Attending community college is often a much more affordable choice than going to a four-year public or private university. Students and parents can save money both on tuition as well as travel and living expenses, especially if the student lives at home. This can translate into taking out smaller student loans and paying them off sooner after graduation.
Going to a community college also comes with other benefits. Here’s a closer look at why a college-bound student might consider choosing a community college.
What Is a Community College?
A community college, also known as a junior college or two-year college, provides a two-year course of study that either ends with an Associate of Arts (AA) or Associate of Science (AS) degree. Alternatively, it can provide the equivalent to the freshman and sophomore years of a four-year college, since credits can typically be transferred and used towards a bachelor’s degree.
Community colleges are located throughout the U.S. and come in varying sizes. You can find large community colleges with multiple campuses in urban and suburban areas, as well as small community colleges in rural settings.
Many community colleges also have technical and vocational programs with close links to local high schools, community groups, and employers.
💡 Quick Tip: Private student loans offer fixed or variable interest rates. So you can get a loan that fits your budget.
Benefits of Attending a Community College
Here’s a look at some of the advantages of going to a community college vs. a four-year college or university.
A Smoother Transition
The transition from high school to college can be challenging, but attending a community college can be easier for some people.
Community college classes are generally smaller and less intimidating. If you prefer smaller class sizes and not having to walk across a large campus daily with thousands (or tens of thousands) of students, then a community college may feel less overwhelming.
Transferring to a four-year college could also be easier for students who have taken classes from a community college.
If you are thinking about using community college as a stepping stone to a four-year school, you may want to find out if the school has a transfer relationship with any four-year colleges, and what GPA and grades are needed to successfully transfer.
If the school doesn’t have a relationship with a college you’re considering, you’ll want to make sure that the credits earned will count at that college.
Flexibility
One reason that many students opt for community college is the flexibility. You can typically take as many classes as you want, and it can vary from semester to semester.
Community colleges also give students the option to enroll when they want, unlike four-year universities, where you typically need to enroll by early fall.
Rolling admissions give students more flexibility in planning their studies, especially if they are working part time or need to save money to pay for tuition and books. The community college website will include key deadlines and requirements, such as transcripts from high school or another college, and any prerequisite classes.
The schedules at community colleges also tend to be more flexible, often allowing a student to work during the day and take classes in the evening.
A Possible Bachelor’s Degree
A growing number of states are allowing some community colleges to offer bachelor’s degree programs. This means students do not always have to transfer to another college after taking classes the first two years. While many of the degrees are focused on a particular industry or skill, community colleges are adding more degree options.
Obtaining a four-year degree at a community college could save a student the time of researching other universities and colleges, transferring credits, having to move, and potentially accruing more student loan debt.
Community colleges are updating the type of degrees offered to meet the needs of the workforce and often include ones in information management, nonprofit management, and health care.
Community college tuition is typically significantly lower than tuition at public and private universities. Some states even offer free community college.
According to the Education Data Initiative, the average cost of tuition at an in-district community college is $3,400 per year. For out-of-state students, the average community college tuition is $8,210.
For comparison, yearly tuition at a public university averages $9,678 (for in-state students) and $27,091(for out-of-state students). The average student at a private college or university spends a total of $55,840 per academic year living on campus, $38,768 of it on tuition and fees.
Even if you don’t live at home while attending community college, you may be able to find housing that is less costly than living in a dorm or an off-campus apartment in a college town. Plus, taking classes at a nearby community college gives you the flexibility to work part time and earn some income you can use to cover your college expenses.
💡 Quick Tip: Need a private student loan to cover your school bills? Because approval for a private student loan is based on creditworthiness, a cosigner may help a student get loan approval and a lower rate.
Financing a Community College Education
You can cover the cost of community college (and potentially two additional years at a traditional college after that) using a combination of savings, help from family, financial aid, and loans.
