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The psychology of being overworked and underpaid

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The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

A competitive salary is something we all strive for in our careers, but for some, the salary we know we deserve doesn’t necessarily match our reality. An employee may put in extra hours, take on more responsibilities and go the extra mile, but they still may not be properly compensated for their work. 

Being overworked and underpaid isn’t as uncommon as we think. According to a poll conducted by Gallup, 43 percent of U.S. workers believe they are underpaid. 

Unfortunately, this can have a negative impact on a person’s productivity, mental health and even credit health. So, what can you do if you feel you’re not being fairly paid at work? 

Read on to find out the psychological impact of being overworked and underpaid and how you can combat this issue—or jump straight to the infographic below. 

Impacts of being overworked and underpaid

Sometimes we’re so eager to accept a job that we settle for whatever salary we’re offered, only to find out that what we’re given doesn’t match the responsibilities we’ve taken on. Or, you may have been at a company for a while and experienced an increase in your workload but seen little to no increase in pay. 

Being overworked and underpaid can ultimately lead to a multitude of feelings that can cause more harm than good. Here are three signs you shouldn’t ignore:

Decrease in productivity

Employees who work long hours and have heavier workloads aren’t necessarily the most productive. Some may think the more hours you work, the more you’ll get done, but for most, this can have the opposite effect.

The more work an employee takes on, the more prone they become to mistakes. This can lead to feelings of burnout, sleep deprivation and work-life imbalance due to stress and the inability to keep up with the heavy workload. On top of that, if you’re being underpaid, it can make it extremely difficult to stay motivated in your role. 

Gallup found that 23 percent of employees felt burnt out almost always at work, according to a study made up of 7,500 full time employees. When it becomes hard to juggle workplace stress, people can find it difficult to function and stay productive. The same study conducted by Gallup also found that 13 percent of workers are less confident in their work performance when experiencing symptoms of burnout.

13% of workers are less confident in their work performance when feeling burnt out. Source: Gallup.

Employees may start to feel disconnected from their work and may even have built up resentment toward their employer because of their lack of compensation, causing a never-ending cycle of stress, burnout and lack of productivity. These feelings can ultimately impact employees’ overall well-being and mental health. 

Negative effects on your mental well-being 

Most people spend the majority of their time in the workplace. Unfortunately for some, the stresses from work can be hard to shut off even when leaving the office for the day. According to a study conducted by Wrike, 94 percent of employees said they felt stress at work and 54 percent said the stresses from work negatively affect their home life.

57.9% of employees said work has impacted their mental health in some way. Source: Paychex.

Long work hours, an increase in work-related tasks and insufficient pay can all start to take a toll on a person’s physical and mental health. A survey conducted by Paychex found that 57.9 percent of employees said work impacted their mental health in some way. 

Damaged credit health  

Aside from mental health and productivity, being underpaid can start to hurt your financial standing. Though your income doesn’t have a direct impact on your credit score, lack of income can make it more difficult to pay your bills on time. A survey by WalletHub found that 30 percent of respondents missed credit card payments because they didn’t have enough money. 

30% of people missed credit card payments because they didn’t have enough money. Source: WalletHub.

A Gallup poll also found that 55 percent of women feel they are underpaid for the amount of work they do, which could play into why they hold nearly two-thirds of the student loan debt in the U.S. With women receiving lower-than-average wages, keeping up with student loans and other debt payments becomes harder, thus affecting their overall credit health. 

6 ways to handle being underpaid 

Being underpaid is a problem that many people find themselves in and struggle to get out of. The only way to get out of this predicament is to take matters into your own hands. Here are six ways you can get out of being underpaid: 

1. Negotiate a competitive raise

Present your employer with an exact dollar amount and provide documentation of your work and performance.

Asking for a raise can seem scary and intimidating, but it’s an important step toward solving your problem. Though it’s not always the easiest thing to do, you’ll never know if you don’t ask. 

When asking for a raise, make sure you do your research on your industry’s salary range and provide an exact number when meeting with your employer. Providing an exact dollar amount as opposed to a salary range will show your employer that you know what you want and will make the negotiation process easier. Try aiming a little higher than what you would like to leave room for negotiation. When researching salary ranges, tools like Salary.com and LinkedIn’s salary tool can be a huge help. 

To support your case, come to the meeting with documentation to show your work and accomplishments thus far. Provide hard data, numbers, positive feedback you’ve received in the past and all of the ways you have helped and plan to help increase the company’s bottom line. The more evidence you provide, the better chance you have at landing that raise. 

