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How to Make a Career Change in Your 40s

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Chandrama Anderson was the senior director at a technology start-up in the heart of Silicon Valley when she decided it was time for a career change. At the time, she was in her early 40s and grieving the recent deaths of her daughter and grandparents.

She decided she wanted to do what she called “work of the heart.” For her, that meant pursuing a career as a family therapist.

Having earned her undergraduate degree in journalism and creative writing, she would have to go back to school for a master’s in order to transition to psychology. She quit her lucrative job at the tech firm and enrolled at John F. Kennedy University in Pleasant Hill, Calif., where she earned a master of arts in counseling psychology/holistic studies over the course of three years.

Going back to school after working for 25 years was daunting, but she didn’t let the intimidation factor stop her.

“A person said to me, ‘You’ll be 48 when you’re a therapist,” she recalls. “I replied, ‘I’ll be 48, or I’ll be 48 and be a therapist.’”

Fifteen years since she quit her job, Anderson, now 57, is the president of Connect2 Marriage Counseling, a couples counseling practice in Palo Alto. She oversees a team of therapists who see people primarily for marriage counseling, premarital counseling, grief and relational issues.

Running her own team of therapists wouldn’t have been possible if Anderson hadn’t taken a risk and made a career change later in life, when she truly felt it was time.

As Anderson’s example shows, switching careers in one’s 40s is definitely doable. But it does require the right amount of planning and forethought.

Kerry Hannon, a retirement, personal finance and career change expert — and the author of numerous books, including “What’s Next? Follow Your Passion and Find Your Dream Job” — says there’s been an uptick in the number of people switching careers in their 40s and even their 50s.

Indeed, a 2014 study from USA Today and Life Reimagined, an organization dedicated to helping people reimagine their lives, found that 29 percent of people ages 40-59 were planning to make a career change in the next five years. Numerous factors are at play in such findings, but Hannon believes that among the biggest, it’s easier to start a business and ramp up one’s education online today.

Many people who change careers at this stage in life, Hannon says, do so because of defining and often tragic life experiences, such as a death in the family or a serious illness. That played a factor in Anderson’s metamorphosis.

“They pause and they say: ‘Is this what it’s all about? Is this what I really want to be remembered for? Is this how I want to spend the rest of my life?’” Hannon says.

There are certain roadblocks to changing careers in middle age: Financial readiness is one, and workplace age bias another. One 2013 AARP study found that three out of five older workers said they had experienced or witnessed age discrimination at work.

Hannon believes making a career switch at this age can be done if one takes the right steps.

Move for the right reasons

Before anything else, take a long, hard look at why you’re intent on making this change.

“First, do your soul-searching about why you want to make this jump, this transition to something new,” Hannon says. Put another way: Really drill into your motivation and figure out if this is your passion, or if you’re simply in a rut at your current job.

To say Mounir Errami put some serious thought into becoming a doctor in his 40s would be an understatement. After working several different jobs over the course of his career, Errami — now a doctor at University of Texas Southwestern Medical Center in Dallas — knew he wanted to return to medical school at the age of 38. He had initially started medical school at 18 in Lyon, France, but dropped out. He then pursued a Ph.D. in biochemistry and bioinformatics, as well as an MBA, and started two business.

His first business went under and once he was in his late 30s, he sold his second one, a software company. He then took a few years off to spend with his family.

After a reset, he knew he wanted to return to medical school, lest he always have regrets.

If he hadn’t made that choice, he says, “it would’ve been sort of an unfulfilled quest that I had started and never finished.” He adds, “I’m very happy I’ve done it.”

Once you’ve identified your intended path, take a look at the marketplace, Hannon says. “What’s the market for it? What’s out there? Who’s currently doing it? Reach out to those people. If possible; network with people who are currently doing the kind of work that you would like to do.”

Just because you think you know your new life is calling, that doesn’t mean it’ll fulfill your every dream. After all, it’s still a job. Figure out if you’re OK with the inevitable downsides of a new career before diving in.

“If possible, it’s really, really important to do the job first,” Hannon says. “Volunteer or moonlight. Something might feel dreamy and like, ‘Oh my gosh, I always wanted to do this,’ but when you’re actually doing it every day, it might not have that glamour to it that you thought.”

Facing a pay cut

For some workers, the whole point of pursuing a new career in their 40s is to leave one low-paying field for a job with better financial prospects. But in reality, the opposite may be true.

“You absolutely have to get financially fit,” Hannon says. “It’s really critical.” She says it’s likely you’ll earn less when you begin your new job — either because you’re a newcomer or you’ve started your own new venture, in which most of the money goes into the business. Coupled with the fact that most career changes occur on a three- to five-year timeline, factoring in a return to school and additional training, you’ll want to save up.

If you’re taking a substantial pay cut, focus on paying down lingering debts or downsizing your lifestyle to fit your new, reduced income.

“At a certain life stage, you might also be able to downsize your home,” she says. Indeed, some people in this demographic might have children who have already left home.

Anderson and Errami were both fortunate to be in a solid financial condition before entering school. Anderson says she inherited some money from her mother and grandmother, while Errami used funds saved from his previous business.

Not having to worry about finances when switching careers means you can focus on the path ahead, in all its nuance.

“If you’re financially fit, then you have options,” Hannon says. “Then you give yourself the opportunity to try different paths, to try new things and move in a different direction without that burden of a must-have salary.”

Don’t quit your day job just yet

Changing careers after decades in a certain field isn’t something to be taken lightly. As previously discussed, it’s vital to make sure you aren’t just restless in your current position. Hannon says you should really identify your “why” before making any drastic decisions.

“What’s the motivation?” she asks. “Is it that you’re just bored with your job right now? Because there are lots of ways to fix that.”

Perhaps you need to work in the same field, but move to a different company. Or perhaps you need a new position within your existing field.

And if you ask yourself these questions and are still fairly certain you want to switch careers, do not quit right away. Saving up around six months’ worth of salary is a great way to ensure you’re financially ready for a change. If you don’t have this much money in the bank, stay at your current job for a bit longer and try moonlighting or working a side gig in your desired field.

Going for it

Once you’ve decided you’re ready to switch careers, Hannon suggests taking these four steps:

  1. Go slow. Take your time and do one thing every day toward making the change. Start out by asking someone in your intended profession for coffee.
  2. Again, don’t be so quick to quit your day job. There are exceptions to the rule, but most people shouldn’t quit their job. Instead, volunteer or get a side job.
  3. Take baby steps. This doesn’t mean you can’t get started right away. Just don’t spend a huge portion of money or dedicate an immense amount of time to your new career path until you’re absolutely certain it’s the right fit.
  4. Don’t be afraid. Hannon says she has spoken with hundreds of people who have made later-in-life career transitions. She says they invariably say, “I wish I had done it sooner.”
Jamie Friedlander
Jamie Friedlander |

Jamie Friedlander is a writer at MagnifyMoney. You can email Jamie here

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How the New Federal Overtime Rule Died — And What it Means for Workers

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A new federal overtime rule had many American companies scrambling at this time last year. The federal regulation, which was set to pass on Dec. 1, 2016, would have required businesses to begin paying overtime wages (1.5 times an employee’s hourly rate) to any full-time salaried employee earning less than $47,476.

This threshold previously had been more than twice as low, with companies owing overtime pay to employees with yearly salaries under $23,660. Then, after many employers had already responded to the regulation by offering raises and adjusting exemption statuses, a federal judge in late 2016 temporarily blocked the rule, halting its effects nationwide.

Less than a month ago, that same judge permanently struck down the Obama-era regulation, leaving the state of overtime pay in limbo. The increased threshold would have affected 4.2 million workers, according to the Department of Labor, so it’s clear this decision will have wide-reaching effects.

Here’s a breakdown of what we know.

Does the rule still stand a chance?

The short answer is no. While the federal government might have tried to fight the court’s ruling, that doesn’t seem to be the Trump administration’s intention.

