by Repayable | Feb 1, 2016 | Money Matters
This article was originally published in the February issue of Queen of the Castle Magazine .
Did you get all sweaty when you read the title of this article? Money? Bias? I don’t want to talk about this. This article is here to empower and inform you, it’s a little uncomfortable to be paid less. Facing reality is the first step to close the pay gap.
You thought you would go to college; graduate with your bachelor’s and make more money than those without a degree. Just don’t expect to make more than a man with an associate’s degree.
According to the Institute for Women’s Policy Research in 2013 full-time women with a bachelor’s degree earned an annual median income of $50,000 while their male counterparts earned $70,000 and men with an associate’s degree earned $50,000.
Has your jaw dropped open yet? You can go to two additional years of college but be paid the same as a man with less-education or $20,000 less than one with the same education?! Sit down for this next one…
College-educated women born between 1955-1959 working full-time year round lost nearly $800,000 in wages by the age of 59. Well that’s for the entire United States, there’s much less gender bias here in Wisconsin.
Unfortunately, no. The average annual median income for all full-time women in Wisconsin is $36,000 and $46,000 for men.That means women earn about 78 cents for every dollar their male counterpart earns. Nationally, Wisconsin ranks 22/50 for gender equality in pay compared to neighboring Minnesota who ranks 10/50.
Things are improving for millennial women in Wisconsin. In 2011-2013 millennial women made about 87 cents for every dollar their male counterpart earned.5 Wisconsin is expected to close the gender pay gap by 2068.6
You have the same debt, education, and experience as your male counterparts. Why are you being paid less?! You deserve the same pay. What can you do to get it?
- Talk wages. This is taboo advice for many of us who were raised conservatively and it’s frequently frowned upon by employers. Here’s the thing, ignorance only benefits the employer. Minnesota and Illinois both have laws that prohibit employer retaliation against employees who inquire about other employees’ wages or disclose their own. Write your congressmen and let them know you want similar protection in Wisconsin.
- Know your price. Go to websites like payscale.com, salaryexpert.com, cbsalary.com and others. Be sure to check male along with the appropriate years of experience and education. Pay estimates for women are typically lower. You’re worth the same amount an employer pays a man.
- Negotiate. After arming yourself with the information above, you have objective data for negotiating. The She Negotiates blog (shenegotiates.com) has a lot of helpful advice to get you started negotiating. Remember, if you don’t ask you won’t receive.
What about your daughter or granddaughter? She still faces earning less her entire career.
- Encourage her to pursue a STEM career. STEM stands for Science, Technology, Engineering and Math. Women in these fields face a smaller pay gap than other fields earning about 80-94% of their male counterparts.
- Discuss finances with her. Get your daughter or granddaughter involved in financial discussions early on. Help her understand the basics of budgeting, investing, and saving. These will help her set financial goals in the future and make the most of her income.
- Be sure she knows value isn’t determined by gender (or any other demographic). Talk with her about being a valuable employee.
- Be conscious of your own gender bias. Even women still have gender bias. Have you ever read the name Dr. Smith and assumed it was a man?
There is a lot you can do about the gender pay gap. Change starts by knowing your value and asking for what you deserve. You can continue to improve the state of pay equality for future women, your daughters and granddaughters by empowering them with knowledge, confidence and tools for their success.
Pay equality isn’t an “us” vs “them” war. Bias is often brushed under the rug and many men don’t know the depth of the problem. I don’t know a dad out there who would say his daughter should earn less than his son for equal work. Inform the men in your life about the gender pay gap so they can become part of the solution. Empower yourself to command your value in the marketplace, you’ve earned it!
Be smart and know your value, be honest with yourself about the wage gap, and empower yourself and others to ask for what you deserve.
For more information:
National Science Foundation, Division of Science Resources Statistics. 2008. Science and engineering degrees: 1966–2006 (NSF 08-321). Arlington, VA: National Science Foundation.
The Status of Women in the States:2015 Employment and Earnings Report Figure 2.4, Figure2.5, Table B2.1, Table 2.1, Table B2.2, Figure 2.2
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by Repayable | Oct 5, 2015 | Money Matters
We all know we need to put money away in case of emergency but how much is really the right amount? Many of you have student loan debt acruing interest at 6.7%. It’s important to have a solid 3 months of expenses in your savings account. You don’t want to be so aggressive about debt that you don’t have at least this minimum amount saved up.
