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What Happens to Debt When You Divorce? 

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

what happens to debt when you divorce

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.  

Student loans. Generally speaking, Ziegler says the court is required to look at the purpose of the degree each spouse pursued to determine whether it’s marital or non-marital debt. Again, it really depends on the nature of the debt, who benefitted from it, and what state you live in, among other things.  

For example, a student loan may be in your spouse’s name, but who’s making the payments? And which one of you is the primary earner? These things matter and could potentially play into your divorce agreement. 

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. 

Marianne Hayes
Marianne Hayes |

Marianne Hayes is a writer at MagnifyMoney. You can email Marianne here

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Credit Cards

Instant-Approval Credit Cards: What You Should Know

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.


Instant-approval credit cards are exactly what the name implies — immediate, instant-access lines of credit for those who qualify. It goes without saying that they’re ideal for those who need spending power now, but be sure to do your homework before going on an application spree.

Here’s what to know about instant-approval credit cards.

Instant-approval credit cards: Explained

These cards work just like any other credit card, except that in many cases, you can begin using an instant-approval card the same day you’re approved.

In other words, you’ll want to use these cards responsibly to avoid digging yourself into an unplanned debt hole. (We’ll unpack those details in a minute.) The application process varies from card to card, but the higher your credit score, the better your chances of scoring a card with reasonable terms.

You’re more likely to get approved by Discover, for example, if you have “good to excellent credit.”

That’s not to say that instant approval cards are off the table if you have less-than-perfect credit; there are plenty of lenders willing to work with people in this camp, but keep in mind that those with higher credit scores will generally get better interest rates and higher spending limits.

Beverly Harzog, credit card expert and author of “The Debt Escape Plan,” cautions people looking for quick access to credit to be sure they’re using it for smart reasons.

“The basic rules are the same: read the fine print and try not to carry a balance,” Harzog tells MagnifyMoney. “Just because it’s instant doesn’t mean it’s a good card for you. Research all your choices and make an informed decision.”

Another thing to keep in mind is that the word “instant” can’t always be taken literally. With the Discover card mentioned above, for instance, the company usually issues what’s called a “conditional approval” after receiving your credit score and approving your application. This will take a deep dive into your credit history, income and financial background, while also verifying that you indeed meet all the card’s requirements. The takeaway? Instant approval doesn’t always mean it’s a guarantee.

Why you might need an instant-approval card

Instant-approval cards are ideal for people who need credit in a hurry. There’s also the convenience factor of not having to wait too long to start using them. While the application and approval process are more accelerated, Harzog says that your standards should stay high.

According to Harzog, the ideal candidate for an instant-approval card is someone who needs to make an immediate purchase and will be able to pay it off by the time the first credit card bill comes due, thus avoiding interest. If it’s a big-ticket purchase that’s going to take you a bit longer to pay for, using an instant-approval card with a reasonable interest rate is your second-best choice.

Just remember: Applying for credit cards leads to inquiries into your credit report, which can adversely affect your score. To reduce the sting, see if the bank offers a prequalification service. You provide minimal personal information (usually just your address, name and the last four digits of your Social Security number), and the bank tells you if you’re prequalified for a card. This in no way affects your credit score, but it does serve as a great way to help you pinpoint the best card to apply for.

Though an affirmative prequalification doesn’t always mean you’ll ultimately be approved, at least this way you’ll know you’ve got a good shot.

The risks of instant-approval credit cards


All credit cards come with some level of risk. Harzog warns that there are a number of instant-approval cards on what she calls “the bad credit market.” With these lenders, as long as they can verify your identity, you’re good to go. This may sound amazing for consumers with bad credit, but Harzog advises wariness.

“You have to be really proactive in the way you protect yourself because while some are fine, many use high APRs and maintenance fees to really take advantage of people,” she says.

She points to First Premier as an example. The bank boasts 60-second approvals, but it also charges a $95 “Program Fee” to open your account. From there, consumers are hit with a 36 percent APR, along with an annual fee that could range from $45 to $125, depending on your credit limit. The lower your credit score, the more careful you need to be, according to Harzog.

