Category Archives for Make Money

The Best Ways to Ask Your Boss For a Raise

January 9, 2015
/ Make Money
/ By J. Irwin

The following is a post by MPFJ staff writer, Kevin Mercadante, who is a freelance professional personal finance blogger for hire, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry.

For a lot of people, one of the most difficult work related tasks is having to ask your boss for a raise. Though it should be something easy to do if you feel that you absolutely deserve one, it’s usually a tense situation. In no small part, this is due to the fact that there is a built-in reluctance on the part of employers to give raises. After all, the more an employer pays a staff member, the less profit that will be available in the budget.

One of the best ways to ask your boss for a raise is be prepared in advance. Doing so can stack the deck in your favor, and make it less difficult to pull off. Before you ask for a raise, try some of the following steps.

Research Your Market Value

Unless your job classification is very unique, the job market largely determines how much your employer is paying you, and how much they may be willing to increase your pay. This is all about defining your market value as an employee, and that’s all about determining how much you make in relation to other people in similar positions.

There are various web based information sources on salary levels, but the most comprehensive is the Bureau of Labor Statistics (BLS) Occupational Employment Statistics website. The BLS is an agency of the US Government, and not only does the site provide salary ranges for nearly every job classification in existence, but it also provides specific regional salary statistics. This is important because for example, an accountant is likely to earn more in New York City than in Nashville.

If you are on the lower end of the salary range for your job classification in your geographic location, you’ll have more room to ask for a raise. But if you are at the higher end of the range, you need to tread lightly. Your employer has access to the same information, and could use your request for a raise as an opportunity to remind you that you’re at the top of the salary scale.

The BLS site also provides ten-year growth projections for each career classification. This information is not to be underestimated. The greater the future demand for your job, the more flexibility you will have in asking for a raise.

Figure Your Employer’s Financial Position Into the Mix

You also need to consider what your employer’s financial position is at time you’re asking for a raise. If the company is losing money and cutting staff, asking for a raise may be a difficult proposition at best.
If you are on the lower end of the pay range for your job classification, you may still be able to get a raise even if your employer is not prospering. But here’s where you will need to do some careful analysis. As yourself the following questions:

How important is your position to your employer’s overall operation?
How well are you performing on your job? Can you objectively rate yourself as a high performer, a medium level performer – or something less?
How difficult or desirable would it be for your employer to replace you?
Would your getting a raise put your employer in a difficult position with other employees?
How much do you like working for your current employer, and would you be willing to make a move if you don’t get a raise?

If you are a key employee at your company, you are a top performer, and you are well below the top range for your career in your location, you can still ask for a raise. But if your answers to a few of the questions above are generally negative, you’ll want to use caution.

Document Your Accomplishments

It’s unfortunate that many employers do a much better job in documenting your mistakes and blunders than your accomplishments. And that’s why you need to be prepared to step in and fill the void.

Seriously, this is a step you cannot leave to chance. Asking for a raise is very much a negotiation process. While you’re asking for the raise, your employer is pushing back and trying to justify why you shouldn’t be given one, or given one that’s less than what you’re asking for. You’ll need to be fully “armed” for that outcome.

You should literally have a file that includes positive past job reviews, commendation letters, and any other examples of outstanding work. If you are in either a production position or have budget authority, you should be fully prepared with hard numbers that document your statistical improvements.

You don’t need to pull these out early in the negotiations, but rather to have them available just in case things don’t go your way. If your employer resists giving you’re a raise, citing your performance as an issue, you’ll be ready with evidence that tells a better story.

Remember That It’s Business, not Personal

It’s very difficult not to get emotional when asking for a raise. After all, you’re asking your employer for an improvement in your compensation, and that’s a true “gut issue”. Be that as it may, you have to do your best to keep your emotions out of the picture. No matter how personal it truly is, it really is a business negotiation.

It’s best to be as cordial and respectful as possible in approaching your boss about a raise. You should always want to stick to the facts – as provided based on the research you have done in the steps above – and to avoid emotional generalities.

You should also fully expect some form of resistance. If you don’t get any, great! But if you do, you’ll be prepared. As noted above, your employer will have their own reasons for wanting to limit your income. Your job will be to prove – based on the facts – that their conclusion is incorrect. But in the process, keep in mind that you are merely asking for an increase in pay, and not attempting to justify your existence on the payroll. That means do your best to reasonably promote yourself, but avoid getting defensive at all costs.

You want to make sure that your request proceeds as a friendly negotiation, and doesn’t spill over into the realm of conflict. Make it clear that you are both on the same side, that the raise will help you to do your job better and to increase your performance.

Also be fully prepared to be flexible. If you’re asking for a 10% raise, and your employer counters with 5%, be ready to meet in the middle. This isn’t about winning, but about getting yourself a better compensation package.

Have a Strategy Just in Case the Outcome is Negative

Despite your best efforts, your request may still be denied. At that point you’ll need to determine whether you will be able to continue on with the employer knowing that your pay will not be increased. And that will depend on whether or not there are better alternatives with other employers.

The strength of your negotiations will rest largely on you knowing that information beforehand. If your career field is in strong demand, in you’re at the lower end of the pay scale, you’ll have the confidence of knowing that you have other alternatives going into the meeting with your boss. That confidence will likely come through, and could win the day for you. But if it doesn’t, you will have to be prepared to go elsewhere.

Should you decide instead to stay on with your employer and make a request at a later date, you will have to be certain that the denied raise doesn’t negatively affect your attitude. No matter what, continue to do your best work! This will be important on two fronts:

Continuing strong performance will put you in a better position to ask for a raise again at a later date, and
It will make it easier for you to find a position with another employer, since your performance will likely get you a favorable reference from your current employer.

There are risks to asking for a raise. If you should carefully consider those risks, and prepare for them in advance, not only will you have a better chance of getting the raise that you want, but you’ll be able to do it with more confidence.

How about you all? Do you struggle at the thought of asking for a raise? Have you tried asking for a raise in the past?