A great first step is to fill out the Free Application for Federal Student Aid (FAFSA), which will let you know if you are eligible for financial aid, which includes grants, scholarships, work-study, and federal student loans (which may be subsidized or unsubsidized).
You can also help pay for your community college tuition by working at a part- or full-time job while taking classes in the evenings.
If you still have gaps in funding, you may want to look into getting a private student loan. These are available through private lenders, including banks, credit unions, and online lenders. Rates and terms vary, depending on the lender. Generally, borrowers (or cosigners) who have strong credit qualify for the lowest rates.
Keep in mind, though, that private loans may not offer the borrower protections — like income-based repayment plans and Public Service Loan forgiveness — that automatically come with federal student loans.
If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.
Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs.
SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Congratulations, you’ve graduated from high school. Now, you’ve got just a few more weeks to soak up all that home has to offer before heading off to college.
The summer before college can be a transformative time in its own right. It’s a time to reflect, wrap up loose ends, and spend quality time with the people you love at the places you love one last time before heading off on your own.
At the same time, there are a number of tasks you’ll need to complete to make sure your transition to school goes as smoothly as possible. Here’s a simple checklist that can help ensure you make the most of your last summer before college.
Getting Organized
Now is the time to clear out the old so you can bring in the new. The bedroom is a good place to start.
Clear out your closet: Use the summer to clean out your closet and dresser and get rid of any clothing you may no longer need or want for college. Start by pulling every single item out and making a giant pile on the floor, separating the clothing into piles to keep, toss, and donate. Donating gently used items to a local charity or second-hand shop will help them find a second life.
Toss old academic work: Go through notebooks, binders, and bookbags, using the same sorting method as with clothing. Cleaning out your computer and deleting any files you no longer need — perhaps moving some to cloud storage — can allow you to enter college with a clean desktop and plenty of space on your hard drive.
Start packing: To make the moving process a little smoother, try organizing your items and packing slowly over the summer instead of cramming it all into one day. Creating boxes labeled as bedding, kitchen, bathroom, academic, and miscellaneous — maybe limiting the size of that particular box, though — then adding items as you’re organizing will make moving easier when the time comes.
💡 Quick Tip: Private student loans offer fixed or variable interest rates. So you can get a loan that fits your budget.
Cleaning up Your Social Media
Just like cleaning out your closet, it’s probably time to think about cleaning up your social media presence, too. You may have joined Facebook groups or liked pages that no longer reflect your interests or what you believe in.
On Twitter and Instagram, it may be a good idea to look back at your content to make sure what you’re sharing is appropriate for future employers to see. If not, you might want to consider deleting it.
Finally, think about your social media handles and your email address. If possible, it might be a good idea to use your full name or a combination of first initial and last name — something clean and simple. Potential employers will likely look at this information before hiring for summer internships or future jobs, so presenting yourself as a professional might pay off in the long run.
Even though your parents may have sometimes embarrassed you through your high school years and your siblings may have annoyed you since you became siblings, you’ll probably still miss them when you head off to college. Use this time to make memories with your family so you have something fond to look back on if you’re ever homesick.
Over the summer, try creating family date nights. Play board games, cook together, go to your favorite restaurants, the movies, whatever makes you all happy. As a bonus, you’ll get to visit all your favorite hometown spots along the way, too.
If you’re living in a dorm in the fall, you likely already know who your roommate will be. You may want to use the few weeks before school begins to connect with them, via phone, text/email, Facetime, or, if possible, in-person.
Consider making a list of dorm room items that you can share, and try making a list of ground rules before you even move in. This could help alleviate any issues before they ever begin.
After chatting with your roommate and figuring out what you both need, it’s time to make a full list of dorm essentials. This list should include bedding, toiletries that fit into a basket to carry to and from shared bathrooms, a pair of slippers to use in common areas (including shower areas), and office supplies like pens, paper, notebooks, labels, rubber bands, scissors, and sticky notes.