2. Review company growth path and policies 

Schedule an official performance review with your employer to discuss your progress and an increase in pay.

Most companies give performance reviews and have a growth path clearly noted, so it may be worth revisiting your company policies first. Growth paths are important in understanding what’s expected from your employer in order to progress within the company and earn a higher wage. 

If you haven’t received an official review, get one on the schedule with your boss. A 2018 report found that 68 percent of executives say they learn about employees’ concerns for the first time during performance reviews. If you’re concerned about your growth within the company, don’t wait for your employer to come to you about it. 

3. Start a conversation about your workload

Consider decreasing your hours to alleviate workplace stress and create a healthier work-life balance.

If you’re continuing to work long hours and find the pay still isn’t worth it, it might be beneficial to have an open and honest conversation about the amount of work you’ve taken on. If your employer is unable to give you a raise, you may want to discuss cutting back on your hours or workload.

The result may not be an increase in pay, but you may be happier in your role and be able to perform better if they ease up on your day-to-day tasks. Your pay sometimes isn’t worth being unhappy at work. In fact, one of our studies on employee happiness found that 60 percent of Americans said they would take a job they loved with half their current income over one they hated. 

Employers may not be aware of the impact the extra work is having on you, so always try your best to be transparent about your load to find a healthy compromise. 

4. Start exploring other options 

Aside from monetary benefits, take other factors into consideration, such as health insurance coverage and time-off policies.

If your request for a raise gets denied and you still find yourself in the same predicament, you might want to start exploring other options. In fact, those experiencing symptoms of burnout at work are 2.6 times as likely to actively be looking for another job. 

Though monetary benefits are usually of the utmost importance, remember to consider other factors like health insurance options, flexible hours, vacation policies and overall company culture. The issues you experience in your current position can help you determine what you’re looking for in your next role. 

5. Consider quitting your job 

Make sure you’re in a good financial standing and have at least 3 to 6 months of pay saved.

At the end of the day, no job is worth putting your mental health at risk. If your current employer isn’t paying you what you deserve and you don’t feel fulfilled in your role, consider moving on. Now that you’ve done extensive research on your industry’s salary range, you’ll know what range to keep in mind when applying for other positions. 

Before jumping the gun and resigning from a position, make sure you’re financially prepared. In these situations, it’s smart to have at least three to six months’ worth of pay saved to give you some cushion during your job search. It may become more difficult to get approved for a credit card without a job, so having saved up income can help ensure you’re able to pay your credit balance. 

6. Know your worth 

Use Glassdoor’s Know Your Worth tool to compare salary levels according to location, experience level and job title.

Understanding your own worth means being clear on the value you can bring to a company. When you know your worth, asking for a raise and vocalizing your concerns will start to come naturally to you. 

Assess your own skills and level of expertise and be realistic with yourself. Once you’ve analyzed your own skills and industry’s expectations, you’ll have a better understanding of an appropriate wage. Glassdoor has a Know Your Worth tool that can help you determine salary ranges by title, experience level and location. 

The most important thing to remember is to not sell yourself short. Research from Glassdoor found that 59 percent of employees did not negotiate salary and accepted the first offer they were given. Know your worth and don’t settle for less than what you deserve. 

Money isn’t everything when it comes to employment, but it can certainly start to impact your career and personal growth if it remains stagnant. If your paycheck isn’t reflecting your worth, take action and make sure you’re getting the compensation that will set you up for further financial success. 

For tips on how to handle being overworked and underpaid, check out our infographic below.

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Credit Cards

Should you pay down debt or save for retirement?

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rebuilding credit

While establishing a comprehensive, workable budget is undeniably one of the most important factors in maintaining a healthy financial life, it can also be one of the most difficult. For those who are struggling with personal debt, building a budget can be particularly challenging. When the money coming in has to stretch like a contortionist to cover expenses, it can be hard to determine where to focus — and where to trim.

Sometimes, the battle of the budget can come down to a choice between dealing with the present — and thinking about the future. When your income is running out of stretch, do you pay off your existing debt, or do you start saving for retirement? At the end of the day, the solution to that particular dilemma depends on the type of debt you have and how far you are from retiring.

If you have high-interest debt, pay it down

When considering how to allocate your budget, it’s important to understand the different kinds of debt you may have. Consumer debt can be categorized into two basic types: low-interest debt and high-interest debt, each with its own impact on your credit (and your budget).