Share your experiences by commenting below!

**Photo courtesy of https://www.flickr.com/photos/usdagov/14605147054/sizes/n/

Five Promising Career Fields – No Matter What the Economy Does

January 1, 2015
/ Make Money
/ By J. Irwin
/ 4 COMMENTS

As the economy moves forward it destroys certain career fields, but creates entirely new ones. Those new careers are certainly promising since they’re on the cutting edge. But there’s no way to predict the longevity of brand-new career fields. If you are looking for a promising career field, there are five that have withstood the test of time, and are likely to prosper no matter what the economy does.

Those include healthcare, computers, sales, education, and financial services, particularly those related to retirement. For statistics we’ll be relying on the Bureau of Labor Statistics Occupational Outlook Handbook.

Healthcare

When we think of healthcare, we immediately think of doctors and dentists and a variety of high level specialists. In truth, the healthcare field is strong almost across the board.

Registered Nurse is an obvious choice. Median pay is $65,470, and the field is expected to add 526,800 jobs, or a 19% increase in employment. That’s well above the rate of growth for the job market in general (about 12%). Just as important, RN’s can work in a wide variety of environments, including hospitals, nursing facilities, clinics, schools and private practices.

Some other healthcare careers to consider:

Dental Hygienist:
Median income: $70,200
Number of new jobs expected through 2022: 64,200
Percent increase: 33%

Pharmacists:
Median income: $116,670
Number of new jobs expected through 2022: 41,400
Percent increase: 14%

Physical Therapists:
Median income: $79,860
Number of new jobs expected through 2022: 73,500
Percent increase: 36%

Occupational Therapists:
Median income: $75,400
Number of new jobs expected through 2022: 32,800
Percent increase: 29%

Almost any field in healthcare offers not only strong earnings, but also a very secure future as the number of jobs increase to meet the demand of an aging population.

Computers

This is another field that’s much more diverse than it seems to the average person. Computer Programmers, perhaps the most visible computer specialists, have a median income of $74,280. But somewhat surprisingly, the field is expected to add just 28,400 jobs by 2022, an increase of only 8% which is below the rate of growth for the overall US job market.

Other niches in the computer field are expected to fair much better. For example:

Database Administrators:
Median income: $77,080
Number of new jobs expected through 2022: 17,900
Percent increase: 15%

Computer Network Architects:
Median income: $91,000
Number of new jobs expected through 2022: 20,900
Percent increase: 15%

Computer Systems Analysts:
Median income: $79,680
Number of new jobs expected through 2022: 127,700
Percent increase: 25%

Information Security Analysts:
Median income: $86,170
Number of new jobs expected through 2022: 27,400
Percent increase: 37%

Software Developers:
Median income: $93,350
Number of new jobs expected through 2022: 222,600
Percent increase: 22%

Even though prospects have slowed for Computer Programmers, the rest of the computer field looks very promising.

Sales

Sales is something of a career mixed bag. There is a sales category connected with just about any and every industry in the country. According to the BLS, most sales fields will grow no faster than the general job market, and some will grow even slower. Incomes meanwhile are all over the map. Travel agents earn a median income of $34,600 per year, while sales engineers earn a median of $91,830.

But when it comes to sales, median income levels and future job prospects vary widely. In fact, generally speaking, the success or failure of a given sales position depends mostly upon the skills, ability, knowledge, and dedication of the salesperson. A good salesperson can easily make six figures in just about any industry niche. Underperforming salespeople can end up doing little better than minimum wage.

But the reason that sales is a promising career field is based on pure necessity. Virtually every business that exists to sell a product or service needs skilled salespeople to keep their income flowing. If you are good at sales, you’ll not only have an above average income, but you’ll also have an almost unlimited future. Many companies promote successful salespeople to top management positions, such as sales director, and even chief operating officer.

If you are naturally good at sales, there are few other career fields where you can earn as much money and enjoy the level of career stability.

Education

Education doesn’t pay as well as health care, the computer field, or even certain sales positions. And as a rule, job growth is expected to be at or below the rate for the entire job market. So why include education as a promising career field? Not only are there literally millions of jobs in education, but the career stability tends to be higher than average. Not only are people who work in the field less likely to lose their jobs in a bad economy, but they typically also enjoy better employee benefits as a result of being part of the public system.

Here are some of the more typical career fields in education:

Career and Technical Education Teachers:
Median income: $51,910
Number of new jobs expected through 2022: 21,400
Percent increase: 9%

Adult Literacy and High School Equivalency Teachers:
Median income: $48,590
Number of new jobs expected through 2022: 6,700
Percent increase: 9%

Kindergarten and Elementary School Teachers:
Median income: $53,090
Number of new jobs expected through 2022: 188,400
Percent increase: 12%

High School Teachers:
Median income: $55,050
Number of new jobs expected through 2022: 52,900
Percent increase: 6%

Instructional Coordinators:
Median income: $60,050
Number of new jobs expected through 2022: 18,500
Percent increase: 12%

Middle School Teachers:
Median income: $53,430
Number of new jobs expected through 2022: 76,000
Percent increase: 12%

Librarian:
Median income: $55,370
Number of new jobs expected through 2022: 11,000
Percent increase: 7%

Post-Secondary Teachers (Includes College Professors who can earn upwards of $100,000 per year):
Median income: $68,970
Number of new jobs expected through 2022: 236,400
Percent increase: 19%

Special Education Teachers:
Median income: $55,060
Number of new jobs expected through 2022: 26,600
Percent increase: 6%

Financial Services – Especially Retirement Planning

Financial services, like sales, encompasses a wide range of career fields, from accountants to real estate appraisers, to insurance underwriters. Future prospects income levels for all of the careers within the field vary incredibly. But one area that’s growing rapidly are personal financial advisors, especially those involving retirement planning.

According to the BLS, the median pay for personal financial advisors is $67,520 per year. But the field is expected to add 60,300 positions by 2012, an increase of 27% over the current level.