A week after Judge Amos Mazzant — an Obama appointee on the U.S. District Court for the Eastern District of Texas —struck down the overtime rule, the Department of Justice announced that it was withdrawing its appeal, essentially agreeing to move on from the issue.

The Department of Labor has done the same. The agency reopened public comment on overtime rules and exemption requirements back in July, with the response period ending on Sept. 25. Suzanne Boy, an employment lawyer with the firm Henderson, Franklin, Starnes & Holt, based in Fort Myers, Florida, says this is an indication that the Obama rule has been defeated.

“For all intents and purposes, it’s dead,” she says.

What’s next for businesses and their employees

There were several ways in which employers responded to the rule. Some gave raises, but others cut hours. Some companies that had switched salaried employees to hourly pay to make them exempt from overtime eligibility changed them back, Boy says.

“I have actually not heard of any client that has taken a raise away as a result of this change,” she says.

Christa Hoskins, a 26-year-old graphic designer in Fort Myers, was given a $10,000 pay bump last year, partially due to the new overtime rule. She tells MagnifyMoney her employers are letting her keep the bump, even though the regulation was struck down.

“I received last year’s pay raise due to this rule possibly coming into play since my work anniversary so happened to be around the same time,” Hoskins says.

Boy says keeping the original $23,660 threshold could help some employees in the long run, because the proposed rule change would have forced many companies to cut costs at the expense of their lowest-earning workers. For example, many employees earning thousands of dollars under what would have been the new $47,476 threshold — such as $30,000 per year — might not have received raises. Instead, they could have seen their hours scaled back or their pay structures altered to help employers circumvent the new overtime policy.

“I think that it would not have been the saving grace that it was intended to be,” Boy says. “I think a lot of people wouldn’t have obtained the big raise that the rule was touted to be.”

The fact that the Department of Labor is asking for public comments means another new rule could be on the way, with the agency likely taking at least a few weeks to analyze and consider the responses.

It’s tough to judge what a new regulation would look like. According to a statement made by Labor Secretary Alexander Acosta earlier this year, it seems possible the Trump administration could place the overtime threshold somewhere around $30,000. This figure would essentially  take the previous amount of $23,660 and adjust for inflation.

Some people are concerned it isn’t enough. Steve Zieff, a San Francisco-based employment attorney with Rudy, Exelrod, Zieff & Lowe, says he thought the Obama administration’s threshold, while not necessarily high enough, was likely better than a potential new rule.

“I think even the current Department of Labor recognizes that the salary level is way too low,” says Zieff, who specializes in overtime pay for white-collar employees. “But I’m fearful they’re not going to raise it to a meaningful level.”

Dillon Thompson
Dillon Thompson |

Dillon Thompson is a writer at MagnifyMoney. You can email Dillon here

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Life Events, News, Retirement

Why Sabbaticals Could Be the New Pre-Retirement

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Brad N. Shaw, a Dallas, Texas-based serial entrepreneur, took a two-year sabbatical from 2011-2013 to spend more time with his family. He’s pictured here with his family in Vail, Colorado. (Photo courtesy of Brad M. Shaw)

Serial entrepreneur Brad M. Shaw made a bold decision several years ago to take two years off from work and move his family to Vail, Colo.

Taking a two-year sabbatical had its challenges, the major one being uprooting his family in pursuit of more work-life balance and a change of scenery. But overall, he says taking time off was more than worth it — both for his family and his business.

“My daughter was growing up so fast,” says Shaw, who is CEO of a web design firm in Dallas. “As a serial entrepreneur, I was always away traveling or at the office. I wanted to be a present father and play a role in her upbringing. I also wanted to show her a life outside of the Dallas suburbia bubble.”

‘No reason to wait’

The concept of taking a sabbatical is not new. People have been taking them for decades. They’re typically thought of happening in academia, in which professors are paid to take time off for research. But sabbaticals have transcended academia and have spread into the general workforce in recent decades.

Thanks to a new wave of workers who value purpose over stability, the upswing of the gig economy, and companies that offer unlimited vacation time or paid sabbaticals, taking an extended break is becoming more of a reality for many. Many major companies in the United States offer unlimited vacation time or paid sabbaticals, such as Groupon, General Electric, and Adobe.

There’s also the reality that today’s American workers are not able to retire as early as previous generations — and they’re living longer, healthier lives. So a sabbatical can serve as a mini retirement, or a chance to take a break from the grind of 9-to-5 life.

Ric Edelman, the founder and executive chairman of Edelman Financial Services, explores this topic in his new book, “The Truth About Your Future: The Money Guide You Need Now, Later, and Much Later.” He says the combination of people living longer and being healthier in old age means the notion of retiring at 65 will be gone in the near future, both because it won’t be affordable and people will get restless.

“You’ll be healthy enough to work, you’re going to want to work, and economically, you’re going to need to work,” he says. “For all those reasons, you’ll continue working. And so that notion that you’ll wait until you’re 60 to take that around-the-world cruise really won’t exist. There won’t be a particular reason to wait.”

Edelman says that instead of the traditional life path (go to school, get a job, retire, die), we’ll have a cyclical one in which people go to school, get a job, take a sabbatical, go back to school, take a different job, etc. Instead of having one big chunk of a 30-year retirement, people will take two years here, three years there, six months here, and they’ll enjoy time off throughout their life at various intervals.

Research has also proven that companies and the economy benefit when employees take sabbaticals. According to a report by Project: Time Off, an offshoot of the U.S. Travel Association, there has been a jump in employees taking time off in the last year. Unused vacation days cost the economy $236 billion in 2016 — an amount that could have supported 1.8 million jobs. In essence, employees not cashing in on their paid time off hurts the economy because employees are forfeiting money that could instead have been used to create new jobs.

Dan Clements, author of “Escape 101: The Four Secrets to Taking a Career Break Without Losing Your Money or Your Mind,” says the biggest benefit of taking a sabbatical is the perspective change it offers.

“People come back from sabbaticals with a completely different vision for how they want to live their life,” Clements tells MagnifyMoney. “They come back and they change jobs or they transform themselves in the company they’re in or they change their business.”

Upon returning to Dallas, Shaw says he made the decision to forgo scaling up his business in favor of running it on a smaller scale so he could be less stressed.

“The time away allowed me to reset my business ideas,” he says.

Clements thinks many companies have begun to offer unlimited vacation days or paid sabbaticals to keep up with the new generation entering the workforce, because by and large, millennials value purpose over stability. Companies want to keep employees happy by offering them the opportunity to find purpose in a way their 9-to-5 job might not be able to.

“You have a different generation of people entering the workforce for whom work means something different,” Clements says. “What they expect from work is not necessarily security and a paycheck, but what they expect is meaning from work more than previous generations have. Part of the way companies can supply that is to give people the time and flexibility to find it.”

Taking the plunge

Tori Tait, the director of content and community for The Grommet, an e-commerce website that helps new products launch, took a 30-day sabbatical in August. Her company offers paid sabbaticals at employees’ five-year mark. Tait, who lives in Murrieta, Calif., spent time relaxing in Huntington Beach, Calif., boating on the Colorado River, and living on a houseboat in Lake Mead, Ariz. Like Shaw, she says the biggest benefits for her were time off with family and a fresh perspective once she returned to work.

“I’m a working mom, so summers are often filled with me in the office, and [my kids] wishing we were at the beach,” she says. Tait says she enjoyed how during her month off, she didn’t have work in the back of her mind the way people often do when on a five- or six-day vacation.

Tori Tait, pictured with her daughters London, 10, and Taylor, 16, took a company-sponsored, 30-day sabbatical in August 2017. (Photo courtesy of Tori Tait)

Her biggest piece of advice for those planning a sabbatical is to not dwell on the planning aspect of it. “I grappled with trying to plan how I would spend my time,” she says. “Would I travel abroad? Volunteer? Finally do that side project I’ve been thinking about? In the end, I just thought, What is it that I always wish I had more time to do? The answer for me was: spend quality time with my family. So that’s what I did.”