In general, low-interest debt consists of long-term or secured loans that carry a single-digit interest rate, such as a mortgage or auto loan. Though no debt is the only real form of good debt, low-interest debt can be useful to carry. For instance, purchasing a home with a low-interest mortgage can actually save you money on housing costs if you do your homework and buy a house well within your price range.

High-interest debt, on the other hand, typically has a hefty double-digit interest rate and shorter loan terms, such as that of a credit card or payday loan. High-interest debt is the most expensive kind of debt to carry from month to month and should always be priority number one when building a budget.

To illustrate why you should focus on high-interest debt above everything else, consider a credit card carrying the average 19% APR and a $10,000 balance. If the balance goes unpaid, that high-interest credit card debt will cost $1,900 a year in interest payments alone. Now, compare that to the stock market’s average annual return of 7%, and it becomes clear that you’ll see significantly more bang for your buck by putting any extra funds into your high-interest debt instead of an investment account.

If you are having trouble paying off your high-interest debt, there may be some steps you can take to make it more manageable. For example, transferring your credit card balances from high-interest cards to ones offering an introductory 0% APR can eliminate interest payments for 12 months or more. While many of the best balance transfer cards won’t charge you an annual fee, they may charge a balance transfer fee, so do your research. You’ll also want to make sure you have a plan to pay off the new card before your introductory period ends.

Most balance transfer offers will require you to have at least fair credit, so if your credit score needs some work, you may not qualify. In this case, refinancing your high-interest debt with a personal loan that has a lower interest rate may be your best bet. Make sure to compare all of the top bad credit loans to find the best interest rate and loan terms.

If you’re nearing retirement, start to save

The closer you get to retirement age, the more important it becomes to ensure you have adequate retirement savings — and the more pressure you may feel to invest every spare penny into your retirement fund. No matter your age, however, paying off your high-interest debt should always remain the priority, as it will always provide the best rate of return (as well as likely provide a credit score boost).

Indeed, no matter how tempting it becomes, you should avoid reallocating money you’ve dedicated to paying off high-interest debt to save for retirement. Instead, the focus should be on re-evaluating your budget to find any additional savings you can. To be successful, you will need to make a strong distinction between want and need — and, perhaps, make some tough lifestyle choices.

Though simply eliminating your daily coffee drink won’t magically provide a solid retirement fund, saving a few bucks by homebrewing while also eliminating a pricey cable bill in favor of an inexpensive streaming service — or, better yet, free library rentals — can add up to big savings over the course of the year. The ideal strategy will involve overhauling every aspect of your lifestyle, combining both large and small cuts to develop a lean budget structured around your long-term goals.

Of course, while you should never allocate debt money to your retirement savings, the reverse is also true. It is almost always a horrible idea to remove money from your retirement account before you hit retirement age — for any reason. Withdrawing early means you will be stuck paying hefty fees for withdrawing money early and, depending on the type of account, you may also have to pay significant taxes.

Aim for both goals by improving income

As you take the necessary steps to pay off debt and save for retirement, you may have already stretched the budget so thin it’s practically transparent. In this case, it is time to consider ways to improve your overall income. Increasing the amount you have coming in not only provides extra savings to put toward your retirement, but may also speed up your journey to becoming debt-free.

The easiest solution may be to look for ways to increase your income through your current job; think about taking on additional shifts or overtime hours to earn some extra cash. Depending on your position — and the time you’ve been with the company — consider asking for a pay raise or promotion, as well.

If you do not have options to make more money at your day job, it may be time to find a second job. Look for opportunities that provide flexible schedules that will accommodate your regular job; many work-from-home positions, for example, can easily fit into most work schedules. Doing neighborhood odd jobs, such as babysitting and dog walking, may also provide a solid income boost without interfering with your existing job.

For some, the need to pay off debt and improve retirement savings can be more than just a source of stress — but a hidden opportunity to begin a new career adventure. Instead of being weighed down by yet more work, use the desire to better your budget as a reason to explore the profit potential of a passion or hobby. Starting a small online store, part-time consulting service, or other small business can be a great way to improve your income and your overall happiness.

While it may sound intimidating, starting a side business can be as simple as putting together a professional looking website and doing a little marketing legwork to spread the word. And no, building a website isn’t as scary — or expensive — as it seems, either. A number of the top website builders now offer simple drag-and-drop interfaces perfect for putting together a professional-looking web page in minutes (without breaking the bank).