Aside from sky-high interest rates and surprise fees, another inherent risk that comes with instant-approval credit cards has to do with the likelihood of overspending. Having to wait 10 days to receive a regular credit card is a built-in safeguard against impulse shopping. On the flipside, getting excited about an unplanned purchase — then having instant access to a ready-to-use line of credit — could be a recipe for financial disaster.
“Just be sure that the reason you need to have an instant-approval card works with your overall financial goals and is within your budget if you plan to start using it that day,” Harzog says.


Application Fees

Annual Fees

Ongoing APR

Our take...

First Premier


$75-$125 annual fee the first year, then $45-$49 after that.


An awful deal, given the upfront and annual fees, not to mention the skyhigh ongoing APR. If you really need money fast, consider alternatives like a personal loan that doesn’t charge upfront fees.


You may have to make a down payment, depending on the credit program you qualify for.


25.90% (variable)

We aren’t big fans of FingerHut, an online shopping catalog that lets consumers finance their purchases through one of its credit programs. You’re much better off going with one of the secured credit cards featured in the next section.

Total Visa Card


$75 for the first year; $48 after that, but you’ll also incur a total of $75 per year in monthly servicing fees.


This is another one that has terrible fees . It makes a lot more sense to take the money you’d spend on these fees and put a deposit down on a  secured credit card . The only way we can justify going with Total Visa is if you really cannot get approved anywhere else, and you really need to build credit. Even then, a secured card would be a better option.

The potential benefits of instant-approval credit cards

Like any other credit card, instant-approval cards, when used wisely, can help you out of a financial jam if you have no other quick financing options. This is especially true if you get a card that allows for cash withdrawals with limited or no fees.

And those playing the long game can actually use them to improve their credit score by keeping their utilization rate low and always making on-time payments.

But if you can’t find an instant-approval card with good terms, going with a secured credit card or prepaid debit card might be a better starting point, assuming you don’t need the spending power right this minute.

Instant-approval credit card alternatives

Secured cards

Let’s make one thing clear right off the bat: A secured card won’t be helpful to someone who needs to put a large purchase on credit right away, doesn’t have cash to fund a card and is looking for speedy credit-card approval.

But if you are looking for a solid way to build credit without going deeper into debt, a secured card is one of the best ways to accomplish that goal.

A secured credit card requires the cardholder to put down a cash deposit at the outset, essentially protecting the bank should you default on your debt. The deposit itself often dictates your credit limit; so putting down a $500 deposit translates to a $500 credit line.

Need more credit? Simply add more and you’re ready to roll. The setup is a roundabout way to build your credit or rehab a poor score (assuming you maintain a low utilization rate and pay the balance off in full each month) as your activity is reported to the credit bureaus.

If you are approved for a secured card, you’ll just need to make the minimum deposit, which varies from issuer to issuer. As your credit score gradually rises and you prove your creditworthiness, you may have the opportunity to request an upgrade to a regular credit card or your lender may bump you up to a regular credit card.

Remember, if the idea is to improve your credit, you’ll want to wait until your score hits the 650 mark before you consider making such a switch. That said, our experts recommend keeping a secured card active for at least one year if you want to see a tangible difference in your credit score.

Harzog adds, “Your score is considered, but they also look at your credit report to see if you have negative items, such as a recent bankruptcy; your income is also a factor.”

When it’s time to transition up, you can begin the process by reaching out to the bank directly to see what regular credit cards you qualify for. (Steer away from ones with annual fees, of course.)

If a secured credit card sounds right for you, check out these two noteworthy picks:


Minimum deposit

Fees and fine print


Can you convert to a regular card?

Discover it® Secured Card

At least $200

No annual fee

23.99% Variable APR


Capital One® Secured MasterCard

$49, $99 or $200, depending on your creditworthiness

No annual fee

Variable APR


Discover it® Secured Card – No Annual Fee

The Discover it® Secured Card – No Annual Fee offers decent rewards to cardholders, like 2 percent cash back at gas stations and restaurants on up to $1,000 in combined quarterly purchases, along with 1 percent back on all other purchases. The interest rate is high, making it all the wiser not to carry a balance. On the bright side, after eight months, Discover will start running automatic monthly reviews to see if you’re eligible for a unsecured card. To learn more, check out this in-depth MagnifyMoney review.

