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7 Things To Do After Getting a Raise

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By Holly Tomlinson

If you’ve recently received a raise, or you’re planning on having the talk with the powers that be soon, congratulations. This is an exciting step in any professional career, and the money earned shouldn’t be regarded lightly.

Look at Your Budget

You’ll need to look back at your budget and do some spring cleaning of sorts. Assess your budget as it is now and determine where you could decrease unnecessary spending. Take a look at your credit card statements from the past few months and take note of any purchases that you could have done without. Once you’ve reviewed your budget, consider where you could put your raise funds and make the biggest practical difference. Be sure not to automatically spend your raise without deciding the best place in your budget is should go.

Emergency Savings Fund

If you don’t have an emergency savings fund, then now is the time to create one. I would recommend having a six-month cushion in case of job loss or emergency. The expenses your emergency savings fund should be able to cover are extensive; from rent, mortgages, and utilities to food expenses, even health care to transportation. There seems to be a never-ending list of items you’ll be responsible for even in the unlikely case you lose your job. Establish automatic transfers when receiving your paycheck; you won’t miss the extra money that automatically goes into your savings account, but you will be glad you have it when a rainy day inevitably comes.

Pay Off Pre-Existing Debt

If you have debt hanging over your head, use the extra funds you’ve been given to start paying off those accounts, focusing first on the ones that are charging high-interest rates. The sooner you get out of debt, the less you will pay over time in interest, and your credit score can start improving the second you settle your debts. Some choose to pay off accounts in the opposite manner; by knocking off smaller debts, your list of accounts gets smaller quicker and may make the debt seem less overwhelming. If your debt is serious, then your raise should definitely go towards paying back what you owe to get you out of hot water with the IRS. If you’re in need of financial advice how to settle outstanding balances with the IRS, use a company like CTax to figure out the best option for you.

Give Back

Now that you’ve been given more, make sure you give back if you have the extra funds available within your budget. Donating to charitable organizations makes you eligible for tax deductions and will relieve the negative effects of decreased deductions and credits that may have come with your change in pay grade.

Consider Retirement

Once you’ve determined how your raise can be factored into your daily and monthly expenses, give a glance to the future. Putting more money in your retirement fund means you’ll have higher retirement income and potentially be able to retire sooner than expected. Consider contributing to a Roth IRA. You’ll pay upfront taxes on your contributions, but once you pull it out, you can grab it tax-free. If your employer matches your 401k contributions, make sure you put more into when possible.

Make Strategic Purchases

Just because you now have more money, it doesn’t mean you should spend it on anything. Rather than hit the ground running by throwing your hard-earned income towards frivolous purchases, it’s imperative to think before you buy. Try to make purchases that will pay you back in the long run. Maybe it’s time to get a new energy efficient appliance that will pay for itself with the amount of energy it saves in the long run. As you look at purchases you want to make, prioritize those which have the potential to save you money in the long run.

What Not to Do

There are several things you shouldn’t do, at least not in the first few weeks and months of receiving your raise. Signing the lease on a more expensive apartment or home, funding a business venture, and loaning out money may seem doable once you’re making more money, but these expenditures can actually come back to bite you. Be responsible with your raise, and don’t spend more simply because you have more money coming into your account.


4th Month of Unemployment – Status Update

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I am now entering our fourth month of unemployment.  It is only by the grace and generosity of others that I have not accumulated any additional debt and am not too far behind on bills.  (I was so grateful that so many took my post What I have Learned being Poor to heart.  One reader even graciously reached out and offered to pay a bill for us.  I didn’t want to make a big deal of it, but I did want to acknowledge the gift and generosity.  So thank you for the generous gift of paying our electric bill last month!)

I am continuing to job search and interview, but as of today am no closer to a full time job.  I am happy to report that I’ve picked up three small website projects for the month of February, so I have high hopes of catching up with monthly bills and being in a better place going to March.

I’m sorry I haven’t gotten around to replying to everyone on my post regarding the lower paying position I interview for (Is it Worth It?), taking the job or not did not become a question as it was no offered, but I reached the same conclusion as many of you that it just didn’t make sense financially any way I looked at it.  I am interviewing for another part time job tomorrow, but hopefully the pay rate will be more in line with what I need…I hope.  I don’t mind piece-mealing together a paycheck with a variety of part time jobs and projects, but I am hoping to at least have steady income of some sort while I continue to search for a full time position.

I can’t remember if I have mentioned here that with certainty we will be moving in April.  I will write a whole post on this part of our lives.  But essentially, because my initial plan when I signed this lease back in August/September was that we would for certain move to better housing at the end of April (our school year end) even if it meant moving away from here.  So when I signed the lease, I signed the move out notice at the same time.  Fast forward to the first week in December, and I was notified by the complex office that our apartment has been rented out, so staying put is not an option.  So we will be moving…but without a job, what kind of housing can we move too?  This has been a constant prayer request for me, but an answer/option has come.  I will share that plan in another post soon.

Another status update is regarding our pets…we are down to two from the original four. (You can read about this plan: Re-homing Pets.) I’m continuing to only solicit homes from people we know, and while there are currently no placements, with 2.5 more months, I am hopeful. Although it is getting tougher and tougher to think about.

Other than that, we are moving right along…basketball season is coming to an end for Princess, robotics season ended this past weekend for the twins and gymnast is approaching the end of his season.

One side note:  I am going to mention this because it is financially related, but I do not and will not revisit the discussion of my ex or child support….My ex, the youngest two children’s dad has gotten a job.  He has 6 weeks or so of training to do at a minimal rate, but then he assures me he will begin providing regular support for the kids….woohoo!  And even better…health insurance.  So I will keep you posted, but many will remember that it was a year ago this past October that he let me know he could not provide any support for the kids due to job issues.  So this will be greatly appreciated and quite timely due to my job situation.