The reason for this growth is simple: there is an aging population with a greater need for financial planning services. There are not only more people in or approaching retirement than ever before, but they are expected to live a lot longer than in the past. There is a huge need for financial planners who work specifically in the retirement area.

We should expect this trend to continue for the next two or three decades, making this one of the more promising career fields available, no matter what the economy does in that time.

If you’re planning your future career – or contemplating a career change – any of these fields hold a lot of promise, no matter what the economy does.

How about you all? Are you planning a new career or career change? Are you in or moving into a career that has promise regardless of what the economy does that was not listed above?

Share your experiences by commenting below!

**Photo courtesy of https://www.flickr.com/photos/tulanesally/6881550355/sizes/n/

Why Being Your Own Boss Can Be Kind Of…Lousy

October 16, 2014
/ Make Money
/ By Jacob A Irwin
/ 6 COMMENTS

The following is a post by MPFJ staff writer, Kevin Mercadante, who is a professional personal finance blogger, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry.

Self-employment…Unlimited income. Plenty of free time. No boss giving you a hard time. No co-workers sabotaging your career. Answering to no one. Taking a vacation anytime you want. Selling your business for a fortune and retiring rich – before you’re 50. It’s easy to see why millions of people would be absolutely delighted to be their own boss.

Or so they think.

Sorry to burst your bubble, but the opening description of self-employment is more the TV version. In the real world, being your own boss can be kind of…lousy. There’s more going on with being self-employed than most salaried folks think, and on deeper analysis, not everyone is cut out to be their own boss.

Here are just a few reasons why…

You Are Responsible for Everything

In a typical employment situations, you have a boss and multiple coworkers. When things get busy, or there are obstacles, there is a staff to fall back on. But when you’re your own boss, it’s all up to you.

Not only will it fall on your shoulders to deal with busy and stressful situations, but failure to adequately handle a crisis could hit you directly in your bank account.

The stakes are always higher when you’re self-employed. When you work for someone else, you could have a bad day, but by the end of the week you’ll still get paid. Self-employment means that a bad day can cost you a lot of money.

You will also need to be a serious multi-tasker, especially when your business is new. Where in a typical employment situation, you will be primarily responsible for one, two, or three primary functions, being your own boss means you’re responsible for every detail of your business. And even if you hire people to handle some of those details, it will fall on you to be the backup person in the event they are unable to complete a task, or if they do it wrong.

Cash Flow Is an Ongoing Problem

It’s a fundamental rule of self-employment that no cash flow = no business. For this reason, the majority of your time will be spent generating cash flow, unless you find a way to create automatic income streams. And in a highly competitive economy, that’s not nearly as easy as it sounds.

This means that you will have to be at least part salesman all the time. Though you will have multiple responsibilities in running your business, marketing and sales will always be your primary function. If you’re not comfortable with this reality, or with making it happen, your business will not last long.

You May Find Yourself Working More Hours Than Ever

Remember at the beginning I mentioned “plenty of free time” and “taking a vacation any time you want“? That’s what a lot of people believe the self-employed enjoy. The reality is usually much different.

It’s not at all unusual to work more hours being your own boss then you ever worked when you were employed by someone else. When you have a job, you can go home at five o’clock, or on a Friday afternoon, and enjoy your evening or weekend. As your own boss, evenings and weekends are often your work overflow time. That’s the time that you allocate to taking care of the many tasks that you simply didn’t have time for during regular business hours.

You Trade Having a Boss For Having Many Bosses

One of the biggest motivators for the would-be self-employed is not having a boss to answer to. While it’s true that you won’t have a single boss who will have something approaching absolute control over your career progress, usually you have multiple bosses. These are your clients and customers, and some of the larger ones can end up being something like the boss you hope to get away from.

The reason for this is that if you fail to satisfy your major clients, it could end up costing you money in the form of lost business. This is especially true if you are in the type of business where most or all of your income is being derived from a small number of large clients.

Then Why Be Self-Employed?

With all these negatives, why then would anyone ever want to become self-employed? Well, many are in fact drawn by the TV image that we talked about at the outset. The fantasy draws them in, and if they can’t deal with the harsh realities of self-employment, they’ll be out soon enough.

But if you have a solid grip on the realities of self-employment, you might take the plunge for one or more of the following reasons:

You’re fiercely independent, and you’re absolutely certain that you can do better working for yourself.
You have the capability to bring in business, even if you’re not using that skill in your current job.
The prospect of unlimited income excites you, though you are fully aware that it may take several years before you reach that level.
You realize that being your own boss will require that you work more hours than you would on a job, but you also appreciate that you will have greater control over your time even if you are working longer hours.
You have a burning desire to “build a better mousetrap” – that is, there is something you believe you can improve on, and you’re willing to make the effort.
Accomplishment means at least as much to you as money does.

Being your own boss definitely has its own virtues. You just have to be aware of the difficulties you will face before you reach the point where those virtues will provide the benefits that you hope they will. If you have a firm grasp of that, you’re probably ready to take a stab at being your own boss.

How about you all? What other obstacles to being your own boss can you think of? What other benefits do you see?

Share your experiences by commenting below!

***Photo courtesy of http://www.flickr.com/photos/gds-productions/6528081483

The Complete Guide To Helping My Teenager Find The Right Job

October 6, 2014
/ Make Money
/ By Jacob A Irwin
/ 4 COMMENTS

The following post is by MPFJ staff writer Travis. Travis is a customer blogger for Care One Debt Relief Services, and also appears weekly at Enemy of Debt. Travis candidly shares his personal journey to pay off $109,000 of credit card debt and the tips he’s learned along the way. As a father and husband he provides a unique perspective on balancing debt, finances, and family.

Being the father of a fifteen and a half year old boy, there’s a lot of talk at my house about driver’s licenses, cars, and part-time jobs.

My wife and I mutually decided that we would be supportive of, and even encourage both of our kids to get a part-time job once they reach the appropriate age. After all the financial lessons we have tried to teach them to this point, having a part time job and having to pay some actual bills such as their own car insurance as well as filling up the tank every now and then for the privilege of using a car just seems like the next natural progression in their financial education.