Daniel Howard, the director at Search Office Space, a website that helps businesses all over the world find office space, took a sabbatical after the financial crisis in 2008. He says he took 12 months off to recharge in hopes of returning to work with more optimism and drive. His employers didn’t pay him for the time off, but promised him his job would be there upon his return.

He traveled with his then-girlfriend (now his wife) to Southeast Asia, Australia, New Zealand, Fiji and Central America. They left their phones at home and relied on physical maps to get around. Aside from the occasional email to family to check in, they were completely disconnected. The biggest benefit for him? “The ability to completely disconnect from my working life and the opportunity to become a more well-rounded person by immersing myself in different cultures and experiences,” Howard says.

Although many people take their sabbaticals overseas, one doesn’t need to travel around the world to reap the benefits. Extended time away from work and technology is beneficial no matter where you are.

“I think for a lot of people, a sabbatical is the first real vacation they’ve ever taken,” Clements says. “I tell people that taking a one-week vacation is sort of like trying to swim in a puddle. You wade in a little bit, and you’re barely wet, and then you have to go inside. When you actually get away from your life for two or three times longer than you’ve ever taken a break from work, you get this sense of perspective that I think most people don’t normally get a chance to experience.”

The 4 stages of preparing for a sabbatical

If you don’t work for a company that offers unlimited vacation days or paid sabbaticals, that doesn’t mean you can’t take one. Clements shares his steps for saving up for a sabbatical:

  1. Boost your earnings. Try to figure out if there’s a way you can earn more before taking your sabbatical. Can you finally ask for the raise you’ve been wanting? Can you do freelance work on the side? Can you rent out part of your home on Airbnb, or drive for Uber? Consider all of your options.
  2. Make it automatic. Have money automatically withdrawn from your bank account the same way you would for retirement, a mortgage or automatic bill payments.
  3. Put it out of reach. Once you set aside money in a separate account, make sure it’s out of reach. Put it in a savings account that isn’t accessible online or via the ATM. If you have to physically go to the bank to withdraw cash, you’ll be less tempted to do so.
  4. Stretch yourself. Don’t be afraid to make your automatic savings plan more aggressive than you think you can handle. Challenge yourself to save more than you think you need, because you can always change the amount if you have to.
Jamie Friedlander
Jamie Friedlander |

Jamie Friedlander is a writer at MagnifyMoney. You can email Jamie here

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Featured, Health

6 Career Strategies for People Who Are Coping With Depression

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.

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Jana Lynch was 27 years old when she was formally diagnosed with depression. The illness wasn’t severe enough for her to start seeking regular treatment until eight years later, when a panic attack at work sparked a series of events that changed her career — and her finances — forever.

At the time, Lynch was working full-time for a social service agency. “Not only was my anxiety and depression through the roof, making it hard to get out of bed, concentrate on tasks, meet deadlines, communicate with coworkers, and remember meetings, but the nature of my job made it a dangerous environment for my mental health at the time,” she says.

Rather than resign outright, she decided to take a four-month leave on short-term disability. A break, she thought, might help. But when the time came to return to work, the same issues began to surface again. In the end, she chose her mental health over working full time.

“Looking back, it was a terrible choice because of the impact on my long-term personal finances,” she says. “But in the moment, it was the best decision for me and my family.”

Lynch’s story is not unique. In a 2004 study that followed workers over the course of six months, researchers found workers with depression dropped out of the workforce at a rate of 12 percent compared to only 2 percent of their peers.

While depression may force affected workers out of active employment at higher rates, it is also true that those who become unemployed are more likely to show signs of depression — three times more likely, according to a 2010 NIH study.

Thomas Richardson, a leading researcher at Solent NHS Trust, one of the largest community providers in the UK’s National Health System, notes that there is most definitely a correlation between unemployment and depression, but that causation is not as easy to pin down.

“In research such as this it’s always a case of chicken and egg: Which came first?” he says. “A lot of research is only at one time point, so it’s hard to say which came first.”

Some research shows losing your job impacts depression because it makes it hard to cope financially, but other studies suggest it has little impact.

“I think it probably works both ways and is a vicious cycle,” Richardson continues. “Someone becomes depressed, struggles at work, and loses their job. This then exacerbates their depression further.”

6 Strategies to Manage Depression and Work

Abigail Perry, author of Frugality for Depressives, had already been formally diagnosed with depression as a part of a bipolar disorder when unrelated chronic fatigue forced her out of traditional employment.

“I thought I’d be nothing but a burden for the rest of my life,” says Perry. “I wondered who would ever want someone who couldn’t pull her own weight financially, and I became suicidal. A lot of therapy and medication management doctor visits later, I finally started believing that I might have worth despite not being able to work.”

Those struggling with balancing their career and depression need not lose hope.

Richardson notes that many are able to develop coping strategies, allowing themselves to stay in the workplace. He’s developed six key strategies that his research has revealed to be helpful to workers with depression.

1. Intentionally look for work you enjoy.

“Try and do a job you enjoy or are interested in,” Richardson encourages. “If not possible, then try and focus on those bits of your job you do enjoy.”
Allyn Lewis, lifestyle blogger and storytelling strategist from Pittsburgh, Pa., has learned this technique through the course of building her business.

Diagnosed with a depression that was further fueled by her father’s suicide when she was a teen, Lewis never truly entered the traditional workforce, but has found self-employment to suit her disability.

Her motivating enjoyment comes from the community-based aspect of her business.

“Telling my story and talking openly about my anxiety, depression, and the loss of my dad is what keeps me active in my career,” says Lewis, 26. “That might sound strange, but when I keep my mental health journey to myself, it feels like it’s all about me. And if I’m having a down day, week, or month, what’s it matter if I do the work or get the things done? But, by talking about my mental health and using my own story to raise awareness, it makes it something that’s much bigger than myself.”

2. Don’t push yourself too hard.

“Don’t push yourself too hard at work,” says Richardson. “Acknowledge when you are struggling. It’s best to slow down early on than to keep going until you crash.”

Lewis learned this lesson through experience.

“Back in the day when I owned my own public relations firm, I would take on any client, under any circumstance, for any amount of money, and I’d make any accommodation or request they asked for. I ended up overbooked, underpaid, and at a point that was way beyond burnt out,” Lewis says.

“I kept trying to push my anxiety and depression aside to pretend like it wasn’t getting in the way, but the best thing I ever did was starting to tune into what my mental health was telling me. Only then was I able to shift into a business model that worked for me.”

3. Ask for help — and know your rights.

Richardson recommends going to your manager or supervisor for access to resources when your symptoms become too much to bear. If you work at a larger company, it may be more appropriate to get in touch with your human resources department.

This can seem intimidating, as you don’t want to give your superiors any reason to question your work ethic or your ability to provide value to the company.

But Perry, who now works full time in a remote position, notes that depression is covered by the Americans with Disabilities Act (ADA). This means your employer cannot fire you because of your disability — in this case, depression — and that they have to provide reasonable accommodations in order to allow you to do your job.

“Even if you don’t ask for accommodations, you need to make it clear that your absences or other work difficulties are based on a real medical condition,” Perry says. “Imagine being a supervisor with an employee who takes a lot of sick days, or may be easily agitated by interpersonal interaction or additional stress. In a vacuum, that’s a problem employee. Understanding the context, that’s someone who is doing their best to be a good employee despite a disability.”

4. Keep a healthy perspective on your career goals.

“It’s easy in a career to focus on goals, but this makes you vulnerable to depression,” says Richardson. “If you don’t get that promotion it might really impact you and lead to self-critical thoughts which fuel depression.”
He recommends instead harkening back to why you enjoy your work and the current position you’re in.