Capital One® Secured Mastercard®

The interest rate is super high on the Capital One® Secured Mastercard®, but again, this is a nonissue if you’re paying off the balance each month. Unlike with the Discover it® card, you can’t earn cashback rewards with this offering, but the minimum deposit is lower, making it a more accessible secured credit card for someone looking to improve his/her credit. One other perk: if you’re unable to pay the full deposit all at once, Capital One will give you 80 days of being approved to do so.

Prepaid debit cards

Getting a prepaid debit card is easy enough — simply use cash to load up the balance, and you’re set. They’re not the same as credit cards, but can be a good alternative if you don’t have access to a traditional checking account or just want an easy, cash-free way to access your money.

How do they work?

Since your payment history for a secured credit card is reported to credit bureaus, using one responsibly is a legit way to build up your credit. Not so for prepaid debit cards. Instead, you prepay the balance, then swipe away until you hit zero.

When are prepaid debit cards a good option?

“If you can’t get a checking account, for whatever reason, a prepaid card might help bridge the gap until you can get an account again,” says Harzog.

In other words, prepaid debit cards represent an efficient, simple way to manage your money. They’re also ideal for people who generally carry a lot of cash on hand, protecting them from theft. Another perk comes if you set up direct deposit so that your paycheck is funneled straight to your prepaid card. According to our insiders, some prepaid card issuers may credit your account with your payroll earnings a full two days early — a worthwhile perk if money is tight.

Just one other important note regarding prepaid debit cards: The fees can be killer. Some attach charges for everything from loading your card to using an ATM. One upside, however, is that the Consumer Financial Protection Bureau has recently tightened up rules for the prepaid debit card industry, issuing a slew of new consumer protections that will take effect next year.

“There are a few that have minimum fees, and these are good candidates,” adds Harzog. “For example, you might want to give your teen’s allowance via a prepaid card so the kid can get used to using plastic responsibly, but if they have a checking account, a debit card can accomplish the same thing.”

If you’re on the market for a prepaid debit card, they’re relatively easy to find. A number of large banks, like Chase and American Express, offer their own versions. You can also find different variations at retailers like Walgreens. Again, just be sure to triple-check the fine print so you know exactly what you’re signing up for.

Prepaid debit cards to consider

Comparing prepaid debit card options? Here are a couple worth mentioning and a few key fees for you to watch out for.


Monthly fee

Reload fee

ATM fee

Replacement card fee

Amex Bluebird


$0, unless you want same-day access to a check you deposit via mobile check capture; fee is equal to 1% or 5% of check value.

$0 at any MoneyPass® ATM. Otherwise, there's a $2.50 fee.


Chase Liquid



$0 at any Chase ATM, otherwise there's a $2.50 fee.


Bluebird by Amex

Bluebird is operated through a partnership between American Express and Walmart. As far as fees go, Bluebird stands out (in a good way). The card itself, which requires no credit check, is free if you purchase it online; it’ll cost you up to $5 if you go through a retailer.

This card gives you plenty of ways to add funds free of charge, including direct-depositing your paycheck, which will get you access to your funds two days faster. You can also reload with cash at Walmart or go with a free debit card transfer. Mobile check capture is another free option.

For mobile deposit, you’ll have to wait 10 days to access your money, or you can get it in a matter of minutes if you’re willing to pay a fee equal to 1 or 5 percent of the check’s value (or a minimum of $5). We highly recommend sticking to the direct deposit option if you can.

A downside to Bluebird is that to avoid ATM fees, you have to use an ATM that’s within its MoneyPass® network. (You might want to check your nearest locations before opening an account.) Another snag is that cash back from retailers is off the table. You’ll also need to keep in mind that this is an American Express card, which isn’t as widely accepted as other major cards.

Chase Liquid

Chase Liquid is another prepaid debit card worth considering if you plan on reloading funds fairly often. This card lets you load checks and cash, for free, at any Chase ATM. You can also use direct deposit or transfer money from an eligible account. But unlike Bluebird, you can expect a few more fees with Chase Liquid.

You have to have one of Chase’s qualifying accounts, like Chase Premier Checking, to get away from the $4.95 monthly service fee. One other thing: you have to go to a local branch to open your account, so this card doesn’t make sense if there isn’t one in your area.

