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Enemy of Debt – I Got Promoted! Now, What Should We Do With My Salary Increase?
Image courtesy of Stuart Miles at FreeDigitalPhotos.net
I’ve been very purposeful with my efforts over the last few years in my primary career as a software engineer. I’ve volunteered for roles, and taken advantage of opportunities that I felt would help further my career. Specifically, I’ve been aiming to be promoted to the next level. My efforts have finally come to fruition, as last Wednesday my manager informed me that I have been promoted.
As you can imagine, I was extremely excited to hear the news that I have been promoted to Senior Software Engineer.
My title promotion comes with a significant salary increase. Whenever our family’s income changes, whether it’s an increase or a decrease, it’s time for a review of every aspect of our finances.
Side Hustle Changes
My income from blogging currently totals just over $1000 a month. Fulfilling all my side hustle commitments takes a large portion of my evening and weekend bandwidth. I’ve been feeling like I’m starting to burnout at the level of effort I need to commit to blogging. For that reason, Vonnie and I have decided that I will cut back a little on my blogging efforts. This will give me more downtime for my own mental health, more time to spend with my family, or more bandwidth to give to my primary career when needed.
Planning For The Future
A significant salary increase is a great time to raise my pre-tax payroll contributions to our 401K. I want the increase in contributions to kick in immediately, so I don’t ever see a paycheck with my full salary increase. It’ll be just like my salary increase is actually whatever shows up with the first affected paycheck, with the added bonus that our retirement savings gets a boost.
Savings
Our home will be in need of some updating in the next couple of years. The first project will be the replacement of the flooring. We had an estimate done during the fall, and it’s going to be quite expensive. With this salary increase we have the ability to save faster, and get to this project sooner than expected.
Splurge for Christmas
There might just be an extra present under the tree for the kids and my wife on Christmas morning. I’m not planning on doing anything crazy. In fact, nobody in my family even asked for anything really expensive (with the exception of my son’s request for a $400 gaming chair, which he’s not getting). Just a few extra little things in celebration of my accomplishment, without going overboard.
Discretionary Spending
Our weekly discretionary spending budget will also be raised. I’m not afraid to admit it. There’s absolutely nothing wrong with enjoying life now, as long as the bills get paid, and our nest egg is being properly funded. I don’t want to wait until the age of retirement to experience life. Life is happening. Right. Now.
Because taxes are a little bit of an unknown, I don’t have exact numbers yet. But I think that we’ve come up with a balanced plan with what to do with the salary increase. We made retirement and savings the priority, but still gave our everyday budget a bit of an increase as well.
Have you received a significant pay increase recently? How would you decide what to do with a significant increase in your budget?
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