How to maximize an increase in salary

All of 2010, Hubby was searching for a new job.  He was unhappy at his current workplace and because of the economy, conditions were only made worse.  And of course, the darn economy made it difficult to find a new job, or atleast a good new job.

Although he was lucky to still have his job, he missed out on raises due to a salary freeze and even faced pay-cuts.  Oh, and our health insurance premiums and co-pays increased dramatically.  All while the cost of living increased.  So it's been difficult, just like for most people these days.

Anyway, he finally found a position at another company!  He starts this coming Monday.  We're super excited for the new job since he was unhappy at the old one, but the icing on the cake is that the salary will be higher.

Since our budget has been tight for the past year, in all of 2010, we hardly made any progress in paying off our credit card debt.  We were paying the minimums or just slightly more than the minimums.  This year I want to do much better... so most of this salary increase will go to paying down debts.  I'll post more on our credit card debts in an upcoming post.

Another way we're maximizing this extra income, will be to start saving more. And we're going to make it automatic.  Before we can even get used to a higher paycheck, we'll set up direct deposit of a portion of Hubby's paycheck to go right into a separate savings account.  This way we won't even see that money and won't miss it.

So basically we'll still live on the same frugal budget we have been living on.  Instead of wasting away the increased cash, we'll be making our money work for us. 

The portion going to pay off our credit cards will decrease our debts, decrease the amount of interest we pay, increase our credit scores, and eventually we'll be able to pay off our credit cards and have more money to save. 

The portion of Hubby's check that goes to automatic savings will build our savings alittle at a time so we can eventually have an emergency fund.  Oh and we'll also collect the interest earned on that saved money.

All around we'll be maximizing this raise and making our money work harder for us.  Buckling down now, so we can live better tomorrow :)

1 comment:

Sarah said...

That sounds like a good plan. We are trying to do the same thing. Living on one income is difficult but we are making it!