My son is becoming more and more interested in getting a job. As his social life expands, so does his need for monetary funds. While working out one day he started asking me questions about having a part time job as a high school student. I was impressed with his thought process, his questions including the following:

How many hours a week would I expect to work?
How much would I get paid?
How often would I get paid?
How much in taxes would be taken out?

As our conversation progressed, I realized that I had stumbled upon a whole new subject matter that required my parenting and educational skills. I answered all his questions as generically as I could, then I told him we needed to back up and start at the beginning. There were a few things I wanted him to think about:

Age Requirement

My son does not turn 16 until January. There are many businesses that will not hire someone until they are 16 years old. We have to decide whether he wants to attempt to get a job now, or wait until he turns sixteen and he has more options for potential employers.

Type of Work

I wanted him to think about what kind of work he would like to do. He has an interest in technology, so he expressed an interest in working at the Best Buy close by our house. He also stated that he would prefer not to work fast food, but would work at a Dairy Queen. I think that has more to do with the fact that some of his friends already work there.

The point I was trying to drive home was it is not a good idea to apply just because a business is hiring. If you don’t think you would enjoy the job, then he likely wouldn’t do his best and end up in a bad situation.

Shift Frequency

My son likes to hang out with his friends, and we also have very high expectations for his grades. I wanted him to think about how many days a week he would be willing to work that would allow him to maintain these other aspects of his life.

I emphasized that he should not only expect to, but he should want to pick up weekend shifts. It gives him the ability to get a long shift in without worrying about it conflicting with the school day and homework.

Shift Times

Some businesses open early, some are open late. I told him that as a restaurant cook in high school, sometimes I would open the kitchen early on weekend mornings, or be the closer at night. Again, being flexible and willing to work those extreme shifts on weekends would get him additional hours, and thus earn him additional money.

He did express an interest in late night shifts, but said he would prefer not to get up early on weekends.

“Dad, do I really get a choice with all of these things?” he asked.

I smiled as it was a perfect transition to what I wanted to about next. An interview is traditionally thought of as an employer questioning and evaluating a potential employee. However, it is important to remember that it is just as much an employee evaluating a potential employer. I told him that an interview is his opportunity to gather information to decide if the job he is interviewing for is a good match for him.

Other questions he may want to ask during an interview may include:

Time Off

Things will come up when he needs to ensure he has certain days off. He will need to find out the policy or procedure for employees to request time off.

Promotions / Pay Increases

When I was in high school I worked at a restaurant. I started as a dishwasher, but was asked to train as a cook. It was considered a promotion, and came with additional pay. High school students may not have much of an opportunity for promotions and pay raises, but it does happen and is a good questions to ask of any potential employer.

I felt it was also important to tell him that even if he is offered a job, he can turn it down if he determined during the interview that it just wasn’t a good fit.

I also wanted to make sure he understood that this same job hunting process applies to not only looking for a part time job in high school, but can also be used when he’s looking for a full time job to start or further his career.

He nodded his head in understanding and asked, “So, can we pick up some applications?”

How about you all? Did you have any jobs while you were a teenager? What were they?

Do you think you will (or are) encouraging your children to find part-time work while they are in junior high or high school? Why or why not?

Share your experiences by commenting below!

***Image courtesy of Stuart Miles at FreeDigitalPhotos.net

How To Sprint Up The Corporate Ladder

September 22, 2014
/ Make Money
/ By Jacob A Irwin
/ 2 COMMENTS

The following is a post by MPFJ staff writer, Derek Sall. Derek is the owner of the blog, LifeAndMyFinances.com, where he teaches people how to get out of debt, save money, and become wealthy.

Have you just started working in Corporate America and are wondering how to get ahead? Or, perhaps you have been stuck in the same job for a number of years and are interested in climbing the next rung of the ladder? Wherever you currently are in your corporate walk, I assume that you would like to get to the next level. Take this advice and you will not only get to the next rung of the corporate ladder, but will be on a sprint to the top.

1) Dress to Impress

This step is incredibly basic, but if you dress like your boss’s boss instead of like a fry cook, people will notice and they will be more prone to respect you and your opinions at work. If your boss wears a tie, then you should wear a tie. If your boss wears a suit jacket, then you might want to follow suit as well (pun intended). Not only will your coworkers respect you, but you begin to respect yourself a little bit more as well.

2) Speak with Confidence

Nobody promotes a mousy employee. If you cannot speak up in meetings or give your differing opinion to your boss, then you will simply not reach the next rung of that ladder. Confident speakers may not always be right, but everyone is aware that they are in the room. And, in order to get promoted, people first need to know that you exist, and then they need to know that you have the confidence to lead others.

3) Take any Leadership Experience You Can Get

When you first start working in Corporate America, it is incredibly rare that you will be gifted a manager’s job. Chances are, you will start at the bottom of the ladder and then will need to prove yourself worthy before moving the next level up.

In order to make a move into a manager position, you likely need to have some sort of leadership experience under your belt. This could be accomplished by volunteering as a Board of Director for a local non-profit. You might also get some leadership experience by taking on projects at work and leading a team of coworkers. If you succeed enough as a leader in these roles, your bosses will begin to notice and will feel comfortable in giving you that promotion.

4) Continue to Educate Yourself

If you want to move up at work, never stop educating yourself. If your employers value a bachelor’s degree, then earn one. If they think an MBA is important, head back to school and earn this degree as well. Also, without their coaxing, continually learn about areas that interest you. If you work in accounting, but are interested in credit instead, ask those that are working in credit if you can help them with some of their work. Do this for enough areas in your work and you will suddenly be the knowledge source for many leaders within the company. If they know that you have the knowledge, they will not even hesitate to promote you when the time comes.