Lynch, who currently works as a freelance writer and editor, relates to the depression that can be felt when career expectations aren’t met.
“I try hard not to get angry at myself if I didn’t do as much as I’d like, or if my inbox isn’t bursting with inquiries,” says Lynch, “which is hard to deal with when you like to work and tie your work to your self-worth. But depression makes it difficult to look for clients. It’s a horrible, vicious cycle that I deal with only by telling myself this is temporary. It will get better at some point.”

5. Nurture hobbies and social contacts.

Lynch and Lewis both note exercise as a way of sustaining a healthy hobby. Lewis teaches yoga, and Lynch regularly attends a gym. While not the primary goal, a side effect of going to the gym or studio happens to be spending time with other people of similar interests.

Nurturing hobbies and maintaining social contacts are important from Richardson’s research — even if doing so initially feels overwhelming.

6. Practice mindfulness.

Finally, Richardson recommends practicing mindfulness, even when you’re not in the throes of depression. Emerging research suggests that mindfulness may not only alleviate depression, but could prevent relapses.

Richardson has produced a free mindfulness resource, which can be accessed here.

Depression and Your Finances

Career and finance often go hand in hand, so it’s no surprise that the ripple effects of depression can often extend into your finances as well.

By understanding and confronting these challenges head-on, there are strategies you can use to protect your finances as you learn to manage depression.

In a recent study published in the British Psychological Society’s Clinical Psychology Forum, Richardson studied people with bipolar disorder as they were going through a depressive episode. During these episodes, he found four key ways that their finances suffered.

Missing bills

Lynch notes that before she set up automatic payments, she would have trouble remembering pay upcoming bills. She’d get her statements, but ignore them. This led to unnecessary costs like late fees.

Richardson’s study finds that this behavior is typical for depressives. It found that missing bills was a financial manifestation of avoidant coping behaviors. In order to avoid being late on charges you may not know or remember exist, it’s important to get in the habit of confronting  through that pile of mail as you establish the habit of paying through automation.

Poor planning

“It can be harder to keep track of your finances when things get tough,” relates Perry. “Monitoring spending, keeping up with due dates — it’s exhausting even in good conditions. If you spend more because of depression, or if you simply don’t keep as close of an eye on things, your budget could take a big hit.”

Perry’s insights are congruent with Richardson’s findings. Those with depression have a harder time completing tasks like budgeting because planning ahead is made more difficult. The study also revealed that rational thinking and the ability to remember past purchases in order to log them into a spreadsheet were impaired.

Comfort spending

Perry says that when you’re depressed, you’re more likely to get caught up in comfort spending.

“This could be anything from convenience or junk food, which adds up, or going out for drinks, dinner, or entertainment. Alternately, you may be more likely to spend money on things that you think will make you happy or comforted — from convenience gadgets to home décor to clothes.”
Richardson adds the example of being overly generous with one’s family as an example of comfort spending.

Compounding anxiety

Richardson’s study finds that financial stress compounds anxiety and depression. This stress leads to more dire mindsets, like extreme anxiety and hopelessness.

“As a business owner, there’s always so much pressure around profit,” says Lewis. “Even when you’re up, you never know how long it will last, so you have to keep hustling. When I’m going through a period of depression, this puts me in a cycle of ‘I’m never making enough,’ which is a thought that likes to pair itself with ‘I’m not good enough.’ Depression has a sneaky way of switching my mindset from one of abundance to one of scarcity.”

Lewis’s reports of low self-worth are also common, according to Richardson’s work. Self-criticism over “economic inactivity” was detected in study participants.

Seeking Mental Health Care

Source: iStock

For help developing more coping strategies or getting resources that can help you manage your depression, consider seeking out mental health care services.

“I think all depressives — especially ones who aren’t on medications — should have therapists,” says Perry. “It may take a few tries to find someone you work well with, but then that person will be a great lifeline. Therapists can help you deal with the things that depression makes harder with strategies, workarounds, or just working through past events that are contributing to or causing your current depression.”

Therapy and medication management specialists can be expensive, though. Many regions in America face a shortage of mental health care providers, and the matter is further complicated when you consider that some providers may be out-of-network, bringing copays up even if you are currently insured.

Related article: 5 ways to find lower the cost of therapy

If you can’t figure out how to fit these services into your budget, seek out therapists who offer sliding-scale payment options based on your income. Another affordable resource is public mental health care clinics, though their availability may be limited.

If you have insurance and don’t immediately need medication, keep in mind that a mental health care professional may not have an M.D. or Ph.D. after their name. Licensed Clinical Social Workers (LCSWs) and other counselors often accept insurance and are able to provide therapy, referring you out to a psychiatrist for prescription needs when necessary.

Lynch did seek therapy and go on medication for a while, though she now leans on other coping mechanisms such as avoiding triggers and exercising regularly.

“I recommend it if you feel you need it,” she says. “There is no shame in getting whatever kind of help you need.”

Today, Lynch operates from a place of acceptance. Depression is a part of her life that she has learned to deal with. While she doesn’t categorize herself as what we would consider classically “happy,” she does consider herself to be as content as possible, and actively seeks out happiness within her circumstances.

Brynne Conroy
Brynne Conroy |

Brynne Conroy is a writer at MagnifyMoney. You can email Brynne at brynne@magnifymoney.com

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Eliminating Fees, Personal Loans

4 Companies That Help You Get Your Paycheck Early

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.

Financial emergencies have a habit of cropping up at the worst possible time — when you’re stuck in-between paychecks. Perhaps you need $250 for an emergency car repair, but you just paid rent and won’t have the funds until your next payday in two weeks. Normally, you might want to turn to a credit card or a payday loan, racking up onerous fees in the process.

What if you could get a portion of your next paycheck early without paying hefty fees or interest?

That’s the premise behind the following four services. They try to help workers make ends meet without taking on debt by giving them access to the money they earn when they earn it.

Activehours

  • Available if you have direct deposit.
  • Withdraw up to $100 each day and $500 per pay period.
  • No fees or interest.

Activehours What it is: Activehours is an app-based service available on Android and iPhone smartphones. Once you download the app and create an account, you connect your bank account and verify your paycheck schedule. You must have direct deposit set up and linked to a checking account.

How it works: In order to use Activehours, you need to upload your timesheet, either manually or by connecting a time-tracking account to the app (your employer must use one of the eligible timesheet partners in order for this to work). Using this information, Activehours estimates your average take-home hourly rate after taxes and deductions.

As you work, the hours will be automatically shared with Activehours, or you may have to upload your timesheet. You can then cash out a portion of your earned pay before payday.

You can withdraw up to $100 each day. Based on your account balances and Activehours use, the pay-period maximum could increase up to $500. The payment will arrive in your checking account within a few seconds, or within one business day, depending on where you bank.

Activehours doesn’t connect to your employer’s payroll. It connects to whatever bank account you use to collect your pay. The next time your paycheck hits your bank account, Activehours will automatically withdraw what you owe. There aren’t any fees or interest charges for using the service, however Activehours does ask for support in the form of tips.

DailyPay

  • Works with popular ride-share and delivery services.
  • Get paid daily for your fares or deliveries.
  • There’s no interest. You pay a flat fee that is subtracted from the day’s earnings.

Dailypay What it is: DailyPay caters to workers who are employed by ride-share or delivery services, such as Uber, Postmates, Instacart, Fasten, and DoorDash. It can also be used by workers at restaurants that use delivery apps, such as GrubHub, Seamless, or Caviar.

How it works: After signing up for DailyPay, you’ll need to connect a bank account where DailyPay can send you payments. Next, you’ll need to connect your DailyPay account with the system your employer uses to track your hours. DailyPay tracks the activity within the accounts and sends you a single payment with the day’s earnings, minus a fee. Restaurant workers get paid for the previous day’s delivery earnings, minus a fee, from all the connected delivery programs.