Learn how you can start repairing your credit here, and carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.



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How does a loan default affect my credit?

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loan default

Nobody takes out a loan expecting to default on it. Despite their best intentions, people sometimes find themselves struggling to pay off their loans. These types of struggles happen for many reasons, including job loss, significant debt, or a medical or personal crisis.

Making late payments or having a loan fall into default can add pressure to other personal struggles. Before finding yourself in a desperate situation, understanding how a loan default can impact your credit is necessary to avoid negative consequences.

30 days late

Missing one payment can further lower your credit score. If you can pay the past due amount plus applicable late fees, you may be able to mitigate the damage to your credit, if you make all other payments as expected.

The trouble starts when you (1) miss a payment, (2) do not pay it at all, and (3) continue to miss subsequent payments. If those actions happen, the loan falls into default.

More than 30 days late

Payments that are more than 30 days past due can trigger increasingly serious consequences:

  • The loan default may appear on your credit reports. It will likely lower your credit score, which most creditors and lenders use to review credit applications.
  • You may receive phone calls and letters from creditors demanding payment.
  • If you still do not pay, the account could be sent to collections. The debt collector seeks payment from you, sometimes using aggressive measures.

Then, the collection account can remain on your credit report for up to seven years. This action can damage your creditworthiness for future loan or credit card applications. Also, it may be a deciding factor when obtaining basic necessities, such as utilities or a mobile phone.

Other ways a default can hurt you

Hurting your credit score is reason enough to avoid a loan default. Some of the other actions creditors can take to collect payment or claim collateral are also quite serious:

  • If you default on a car loan, the creditor can repossess your car.
  • If you default on a mortgage, you could be forced to foreclose on your home.
  • In some cases, you could be sued for payment and have a court judgment entered against you.
  • You could face bankruptcy.

Any of these additional consequences can plague your credit score for years and hinder your efforts to secure your financial future.

How to avoid a loan default

Your options to avoid a loan default depend upon the type of loan you have and the nature of your personal circumstances. For example:

  • For student loans, research deferment or forbearance options. Both options permit you to temporarily stop making payments or pay a lesser amount per month.
  • For a mortgage, ask the lender if a loan modification is available. Changing the loan from an adjustable rate to a fixed rate, or extend the life of the loan so your monthly payments are smaller.

Generally, you can avoid a loan default by exercising common sense: buy only what you need and can afford, keep a steady job that earns enough income to cover your expenses, and keep the rest of your debts low.

Clean up your credit

The hard reality is that defaulting on a loan is unpleasant. It can negatively affect your credit profile for years. Through patience and perseverance, you can repair the damage to your credit and improve your standing over time.

Consulting with a credit repair law firm can help you address these issues and get your credit back on track. At Lexington Law, we offer a free credit report summary and consultation. Call us today at 1-855-255-0139.

You can also carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.



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How to identify credit repair scams

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family learning more about credit

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

If you have poor or damaged credit and want to repair it, you may have considered using a credit repair service to help. Unfortunately, there are many companies and individuals that want to take advantage of unsuspecting consumers needing help with their credit. 

While there are legitimate companies that can help you repair your credit, there are also credit repair scams that are only after your money and your information for identity theft purposes. To keep both safe, we created this guide to help you tell the difference between legitimate credit repair companies and credit repair scams.

Five signs of a credit repair scam

There are many things credit repair companies are not allowed to do or promise customers. If it sounds like it’s too good to be true, it probably is, and you should steer clear of that company. We’ve put together a list of signs you should watch out for when working with credit repair companies.

1. Guaranteed results

Under the Credit Repair Organizations Act (CROA), credit repair companies cannot guarantee results. Here are a few common examples of false promises unethical credit repair companies might make:

  • Improvement to your credit score
  • Results in a fixed time period
  • Removal of all of negative items, even if they are accurate

2. Up-front payment is requested

The CROA prohibits credit repair companies from asking for any payment before they render services. Many scammers know that most consumers don’t know this and, as a result, promise a quick turnaround on credit repair for a large upfront payment.

Some illegitimate credit repair companies may not allow you to cancel unless you pay a fee. All credit repair companies are required by law to give you at least three days to cancel services with them and there is no penalty for canceling.

3. Claims a new identity is needed 

A credit repair company can’t promise or offer you a new identity. Anyone offering you a new identity is a fraud. Besides guaranteeing results, scammers may try to promise you a clean slate with a new Employer Identification Number (EIN) or a Credit Privacy Number (CPN).