You’ll now be responsible for doing your own laundry, so make sure to add on a laundry basket and detergent. The list can also include decorations such as desk lamps, a bulletin board, and any fun decor that fits your style.
Becoming Familiar With Your College Town
You can get familiar with your new town even before you set foot in it by checking out local publications, including local news sites and your school’s newspaper. You might want to make a list of restaurants you want to try and local attractions you’d like to see.
You might also consider sharing the list with your new roommate so you can explore the town together.
It could be prudent to check out class offerings before registration even opens. Familiarize yourself with the classes offered in your degree program, which ones are available to freshmen, and which electives you’d like to take. Make a list and have it handy for registration day.
Pro tip: Sign up for classes as soon as registration is open because popular classes may fill up fast.
Once you’ve got your classes lined up, it’s time to check out your future professors. Doing a bit of online research on the people who will be teaching you could help identify any potential future mentors.
Getting to know professors can make asking for recommendations for internships and jobs easier. If they don’t know you well, it might be difficult for them to recommend you.
💡 Quick Tip: Even if you don’t think you qualify for financial aid, you should fill out the FAFSA form. Many schools require it for merit-based scholarships, too. You can submit it as early as Oct. 1.
Getting Your Finances in Order
It’s time for the most adult step of all. During the summer before college, it’s probably time to get your finances in order. If you don’t already have a checking account, it’s a good idea to open one, ideally at a bank that you can access easily while at school.
Now is also a good time to explore — and discuss with your family — how you will finance all four years of your college education. If savings, financial aid, and federal student loans are enough to fully cover the cost of your education, you might also consider using private student loans to fill in any gaps.
Private student loans are available through private lenders, including banks, credit unions, and online lenders. Rates and terms vary, depending on the lender. Unlike federal student loans, private student loans will require a credit check. Generally, borrowers (or cosigners) who have strong credit qualify for the lowest rates.
Keep in mind, though, that private loans may not offer the borrower protections — like income-based repayment plans and deferment or forbearance — that automatically come with federal student loans.
If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.
Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs.
SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
After spending months researching and applying to colleges, you’ve finally decided on a school.
You should be proud of this achievement. But weighing and comparing schools isn’t the only decision you’ll be faced with. At some point, you’ll also need to choose a major.
Many college freshmen haven’t settled on a field of study, so you’re not alone if you’ve been wondering, “What should I major in?” Choosing what to study at college can feel nerve-racking, but it doesn’t have to be that way.
There are steps you can take to make an informed decision you’ll be happy with. One tool that can help you narrow your options? Taking a college major quiz.
Read on to learn more about choosing a major, take our college majors quiz, and then discover the strategies that will help you pick the right major.
When Is It Necessary to Declare a Major?
Schools usually require that you declare a major by the end of your sophomore year. Generally, there’s not a particular rush to declare. What’s more important is that you take a variety of classes if you’re still trying to figure out “what should I major in?,” to find the subjects that interest you most.
Just be aware that if your chosen field requires sequential classes, you may not be able to take quite as long to shop around for a major. For instance, it’s easier to switch out of being a science or engineering major than it is to switch into that field.
Why Choosing the Right Major Is Important
Your college major is the first stepping stone to your career. It won’t decide your entire career path, just as your first job won’t determine your entire career, but it will launch you on a particular trajectory and help you develop certain skills you’ll need to be successful.
Practically, you’ll want to choose a major with college program costs you can afford, that will pay you the kind of income you’re looking for, and has good employment prospects for the future.
On a more personal level, some of the most important considerations are: Is it something that truly engages you? Does it set you up for a career that you’ll enjoy? And does it suit your personality?
It seems obvious to say that you should choose a degree based on your interests, but it’s a consideration that you should respect. True engagement in a topic can have numerous ripple benefits. For instance, you’ll probably be more motivated and committed to lifelong learning and less likely to feel burnt out in school or later in your career.
College Major Quiz
Now that you understand why the right major is important, take this college major quiz to help answer the question, “which college major should I choose?”, and find the right area of study for you.