About those fees…

Fees are based on how much you ear per day. As a driver or on-demand worker, when you make less than $150 during a day you’ll pay a $0.99 fee. For workers who earn more than $150 in a day, the fee is $1.49. Restaurant workers’ fees vary based on order volume, but are often around $2.49 for each payday. In either case, you’ll need to update your account with each service and redirect the payments to go to DailyPay.

PayActiv

  • Employer must sign up and offer PayActiv as a benefit.
  • You can withdraw up to $500 in earned income before payday.
  • $5 fee for each pay period when you use the service.

Payactive PayActiv is an employer-sponsored program that allows employees to withdraw a portion of their earned wages before payday. While you can’t sign up on your own, you can ask PayActiv to contact your employer about offering the service. There’s no setup or operating costs for employers.

Once your employer offers PayActiv, you sign up and withdraw money as soon as you earn it. You can withdraw up to $500 early during each pay period via an electronic transfer or withdrawal from a PayActiv ATM (available at some employers’ offices).

The early payment comes from PayActiv, but it isn’t a loan and you won’t need to pay interest. Instead, your employer will automatically send PayActiv an equivalent amount from your next paycheck.

There is $5 fee per pay period when you use the service, although some employers cover a portion of the fee, according to Safwan Shah, PayActive’s founder. As a member, you’ll also get free access to bill payment services and savings and budgeting tools.

FlexWage

  • Employer must sign up and offer FlexWage as a benefit.
  • You’ll receive a reloadable debit card tied to an FDIC-insured account where your employer deposits your pay. You can add earned pay to your account before payday.
  • There is a flat fee of $3 to $5 for early transfers.

Flexwage FlexWage is an employer-sponsored program that relies on the use of a payroll debit card and integrates with employers’ payroll systems. If your employer offers FlexWage, you can get your paycheck deposited into an FDIC-insured account with the linked Visa or MasterCard debit card. You can also add earned, but unpaid, wages to your account before payday without paying any fees.

With FlexWage, the employer determines how often you can make early withdrawals and the maximum amount you can withdraw. Unlike PayActiv, FlexWage doesn’t act as a middle-man. Your paycheck advances will come directly from your employer’s account.

Bottom Line

These four companies work slightly differently, but they share the same basic premise: giving you early access to the money you earned, without saddling you with a painful assortment of fees. If you’ve had to rely on borrowing money in the past when funds are tight, these could be a better alternative to credit cards or payday loans.

Louis DeNicola
Louis DeNicola |

Louis DeNicola is a writer at MagnifyMoney. You can email Louis at louis@magnifymoney.com

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Life Events

The First 7 Financial Moves You Should Make When Changing Jobs

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.

The First 7 Financial Moves

Changing jobs can be exciting and overwhelming all at the same time.

There’s the thrill of beginning a new opportunity and advancing your career. But transitioning into a new role can also be a logistical nightmare, especially when it comes to your finances.

While we can’t help with everything, we can help you make the most of this transition from a financial perspective so that you avoid some common pitfalls and keep every last dollar you’re owed.

Here are the first 7 financial moves you should make when changing jobs.

1. Get the Skinny on Your New Paycheck

In addition to a change in your take-home pay, there may be a change the frequency and/or timing of your paycheck, either of which may require a change in habits.

As an example, maybe you’re currently paid twice per month on the 1st and 15th, but your new company will pay you every two weeks. That kind of change could mean a couple of things:

  1. Even if you are getting a raise, your paycheck may not be as big as you think, because your salary will now be spread over 26 paychecks per year instead of 24.
  2. You may need to adjust certain spending and savings habits to account for the fact that you’ll be getting paid on a different schedule. You should especially be careful about updating any auto-bill pay or auto-saving withdrawals through your bank account. If those were tied to your previous paycheck cycle, you could risk overdrafting your account.

Of course, you’ll also want to know how much you’ll actually be taking home with each paycheck after everything is taken out. Here are a few things to consider:

  • Your gross salary per paycheck. This is your annual salary divided by the number of paychecks you’ll receive over the year.
  • How much will be taken out for company benefits like health insurance and 401(k) contributions? More on this below.
  • How much will be taken out for taxes?

The website paycheckcity.com can help you estimate your new take home pay. Michael Solari, CFP®, the founder of Solari Financial Planning, recommends paying special attention to your withholdings on your W4, which may need to increase in order to avoid a large tax bill, or could decrease if you’re moving to a state without an income tax.

2. Split Your Raise 50/50

If your job change comes with a raise, congrats! Now it’s time to put that new money to work.

The key here is striking a balance between allowing yourself to live and being responsible. You don’t want to waste the money, but you don’t need to completely deprive yourself either.

Pam Capalad, CFP®, the founder of Brunch and Budget, advises her clients to put 50% of their raises towards spending and 50% towards savings and debt.

“If your net paycheck goes up by $400 each month, give yourself permission to spend $200 of that,” Capalad says. “Now you’ve given yourself some leeway to spend a little more each month, which is what would happen anyway, but you’re also committing a good chunk of your new earnings to savings.”

3. Prepare Ahead for Any Decrease in Income

New jobs don’t always mean higher pay. You may take a pay cut at a new job either out of necessity or in pursuit of a more enjoyable job.

Whatever the case, you should start preparing for the change as soon as possible, preferably before you actually change jobs.

  1. Estimate your new take-home pay and the expected difference in income.
  2. Start living on that decreased income ahead of time if possible.
  3. While earning your old income, put the difference into a savings account.

Following these steps allows you to adjust to the change ahead of time and build up some savings to help with any bumps in the road.

4. Know Your Health Insurance

Depending on the specifics of your coverage and your particular medical needs, your new health insurance plan could end up saving you money or forcing you to pay more out of pocket. Getting up to speed on how all of that works will help you prepare either way.

“Get familiar with the new deductibles,” says Capalad. “Make sure you know the new costs of any regular prescriptions you take, and talk to your doctor if you need to switch to brand name or generic, depending on what the new insurance will cover.”

If you are stuck with a high deductible plan, see if your employer offers access to a health savings account or flexible savings account, which allow you to cover medical expenses with pre-tax dollars. A health savings account can even be used as a retirement account. FSA accounts can also be used to help pay for childcare expenses.

5. Take Advantage of Employee Benefits

Companies offer all kinds of employee benefits, from life and disability insurance to free fitness equipment and child care reimbursement. These are valuable benefits that can save you money and add some security to your financial life.

Capalad recommends looking into worker benefits in your first week on the job, just to make sure you don’t forget and leave a valuable perk behind.

6. Rollover Old Retirement Accounts

Did you have a retirement account with your previous employer? If so, now is the time to decide whether to move the money.

Many 401(k)s are laden with high fees that eat away at your investment returns. But you don’t have to keep your money there once you leave. You can choose to roll it over to an IRA, or even into your new 401(k) if it’s a good one.

7. Make a Backup Plan

As hopeful and excited as you are about your new job, there’s the unfortunate possibility that it might not work out. You may not like it and want to leave, and you could also be laid off.

That’s why Eric Roberge, CFP®, the founder of Beyond Your Hammock, encourages people to have a backup plan.

“You really need to have a plan B,” he says. “You don’t want to get locked into a bad situation. You’ll end up resenting the move and your job performance will suffer.”

In addition to thinking about other potential opportunities, Roberge recommends building up a healthy emergency fund.

“That extra cushion will allow you to take a lower paying job that is more fulfilling, or cover you in case the unexpected happens and you lose the next job.”

Hopefully all that happens here is that you end up with a little extra money in savings, but no matter what you’ll be able to sleep better at night knowing you have cash on hand if you need it.

 

Matt Becker
Matt Becker |

Matt Becker is a writer at MagnifyMoney. You can email Matt at matt@magnifymoney.com

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Life Events

5 Signs You’re About to Get Fired

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.