5) Apply to Open Positions When Appropriate

If you have a good handle on your current job and feel that you can take on a more challenging role, don’t be afraid to look at the open jobs that are available in your company. If you have truly been working hard and have been getting the attention of the leadership team of the company, then you will almost be expected to apply for the job. Even if you do not get awarded the position, this action still lets them know that you are interested in advancing within the company. The next time another job opens up, you might not even need to interview for it. They’ll just give it to you since they know you have earned it and are interested in advancement.

If you take action on these five items, you will almost certainly find yourself advancing up that corporate ladder.

How about you all? Have you climbed the corporate ladder? What did you do to succeed?

Share your experiences by commenting below!

***Photo courtesy of https://www.flickr.com/photos/chefranden/155267057/in/

Which Job Hunting Expenses Are Tax Deductible?

September 12, 2014
/ Make Money
/ By Jacob A Irwin

Job hunting expenses are one of those tax deductions that are often forgotten, even at tax time. The problem is often either that the expenses are not particularly high, or that they’re not high enough to reach and exceed the IRS threshold beyond which they become tax-deductible. That’s why it’s good to review the tax deductibility of job hunting expenses from time to time.

Job hunting expenses can only be deducted if you itemize expenses on your income tax return. They are reported on Form 1040, Schedule A as a miscellaneous deduction (yes, you must itemize to deduct most job hunting expenses). You can deduct them even for jobs you don’t actually land.

If you have particularly large job hunting expenses, such as those related to an out-of-state job search, they could be significant and rise to the level of an important tax deduction.

Which job hunting expenses are tax-deductible?

Administrative Job Hunting Expenses

These are the more typical job hunting expenses, and can include:

Third party resume preparation
Printing and postage
Paid phone calls
Career counseling costs

As a rule, you will only be able to deduct expenses that are paid directly to a third-party provider. Unfortunately, this means that you will also be unable to deduct expenses for the pro-rata cost of making phone calls on your cell phone plan.

As is always the case with income tax deductions, make sure that you keep copies of invoices and payments for any expenses you incur. You can only deduct what you can prove, and that will require a paper trail.

Third Party Fees

Third-party fees are also deductible under job hunting expenses, although it is pretty rare for an employee to pay these. They would include job placement fees paid to recruiting firms, however these are customarily paid by employers, and not by employees. Though for the record, for my first job taken out of college, I did get stuck paying half of a placement fee due to the fact that I graduated into the middle of a wicked recession. So it is possible under certain circumstances you may end up paying for it.

There are also instances in which you as the employee will pay the placement fee, however it will be reimbursed by the employer if you remain employed with them for a certain minimum amount of time. If the employer does reimburse you, the fee will not be deductible by you. And if you do deduct payment of the fee one year, any reimbursement coming in subsequent years will need to be reported as income.

Travel and Transportation Expenses Related to the Job Search

This is where you are most likely to see the most significant – and deductible – job hunting expenses. You can deduct expenses related to the cost of travel, whether you are doing so locally or for out of town interviews.

Deductible expenses include:

Travel expenses, like air fare
Car rental fees
Auto mileage (56 cents per mile for 2014)
Baggage fees
Hotel and lodging costs
Connecting and local transportation (trains, subways, buses, cabs, etc)

When deducting these expenses, you must be sure that they are incurred primarily for job hunting purposes. If you travel to Orlando to go to a job interview, and then end up spending the rest of the week at Disney World, it is entirely possible that the IRS will overturn your deduction on audit based on the fact that the trip was primarily taken for pleasure and not for job hunting purposes.

Relocation Costs

Relocation costs can be the most significant income tax deduction that you can get as a result of a job search. In order to deduct moving expenses on your tax return you must meet three tests:

Your move is closely related to the start of work. Per the IRS, the move must be “incurred within 1 year from the date you first reported to work at the new location.”

Time. If you are an employee, you must work full time for at least 39 weeks during the first 12 months after moving to the new location. The requirement for self-employed persons is 78 weeks.

Distance. There is a 50 mile rule in order for you to be able to deduct relocation costs. The new location must be at least 50 miles farther from your former home than your old main job location was from your former home. For example, if you lived 20 miles from your old job, you will have to move at least 70 miles from your current home in order for the cost of the move to be deductible.

The advantage with moving costs is that you don’t have to itemize in order to deduct them, nor are they subject to the 2% of AGI reduction (that we’ll discuss below). You can actually deduct them on Page 1 of Form 1040, which will also lower your AGI for other deduction purposes.

Relocation costs can be a lot more complicated than time permits us to present here. Please see IRS Publication 521 for a more in depth description of what relocation expenses are allowed, as well as consideration of the many special provisions within the allowance.

Your Job Hunting Expenses Are Subject to Reduction!

According to IRS regulations, you can only deduct job hunting expenses to the degree that they exceed 2% of your adjusted gross income (AGI). If your AGI was $100,000 for the tax year, you will only be able to deduct job hunting expenses to the degree that they exceed $2,000, or 2% of your AGI.

The good news is that there other expenses that count toward the 2% threshold, including tax preparation fees, investment related expenses, and un-reimbursed employee business expenses. You may find yourself exceeding the threshold very easily if you have other such expenses, or if you are unemployed for much of the tax year, so the threshold will be an extremely low number.

Per the IRS:

You cannot deduct these expenses if:

You are looking for a job in a new occupation (more on this in the next section),

There was a substantial break between the ending of your last job and your looking for a new one, or

You are looking for a job for the first time

Sources: IRS Publication 529, and Job Search Expenses Can be Tax Deductible

And that isn’t the only limit either…

You Can Only Deduct Job Hunting Expenses Related to a Job in the Same Career Field You’re Already In

If the 2% of AGI limit doesn’t seem fair, it gets even worse. You cannot deduct job hunting expenses if they are for the purpose of moving into a different career. The deduction applies only if you are moving to a job within the same career field.

This doesn’t make a whole life sense, considering you are more likely to occur large job hunting expenses if you are looking to move into a different field. After all, that would likely involve sending out more resumes, going on more interviews, and a greater likelihood of extending the job search to other states.

But perhaps that’s the reason why this restriction exists – the government is looking to minimize the loss of tax revenues related to the more costly job hunt that would be involved if you are moving into an entirely different career.

