Jul

21

Unfrugality of the Week – I Got a Droid

Filed Under Frugal, Personal Finance, Saving Money | Leave a Comment

So, it finally happened. I committed the most unfrugal act of getting a smartphone. However, I still managed to squeeze a bit of frugality into it, even though it’s a big budget change.

Not only did I buy a smartphone, but I had to break my current contract and pay a $70 termination fee to do it! However, buying my husband a replacement phone for four months would have cost $40, so it’s really only a net loss of $30. It’s worth it to get our phones now.

Why I Got a Droid
As you’ll recall, my old phone broke back in January, right before my husband’s surgery. Although I had wanted an iPhone, AT&T made me cry, so I vowed to abandon them when my contact was up. Until then, I bought a cheapie phone that got me through.

Except, that both my husband and I were experiencing work-related reasons as well as personal reasons for needing smartphones with email and web access. Still we waited.

Then his phone broke. In the exact same manner as mine. Note to AT&T – when phones of the same model break in the exact same place for multiple users, this is a design flaw and you should issue a recall, not ignore the issue. This is why you lost a customer for life.

So, with the iPhone off-limits (not to mention that the recent news about iPhone 4 troubles didn’t make me lust for one), I looked around for the best alternative. Enter the Droid. Folks, it is awesome. I did my research and settled on Verizon phone service. We went to the Verizon store to look at the various Android phones. We then waited until July 15 to look at the Droid X, because if we’re going to do this, we might as well get the best available at the time.

As it turned out, a Droid X barely fits in my hand, so that was out. The HTC Incredible was unavailable for at least three weeks and I needed the phone by the middle of next week for an upcoming trip.

How I Made My Unfrugal Purchase Slightly Frugal
There was one other reason we opted for the Droid by Motorola rather than the Droid X or Incredible – it was buy one get one free. This was a savings of $250 over buying two Xs or Incredibles.

We also opted for a family plan with a minimal texting plan rather than the full talk and text plan. We studied our minutes and determined that we use more than 700 minutes, but less than 1400 minutes a month. We previously only paid for 700 because we had tons of rollover minutes with AT&T, so we were sad to lose that deal, but the 1400 minute plan does come with unlimited calls to 10 Friends and Family designees, so we can make it work.

So, our phone cost is jumping from around $95 a month to $189 a month, however, we still get $90 in reimbursements from our employers.

And folks, I’m not sorry I did it. I love this phone. Seriously love it. It will make my life easier in so many ways.

Jul

9

What Should Be In Your Wallet?

Filed Under Credit Cards, Money Management, Personal Finance | 2 Comments

Another interesting post from LearnVest this week: What should be in your wallet?  This will, of course, vary by person, but they offer a few pointers for paring down your wallet. You don’t want the exploding wallet a la George Constanza!

However, I had to disagree about some things they suggested for wallets, because I either don’t need them or keep them in my purse instead. If I kept everything in my wallet, it wouldn’t close.

What’s In My Wallet
My wallet has slimmed down significantly since most of my store cards have been cancelled, but it’s still got quite a bit of stuff in it:

License/ID: Obviously my driver’s license needs to be in there because I drive. Even if you don’t drive, you should always have ID with you because it could be needed in an emergency. Behind it I have my organ donor card and a change of address card because California doesn’t issue a new license when you move.

One point of contention with the LearnVest article though. They said, “Stores have the right to ask for an ID when you use a credit card, so you need to have one ready to show them.” Although some state laws do permit the request, it’s a violation of the store’s merchant agreement with Visa and Mastercard to require ID. They can request, but can’t make showing ID contingent on completing the transation. Requesting ID protects the store, not you. The signature is considered your ID for the transaction.

Emergency contacts card: My husband and I printed emergency contact cards that we keep behind our licenses. In case we’re in accidents and are separated from our cell phones, any emergency workers who find our wallets will know how to reach our spouses/relatives in an emergency.

Credit cards: LearnVest recommends only carrying one, but I carry three. One Amex, one Visa, one Mastercard. I mostly use the Amex, but I rotate the other two at stores that don’t take Amex. Their recommendation is to use a Visa or MC branded debit card if a store won’t take your primary Amex, but that really wouldn’t have worked when I had to buy $1400 worth of furniture! I recommend carrying at least two cards, just in case a card is rejected for credit card security reasons, as happened to me at Cost Plus while buying furniture.