Job Security

Wouldn’t it be great if there were some way to know ahead of time when bad news was coming our way? When it comes to our job security, there definitely are some telltale signs of trouble.

If you catch the signs early enough, it may not be too late to save yourself. Other times, such as a company-wide layoff, the decision will be entirely out of your control.

Here are a few of the ways you might be able to tell your job is in jeopardy.

You haven’t been given new projects in a while

If your boss has overlooked you for recent assignments, you might tell yourself it’s just a slow time for the business. But pay attention. If everyone else around you is still busy with deadlines and meetings, it might be time to start questioning why you aren’t. Here’s an even bigger red flag: Your boss has been delegating tasks that you typically handled to other employees.

What you should do: If your boss has decreased your duties, look for ways to regain her trust. Brainstorm a few ideas to improve efficiency in your department or drive revenue and send your boss a project proposal that includes the names of people you would like on your team to help accomplish these goals, suggests Roleta Fowler Vasquez, a professional resume writer and resume expert for CareerBuilder.com. Showing initiative like that could help your boss see you in a new light and make co-workers eager to work with you again, says Vasquez.

You’ve noticed a change in your co-workers

It’s not likely that your colleagues would know about you being fired before you would (at least they shouldn’t). But if you sense a colder-than-normal vibe from your workmates, it could signal that they’ve lost confidence in your work or have stopped considering you as a part of the team. Some companies rely heavily on peer reviews, whether formal or informal. When your coworkers aren’t on your side, it could spell trouble for your future.

What you should do: Be as much a team player as possible. Let your colleagues know that you notice what a good job they are doing, and that you are always there to help. If the vibe doesn’t change, take one of your colleagues aside and ask them candidly if there’s anything you should know about your performance. He or she might be willing to open up about issues other workers have mentioned about your work.

Your boss is avoiding you

If you’ve been trying to schedule a meeting with your boss for weeks to no avail, they could be avoiding you purposefully. Apart from ignoring meeting requests, your boss might stop assigning you the same types of tasks that she always has in the past, simply to avoid the uncomfortable feeling that comes with conflict, which she might know is coming.

What you should do: Make every effort to continue to greet your boss with a smile and pleasantries. If you do finally get your meeting, Vasquez suggests using it as an opportunity to reestablish how committed you are to your job. Talk about the different career paths you would like to pursue within the company, even if it means making a transfer to another department or office.  “More directly, you could say that you have heard your job worthiness is being questioned, and that you are seeking advice on how to either improve your stance — always making sure to add ideas of your own, like an independent study or classes — or on how to exit with their good graces and a solid recommendation,” Vasquez says.

Your job description seems to have changed

It’s not unusual for the needs of employees to change frequently with an ever-changing professional landscape. But if it seems that all your important responsibilities have been whittled down to nothing and you’re left with menial tasks or responsibilities, it may be a sign your job is being phased out.

What you should do: Go into survival mode. If your specific job duties are quite narrow, show your team that you have skills in other areas they may need. Your manager should be transparent if your job responsibilities have changed, so you’re within your rights to go to your supervisor or Human Resources and ask for an official copy of your new description. “Normally, you are asked to discuss this with a supervisor or HR, sign it and you’re given a signed copy,” Vasquez says. “This legally protects both of you. If the wording indicates a new lateral assignment or worse — a demotion — you need to ask why it happened, and what you can do to avoid it.”

You’ve been asked to justify your job

The truth is, sometimes positions that once were valuable simply fall out of use (especially when a company is looking for ways to scale back and there are quite a few people on staff who have the same role as you do). If you’ve been asked by a superior to put together a note detailing your value to the company or what you do on a daily basis, it may mean that they’re trying to decide where they can afford to cut what they deem to be superfluous roles in the business.

What you should do: When large corporations are planning a significant round of layoffs, they often have consultants come in to audit the office and suss out any personnel “redundancies.” They’re on the look out for workers whose jobs overlap. “It’s not always because of something you did or did not do, but your job will be in jeopardy if you fail to justify your position,” she says. If possible, ask your boss why this is happening. If layoffs are unavoidable, be sure to show your team why your services are essential to the company’s mission and organization — explain your job tasks and how you perform them, and show the auditor how you go beyond the call of duty to get your job done.

Cheryl Lock
Cheryl Lock |

Cheryl Lock is a writer at MagnifyMoney. You can email Cheryl at cheryl@magnifymoney.com

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Featured

6 Months After Settling Sexual Harassment Claims, a Worker Faces the Consequences

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.

Sexual Harassment Claims
Illustration: Kelsey Wroten for MagnifyMoney

Chelsea Jones thought she’d feel relieved.

In the spring, Jones’ employer agreed to settle her claims that she was sexually harassed by her manager. The matter was handled out of court, and Jones is not allowed to discuss the terms of the settlement. She agreed to share her story with MagnifyMoney under the condition of anonymity. We have changed her name and other identifying details in this story.

Soon after her settlement was finalized, Jones tendered her resignation. It was the end of a months-long battle to convince her employer that her manager’s unrelenting advances — offers to rub her back, late night texts and weekend phone calls — were worthy of of retribution.

But it was hardly a victory. Six months later, Jones, a single mother of a young daughter, is cashing unemployment checks and struggling to find a new job. As far as she knows, her former boss is right where she left him.

“The worst part is that I second-guess myself now,” said Jones, reflecting on the harassment, which she said began after she received a promotion last year. “I’m a hard worker, and I feel like I do a good job. But what if I’m not? Was I really good, or was it always about something else?”

Coming forward

Whether the employee is a famous news anchor or an office assistant, reporting sexual harassment at work is never an easy battle to wage alone. It’s arguably more difficult for the average worker, who may not feel they have the professional clout or the financial means to take action. Workers filed roughly 6,800 sexual harassment charges through the Equal Employment Opportunity Office in 2015, down 14% since 2010.

For Jones, speaking up was only the first of many challenges she faced. While her attorney squared off against her company’s legal team behind closed doors, she continued coming to work each day, where she said she was subjected to an increasingly hostile environment.

Even filing a simple human resources complaint can be rife with complications, exposing workers to forms of retaliation that, while illegal, can make it difficult to muster the willpower to keep fighting.

“[Workers] can be fired or suffer other consequences,” said Gary Young, an attorney who specializes in workplace harassment issues at the business law firm Scarinci Hollenbeck. “Even if you have your day in court and are vindicated, it can be a long road and it’s tough to go through the process.”

No one understands that process better than Jones.

Jones was in her late 20s when she started working for the Boston-area firm in 2013. For Jones, it was something of a professional comeback. She had recently ended a marriage and went back to school to earn her Associate’s Degree. She was thrilled to be hired and eagerly accepted a promotion a couple of years later.

The new title came with a higher salary and, she soon discovered, an increasing amount of unwanted attention from her boss.

“We were at a conference together, and he was offering to give me a back massage, to put his arms around my shoulders,” said Jones, now 30. The advances continued for months. According to Jones, her manager insisted on buying her gifts on her birthday and began texting her late at night and on weekends. She asked her manager to stop his advances, to no avail.

Worried that her coworkers would get the wrong impression about their relationship, Jones decided to report his behavior to her human resources manager.

“I was hoping to resolve the issue [through HR], and change my position so I was no longer sitting outside of his office,” Jones told MagnifyMoney. “My goal wasn’t to file a lawsuit.”

Dead-ends and demotions

Illustration: Kelsey Wroten for MagnifyMoney
Illustration: Kelsey Wroten for MagnifyMoney

HR proved to be a dead end. As a solution, her HR manager offered to put Jones in an administrative role in another part of the company. The new job would have moved her out from under her manager’s purview, but it was effectively a demotion.

She turned the offer down. In the ensuing weeks, her boss increasingly began cutting back her job duties, she said. He yanked her budget for a previously approved work project. She was told she could no longer use support staff to see the project through.