It gets worse still. If you are a recent graduate searching for your first job, the expenses you incur will not be considered deductible because – technically speaking – you are moving into a new career.

Despite the limitations, job hunting expenses may be worth paying close attention to in the event that you have a very low income in the year that you’re claiming them, or they are mostly comprised of moving expenses, or if the total amount is substantial.

How about you all? Have you ever been able to deduct job hunting expenses in the past?

Share your experiences by commenting below!

***PHOTO: https://www.flickr.com/photos/ftmeade/14675342103/sizes/n/

How To Give Your Kids A Well Rounded Education For Less

September 3, 2014
/ Make Money
/ By Jacob A Irwin
/ 10 COMMENTS

The following post is by MPFJ staff writer, Catherine Alford. Cat is a freelance personal finance writer who blogs at www.BudgetBlonde.com.

Although my children are only four months old, I have been thinking about their education for many years before they even came into existence.

I’ve always ascribed to the typical idea that “being educated” means, of course, going to college. However, now that college has become an overpriced industry, I’m becoming more flexible on what I expect out of my kids.

Mostly, I am open to them pursuing their college education in a variety of ways, and I hope at least they will become independent above all else and learn to make a successful life for themselves. Nothing would make me happier than raising kids who are self-sufficient and who are willing to find ways to get their degrees for less.

However, when I think of a well-rounded education especially, I think of more than just school and books.

Here are some ways I plan to educate my twins for less and ensure they are well rounded along the way:

1. Encourage Community College

I wish I had gone this route. Both Jacob and I went to highly competitive schools in the great state of Virginia. However, did you know that if you complete two years of community college in Virginia and maintain above a 3.5 GPA, you are eligible to get accepted to schools like UVA and William and Mary?

Many people I met in college went this route. Not only did they have two years of cheaper tuition, but also they got the same diploma I did along with all the perks of attending a top tier school.

I will definitely be encouraging my children to take as many community college classes as possible during their high school years and college years. The education is good, the classes might be easier to get better grades, and you can go to college with a semester or two of classes already under your belt. I’m not sure why people don’t take advantage of this more.

2. Take Them New Places

I believe that travelling is an amazing way to give your children a well-rounded education. When you travel, you can show them different parts of the world and how people navigate their lives through different experiences and traditions. When you travel and let your children lead the way, you are also teaching them how to use airports, how to behave in public, how to be level headed in stressful situations, and how to find their way quickly in a new place.

All of these skills are extremely valuable in life, and as long as my income allows it, I plan to have a smaller house and more modest cars so that I can take both my kids traveling with us as much as possible. This might not be getting an education “for less” but when you think of the price of college these days, a trip here or there hardly seems extravagant by comparison.

3. Take Them Out to Eat

If you want your children to succeed in life or learn how to interact with other people, make sure you include them in your dinners out.

In order for your kids to be well rounded, they should know how to order dinner at a restaurant and know how to sit there without an iPad entertaining them. I doubt Donald Trump let his kids play with their phones or act out while out to eat dinner, and while that’s a big example to give, it goes to show kids are capable of sitting still and having a conversation at the dinner table without gadgets keeping them quiet.

I’m sure there will be many times when I’m embarrassed by something my kids do in public. They’re kids after all. However, I think with enough exposure and training, they can come to know what’s expected of them when they are out and about.

Ultimately, I think parents get caught up in the idea of college and making sure their children get the “right” opportunities in the “right” places. However, I don’t plan on over-extending my kids, over-scheduling them, or paying $20,000 a year for high school just so they can get a chance at an ivy-league education.

I believe with the right tools, with the right exposure, with the right level of independence, they can do anything they want whether it’s attend a fancy school, start their own business, or take a year off to travel the world. In this day and age with the rising cost of tuition, I think it’s important to be flexible and open when it comes to education and realize that being education is so much more than a college degree.

How about you all? How do you ensure your kids get a well-rounded education? Do you plan on sending them to a 4-year college or university or are you flexible in your expectations of them?

Share your experiences by commenting below!

***Photo courtesy of https://www.flickr.com/photos/jblndl/1413647425/in/

Strategies To Help You Choose Health Insurance When Taking A New Job

August 27, 2014
/ Make Money
/ By Jacob A Irwin
/ 2 COMMENTS

The following post is by MPFJ staff writer, Melissa Batai. Melissa is a freelance writer who covers topics ranging from personal finance to business to organics to food. She blogs at Mom’s Plans where she shares her family’s journey to healthier living and paying down debt.

My husband recently took a new job in Arizona. We’re from Illinois, so the move itself was a big deal. After the headache of packing up and moving halfway across the country, I discovered we had several other obstacles.

Namely, I couldn’t believe how complicated picking a new health insurance plan was. We were faced with three choices–a health savings account (HSA), an EPO (similar to an HMO), and a PPO. After we made that decision, we then had to choose between four insurance companies to meet our needs. Geesh! I don’t remember it being this complicated when I started my full-time job 14 years ago.

If you, too, are faced with choosing a health insurance policy from a new employee, consider using some of these strategies that made our decision making process a little bit easier:

What Providers Are Included?

If you’re new job doesn’t involve moving from your current location, you may want to give preference to the plan that lets you keep your current provider, assuming you like your doctor and are comfortable with the services offered.

We had to get a new doctor anyway since we’re new to the area, so this had very little weight in our decision.

What Are Your Own Biases?

My husband and I were trying to decide between the EPO and PPO plan. Initially I was drawn to the PPO plan because I had heard bad things over the years about HMOs. I had concerns because the EPO wouldn’t cover providers who were out of network, and I had heard that HMOs can sometimes not be a wise choice if critical injuries or illnesses occur. Sometimes it can be difficult to get the treatment needed.

I entered the decision making process with a strong bias while my husband entered it with an open mind. In retrospect, the decision making process would have been easier if I’d been a bit more open-minded.

