How to take advantage of the new overtime rules

If you’re a salaried employee, you could be getting a pay raise thanks to new law set to go into effect in December of this year. The Department of Labor recently bumped the threshold for overtime pay. Let’s take a look at those changes and see what you can do to take advantage of them.

The new law sets the base salary for exempt employees at $47,476…an increase of $23,816. Before an employer could keep from paying overtime if the salaried employee made $455 a week, now that number is $913. That means employers will either have to increase salaries, start paying overtime if a salaried worker is under this mark or make sure employees don’t go over 40 hours.

With these new rules you may be entitled to a bigger paycheck… either with a salary increase or overtime hours, meaning more money in your pocket. If that’s the case, here’s a few ways to take advantage of the extra income.

1. Shore up your emergency fund.

If you don’t already have three to six months of living expenses set aside, do it now.

1. Pay down unsecured debt.

   

You’ll have a surplus of funds if you keep living of what you were making before, so throw all your excess at those credit cards and student loans.

1. Increase your retirement savings by roughly 50% of the proceeds.

Take at least half of your extra earnings and fund your retirement. You weren’t living off of it before so start saving it to live off of later.

1. Take the remaining 50% of the increase and splurge a little on yourself or your loved ones.

   

Have some fun! You’ll have warned the extra so use some of it to enjoy your hard work.

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