the importance of having a three- to six-month emergency fund before buying a house — especially since putting down less than 20 percent often necessitates paying for private mortgage insurance. He also suggests keeping your overall housing costs under 30 percent of your income. When it comes to finding a lender, he adds that shopping around is in your best interest. 

“It’s a competitive process,” he says. “I always tell people: get more than one offer. Go to more than one institution because different banks at different times have different standards, different amounts of money they’re willing to lend, and different risks they’re willing to take.”

The post How I Bought My Dream Home for No Money Down   appeared first on MagnifyMoney.

Here’s Proof You Don’t Need to Go to College to Land a Good Job

Michelle Laydon earns $80,000 per year as a senior network engineer in Santa Paula, Calif. She’s been working in the IT field for close to 20 years without a college degree, instead working her way up in the field through a mix of on-the-job training and a number of professional certificates, which she has actively renewed throughout her career.

“I’ll be quite honest, we have folks who come in to interview who may have a college degree and claim to know this stuff, but who’ve honestly never had their hands on it,” says Laydon, 50. “When they sit down in my department, it’s very intimidating because if you don’t know it, you don’t know it. With IT, there’s just so much to be gained by that hands-on experience.”

Workers without a B.A. currently make up about 64% of today’s workforce, spanning across a number of industries that go beyond traditional blue-collar jobs. And, despite popular belief, there are plenty of good jobs to be had that don’t require a bachelor’s degree — about 30 million, to be precise. The news comes from fresh research released Wednesday by Georgetown University and J.P.Morgan Chase & Co., which sought to find out how many workers are in good jobs (defined as those that pay at least $35,000) that don’t require a B.A.

The “New Collar” Job Market

The “Good Jobs That Pay Without a B.A.” report found that while manufacturing jobs on the whole are declining, they’re being more than made up for by good jobs in other skilled-service industries like health services, information technology, and financial services; the report’s lead author Anthony P. Carnevale, director of the Georgetown University Center on Education and the Workforce, refers to these as “new collar” jobs.

“The dominant narrative was that the American economy was hollowing out, that we were losing all the jobs in the middle, that in the end we’re going to end up with an economy that only hired brain surgeons and pool cleaners,” Carnevale told MagnifyMoney.

It turns out there is some truth to that — the abundance of blue-collar manufacturing jobs is indeed decreasing — but we’re simultaneously seeing a spike in these “new collar” jobs that pay well without requiring a B.A. The takeaway?

“The hollowing-out story, in a way, is being oversold,” says Carnevale.

To be certain, college experience does matter in the job market these days.

For the most part, Carnevale says that having some college experience will likely give you a leg up in the job market — professional certificates, some college, associate’s degrees, two-year degrees, etc.

“That’s where the most striking growth has been,” he says. “In a sense, for a lot of these jobs that used to require only high school, there’s been an upward shift in the education requirements for these jobs now.”

How to Get a “Good Job” These Days

Despite suffering major job losses, blue-collar industries continue to represent the greatest source (55%) of good jobs for folks without a B.A., according to the report. And while there has been a slight increase in good jobs that pay without a four-year degree, their overall share of good jobs has actually dropped from 60% down to 45%. According to Carnevale’s findings, this is because B.A.-holders are still scooping up more and more of these gigs.

This may be the case, but as “new collar” jobs grow and evolve, workers without a B.A. can still earn a solid living. In some cases, they can even out-earn their higher-educated colleagues.

“You can get a one-year certificate in heating, ventilation, and air conditioning, and you’ll make more than 30% of the people who get A.A.s, and a fair percentage of the people who get B.A.s, actually,” says Carnevale. “In the old days, it was: go to college, get a B.A., earn more money. It’s more complicated now. It’s more about the field of study.”

He adds that the idea that more education translates to more money is still generally true — but there’s a whole lot of variation.

“If you get a certificate in engineering or computers, for instance, you’ll make more than somebody who gets an A.A. in an academic subject,” he says.

There’s a wide range of good jobs that don’t require a bachelor’s degree, from nurses to police officers; electricians to plumbers; bookkeepers to customer service representatives. The report points to a computer support technician earning $60,000 as a perfect example of this new worker demographic.

College Debt vs. Career Prospects

Matt Eyre, an assistant manager at a Tampa, Fla., restaurant, still carries student loan debt from the associate’s degree in music engineering and production he earned a decade ago. But he has no plans to return to school to complete his four-year degree.

“I switched career tracks and have been in restaurant management for about six years now, earning more than I think I’d get in music production,” says Eyre, 35. “I honestly don’t think having a degree would unlock any new opportunities for me; if anything, it would drive me further into debt.”

Eyre made the career jump in New York City, where his entry salary landed at $50,000. After three years of positive reviews from employers and consistent raises, he was earning $60,000 by the time he moved to Tampa in 2014. Despite taking a pay cut (he now earns $48,000 per year), he is still earning more than the $41,250 average salary of assistant managers in the U.S., according to Glassdoor’s estimate.

“In my field, performance speaks louder than degrees,” says Eyre. “I’ve worked with managers who had bachelor’s degrees in hospitality management, and I actually made more than they did because of my experience.”

Location Matters

When it comes to his career, Eyre has fortunately lived in states ripe with “new collar” job opportunities; according to Carnevale’s team, both Florida and New York are among the top four states that offer the largest number of good jobs that don’t require a B.A. degree. Texas and California take the top spot on the list, which is good news for Laydon, who works in the Golden State.

According to career resource Glassdoor, the average salary for a senior network engineer like Laydon in the U.S. is just over $104,000. Could Laydon hit that number if she had a B.A.? Maybe, but at this point in her career, like Eyre, she has no interest in taking out loans to pursue a higher degree.

The larger your state’s population, the better odds you might have of landing a good job without a B.A. According to the report, California, Texas, Florida, and New York, which happen to be the more populous states, offer up most of these jobs. Illinois and Pennsylvania are right behind.

The post Here’s Proof You Don’t Need to Go to College to Land a Good Job appeared first on MagnifyMoney.