Talk to Others Who’ve Used the Insurance

I called Human Resources for more information about the insurance plans. The woman I talked to had been using the EPO for the past 10 years and had had no problems. She highly recommended it.

When I called an independent insurance agent for homeowner’s insurance, she mentioned that her husband also worked where my husband’s got his new job. I took the time to ask her what insurance plan she and her husband had chosen. They’ve used the EPO for the past 12 years and have had no problems. The insurance agent had even had a serious heart problem and a pacemaker installed, and the EPO covered her entire expense. She paid nothing out of pocket.

Talking to others to get their opinion about the insurance coverage can help you choose which plan you’d like and make you feel more comfortable with the decision you make.

How Much Does the Plan Cost?

Although it can be tedious, take the time to do a side-by-side comparison on the policies you’re deciding between. When I did this exercise, I was shocked!

The PPO would cost us over $6,500 per year in premiums alone! Then, there was a $1,000 in-network and $2,500 out-of-network deductible to meet per year.

The EPO, on the other hand, would only cost us $2,200 per year in premiums. There were no yearly deductibles to meet.

Both plans had the same co-pays for doctor’s appointments, prescriptions, and other expenses.

Do You Have any Special Needs?

You’ll want to consider your own unique issues. For instance, if you and your spouse want to start a family, you may want to consider a plan that has the best maternity coverage. If you are having trouble conceiving, you may want to choose the plan that has the most generous plan for fertility specialists.

Consider your own unique medical issues and look for the plan that best suits your needs.

In our case, my oldest son and I are dealing with food intolerances and see a specialist to treat the issues. The EPO plan wouldn’t cover these expenses at all. The PPO plan would cover them at 50%. Still, even though the EPO wouldn’t cover the expenses, choosing an EPO and paying out of pocket for these expenses would still cost less than going with the PPO due to the high premium expense of the PPO.

Are There Any Tax Implications?

The plan you choose may have tax implications. For instance, if you choose a health savings account (HSA), you reap several tax advantages. The money to fund your account is taken out of pre-tax dollars. The interest on the account accumulates tax deferred. Finally, you don’t have to pay taxes when you withdraw the money for qualified health expenses.

However, when you withdraw the money for qualified health expenses, you need to put the withdrawal amount as “other income” on your tax return. Before choosing a HSA, check the tax implications with your accountant.

Look Into More Ways to Save

Regardless of what plan you choose, you can always opt for a flexible spending account (FSA) or a health savings account (HSA) to help you pay qualifying out-of-pocket expenses. (To qualify for a HSA you must have a yearly deductible of $1,200 or more.) There are benefits and drawbacks to both.

The FSA works with any insurance plan, and the money is taken out from pre-tax dollars. However, whatever money that you do not use by the end of the year is taken by the government.

The HSA, like the FSA, is funded through pre-tax dollars. On the other hand, unlike the FSA, the balance continues to roll over year after year. However, if you don’t have a high enough deductible, you will not be able to use an HSA.

Consider Other Alternatives

Unfortunately, not all employer based health insurance plans are created equal. A friend of mine chose not to go with his employer’s insurance because the premiums are $10,000 a year, and the deductible is $5,000 per year! He and his family simply could not afford to pay up to $15,000 a year out of pocket for health care.

In this situation, some people have looked at Christian-based health savings plans. These plans are not health insurance per se. Instead, members pay a standard amount every month (usually $350 to $500 depending on your family’s size and health), which goes to pay other members’ health care needs. When you have health care needs, other members send their monthly payment to you for your expenses. Those who join this kind of plan are exempted from the Obamacare penalty.

You Can Always Switch

While choosing a health insurance plan is a big decision, keep in mind you can always switch plans during the open enrollment period. If you have one plan that you don’t care for, you can try out another one for a year.

Our Decision

Ultimately, we couldn’t ignore the high price difference between the two plans. We decided to go with the EPO to save nearly $5,000 a year on premiums and deductibles.

The decision was much easier after I talked to two people who had no complaints about the plan, including one who had faced serious health issues.

How about you all? What other factors go into your decision when choosing a health insurance plan with a new employer?

Share your experiences by commenting below!

***Photo courtesy of https://www.flickr.com/photos/68751915@N05/6793821977/

5 Tips For Switching To A New Job Industry

August 20, 2014
/ Make Money
/ By Jacob A Irwin
/ 2 COMMENTS

The following post is by MPFJ staff writer, Catherine Alford. Cat is a freelance personal finance writer who blogs at www.BudgetBlonde.com.

Once upon a time, I was an historian for the National Park Service. I knew very, very tiny details about the American Civil War and spent 40 hours a week tromping through the battlefields in Richmond, Virginia telling the public about the American past. I got chiggers on my legs, got harassed by old guys who thought female rangers were “hot” and received a lot of professional satisfaction from making history interesting and fun to a wide variety of people.

Despite the fact that I loved my job and later moved on to teaching at the college level, today I’m doing something completely different. As many of you know, now I spend countless hours of my week writing about finance.

I have no formal background in finance. I never even took a business class in college (note from Jacob – I got a finance degree in college, but I didn’t learn anything in it about personal finance, so you didn’t miss much! haha). However, my life experiences and ability to learn things quickly has allowed me to embrace this new path and really enjoy it along the way.

If you would have told me a few years ago that I’d be self employed and spending my Saturday morning researching Apple’s performance last quarter, I would have looked at you and laughed.

It’s amazing the twists and turns our life can take, especially for someone who is such a planner like me (who had her whole life figured out complete with a life-long career in the history field!)

Here is my advice for anyone who wants to actively switch to a new job industry:

1. Seek New Connections

Your network in your current job might not be able to carry you over to your new field, but you can use it as a place to start. Maybe one of your co-workers’ parents or spouses works in the field you want to be in, and you can ask for their contact information. You can also search on LinkedIn for people in your area who you might be able to take out to coffee or dinner to ask them questions about their work.

