I got a pay raise and had a plan for it months before I got it…in a good way

I got a pay raise and had a plan for it months before I got it…in a good way

Woot Woot!!! $$$$$ Don’t pay raises make you just want to jump up and down? They were already paying you some money and now they are telling you they will pay you MORE money! Kind of cool (unless you are under market value). See Glass Door.

Anyways… What is the first thing you do when you get a raise? Go out to some fancy, pricey place to celebrate like Red Robin? (Ms Blue Ribbon and I don’t get out much.) Buy a fancy new ______? Not if you are reading these blogs, or are trying to stop spending beyond your means.

When I received my second pay increase we were just starting to use the cash budget system. So we had decent heads on our shoulders. We determined a set of places we wanted to use the money in order to speed up the process of getting out of debt. Balancing the new money across different goals we wanted to achieve.

I had been out of college for 4 years and for the first time we were making a plan for the new money coming in.

We did a balanced approach by overpaying our loans and increasing the Roth IRA contributions. Fast forward to Oct. 2016 when we are consumer debt free and have a nearly completed emergency fund. We decided to increase our mortgage over-payment and upped the 401k 2% since we were so close to completing the emergency fund. This meant that we could start working on our long term goals.

Now any time we have an increase in our income we just review our goals for the year or long term goals and adjust how much money goes where to meet these goals. It doesn’t have to be a pay increase. This works with bonuses and tax returns as well.

It is important to know your goals and have plans in place to make sure you meet your goals.

This is how we are doing so far this year!

2017 goals

What are your plans for any influx of money? (ie paycheck increase, windfall, etc) How are your goals going for this year?

19 thoughts on “I got a pay raise and had a plan for it months before I got it…in a good way

  1. I’m relatively sure a decent pay raise is coming in the next few months. Currently the money is already allocated to employee stock purchase plan. I even upped contributions in anticipation.

    1. Nice! I used to be able to do employee stock but didn’t like the idea of holding it for a number of reasons. By the time I learned about the tricks from Scott Alan Turner it was too late and I moved to a company with no stock program.

  2. This is a great post. Planning ahead is something that should be taught more. When I get pay raises now, I go the complete opposite of lifestyle creep and find more things to cut from my expenses. Less going out than coming in makes me happy every other week.

    1. That’s awesome you end up cutting more! I actually get excited for my next pay raise just so I can throw more into retirement. I have a whole spreadsheet about when I will have everything maxed out.

  3. I’m honestly not expecting a raise anytime soon. I just got in a new position and I think it will be a couple of years before I can really make some head way to show that I’m adding substantial value to the organization.

    However, if I receive a raise I definitely plan to invest more money into the stock market so I can reach FIRE that much quicker 🙂

  4. What’s not to love. Planning ahead for anything is key. Plan, plan, plan. I definitely have a plan in mind for my raise in August. And it is to pretend like I never got it and use the extra cash to pay down debt faster. We’ve lived on these levels for a while now, so I’m trying to keep the mentality the same and pretend like the raise never happened.

    Bert

  5. Congrats on the pay raise! I had to do a career change a few months ago to earn a pay raise, but it was well worth it!

    Looks like you are executing your plan well with persistence and efficiency. Only a matter of time before all of your goals are checked off!

    Also, we are getting a Red Robin near us next year and I am entirely way too excited for it!

  6. This is pretty relevant to me because I’m actually getting a raise after being promoted. I’m planning on bumping my retirement savings a bit and then using the rest of the extra income to pay down our debt. We also have some DIY projects that I want to get done and need to pay for the materials.

  7. One of our many goals this year is to max every pre-tax investment currently available to us, which includes a 457(b), HSA, SIMPLE IRA, pension, and two traditional IRAs. But right now, Mrs. Vigilante and I are in a position where it’s iffy whether we’ll be able to max out our traditional IRAs this year. Boo 🙁

    We don’t expect any bonuses except those which we already included in our estimates, anyway. I get an origination fee from my firm (percentage of work done) on cases I bring in, though, so I’m working pretty hard this year to find new clients to put us over the top!

  8. We don’t expect any windfalls but I always have a plan for extra money! I’ve got some investments on my Buy list, just waiting for either regular savings to fund them or any extra money that comes in. We have our regular retirement savings on autopilot already so this is all for the dividends investing which is intended to replace our incomes.

  9. Yay on the pay raise! We are getting some too in July, a very generous 2%! (Government) I’ll take it. It’s already been allocated. We increased our 457b contributions to 16% as it was 15% before. I’m also getting a step raise come December so i am excited for that too. Will also increased the 457b to probably 18%, our goal is to fully maximize the 18k contributions for 457b. For both of us that’s 36k that gives me the butterflies ^^

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