Final thoughts

Instant-approval credit cards can be a great option for when you need credit now, assuming you don’t carry a balance and you go with cards that have reasonable rates and little to no fees. If that’s out of reach, secured credit cards are an effective way to build up your credit score until you qualify for better deals. As another option, a prepaid debit card is a solid starting point on the road to better money management.

Marianne Hayes
Marianne Hayes |

Marianne Hayes is a writer at MagnifyMoney. You can email Marianne here


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Can I Get a Home Equity Loan with Bad Credit?

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.


A less-than-perfect credit score isn’t necessarily a barrier between you and a home equity loan (definition courtesy of MagnifyMoney’s parent company, LendingTree). Why? Because unlike unsecured debts, such as personal loans or credit cards, you actually have some valuable collateral to offer the lender — your home. So while you may still face a difficult road ahead in pursuit of such a loan, for many it’s more than doable.

When applying for a home equity loan (HEL), you’re essentially leveraging the equity you’ve built up in your home. By equity, we mean the difference between the value of the home and whatever’s currently left on your mortgage. If, for example, an appraisal finds that your home is worth $150,000, and your mortgage balance is $100,000, then you have $50,000 of equity. (You can find a handy LendingTree equity calculator here.)

Generally speaking, more equity translates to more robust financing options, even if you have poor credit. That’s not to say you’ll get the best terms and interest rates. (We’ll get back to that.) But even if you’re squarely in this camp, there are options out there.

The application process for a HEL, which isn’t unlike that of a mortgage, can be lengthy. Get ahead of the game by gathering up all the relevant financial documentation. This includes your latest tax returns, proof of income and employment, home insurance documents, your home value estimate and the like. Any co-applicants ought to do the same.

What’s considered a “bad credit score” for a home equity loan?

Getting a home equity loan with bad credit is possible, but as with any other type of financing option, a good score is bound to work in your favor.

“Anything under 680 is going to be where things get a little difficult,” Nathan Pierce, a certified residential mortgage specialist and vice president of the National Association of Mortgage Brokers (NAMB), tells MagnifyMoney.

Of course, this isn’t a hard and fast rule Discover, for example, offers HELs to consumers with credit scores as low as 620.

If your score is on the lower side of the 600s, you aren’t necessarily out of the game. Lenders look at other factors besides your score. They also consider whether you have a history of responsible credit use, solid employment and income, and sufficient equity in your home.

Other factors that can impact your quest for a HEL

Debt-to-income ratio: Aim for 43 percent or less

Qualifying for a home equity loan with bad credit is about more than just your credit score. During the process, a number of factors come into play. Your debt-to-income (DTI) ratio is a biggie. This basically provides a snapshot of what you owe versus what you earn.

Many lender sites specify the 43 percent threshold. According to Pierce, a DTI that exceeds 45 percent will likely work against you when applying for a home equity loan.

“You may see some lenders that may go up to 48 percent or 50 percent, but that’s on the rare side,” he adds.

In general, lenders tend to lean more conservatively here. And, as we said, 43 percent is a big number for many lenders. The maximum DTI for applying through both Chase and TD Bank, for example, is 43 percent.

Let’s say your monthly gross income stands at $4,000 and all your monthly debt payments (from your mortgage to credit cards to student debt to auto loans) adds up to $3,000. When we divide your debt by your income, it reveals a 75 percent DTI. That is an amount that’s considered high by HEL standards, which will probably impact your ability to qualify for a home equity loan in spite of bad credit.

Loan-to-value ratio: Aim for 85 percent or less

How much equity you have in your home is another big piece of the puzzle, as it affects how much money you’ll be able to borrow. Since you’re using the home itself as collateral, owing less makes you more desirable to lenders.

It’ll also help you get approved for a larger loan amount. If your mortgage debt exceeds 85 percent of the home’s value, qualifying for a home equity loan with bad credit might prove tricky. This calculation is called the loan-to-value ratio. (You may encounter the acronym LTV.)

“For most lenders, that’s the bottom number,” says Pierce. “When you get up to 90 percent, it gets a little bit thinner, but there are some institutions out there that are going to 100 percent these days.”

Most of these will be credit unions and small community banks, as opposed to traditional banks and mortgage companies. The big guys, according to Pierce, are usually limited to 85 to 90 percent.

Low equity, when coupled with poor credit, is likely to make qualifying for a HEL an uphill battle. That’s not to say you’re out of options; you just might have to take a different financing route.

