Thursday, November 8, 2007

Mo' Money!

I got a promotion and a raise this week. It was my first promotion ever (yay!) and my most significant raise (about 13%). It's big enough that I will see a definite boost in my take-home pay, which has me most excited of all.

The night I got this news, I sat down and figured out roughly how much it'll pan out to be after taxes, and then planned what to do with it.

1. Increase my 401k contributions.
I would like to be contributing a full 15% as Dave Ramsey suggests, but I just can't quite swing that yet, especially with the upcoming expenses I foresee. I will bump my contributions up 1% to 10%, and enjoy the 6% match.

2. I will not change my budget yet.
I am on a rather strict on-paper, on-purpose budget right now. My rent is high (a little more than 50% of my pre-raise takehome pay--ouch!) and I am squirreling money away for school and the impending move. Rather than create new budget categories (like clothing again!) or putting more dinero in existing ones (more for eating out! or travel!) I will continue as is. The first paycheck's difference will be placed in a school fund (for books and anything not covered by loans), and the second into a moving fund. I'll keep doing this until I actually move.

3. Dreaming about future options.
There are lots of things I want to do with the money when I am free to do something with it. I anticipate that my rent will drop by $100 or more after the move, so that will give me even more to play with. I'd like to have a clothing fund again--I AM a 20-something young professional, after all, and you know how we working girls love to shop.* I'd like to build my emergency fund up some more--right now I have about six months worth of dire emergency funds (nothing gets paid but rent, utilities and food) and I'd like to pad that a little more, up to $10,000. I'd like to buy some real furniture. I'd like to have a pet fund, if I can convince Mr. Boyfriend to eventually get a cat. I'd like to just loosen the budget reigns a little bit and have more money in all my existing budget categories.

Clearly, I can't do everything with only a little more than $200 per month. But I can start. I can plan. Even $20 put away each week will wind up being more than $1k after a year, and that's without the power of compound interest. The most important thing is that I do plan...that I don't just fritter this extra money away. Having goals is one thing...but you have to take steps to reach them.

*I'm being a little ironic here...I'm not a big shopper, but I am still trying to build a full professional wardrobe, especially since I lean towards all black clothing. Not having a clothing budget for the last year or so hasn't been that much of a hardship, especially as I do put money from my side gigs or that I receive as gifts to good use to buy things that I need, like a winter coat. But I don't go shopping "just because" anymore.


  1. Congrats on your raise, that's great. I am glad are already thinking about where the money should go. Did you consider setting up a little emergency fund and just sticking it in the bank? You never know when you'll need it!

    Jay @ Dumb Little Man

  2. I have had an emergency fund in place since I was in college. Right now, most of it's in an ING account earning more interest, with $1k liquid in my savings account. I could live quite comfortably for 3-4 months on that, and in hard-core survival mode for more than six months. While I don't want to tie up all my networth in emergency funds (need to start investing!), I would like to have a nice round 10k in the bank for a rainy day.


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