2. Self-Teach Important Advancements

If you want to make a move to marketing, for example, but you have no formal background, it’s important that you take the steps to get there. It will be hard for a boss to hire someone with no background over someone who has a marketing degree, so you’ll have to use all your resources and energy to really leverage yourself. Take some extra classes, work for free in order to learn more about the industry, and in general get as engrossed as possible in the new field so you can speak about it knowledgeably.

3. Gear Your Resume

Chances are, you can “gear” your resume to your new field, even though you’ve never worked in it before. By “gear” I mean you can take some of your current experiences, even volunteer experiences, and show how it makes you qualified for your next job. For example, if I was applying for a job at a finance company, I would point to all of my blog writing experience and not necessarily to my history degrees.

4. Exude Confidence In Your Interview

We’re pretty fond of saying “Fake it ‘till you make it” in my house. It’s said in jest, of course, but much of what my husband and I do requires a lot of confidence. With his career in medicine, medical students are definitely on the bottom of the totem pole and are often grilled with questions. An air of confidence or being confident enough to admit when you don’t know something is actually a good thing. Even if I don’t know how to do something in the world of finance or I’m not sure what a word means, I’m confident at least that I’m resourceful enough to figure it out. When someone questions my qualifications, I always point to my ability to find the answers – that’s one thing that my career as an historian taught me.

5. Work Harder than Everyone Else

When you switch to a new field without the background that other people likely have, it’s up to you to work harder than everyone else. You should get to work earlier and leave later than them. Show your boss that he or she was right to hire you. When you don’t know something, spend extra time looking it up or asking a trusted co-worker for advice. With enough hard work, you can definitely “catch up” or even speed past your co-workers who have years more experience than you do.

Ultimately, my own career switch was gradual and happened over a period of a few years, but if I were to make the switch all at once I would definitely utilize the tips above.

How about you all? Have you ever wanted to switch career fields or have you ever been able to do so successfully?

Share your experiences by commenting below!

***Photo courtesy of https://www.flickr.com/photos/bionicteaching/10885834946/in/

Don’t Burn Your Bridges When You Leave Your Job

August 5, 2014
/ Make Money
/ By Jacob A Irwin
/ 10 COMMENTS

What do you do if you are working for an employer that you absolutely detest? Here’s some advice as to what you shouldn’t do: don’t burn your bridges when you leave your job.

That can be a tall order with some employers. You may be on a job where the employer is completely mistreating you, and even degrading your capabilities as a professional. That never means leaving on bad terms – like telling a few people off and trashing the company in your last few days on the job – otherwise it may come back to haunt you later.

Keeping a professional profile right up until the last day

How you leave a job says more about you than it does about the company you’re leaving or the people who work there. In the business world, your reputation is your most important quality. How you handle leaving a job – particularly an unsatisfactory one – will speak volumes about you.

You want to make sure that at any job that you’re on that you always maintain a high level of professionalism right up until the very last day that you’re employed there. That will include continuing to perform at a high level, even after you’ve given notice.

You never know if you might have to come back some day

As the saying goes, never say never, and that especially applies to returning to old jobs. Though you may be absolutely certain that you are so unhappy on a job that you will never return, you don’t know what the future holds. If the next couple of jobs you’re on are worse than the one you’re on now, your old job could start looking better all the time.

In addition, if your industry goes through a major squeeze, every employer in the field – including the bad ones – will be back in consideration for a new job. That might include the employer you’re working right now, that you’re desperate to leave.

Still another scenario could have an influential friend changing jobs into your soon-to-be former employer, but in a position of rank. If that friend wants to bring you along, it may not happen if you burned your bridges when you left the first time around.

You’ll very probably work with the same people in the future

Most career fields – even those that are common across the country – are fairly small at the local level. That means that there’s a better than even chance that you’ll work with one or more people from your current job at some point in the future. Should you leave your current job in a negative way, you could be building future enemies at a new employer when that time comes around.

People don’t always remember how good or bad a past employer might have been, but it always seems that they can quickly recall how a given coworker from that experience behaved. Even if you absolutely cannot stand the company you’re working for, you should be extra careful to make sure that you always leave a positive impression with as many coworkers as possible. Sooner or later you’ll be working with at least some of them in the future. One of them might even end up being your boss.

You need positive references

No matter how bad a job is, you’ll need to take at least a few good references away when you leave. In fact, it will be even more important the worse that the experience was. If the company will not speak well of you, you have to be sure that you have a few references who will. This can be coworkers, or even supervisors and managers in cooperating departments who are aware of your performance.

And as bad as your current job may be, if the next job that you’re on turns out to be even worse, the references that you will have from this job will be even more important.
The only time that you should ignore the reference factor is if the overall employment situation was so negative that you fully intend to leave it off your resume. But don’t even be sure that will work either. With all of the databases and snooping agencies available today, an employer can find out where you’ve worked in the past even if you don’t disclose it.

Leaving angry won’t fix anything

It’s absolutely true that there are lousy employers out there. They mistreat their employees, show favoritism, foster hostile competition, and seldom reward people for doing a good job. While you might feel particularly drawn toward letting your feelings be known once you give your notice, it probably won’t do any good if you do. Companies are often hell holes precisely because they seem to be completely immune to good advice.

Employers are also quick to declare that certain employees have a bad attitude – especially former employees. If you leave on bad terms you’ll simply justify the claim once your gone. And that won’t fix anything in the company that you’re leaving.

In fact, if you leave on bad terms the employer is more likely to assume that you’re part of the problem, and they’ll be happy to be rid of you. Any criticism you level against the company – no matter how legitimate – is likely to be completely ignored.

It’s much better to leave an employer on good terms, that way the company may solicit constructive criticism from you that might actually improve circumstances for your soon-to-be former coworkers. If they don’t, it’s no longer your problem.

How about you all? Have you ever had a job in the past that was so bad that you felt that you couldn’t leave on cordial terms? How did you handle it? Was there any negative fallout after the fact?

Share your experiences by commenting below!

***Photo courtesy of https://www.flickr.com/photos/24051087@N08/2281414800/sizes/n/

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