Your credit report: Getting it right

That said, you’ll definitely want to take a good look at your credit report before applying for a HEL. According to a 2012 Federal Trade Commission report, roughly one in five Americans has potential errors on his or her credit report. If you’re one of these people, disputing errors with credit bureaus can give your credit score a nice boost in the right direction. Indeed, 13 percent of consumers experienced a change in score due to their dispute, the report said.

Legitimate red marks on your report, like delinquent accounts or a past bankruptcy, could indeed makes things harder, but every lender is different.

How to shop for a HEL with bad credit

Before making any big financial decision, it’s in your best interest to shop around. Don’t let having poor credit score or disempower you or make you feel like you need to jump at the first offer. Instead, leverage what equity you have in your home to negotiate multiple offers and try to score the best terms you can.

“With a home equity loan, there could be large variations between lenders, so I’d definitely suggest checking with multiple places, as you could get pretty different options from each,” says Pierce.

Just remember that the qualifying criteria for one lender might not match another’s. But that’s all the more reason to do your homework. (Oh, and by the way: if you sign loan papers and then change your mind, the Federal Trade Commission says you have the right to cancel the deal for any reason, without penalty, within three days.)

Additionally, Pierce says that large banks and mortgage brokers might not be your best option. So check out your local community banks and credit unions, which will likely be more open to working with people who have less-than-perfect credit.

What to expect during the HEL application process


After submitting the necessary paperwork, the application process typically takes a few weeks. This may vary depending on the complexity of the application, underscoring the importance of being prepared. If a lender needs to dive deeper to verify your income or look into other properties or assets you have, it’ll draw out the timeline.

That said, folks with good credit are more likely to snag financing options with better terms and lower interest rates. This doesn’t mean you’re out of luck if your credit score is on the lower end, but applying for a home equity loan with bad credit may result in being offered less or paying a bit more in the long run because of higher interest rates. This is when you really need to compare your options, which is why shopping around can pay off big time.

You also need to think about why you’re seeking the loan in the first place. For example, a home equity loan with a 10 percent interest rate that’s used for a home renovation — which could ultimately boost your home value — might make sense if you have room in your budget to easily absorb the monthly payment. But the same loan doesn’t add up if you’re looking to consolidate lower-interest debt. Sure, you might boost your credit score a bit, but you’ll pay more over the long haul.

Either way, be sure to really pay attention to the loan terms, especially the monthly payments. The good news is that HELs come with fixed rates, and the repayment window seem to fall in the five- to 30-year range. But if the payments are going to strain your budget, you might be better off going with an unsecured line of credit. You’ll pay more in interest, but defaulting on a HEL could result in you losing your house — no small thing.

The application process for someone with poor credit might also involve lenders limiting the amount of money they’ll let you borrow. And while hashing out loan terms and interest rates, Pierce adds that many lenders will set minimum loan amounts as well.

“You may have lenders that say they want a $25,000 minimum loan amount [if] they’re not interested in $10,000 or $15,000, which may be another factor that stops somebody from getting it,” he tells MagnifyMoney.

How to improve your chances of a HEL approval with bad credit

Reduce your DTI

If you’ve got a few strikes against you, rest easy; there are a number of things you can do to improve your odds of qualifying for a HEL. As we mentioned, reducing your debt-to-income ratio is a big one. Take a look at your monthly budget to see where you can free up extra cash to redirect toward your debt. Minor tweaks, from shrinking your cable bill to eating out less, can make a big difference; $50 here and $25 there, when used to accelerate your debt payments, will supercharge your efforts to improve your score.

While it may not be as easy to dramatically increase your salary, you can give your income a nice boost by picking up a side gig or taking on a roommate to reduce your monthly mortgage burden. The idea is to get creative and find something that works for your lifestyle. The freed-up cash can help dig you out of debt faster, which will also improve your credit score and bolster your chances of being approved for a HEL.

Bring on a co-signer

As with applying for a student loan or a traditional mortgage, introducing a co-signer can be a game changer.

Pierce says bringing a co-signer with good credit on board is a good move because lenders will feel a little safer taking a chance on you. Just do your homework, as different lenders have different qualifying options.