Satisfaction Survey Results
How do college graduates feel about the majors they chose? BestColleges.com conducted a survey to see how happy college graduates were with their choice of major. The survey asked numerous questions, with results tabulated for each question from each of the following generations: Millennials, Gen X, Baby Boomers, and the Silent Generation.
Here are three key findings:
• 61% of respondents would change their major if that were possible.
• About 26% of participants would change their major to reflect their passions.
• About 30% of the Millennials who participated said they should have chosen a major with better job opportunities.
It’s important to remember that this survey focused on people who graduated and were looking back at decisions they’d already made about their majors. As a current college student, you still have the ability to make the right decision.
6 Steps to Choosing Your College Major
Here are some key steps you can take to find the best college major for you.
1. Exploring
What’s tough about making a decision about which major to choose when you’re a teenager is that you haven’t tried a lot of things yet. The first year or two of college is a fine opportunity to explore, even if you think you know what major you’ll choose.
To begin, think about what you enjoy and what you’re good at. In addition to subjects, include skills such as leadership or organization. Next, consider the majors that match up with those interests. Branch out beyond the same subjects you took in high school.
Sign up for academic or pre-professional clubs—they’re a great way to learn more about career possibilities, create a support network as you’re enrolling in classes, seek out job-related opportunities, and meet people who share your interests. If you plan on working while you’re in college, find a job in a field you’re interested in.
2. Talking to People
As you’re thinking about, what major should I choose?, speak with other students, professors, and guest lecturers about their career experience. You’re likely to learn more about what a career is like by talking to someone with real-life experience.
Find a career counselor at your school who is willing to discuss with you options for majors and career opportunities.
It’s also no secret that we can have very skewed opinions of ourselves. Often, we’re too hard on ourselves or don’t recognize our own talents. It can help to have conversations with the people in your life (family, friends, teachers, coaches, and so on) whom you know will provide constructive observations and advice. It’s entirely possible that you’ll learn something about your strengths you never knew before.
3. Thinking About the Money
While no one expects that you have money figured out, you should have a general idea about how the decisions you make in college will affect you later in life.
First, investigate the starting salaries for different majors and entry-level jobs. This is an especially important exercise if you have student loans. As you’re choosing a major, it’s helpful to understand the basics of student loans and what they cover.
For instance, you’ll need to be aware of when you need to start putting money toward student loans, and how much your payments might be. Your loans can affect your financial future for many years, so make sure your major and career of choice will allow you to cover what you owe.
Even if you don’t have student loans, having a realistic idea about salaries, job availability, and cost of living in the area where you expect to live is important. Find a major that works within your budget and schedule.
It’s also important to look ahead. Is a career of choice expected to be in demand in the future? Is the demand expected to actually increase?
At this point, it may be obvious to you which major is best. If not, and you’re still asking, “what major should I choose?”, a good strategy can be to create an in-depth list that includes:
• Your strengths
• Your weaknesses
• Activities you enjoy
• Tasks you dread
Also ask a college counselor if you can do aptitude testing. Are career fairs that you can attend coming to your school? Do some volunteer work or see if you can secure an internship in an area of special interest. Spread your net wide and take all you’ve listed and learned to make a choice that’s right for you.
5. Post-graduate Plans?
Is a bachelor’s degree what’s needed for the career you’re considering? Or will more schooling be required? Before finalizing your major, it makes sense to be clear about how much education you’ll need for a particular job.
If a master’s degree or more is required, is this something you’re interested in pursuing? And can you afford it?
And again, it makes sense to think about your student loans and the repayment terms they have. One thing to know is that you don’t necessarily have to stick to those terms if they won’t work for you. Refinancing student loans could help you get a more favorable rate and term, and possibly make your payments more affordable.
When you refinance, you replace your current loans with a brand-new private loan. It’s important to explore the advantages of refinancing student loans as well as the disadvantages.