They tell you to use these numbers on your future credit applications instead of your Social Security Number. We explain more about common credit repair scams below.

4. Don’t explain your legal rights

Credit repair companies should explain your legal rights to you from the beginning. These are a few common things an unethical credit repair company might do.

  • Tells you not to contact the credit bureaus directly
  • Doesn’t give you a copy of the contract to review before signing
  • Fails to inform you that you can repair your credit yourself without the help of a credit repair company
  • Leaves out important information from the contract, like the date services will be executed or the amount you will pay

If you feel like the company isn’t telling you everything or refusing to answer your questions, you should seek services elsewhere.

5. Asks you to misrepresent information

Finally, an unlawful credit repair company might ask you to misrepresent your information. This can range from unlawfully using an EIN or CPN number in place of your social security number to claim you are a victim of identity theft when you’re not.

five signs of a credit repair scam

Common credit repair scams 

You’ll most likely see credit repair companies illegally promising results. However, it’s important to familiarize yourself with other scams so you understand what is and is not legal. We highlighted a few common ones below.

File segregation schemes 

A file segregation scheme is when a company or individual offers to give you an Employee Identification Number (EIN) to use in place of your Social Security Number when you apply for credit. It’s illegal for companies to do this, and it’s illegal for consumers to obtain one to use in place of their Social Security Number. 

Credit privacy numbers 

Like an EIN, a Credit Privacy Number (CPN) is created by scammers to use in place of your Social Security Number when applying for credit. Simply put, a CPN is a fake Social Security Number. Usually, these are created using somebody else’s identity, and using one can be considered identity theft. 

Tradeline renting 

Tradeline renting is when you pay for authorized user status so that the tradeline shows up on your credit reports to improve your score. This doesn’t repair any negative information on your credit, but adding a positive tradeline to your credit report can boost your score.

While this isn’t necessarily illegal, it can get you into trouble. There is nothing wrong with a loved one adding you as an authorized user. However, if you pay to “rent” a tradeline from a stranger, you don’t know how it will impact your credit and it may be a scam to get your money. 

credit repair scams to watch out for

What to do if you are scammed

There are a few things you can do if you realize you’ve fallen victim to a credit repair scam. Take a look at your options below.

who to report a credit repair scam to

Can credit repair companies fix your credit?

Yes, a legitimate credit repair company can help you work to remove inaccurate negative items from your record that may be damaging your credit score. Here are ways to recognize a legitimate, expert credit repair company. Although you can work to repair your credit yourself without a credit repair company, ideally a credit repair company would make the process much easier. Here are some signs of a legitimate, expert credit repair company:

  1. They create a repair strategy custom to your unique situation. A good credit repair company will customize their course of action only after evaluating your credit reports and credit history. Everyone’s credit history is different, and their approach to repairing your credit should reflect that. 
  2. Maintain communication with you during the process. A credit repair company that maintains scheduled calls, emails or any other form of communication with you will help you stay up-to-date with their progress. They shouldn’t keep you in the dark as they’re conducting their services. 
  3. Informs you of your rights from the beginning. At the time of signing, a credit repair company should provide two documents: a disclosure of your right to repair your credit yourself and a detailed contract of services.
  4. Make realistic claims about their services. Like we said above, credit repair companies cannot guarantee results. A legitimate credit repair company will not guarantee timeframes or point changes, but they can guarantee the delivery of services—access to credit monitoring tools, or letters delivered on your behalf. 

How to safely repair your credit

Making payments on time and disputing inaccurate information on your credit reports can help you repair your credit. While you can do this on your own, a professional credit repair firm like Lexington Law Firm will make the process easier and more efficient.

Lexington Law Firm proudly adheres to CROA to make sure we give our clients the best experience possible. For over a decade, we’ve helped clients challenge information that is unfair, inaccurate and unsubstantiated. Give us a call today for a free, personalized credit report consultation.


Reviewed by John Heath, Directing Attorney of Lexington Law Firm. Written by Lexington Law.

Born and raised in Salt Lake City, John Heath earned his BA from the University of Utah and his Juris Doctor from Ohio Northern University. John has been the Directing Attorney of Lexington Law Firm since 2004. The firm focuses primarily on consumer credit report repair, but also practices family law, criminal law, general consumer litigation and collection defense on behalf of consumer debtors. John is admitted to practice law in Utah, Colorado, Washington D. C., Georgia, Texas and New York.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.

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