At a loss for what to do, Jones posted a message on a Facebook support group for single working moms. A member referred her to an employment attorney in her area, who offered her a free consultation.

“He said I’m young and if I file a lawsuit it will become public record and it could hurt my future employment,” Jones said. She agreed to give it another try with HR.

When she submitted another complaint, Jones said she received a warning: HR had noticed her performance was slipping and her colleagues were complaining. It was clear she was getting nowhere.

Jones went back to the attorney, who agreed to take her case. The attorney compiled all of Jones’ allegations — she had documented every unwanted advance, phone call and text message from her manager over the years — and sent a letter to her company informing them of the pending lawsuit.

“Once [my boss] got the letter, obviously it made everything way more hostile,” she said. “He didn’t speak a single word to me. I was going [to work each day] having no work to do. Then they started putting me on odds and end jobs not even related to what I was supposed to do there.”

She considered quitting, but Jones’ attorney encouraged her to hang tight.

It can in some cases help workers in sexual harassment cases if they keep working, said Paula Brantner, an attorney with Workplace Fairness, a non-profit that promotes employee rights, says . “First of all, you are required to give the company a chance to rectify the problem,” Bratner said. Quitting before a complaint is resolved can also remove some of the bargaining power in settlement negotiations. Companies are often eager to keep matters like sexual harassment under wraps.

Staying on the job can also give workers the opportunity to keep track of any retaliatory behavior. Workplace harassment lawsuits are often stronger if workers can prove their employer retaliated against them after they took matters to human resources. In Jones’ case, she was offered a demotion and her job duties shrank.

“Even if the initial harassment claim fails, the retaliation claim can subject the employer to as much or more liability as the underlying harassment claim,” said Brantner. “Judges and juries don’t like to see people [follow proper protocol], only to be subjected to more injustice.”

When her attorney reached a settlement with her employer, Jones decided to accept.

“One of the reasons I accepted a settlement instead of going to trial is that I didn’t want to be publicly seen as a woman who files these claims,” she said.

Her allegations will never be made public, but the ordeal has effectively stymied the beginning of what was a promising new career. Jones is still looking for a new job.  She worries about using her former employer as a professional reference, despite the fact that it was her first significant job in her chosen profession. While she continues her job search, Jones is studying part-time to complete her Bachelor’s degree. Under the terms of her settlement, she was entitled to collect unemployment benefits, which has given her a bit of a financial cushion. Her settlement award remains in a savings account, untouched.

“My goal with the settlement wasn’t just to get some payday,” she said. “I’d like to think it was enough to make him stop [doing this to other women].”

Handling harassment at work

We’ve spoken with legal experts and put together some tips for workers who feel they are facing harassment at work.

Identify the unwelcome behavior. Brantner, who has represented workers in harassment lawsuits, says the first thing to do is to recognize when you are being sexually harassed. She says sexual harassment is defined as unwelcome sexual advances or verbal or physical conduct of a sexual nature that is made explicitly or implicitly a term of your employment. It can also be conduct that interferes with your work or creates a hostile work environment.

Report the behavior to your human resources department or other supervisor. When you’ve identified the unwelcome behavior, Brantner says the next step is to report it and ask that it stop. “If the behavior continues after you have clearly communicated that you wish it to stop, you need to decide if you wish to take further action,” she says.

Document everything. If you want to bolster your case, Young suggests documenting any evidence of harassment. Keep a log that includes dates and times, as well as descriptions of the offensive behavior. Note your attempts to speak with human resources and the outcomes. Save emails and written notes to back you up. In some states it is illegal to record conversations without the other person’s knowledge, so check your state’s laws or consult an attorney before you take that route.

Be on alert for any form of retaliation. Speaking up about harassment in the workplace can trigger retaliatory behavior from colleagues. It’s important to keep close track of anything your colleagues may do in order to undermine your position after you have spoken up about harassment. The person you are accusing of harassment might try to make it difficult for you to do your job, or, in Jones’ case, demote you or remove your job duties. Document these instances carefully in order to support your case.

If your employer doesn’t act, contact a lawyer or the EEOC. If you aren’t getting results with your employer, Young recommends visiting the Equal Employment Opportunity Commission (EEOC) website to learn about filing a charge. You can use the EEOC’s assessment tool to get a better idea of what to expect. It takes about five minutes to use the tool, and you will be directed as to your next course of action. Some states have rules on how much time can go by before harassment suits are filed. The EEOC can help you expedite the process if needed.

Money doesn’t have to mean everything. Even if you don’t have unlimited financial resources to hire a legal team, you still have options. Many lawyers will take on workplace harassment cases on a contingency basis, which means they are paid once you have a settlement or win the lawsuit. For example, Jones’ attorney accepted a percentage of her settlement earnings as payment and collected no other fees. If you file with the EEOC or the Department of Labor, or with the appropriate office in your state, the government will investigate if there is probable cause to pursue a lawsuit.

Edited by Mandi Woodruff
Illustrations by Kelsey Wroten

*Names, dates and locations have been changed. 

Miranda Marquit
Miranda Marquit |

Miranda Marquit is a writer at MagnifyMoney. You can email Miranda here

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College Students and Recent Grads

9 Questions to Ask Before Accepting Employer-Tuition Assistance

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.

Tuition-reimbursement_lg

For the most part, employer-provided tuition assistance is a pretty sweet perk. Your work will literally pay for you to further your education, saving you tons of money while you’re bringing home a paycheck. More than 80% of organizations surveyed by the International Foundation of Employee Benefit Plans in 2015 offered some sort of educational assistance or tuition reimbursement. Some of the more familiar names on the list of companies offering tuition perks include UPS, Home Depot, Bank of America, and AT&T.  Starbucks is probably the biggest brand to jump on the tuition-assistance bandwagon in the last few years.

But before you jump at the first tuition assistance package that lands in your lap, keep this in mind: companies don’t just hand out free cash and expect nothing in return. Tuition benefits nearly always come with strings attached…strings that could potentially turn you into a modern day indentured servant.

Ask your employer these 9 questions before you sign up:

1.How many hours do I have to work in order to qualify?

Some employers only provide tuition assistance or reimbursement to full-time employees, which generally means you’re working 25-40 hours per week. Others extend their program to part-time workers. But if you’re picking up a part-time job solely for this perk, it would be best to look into the time commitment first. If you don’t think you can handle a full-time job on top of being a full-time student, the programs that require 25-40 hours per week may not be for you.

2. Do I have to earn certain grades?

Some companies may demand you perform at a high level (earning As and Bs) in your courses in order to remain eligible for tuition assistance moving forward. If you don’t make the grade, you may find yourself getting stuck with your tuition bill at the end of the semester.

3. How long do I have to be employed before qualifying?

Like many other job perks, tuition assistance may come with a probationary period.  That means your job will require you to work for a certain amount of time before you become eligible. That period could be as short as 30 days and as long as several years. So, if you’re applying for a job and hoping they’ll cover classes that start in two weeks, you might be out of luck.

4. Is this tuition assistance or tuition reimbursement?

Generally, tuition assistance means that your employer will pay the school directly. Tuition reimbursement means that you’ll have to front the cash for your studies and get reimbursed by your job once your semester or term is over. Because these terms are often used interchangeably in HR circles, be sure to clarify before you sign up. You don’t want to be on the hook for classes you can’t afford upfront.

Pro tip: Sometimes your school’s Bursar office will let you make a partial payment as long as your employer sends in a letter asserting their intention to pay upon receipt. This policy will vary from school to school. Do your homework beforehand so you know what to expect.

5. Do my classes have to be related to my job?

Work at a bank but want to major in Medieval Literature? Your employer may not be so keen on paying for your education. While some employers will fund whichever degree you decide to pursue, others will only pay for courses related to a major that will strengthen a skill set relevant to your current job description. They can even refuse to pay for courses that have nothing to do with your day job even if they are required for your degree.