Debit cards: Again, I carry two. One for my regular checking account, one for my business account. I could probably stop carrying the biz account card since I only use it to deposit infrequent checks, but I know I’d forget to bring it when I did finally have to deposit a check.

Retailer Cards: I’m down to Goodyear at this point, so that card stays with me. When your car has 150,000 miles on it, a service emergency can happen at any moment!

Membership Cards: I keep my Blockbuster card and my Costco card in my wallet, but other cards have a different home. I also keep my library card in my wallet in a prominent pocket because I use it almost every week.

AAA/Roadside Service Card: Another must carry. If you’re a member and drive a car, you should always have it with you. You can’t use it if you don’t have it! AAA members can also use it if they’re a passenger in a non-member’s car, so there’s no reason to remove it for a road trip where someone else is driving.

Health Cards: One more must carry. Actually, for me, it’s three cards. Medical insurance, dental insurance, and FSA debit card.

Business Cards: One of mine and one of my husband’s.

Cash: I’ll be honest. There are times when I run out of cash. Before my husband had surgery, he went to the bank each week and then I’d take enough money for the farmer’s market out of his wallet. Any leftover went into my wallet. I rarely spend cash, so after a while, the total will get up there. Other times, I’ll spend all the farmer’s market money at the market and not have any leftover. After a while, my wallet starts to empty out. I have to remember not to let myself be cashless! Fortunately, there’s an ATM for my bank in my office park, so I can replenish if I’m going to a team lunch or happy hour.

What’s Not in My Wallet
LearnVest recommends a few other items that aren’t relevant for my life, or that I’ve found a different solution for.

Frequent Flyer Cards: Rather than put them in my wallet, I put them in my address book so I can look them up when I’m booking travel. I also registered at each airline’s website. All you have to do is sign on to the website to get your number. You can always go back and add your number to the flight record later if you forget.

Club Cards and Gift Cards: Rather than keep my CVS card, Ralph’s card, Vons card, and all manner of gift cards in my wallet, I keep them in a zipped pocket in my purse. That way I can easily access them, but can still close my wallet. Actually, I keep my grocery store cards in my coupon folder because I can use my phone number to get the discount if I need to run out for one or two items. The card isn’t really necessary unless you want it to print out the points you’ve earned.

Are you a keeper of a slim wallet or do you let it fill up with junk before finally emptying it?

May

7

Why You Need to Save for Gaps in Disability Pay

Filed Under Emergency Preparedness, Money Management, Personal Finance, Saving Money | Leave a Comment

Before my husband went on disability, we stopped spending money in order to increase our savings. We’ve found that our spending has actually been much lower while he’s been out of work, but we also had a few unexpected events develop where the savings has come in handy.

Delays in Disability Pay
The first issue is delays in processing disability pay. We were prepared for it to take up to a month to get the first check, so we needed to have at least one month’s expenses in the bank. As it turned, we got the first check in two weeks, but it gave us peace of mind anyway.

Being on Disability Longer than Planned
We initially planned for my husband to be out of work for two months. Due to a complication, that timeline stretched out to three months. We reached that point, and another small issue arose. My husband won’t be returning to work until three and a half months after he went out, and he may not be full time at first. Fortunately, we still have savings to cover any gaps, because our spending will start to rise again once he returns to work.

Gaps in Disability Pay
The initial disability application had an end date of April 1. At the end of that period, the state sent us an extension form, but it took a month to restart the payments from that point. We received back pay, but our check account got a little low during the gap period because we also had a plumbing emergency and some work done on the kitchen. Again, because we’d saved up, we were able to cover the gap without a great deal of stress. We were close to transferring money from our savings, but the checks arrived just in time.

So far we haven’t had to spend any of our savings, although we will when the plumber finally asks to be paid. We were very fortunate to be able to plan for disability, but this is yet another reason you need an emergency fund. California provides state disability pay (funds come from employee payroll taxes), but most other states do not. If you don’t have disability insurance, or your disability coverage is taxable, make sure you have enough money to cover a three-month shortfall. You’ll be glad you did you or a family member suffers an accident or illness.

May

6

That Makes Me Stabby: We’re Rich

Filed Under Personal Finance, That Makes Me Stabby | 1 Comment

I’ve been on a slow burn for a few weeks over something my husband said. First, a little backstory. We helped found a small non-profit about ten years ago. For several years, we had to provide loans to the org to get it through some shortfalls. We’re actually still owed about $300. So, the other day my husband was speaking to one of the other board members about a current shortfall and said, “They expect Aryn and I to cover it, because we’re rich.”