One thing to know is that refinancing federal student loans makes them ineligible for federal programs and protections, like income-driven repayment plans. If you think you’ll need access to these benefits, refinancing may not be the best choice for you.
6. Filling in the Gaps
Once you choose a major, you might also want to select a minor. Having a minor opens up another academic discipline and can provide you with additional skills that can help you pursue your ideal career.
If, for example, you want to become a psychiatrist, it can make sense to have a business minor if you want to open a solo practice.
Whenever possible, it makes sense to choose a minor at the same time you declare your major. This allows you to strategically schedule classes so you can graduate within the planned time frame.
In the end, no matter what major and minor you decide on, know that your flexibility, creativity, and passion for life-long learning will have much to do with your success.
SoFi Private Student Loans
As you’re determining your major and also thinking about paying for college, student loans can help you cover some of the cost of college. If you’re exploring student loan options, shop around for the best rates and terms. SoFi private student loans have low fixed or variable interest rates and no fees. It’s easy to apply online and you can add a cosigner in just minutes. Additional benefits include exclusive member discounts and the flexibility to choose from multiple repayment options.
Students are encouraged to explore their federal student loan options before applying for any private loans. Federal student loans come with benefits that may not be offered by private lenders. Private student loans can also be more expensive than federal student loans.
If you have student loans and you’d like to lower your monthly payments, refinancing might be one way to do it. SoFi offers loans with low rates, flexible terms, and no fees. And you can find out if you prequalify in just two minutes. Note: You may pay more interest over the life of the loan if you refinance with an extended term.
With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.
SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.
SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs.
SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs.
SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. SoFi Bank, N.A. and its lending products are not endorsed by or directly affiliated with any college or university unless otherwise disclosed.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Figuring out how to pay your bills when your usual income stream is interrupted by job loss can be a difficult task. You probably know to cut back on dining out and movie nights, but what can you do about bills for your rent, student loans, and other vital expenses?
Plenty of people confront this situation, and there are ways to navigate this challenge. If you are wondering how to pay bills when you lose your job, it’s a matter of knowing how to recognize the most pressing bills, organize your assets, and seek additional income and assistance if needed.
Here, learn more, including:
• Which bills to prioritize if you lose your job.
• How to develop a survival budget.
• Where to access funds until you find your next job.
What Bills Should I Prioritize?
If you’ve lost your job, you may feel as if you can’t pay all your bills. In this situation, it’s crucial to prioritize certain ones to make sure you can meet your basic necessities. This means looking at your list of bills and determining ones that should be at the top of your list (or close to it).
In addition to the bills that keep your daily life running, you also want to consider the damage unpaid charges can do to your credit rating. The goal is to balance these factors with the funds you do have available.
Bills you should probably prioritize include:
Rent
Having a roof over your head is important for you and those who live with you, so contact your landlord as soon as possible to discuss alternative payment arrangements. Perhaps you can negotiate lower payments for a window of time. Otherwise, if you don’t communicate and don’t pay, you could find yourself facing eviction.
💡 Quick Tip: Want to save more, spend smarter? Let your bank manage the basics. It’s surprisingly easy, and secure, when you open an online bank account.
Mortgage Payments
If you have a home loan, falling behind on payments can have serious consequences, one of which is foreclosure. Non-payment can lead to default and the bank has the right to recoup their property (aka the home) and sell it to attempt to make back the money it lost.
Falling behind on student loans could mean you’ll go into default. In some cases, the lender may have the right to garnish your wages. If you’re handling student loans during a job loss, consider applying for an income-driven repayment plan for federal student loans or contacting your private lender to see what options are available.
Car Loans
You’ll most likely need your car to run errands or look for work. Staying on top of payments for your loan or lease can help ensure you won’t risk having your vehicle repossessed.
Insurance
Non-payment could result in denial of coverage, which might not be helpful if you need to see medical treatment or are in a traffic accident, for instance.