6. What is the max that will be reimbursed per semester?

Just because your employer provides tuition assistance doesn’t mean you’re getting a free ride. The IRS will want its cut. As it stands, you won’t pay any taxes on the first $5,250 your employer kicks in each year. But any amount beyond that is subject to payroll taxes. This can cause a huge headache for firms, so many companies just decide to cap their contributions to employee education at $5,250 per year.

7. What is the max I can use overall?

Some programs will only pay a certain lifetime amount. That means if you have to take a number of remedial courses or end up having to retake a class, your financial plan could be thrown off kilter. Be sure to examine whether the max benefit is measured in terms of time or dollars, too. If you only have a certain amount of years to finish your degree, you’ll likely want to become a full-time student rather than only attending part-time.

Time limits are frequently applied to other types of aid, too. For example, if you receive the Pell Grant, you’ll only get it for twelve semesters, and it can only be applied to one major. See if your employer’s tuition assistance program has similar limitations.

8. How long do I have to stay with the company after I graduate?

Your employer doesn’t want to pay to educate you just to lose you to the next highest bidder. They’ve invested in your education, and are going to want to protect that investment. For this reason, most employers will have a Tuition Payback Clause. Read this carefully, as it may be something you can negotiate.

Typically, these clauses cover three distinct situations. The first is voluntary separation, where you quit or leave for another company. If you do this within a certain timeframe of accepting tuition assistance, your employer is likely to make you pay them back for the part of your education that they funded.

However, some employers will make you pay them back if you are terminated with cause. That is, if you are fired for an action that would prevent you from collecting unemployment benefits, you’re probably going to have to pay them back for your schooling, too.

In an even nastier twist, some employers will require you to pay them back if you are laid off. If you see a clause like this in your tuition assistance agreement, consider it a huge red flag.

9. Can I set up tuition assistance if I’m self-employed?

Yes! In fact, if you are a sole proprietor attending college, it can be wise to set up a tuition assistance program for yourself. The amount of money you allot to your education will not count as taxable income up to that $5,250 mark. That means by setting aside tuition funds up you’ll effectively be lowering your taxable income for the year.

Keep in mind that when you establish this as a benefit of your business, you may disqualify yourself for things like the American Opportunity Credit. Sometimes costs over $5,250 can still be claimed under such credits as long as they were used on tuition, fees or necessary materials like textbooks.

Before filing your taxes, you need to make your tuition assistance program official. Have a professional help you write a legal document that will satisfy the IRS should you ever get audited.

Know what you’re getting into

Tuition assistance programs can make college more affordable, and translate into a higher paycheck. Just be sure you know program limitations and stipulations before signing on the dotted line. It could save you time, headaches and potential budget fails later down the road. If tuition assistance isn’t available, check to see if your company helps pay off student loans.

Brynne Conroy
Brynne Conroy |

Brynne Conroy is a writer at MagnifyMoney. You can email Brynne at brynne@magnifymoney.com

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Life Events

6 Steps to Take When You’re About to Get Laid Off

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.

6 Steps to Take When You’re About to Get Laid Off

About four years ago, one of the very first companies I worked for out of college was bought out by two of its biggest competitors resulting in job insecurity for many of the employees. I’ll never forget the day we got the news.

One morning, an email for an emergency telecall was sent out to everyone. We all gathered around to listen on speakerphone as an executive explained that our competitors acquired our company. At the end of the brief call, he finished with something like “good luck to everyone”.

It sent shock waves through upper management. Little by little representatives of the new companies began restructuring. The bright side of the situation was that we all got a decent amount of time to decide if we wanted to be a sitting duck or if we wanted to proactively look for a new job.

Find yourself in a similar position? Here are a few tips:

1. Get a Headstart on the Job Hunt

My counterparts told me the low-level management position I held was fairly safe. That didn’t stop me from sending out some resumes anyway. If I had to leave the company, I wanted to do it on my terms. I landed an interview and a new job shortly after we listened in on that shocking telecall announcement.

At the end of the day, it’s easier to look for a job while you have a job. You don’t have to explain gaps in employment. Collecting unemployment is also something to consider if you simply can’t find a job before your position is made redundant.

2. Downsize, Downsize, Downsize

Downsize your lifestyle wherever you can as soon as you get the feeling your job is on the chopping block. Tiffany “The Budgetnista” Aliche, financial educator and speaker, rented out her home to pay the mortgage when she was laid off from her position.

She moved in with family during this time to make ends meet. She also cut out all non-necessities like eating out and her gym membership. Review your budget carefully to remove all expenses that you can survive without. Make the serious budget cuts now so you won’t have to scramble to pay bills later when layoffs happen.

3. Use Your Discretionary Income Wisely

While still making a steady income, beef up your emergency savings with the excess money you can squeeze out of your budget. Prepaying bills is another way to put your discretionary income to use while still employed in order to ease the financial burden later on.

Sandy Smith of Yes, I Am Cheap had notice before leaving her job and prepared for it well in advance. She prepaid three months of her car note and two months of her mortgage to avoid feeling the pinch when she was out of a job.

4. Bring in Income from Other Sources

Even though you may not find a new permanent position quickly you can still earn income in other ways. Sandy ended up staying home for 6 months and fell back on various side hustles to bridge the income gap. She continues to chronicle her adventures in side hustling on her blog. According to Sandy, everyone has a talent that they can make money from.

Tap into skills and education that you already use professionally. There are also many legitimate side jobs you can do online like selling on Amazon, freelancing or virtual assisting.

5. Take Advantage of Your Health Insurance While it Lasts

Sherrian Crumbley of KNS Financial recommends getting last minute physicals and dental visits in while you can. Then, she suggests pricing out COBRA and individual health insurance to see which one will benefit you more after you’re laid off.

For a quick overview, under the Consolidated Omnibus Budget Reconciliation Act or COBRA for short, employees that experience a serious life event (like getting laid off) can get a continuation of coverage under an employer’s group plan for a limited amount of time.

While using COBRA, the full cost of coverage may get passed on to you by the employer plus administration costs. This may not be the most affordable option. Check out the health insurance marketplace to compare costs. And keep in mind, going without health insurance altogether while jobless can result in tax penalties.

6. Rollover Your 401(k)

What should you do with your 401(k) when leaving the company? First, check how much you have vested in your 401(k) balance. Your vested balance is the percentage that you can take when leaving a company depending on the terms of your employee match.

One popular option is rolling over your 401(k) balance to another tax-deferred account like an IRA. You can do this easily by opening an IRA account and requesting a transfer of your 401(k) balance directly to the new IRA.

Whether or not you should cash out your 401(k) to pay the bills while you’re out of work is another story. Taking money from your 401(k) before you hit retirement age has tax implications that you may regret later.

For instance, Tiffany took out money from her 401(k) as a last resort during unemployment and was hit with a sizeable tax bill and withdrawal fees which she now believes was a mistake. Rhonda J. Williams, speaker, financial coach and founder of Exodus Financial Education Group, experienced a layoff in the past as well and withdrew from an account she had been investing in for 15 years.

According to Rhonda, “[now] it would be close to impossible to make up the time and compounding interest I lost.” After recovering from these experiences, both Tiffany and Rhonda now run successful businesses providing financial education to others in need.

If you have no savings and you’re about to get laid off, dipping into your 401(k) could be a last resort. Before that, you may want to consider other resources for money first like a low-interest personal loan.

Final Word

You’re not alone. Going through the fear of job cuts and becoming unemployed can feel like an isolating experience. Yet, it’s an experience that many of us go through.

The benefit of hearing whispers about layoffs around the water cooler is that you can prepare in advance. At a bare minimum, reel in your spending and hunt for jobs to make sure you don’t have the wind knocked out of you when your position is eliminated.

Taylor Gordon
Taylor Gordon |

Taylor Gordon is a writer at MagnifyMoney. You can email Taylor at taylor@magnifymoney.com

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