Wait until you have more equity

This might take a bit more time, but remember: More equity translates to a higher LTV (loan-to-value) ratio, which tips the scale in your favor when shopping around for a home equity loan.

Just as we discussed upping your take-home pay and trimming your budget to accelerate your debt payments, the same can be said for fast-tracking mortgage payments. Hacking away at the principal balance will cut the loan down quicker — and grow your equity at a faster clip. This tactic may prove tricky if you’re also tackling high-interest debt, but if you have the wiggle room in your budget, it could help reduce your timeline.

Alternatives to a HEL

Marcus Personal Loan Review: Goldman Sachs Takes on Online Lenders with Exclusive New Loan

If you’re having trouble qualifying for a home equity loan with bad credit, you also have some other financing options to explore:

Cash-out Refinance

  • What it is: A cash-out refinance lets you start over with a new mortgage that replaces your old one while letting you borrow extra that you can use as you wish.
  • Why might it be a good alternative? You’ll have one new monthly mortgage payment. If you refinance to a longer-term mortgage, that’ll also improve your credit utilization ratio, which can help boost your credit score.
  • Would someone with bad credit qualify? It depends on the situation. You may qualify, but with a higher interest rate. Pierce adds that, when compared with a HEL, there may be more limits in terms of how much cash you can take out

Personal loan

  • What it is: A personal loan is an unsecured loan. If you qualify, a lender will deposit cash right into your account that you can use any way you wish. It can be a good way to consolidate and pay off debt, so long as you can afford the monthly payment.
  • Why might it be a good alternative? No collateral. If keeping up with HEL payments means stretching your budget (and potentially defaulting), this option has an advantage: You won’t risk losing your home.
  • Would someone with bad credit qualify? Probably, but think carefully. Interest rates for people with bad credit can in some instances be upward of 35 percent. Lenders may also tack on an origination fee and/or prepayment penalty

Home equity line of credit (HELOC)

  • What it is: A little different from a HEL, a home equity line of credit (HELOC) is a revolving credit line extended to you by the lender.
  • Why might it be a good alternative? Your equity level dictates your credit limit, but you can borrow against a HELOC as much as you need to during what’s called the “draw period,” which usually lasts five to 10 years. (Side note: you’ll be on the hook for making interest payments during this time.)
  • Would someone with bad credit qualify? If you don’t have a lot of equity and/or you have a spotty credit history, getting approved for a HELOC is apt to be as challenging as snagging a HEL, Pierce says.

Last words

Getting approved for a home equity loan with bad credit is tough, but it is not impossible. The most powerful tool in your arsenal: to gradually improve your score by making consistent, on-time payments. This, in turn, will reduce your debt while improving your debt-to-income ratio. Keeping up with your mortgage payments will also help you steadily build more home equity.

Plus, you’ve got other options. Aside from potentially bringing on a co-signer, a cash-out refinance, personal loan or HELOC all represent viable alternatives, depending on what you need the money for and what terms and interest rates you can snag.

Marianne Hayes
Marianne Hayes |

Marianne Hayes is a writer at MagnifyMoney. You can email Marianne here


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How These Side Gigs Saved Our Finances

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.


As the summer came to a close, Anthony Garcia, 34, achieved a big financial goal: He bought a lightly used car that he loved, a 2015 Jeep Renegade, to be precise. When all was said and done, the purchase set him back $14,500.  

It’s Garcia’s active side hustles that cushioned the monetary blow, helping him make a $1,000 down payment before financing the rest with a low-interest loan.  

“My main side gig is deejaying,” the Long Beach, Calif., resident told MagnifyMoney. “What I make varies, but weddings range from about $800 to $1,000; corporate events, clubs and bars range anywhere from $200 to $500 per event.” 

Garcia, an online banking specialist for a local credit union by day, has been picking up work as a DJ on and off for about seven years. These days, he books two or three gigs per month. He plans to use the money to cover his monthly car payments. 

“It’s almost like not having a car payment,” says Garcia. “I love what I do and get a car out of it, as long as I’m working on a steady basis.” 

His story isn’t without precedent. According to new research from CareerBuilder, close to a third of American workers have side gigs, with those under 35 making up the biggest piece of the pie. What’s more, a recent Pew Research Center survey found that 24 percent of Americans bring in money from what they call the digital “platform economy” — think apps and online platforms like Uber, TaskRabbit, thredUp and beyond. Some do it by economic necessity, others for extra cash.  