Utilities
Not paying these types of bills can result in your electricity, water, phone, and internet being shut off. These are obviously vital for daily life and, in terms of connectivity, job hunting.
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How to Create a Survival Budget
If you’ve lost your job, it’s important to create a survival budget to help prepare for the lean times ahead. This type of budget only takes into account the bare necessities with whatever savings or income sources like unemployment benefits you currently have.
The main goals of a survival budget: to ensure you and your family are taken care of, and then turn your attention to any creditors as necessary. What this means is that even without a job, you pay the bills that will ensure you can survive first — such as food and housing.
Taking Stock of Your Expenses
To start, look at all of your current expenses and eliminate anything that isn’t really and truly a necessity.
• You can’t get rid of your food expenses, but you can temporarily cut back on dining out. Cook your meals instead, and ditch your takeout coffee habit for now.
• If you have a cell phone, you can consider downgrading your service for a cheaper plan to save some money.
Look at the funds you have available for the next couple of months as you job hunt. Deduct the priority expenses, and then evaluate what is left and how you can budget those funds. Be strict with yourself: Now is the time to unsubscribe from all those streaming services and save your money for what’s vital.
If you’re not sure if you have enough cash to pay for the necessities and debt payments, it’s best to seek options like forbearance and deferment — negotiate with your lenders to see what you can do.
Where Can I Turn for Money?
Here are some income sources you can turn to when you’re unemployed. It’s hard to pay bills with no job, but these resources may get you through a tough time:
Credit Cards
Using credit cards or even taking out a personal loan when unemployed can be a quick source of funds if you need to make purchases such as groceries and gas. While the interest rates tend to be high, you’ll have a grace period before your balance is due, giving you a buffer to get another income source.
Otherwise, you can make the minimum payment for the time being and make a plan to pay it back once you’re employed again.
Also, see if you can negotiate with your card’s issuing company; you might be able to delay credit card payments. You may also want to explore balance transfer credit card offers, which give you a window of low or no interest.
Retirement Accounts
Tapping into a retirement account like a 401(k) or an IRA is typically seen as the last resort because the downsides typically outweigh the benefits. However, if you’re running out of resources and you have a decent chunk in there, you may not have another choice.
You can choose to tap into your retirement accounts in the following ways:
• Take out a 401(k) loan: Depending on the terms of your 401(k) plan, you may be able to borrow up to a certain amount — usually up to $50,000 or half of your vested amount — and pay it back within a predetermined amount of time (in most cases, five years). Keep in mind you could face additional penalties if you don’t pay back the loan, such as the loan amount being subject to taxes. In addition, loan and management fees may apply.
• Withdraw from your retirement accounts: If you have an IRA or taxable brokerage account, you can make withdrawals. Keep in mind with IRA accounts, you may be subject to a penalty and taxes on the amount you withdraw.
Government Assistance
You’ll want to find out how unemployment works if you lose your job; it can help get some cash flowing your way. Those funds can help you pay for your necessities as you seek other work.
If you’ve been unemployed for a while or face mounting pressures on things like an unexpected medical expense, you may be able to seek other forms of government assistance. These sources can be helpful if you feel as if you’ve lost your job and can’t pay your bills. To see what you may qualify for, you can search on Benefits.gov , your local state or municipal office, and even local charity organizations and churches.
How Setting Up a Bank Account Can Help You When You Are Not Working
When you’re unemployed, setting up a bank account (if you don’t already have one or one you love) may seem like the last thing on your mind, but doing so can help. For one, it can help you to keep track of your finances and apply for products such as credit cards and loans if you need these sources of income.
Plus, many banks offer tools to help you budget your money, a useful feature considering you need to watch your money more carefully. These pros of opening an account can make this moment of unemployment a good one to explore your options.
How to Budget and Save with a Bank Account
Here are some ways in which you can make a budget and save using a bank account when you are unemployed and navigating the job market:
• Divide money into multiple checking or savings accounts for each type of expenses so you can ensure you have enough money for necessities as well as bills.