I often read that an emergency fund should have 6 months of expenses. For most of you seeing your debt grow at 6.7% isn’t outweighed by an extra 3 months of expenses. Your savings account is there for emergencies only. You should have high expectations for yourself that if something happened to your job you would be able to find another way to replace your income within 3 months.
It’s hard to add to and build up your savings account when you want to tackle other expenses first. Just remember you don’t want a crippling financial setback from a surprise expense or job loss. Delay aggressively tackling debt until your emergency fund has 3 months of expenses. If you need to use some of your savings for an emergency replace what you used.
Here’s how I would replace money I had to use from my savings account. For this example say my 3 month emergency savings fund is $10,000. I have an unexpected car repair bill and need to spend $1,000. I don’t have $1,000 extra cash lying around or worked into my monthly budget. I’ll likely put the expense on my credit card initially (because I want 1.5% cash back on that $1,000) then pay off the balance by using $1,000 from savings.
Now my savings account has $9,000 in it. I need to work on putting extra income into my savings account each month until I reach the $10,000 mark again. For me that would mean making less of an extra student loan payment that month.
Notice I would use the money from savings rather than carry a balance on the card. Most credit cards have very high interest rates so I would waste money paying interest on the balance.
Beyond the emergency fund saving for big expenses is important too. If you’re considering buying a house or new car saving up is a great way to fund it. For most of you saving entirely for a new car or house is quite the challenge. However, expect to have a 20% down payment saved. The more you have saved the better you look to lenders and the lower interest rates you will get.
Larger down pyaments free up more of your income from debt payments in the future. I suggest finding room in your budget to continue to increase your savings account for things like this. If at first your debt load is very high maybe you can only save $50 a paycheck or per month. That’s OK, saving any amount on a regular basis helps build the habit. You may find it useful to save your money in different accounts for different types of expenses. Like separating your emergency fund from your house fund.
Saving for big ticket items like this requires a baseline of financial responsiblity and consistency. You should have consistently paid down your student loan debt for at least 3 months before funneling additional income to savings. Saving for a big purchase requires a solid knowledge of your personal cash flow so you don’t inadvertently put money where it doesn’t belong. If you have credit card debt don’t even think about saving for a bigger project. Your number one priority should be paying off your credit cards.
If you’re taking a big trip remember this is an optional expense so it’s important to save and budget appropriately so this doesn’t become a debt. Ideally you would have 100% of the planned cost of the trip saved up prior to heading out for your fantastic vacay!
Having an adequate emergency fund is one of the most important steps to becoming fiscally responsible. You should have 3 months of expenses in your emergency fund before you switch focus and start aggressively tackling debt by making extra payments. Before saving for big ticket items like a house, car, or expensive trip be sure you’ve established a routine of tracking your spending, budgeting, and paying down debt for at least 3 months. This ensures you have a strong enough knowledge of your personal cash flow to make informed decisions about saving.
What are your biggest challenges with saving money? What’s one trick you find has helped you save money for a rainy day? Let me know in the comments, send me an email jeni@millennialmaxims.com, or join our Facebook group and share your favorite goal(s)!
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by Repayable | Sep 21, 2015 | Money Matters
You’re a millennial, you’ve got student loan debt. The vast majority of us will have student loan debt in numbers not seen before by previous generations. My student loan debt was comfortably into the six-figure range at $128,000 when I graduated in 2013. That’s what it cost for six years of college education at an in-state public college. The first two years were undergraduate and left me with $8,000 in debt.
Then I went to the University of Iowa College of Pharmacy and tuition skyrocketed. With steady tuition hikes of 2-5% per year I graduated with $118,000 in federal student loan debt. Wait, I said I graduated with $128,000. Where did the other $14,000 come from? Interest. My unsubsidized and subsidized federal student loan interest rates are sitting at a pretty 6.55%… Disgusting. During the 4 years of pharmacy school my unsubsidized student loans piled up interest.
Interest is why you have to tackle your student loan debt aggressively. 2013-2014 was my first year out of pharmacy school. I did residency (basically an internship for a licensed pharmacist) which paid approximately $45,000/yr. Not enough to make the $1500/month payment on the 10 year repayment plan.
