In my experience, repeated attempts to contact me during business hours means one of two things: either something very good (adorable puppy sighting) or very bad (kidney stones) has happened. In either case, it's generally a good idea to return the call ASAP.
What was Mr. W's reason for calling? Well, he'd received a raise. In fact, a really spectacular 25% raise. I imagine he must have felt something like this:
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So, what should you do after receiving a raise? First things first, thank your boss. Express your appreciation for the recognition, as well as the continued opportunity to contribute to the company/organization's mission. Receiving a raise affirms that your company/organization values your work and recognizes your potential. It's also proof that your employer wants you to stick around. Having that vote of confidence feels great.
Then, some form of celebration is in order. It doesn't have to be anything elaborate or expensive, but I firmly believe that happy life moments deserve a celebration. I'm not saying you should spend $300+ per person for a dinner at Per Se. We just enjoyed sushi from our favorite place.
Once you've had a chance to absorb the good news, assess how the raise will impact your financial goals. What are you going to do with the extra money?
This is NOT how we're planning to use the extra money. At least, not any time in the near future.
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Mr. W. and I know we don't want to inflate our lifestyle. We're not planning to buy a new car, rent a bigger apartment, or wear fancier clothes. We already have what we need and feel very blessed in our current situation. We're content with what we have. In other words, there shouldn't be much change to our spending. If anything, this raise confirmed our commitment to our existing financial goals. Our goals haven't changed, but his raise could help us to reach them a little sooner.
This is what we'll be doing with the extra funds:
- Increasing retirement contributions
- We haven't decided precisely how much to increase Mr. W's retirement contributions. Most likely, we'll double the percentage that he was previously contributing.
- Paying down the car loan faster
- Our car payment for Mr. W's car is $366/month (used Honda, 36 months at 4.6% APR). We're planning to pay off an additional $100-$150/month.
- Saving more aggressively for our first home
- By our rough calculations, we should be able to save about $4,000 more, per year, for a down payment. This number will vary depending on how much more we allocate towards retirement and paying down the car loan. I think we're still a few years away from buying our first home. Nonetheless, it's good to know that we'll be able to put more money away for the down payment.
How would you make use of a raise?