• Set up automatic transfers so you can ensure you’re setting aside money from any income to save or pay bills on time.
• Set up direct deposit for unemployment benefits or government assistance.
• Set up card controls or features from your bank to restrict spending.
• Turn on balance alerts to notify you when your account falls below a certain balance, so you can decide to pause or delay certain purchases.
• Earn interest with a high-interest savings account.
Alternative Sources of Possible Income
For some people, the above options for money won’t be a good fit; for others, additional funds will be needed. If you have learned how to apply for unemployment and taken other steps to get money but are still seeking other sources of income, consider these options to get cash flowing:
• Borrow from friends and family.
• Look for work on freelance marketplace sites like Upwork and Fiverr.
• Sell things you own or make online via eBay, Etsy, or other sites.
• Participate in paid market research.
• Look locally for jobs like dog-walking.
• Explore passive income ideas, including renting out your car or your tools.
Protecting Your Finances from Future Job Loss
There are also steps you can take to bring in income and prepare for any future financial setbacks you may endure. Consider these options:
Starting a Side Hustle
A side hustle is a gig you start that doesn’t have to be full-time but fits into pockets of time you have available. One of the key benefits of a side hustle is bringing in income.
Side hustles can include anything from driving a rideshare to delivering food. You might sell your nature photography online or help local businesses with their social media part-time.
Building an Emergency Fund
Starting an emergency fund can help protect your finances if you were to lose your job. This involves saving money so it’s there if you are laid off or encounter an unexpected expense, such as a major car repair or dental bill.
In terms of how much money should be in an emergency fund, aim for three to six months’ worth of basic living expenses. Of course, it’s fine to build that up over time versus coming up with the whole amount. Even putting aside $20 a month is a start. And by keeping the funds in a high-interest savings account, you’ll help it grow.
It’s important to know when to use an emergency fund. Losing one’s job is an emergency; it’s exactly what the money is there to pay for. However, the opportunity to travel at a deeply discounted rate or buy designer shoes for 50% off are not good reasons to tap this account.
Starting a Budget
Developing a budget and following it can help you get through challenging financial moments and thrive in good times. A budget helps you balance the money you have coming in, your spending, and your saving. It helps you get a better handle on your financial situation and make adjustments in real time.
• One popular budget is the 50/30/20 budget rule. This says that, of your take-home pay, 50% should go to basic living expenses, 30% to spending on your wants (such as eating out), and 20% should go to savings and debt payments beyond the minimum.
• If you have lost your job, you can minimize the 30% by trimming back your spending on wants as much as possible and then attributing more to the basic living expenses and debt payments.
• The 20% saving figure can be a way to plump up that emergency fund that can help sustain you during a job loss.
The Takeaway
Paying bills when you lose your job can feel stressful, but it’s not impossible. Some key steps may include prioritizing your bills and focusing on budgeting for the bare necessities. It’s also wise to negotiate lower or delayed payments where possible and look for other interim streams of income while you look for your next job.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.20% APY on SoFi Checking and Savings.
FAQ
What happens to debt when you lose your job?
Your debt does not go away when you lose your job. You want to keep paying at least the minimum due. However, you may be able to negotiate a way to lower your interest rates or defer payment while you are out of work. Contact your creditors and see what can be worked out.
What bills should I pay first?
When you are unemployed and need to pay bills, prioritize basic living expenses, such as housing, food, and healthcare. It’s also important to stay current on loans, such as student or car loans.
How do you budget if you are unemployed?
If you are unemployed, focus your budget on paying for your basic living expenses (food, shelter, healthcare, etc.) and paying the minimum on your debt. Trim down your discretionary spending; negotiate with creditors to keep debt manageable; and look into borrowing or earning additional funds.
SoFi members with direct deposit activity can earn 4.20% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.20% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 10/31/2024. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.
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