I knew better than to defer my loans (interest continues to accumulate) so I enrolled in an income-based repayment plan. My required payment was about $180/month. I payed anywhere from $300-1000 per month as I could afford. Despite paying $6,600 on student loan debt when I finished residency one year later my loan amount had gone up. I now had $132,000 in debt.
2015 is my first entire year making pharmacist salary. I have been aggressively paying back my student loans and have a 10 year repayment plan. My minimum monthly payment is $1500. I get paid bi-monthly so I pay the $1500 with the first paycheck and with the next paycheck I pay an additional $1,000-$1,500.
The second payment really knocks my debt down. Of my required monthly payment nearly $600 is applied to interest with the remaining $900 applied to the principal. Nearly all of the extra payment is applied to principal.
Your loans won’t pay themselves and the only way to have true financial freedom and liberty to do what you want is to be debt-free. With this strategy I will have <$100,000 in debt by the end of 2015 with a goal payoff year of 2018.
Make your payments aggressively.
Anyone who advises you otherwise doesn’t understand the current state of student loans. They don’t understand that current interest rates are higher than the return rate most people are getting on their 401K this year and higher than a car loan or a mortgage rate. Do no listen to them. They think you have a few thousand dollars in debt at a 1-2% interest rate.
Tackle your student debt. It’s guaranteed to accrue 6.55% interest on six figures regardless of what the stock market is doing or how your investment portfolio is performing.
I’ve talked a lot about student loan debt but what about other debt? My advice, avoid it if at all possible.
I know you worked your ass off during college, sacrificed to get a good job, and now you’re making real money and want to treat yourself! That’s fine. Give yourself the opportunity to celebrate with your first real paycheck. Take a vacation, buy some new clothes, do something that has an end.
Don’t put yourself further into debt by buying a brand new Mercedes or BMW. Until you can buy luxury things without debt you haven’t earned them.
If you’ve been limping along with an ancient car that’s not reliable it may be time to upgrade. Save for a decent down-payment (~10-20% of the purchase price) and then buy a reliable used car or modestly priced new car. I’m suggesting you buy a Honda not a Mercedes or a Subaru not a Range Rover.
What about a house and kids and a family? My advice is contrary to the expectations of previous generations. Don’t put yourself further into debt by adding a mortgage on top of your mortgage worth of student loan debt!
Exceptions to this would be if renting in your area is astronomical compared to purchasing your own home (unlikely because they’re both real-estate but not impossible), or if you have the opportunity to purchase an investment property (i.e. apartments, duplex, etc) that can help you make additional income.
Even if you’re starting a family remember that a baby doesn’t need a ton of space (they barely move their first year of life) and toddlers don’t remember much. Kids aren’t picky, they want a safe, loving environment to grow and play in. Whatever housing you have that provides that is good enough!
Avoid credit card debt at all costs! It’s fine to use credit cards, in fact you should! You’re financially safer if someone steals it and most have rewards you don’t get from using a checking account. Be sure to keep track of all your expenses and pay the balance off each month.
I pay my credit card off every time I get paid. It really helps me keep tabs on my spending.
If you need to put something you can’t afford on a credit card analyze if it’s a need or a want. Ideally you have a decent savings account to help with these scenarios but a credit card can serve as a bridge in an emergency. Be sure to pay what you can afford and not the minimum to pay it off ASAP.
Here are the key takeaways:
- Aggressively tackle high-interest student loan debt by going after the loans with the highest interest rates first
- Don’t get into unnecessary debt like credit card debt and car loans
- Wait to buy your first home unless it’s an investment property
- Pay your credit cards off every billing cycle and consider paying the bill off as often as you get paid
What are your biggest debt struggles? What’s one debt you avoid or recently paid off? Let me know in the comments, send me an email jeni@millennialmaxims.com, or join our Facebook group and share your favorite goal(s)!
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by Repayable | Sep 6, 2015 | Money Matters
Congrats, you’re working a real job and making bank! Now you’ve got to get your finances straight to reach your fullest potential. To do so you’re going to need a solid understanding of some financial basics. This series will touch on a few key areas faced by most millennial professionals. I’ll talk about budgeting, debt (with a focus on student loan debt), bare bones investing, and savings. I’ll also address some ways money can keep you from being your best self. (more…)
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