Guest Blog: Detroit’s Recipe for Wallet Wellness

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The nation’s perception of Detroit isn’t great right now. The city has been through a lot, after all. But there’s distinct reason for optimism, as Detroit ranks far higher than you might expect in recent studies examining the economic conditions in America’s largest cities.

Detroit, for example, ranks 27th out of the 150 largest cities in the country as an entrepreneurial destination, and the 38th best city to find a job — above the likes of Los Angeles, New York, and Cleveland. When it comes to “wallet wellness,” Detroit beats New York, Cleveland, as well as Chicago, Philadelphia, and New Orleans.

A closer look at the underlying economic dynamics in play here reveals a few clear areas in which Detroit excels in addition to a few areas that need some work before the city’s economy can really get rolling.

For starters, Detroit’s real estate is the cheapest in the country when considered along with local wages. There are also roughly 36 job openings per capita in Detroit — the 24th most nationally. That makes the Motor City a particularly attractive destination for the 10.5 million Americans who were unemployed as of March, according to the Bureau of Labor Statistics. Being able to watch Megatron and Verlander up close isn’t a bad incentive either.

A deep pool of job seekers, a high five-year business survival rate, and relatively few businesses per capita also make the Detroit market potentially fertile for enterprising small business owners.

On the flip side, Detroit residents put in a relatively short workday compared to the rest of the country and are lacking when it comes to higher education. At 12.7 percent, the percentage of the population with at least a bachelor’s degree ranks 147th out of the 150 largest cities in the country.

Most of us have significant room for improvement when it comes to our overall financial habits and goals. But what follows are a few tips designed specifically for the good people of Detroit, based on the aforementioned socioeconomic analysis:

  1. Go back to school. Given the low levels of higher education in Detroit, going back to school — whether it’s for a GED, trade school, or a bachelor’s or graduate degree — will set you apart from the competition and set you up for a higher salary.
  2. Learn how to market yourself. Detroit has one of the highest levels of job openings per capita in the country. Now it’s a matter of finding the right one and landing it. There are a few easy steps that you can take to drastically improve your chances. For starters, don’t apply en masse. Instead, take the time to research specific jobs you might be interested in and then only apply to those that you’re truly serious about. You should also spruce up your resume, adjust the privacy settings on your social media accounts, and practice answers to the questions that you think might come up in an interview, particularly in regard to your job history.
  3. Improve your credit standing. Employers often use credit history to gauge the responsibility of applicants. Your credit standing also dictates the rate you’ll pay on loans, lines of credit, and insurance policies as well as your ability to rent an apartment or lease a car. In other words, it really does pay to have good credit. Always making on-time payments on monthly bills and keeping your credit utilization low are the keys to credit score improvement.
  4. Minimize everyday expenses. With the exception of real estate, Detroit is one of the most expensive cities in the country, considering average local income levels. So, think about the frivolous spending you can cut from your life — for example, eating out every day for lunch or paying for premium cable — and take the requisite measures to enforce these lifestyle changes.
  5. Budget debt to death. The only way to keep track of spending and saving goals is to develop an itemized budget that you compare to reality on a regular basis. Only two in five people in the U.S. have a budget, according to the National Foundation for Credit Counseling, which is one of the reasons that Detroit residents added close to $65 million in credit card debt to their tab in 2013. The best way to set up a budget is to make a list of your core monthly expenses – such as food, rent/mortgage payment, utilities, and insurance. In doing so, make sure not to forget about savings and debt payments. You’ll want to allocate both your savings and debt allotments to establishing an emergency fund with about three month’s salary before paying off debt in earnest. You don’t want to scrap and claw to pay off your debt, incur an unexpected expense, and end up right back where you started, after all.

Ultimately, with big things expected for the auto industry in the near future, the Motor City’s stock certainly appears poised to rise. Your job is to position yourself to ride that wave to greater fortunes and the peace of mind that comes with financial security.

Odysseas Papadimitriou is CEO of the personal finance websites WalletHub and CardHub. He previously worked as a senior director at Capital One.

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