The findings suggest that today’s most popular side gigs cover everything from ride services to shopping/delivery tasks to selling your old clothes and gadgets online. 

Then there are folks like Garcia, who leverage an existing skill to bring in some additional income. 

Along similar lines, Dana Bruce, a 38-year-old nonprofit executive in Alexandria, Va., spun a random hobby into a legit side gig that paid for most of her 2012 wedding. 

But how? 

‘A side gig paid for my wedding’

Bruce is living proof that your greatest interests might also be your best income generators. A longtime lover of antiques, she took to Etsy in 2012 and began selling vintage lamps; it’s a task she absolutely loved. 

“The overhead is very low, so at times it brings in as much as $1,000 net income a month,” said Bruce, who combs antique malls, thrift stores and estate sales for unique finds. After factoring in all her costs, she typically nets about $65 per sale.  

This wasn’t the first time she dipped her toes into the gig economy. From 2012 to 2013, she took on an adjunct professor position at a community college on the side, where she earned roughly $450 per month. She put the money toward her car payments, adding some wiggle room to her monthly budget. This, combined with her Etsy earnings, allowed her to kick in about $10,000 toward her November 2012 wedding.  

And she isn’t slowing down. Her next goal is to use side gig money to help pad her home-buying fund. 

A side hustle, and a career change

It’s no secret that a healthy emergency fund is the foundation of financial success, but actually building up three to six months’ worth of expenses is no small feat, especially on an average income. This is exactly why Hilary Murrell, a 27-year-old campus visit coordinator at a Birmingham, Ala., university, is upping her side gig game. A little over a month ago, she began tutoring student athletes in the evenings and on Sundays for $11 an hour. 

“Side hustling is very new to me, but very welcome since I’ve been looking for an online side gig for months,” said Murrell, who draws a $35,000 salary with her 9-to-5 job. “My big financial goal is to save up enough money, plus emergencies, to live for three months while my husband quits his full-time job to be a full-time Realtor.” 

Tutoring serves double duty, as it also gives Murrell more teaching experience, which will come in handy for her next side gig: teaching at a local community college next semester. Her goal is to bring in around $700 per term. 

Side gigs and your taxes 

Got a side gig, or even more than one? Just be sure to report your additional income to Uncle Sam. Paying taxes comes with the territory, regardless of how much cash your side hustles bring in. Uber and Lyft drivers, for example, are considered independent contractors, not company employees. As such, paying federal and state income taxes falls on you. Come tax time, those who earn $400 or more will likely be on the hook for a self-employment tax, too. 

In addition to filing an annual tax return, self-employed folks are generally required to pay estimated taxes on a quarterly basis. (Failing to do so could result in a big tax bill when tax time rolls around.)  

But wait, there’s good news, too. Many self-employed workers are also eligible for deductions to help offset their tax burden. If you use part of your home for business, for instance, you might qualify for the home office deduction 

In the end, every case is different, so it may be in your best interest to seek out a professional to help answer your individual tax questions. 

In the meantime, the gig economy appears to be going strong. According to the annual Freelancing in America survey put out by the Freelancers Union and Upwork, the freelance economy grew to 55 million Americans in 2016; that’s 35 percent of the U.S. workforce. The way we work is changing, and the side gig revolution seems to reflect that, as multiple income streams gradually replace the traditional “9-to-5 till you die” way of life. The takeaway? The rewards can be big for those who are willing to hustle. 

Marianne Hayes
Marianne Hayes |

Marianne Hayes is a writer at MagnifyMoney. You can email Marianne here


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Strategies to Save

How My Emergency Fund Saved My Finances

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.


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.”

Marianne Hayes
Marianne Hayes |

Marianne Hayes is a writer at MagnifyMoney. You can email Marianne here


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How I Bought My Dream Home for No Money Down  

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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 Pitcher 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



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




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



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



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.”

Marianne Hayes
Marianne Hayes |

Marianne Hayes is a writer at MagnifyMoney. You can email Marianne here


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College Students and Recent Grads, News

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

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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.

Marianne Hayes
Marianne Hayes |

Marianne Hayes is a writer at MagnifyMoney. You can email Marianne here