Getting A Raise

by mike on January 17, 2010

Do you dread asking your boss for a raise?  Are you sure there is no possible way to get a raise, especially with the current economic climate.  I do have a way for you to have that raise you know you deserve.  It doesn’t even require working hours and hours extra every week.  It actually only takes a total of about one hour per month.  How do you get a raise?  It’s as simple as doing a written game plan each month.  That’s right: a budget, a cash flow plan, whatever you want to call it.  Although it doesn’t technically get you more income, it will make you feel like you got a raise.  Once you start telling your money what to do, you will stop wondering where it went.  There are several steps to start working on your monthly cash flow plan:

1.     Add up all of your monthly take home pay. First, examine your last few paystubs and determine what your take home pay each pay period is.  If you get paid once a week, take it times four.   If you get paid every other week or twice a month, then obviously double it.  Keep your eye out for what I call the “bonus” months.  Those are the months where you get five paychecks if you get paid weekly, or three paychecks if you get paid every other week.  Also include any income you may have from rental properties, self-employment, or interest from investments.

2.     Determine your non-debt expenses. The following is a list of possible expenses you may have for a month.  For the non-monthly expenses, determine a monthly expense.  For example, if you pay $600 for car insurance every 6 months, put $100 per month in your cash flow plan.  That way you have the money in your account when the bill comes due.  This list doesn’t cover every possible expense out there, but almost.

a.     Charitable Giving

b.     Groceries

c.       Eating Out

d.     Electricity

e.     Water

f.       Sewer

g.     Gas (For your home)

h.     Phone

i.        Business phone line

j.       Trash

k.     Cable/Satellite

l.        Internet

m.  Cell phone(s)

n.     Alarm System

o.     Mortgage(s)

p.     Rent

q.     Timeshare Maintenance

r.      Home Repairs/Upkeep

s.      Homeowner’s/Renter’s Insurance

t.       Real Estate Taxes

u.     Homeowner’s Association

v.     Pest Control

w.   Car Payment(s)

x.      Car Replacement (to pay cash)

y.     Boat, RV, ATV, etc.

z.      Fuel

aa. Car Repair, oil, tires, etc.

bb.                        Auto Insurance

cc.  Auto Registration and Tags

dd.                        AAA, OnStar, etc.

ee. Health Insurance

ff.    Disability Insurance

gg. Medical co-pays, dentist, medicine

hh.                        Clothing

ii.      Miscellaneous (stamps, dry cleaning, etc.)

jj.     Toiletries

kk. Life Insurance

ll.      Pet Food/Care

mm.                   Gifts

nn.                        Hair Care

oo.                        Long Term Care Insurance

pp.                        Child Care

qq.                        Tuition

rr.   Entertainment

ss.   Vacation

tt.    Fun/Spending Money

uu.                        Subscriptions

vv. Memberships

ww.                    Cigarettes

xx.  Child Support

yy. Emergency Savings

zz.  Retirement Savings

aaa.                    College Savings

3.     Determine your disposable income. Add up all of the expenses for the month from the above list and subtract that from your monthly income.  For example, if your expenses add up to $2,000 for the month and your income is $2,500 for the month, then you have a disposable income of $500.

4.     Add up all of your minimum debt payments.
Make a list of all of your debts such as credit cards, student loans, medical bills, and personal loans.  Add up all of your minimum payments.

5.      Establish your extra for debt reduction of savings.  Subtract your minimum payments from your disposable income.  From #3 above we determined that your disposable income is $500.  So, if you have minimum payments totaling $300, you have $200 left.  This is the amount to apply toward your baby steps: either emergency savings, debt reduction, or long term investing.

The most important part of the cash flow process is that every dollar has a name.  The income minus your expenses always must equal zero.  If you get a negative number the first time you do it, then you need to start making cuts or figure out a way to increase your income.  If you get to step 5 and have a positive number, then you apply that money towards your baby steps.  That way you are making your dollars work as hard as they can for you.  Most of my clients find that when you actually write it all down and start making a plan, you realize how much “extra” money you have that you can put to better use.  That is why it feels like you got a raise.  If you have any questions about the budgeting process, please e-mail me or give me a call and I would be glad to help.

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