Folks, I hit the roof. We are NOT rich. In comparison to the other board members, we’re certainly well-off, but we’re not rich by any stretch. The mere suggestion that we’re rich, or that he was telling someone we’re rich was infuriating. If we lived in Kansas with our income, we’d be rich. In LA? Not so much.The very idea that we’re rich makes me stabby.

What Is Rich?
In my mind, rich people earn more than $500,000 a year. According to Obama, it’s families earning more than $250,000. I know people in both camps, and neither would say they’re rich. Again, it’s partly location. In Kansas, that would be rich. In California or New York? Most definitely not.

Stretching the Middle Class
According to Wikipedia, the middle class starts at $65,000 for a family, and maxes out around $166,000. Of course, these are squishy numbers. The upper middle class is defined as a family earning more than $100,000. In my view, that upper threshold is low – in coastal states you can be well beyond $166,000 and still be upper middle class.

Why I Consider Us Upper Middle Class
I grew up upper middle class, so that’s a comfortable spot for me. I feel like we’re there. My husband was more staunchly middle class, so being upper middle class feels rich to him. We earn a comfortable income with two higher degrees between us. We also budget carefully, because we have many of the expenses associated with upper middle class families, like a large mortgage and student loan bills. We hope to start a family, so day care would also join that list eventually.

And that’s where the “we’re rich” argument breaks down. Day care, a pending increase in student loan expenses, and a car loan would eliminate our current monthly excess income. We still haven’t managed to boost our retirement savings, and we desperately need to. We’re frugal and budget carefully to afford our life. I’d be much more comfortable if we earned 20% more, but even then we still wouldn’t be rich. We’d just be able to save more.

Let’s Get Rid of the Term Rich
Why even bother calling people rich? Most people don’t define themselves as rich, even if other people think they are. So, let’s just dispense with the term, especially when discussing which portion of the population is rich enough to pay more taxes. At the very least, reserve the term for people for whom work is merely a hobby, not a requirement for living. People like Athina Onassis.

Apr

20

What Is a CD Ladder?

Filed Under Budget, Emergency Preparedness, Money Management, Personal Finance | 1 Comment

I’ve mentioned CD ladders as good options for tax refunds and emergency funds. They’re a safe way to earn a bit more in interest than the basic savings account. Currently, you won’t earn significantly more, but in the past I’ve seen CD rates go as high as 7% on a 5-year CD.

What is a CD Ladder?
Basically a CD ladder is five CDs, each with different maturity dates. Traditionally, the maturity dates are 1, 2, 3, 4, and 5 years. You buy them all at the same time. Then, when the 1-year CD matures, you roll it over into a new 5-year CD. After 5 years, you’ll have 5 CDs with the highest possible rate at the time of purchase, and you’ll always have a CD maturing within the next 12 months in case you need the funds.

Where Can I Create a CD Ladder?
Most banks offer CDs, so choose any bank or credit union. It’s best to get them all from the same bank or credit union to avoid future confusion. Before choosing a bank, read the reviews to make sure they don’t have issues with properly informing you about CD maturity. If you don’t notify them of your intention within the designated time period after maturity, they’ll automatically renew it into a CD with the same term.

Potential CD Ladder Earnings
Here’s an example of the interest you could earn with a CD ladder vs. a traditional savings account. We’ll start with $1,000 CDs. You may need more than this to open a CD at some banks, but it’s a nice round number for calculations. If you have a significant amount of money to invest, you can buy jumbo CDs, which have higher interest rates. These are Everbank rates. Even though I no longer love the bank, they have all the rates on their website, and they’re pretty generous.

1-year CD – $1,000 – 1.39%
2-year CD – $1,000 – 1.85%
3-year CD – $1,000 – 2.27%
4-year CD – $1,000 – 2.78%
5-year CD – $1,000 – 3.30%

After 5 years, you’ll have earned $768.40 in interest vs. $360 from a standard savings account. Of course, this assumes that interest rates won’t rise in the next five years. They will, because they move with the Fed rate, but CD rates will also rise with the Fed rate, so you’re renewed 5-year CD will earn substantially more than a savings account.

Of course, the more you can start with, the more you’ll earn. If you’re just starting, shoot for $10,000 total. Then, as each CD matures, consider adding more funds to each CD until eventually you have $25,000 in a CD ladder. The money is safe, it can be used for emergencies, and it’s earning a decent return.

Apr

19

Pros and Cons of Liquid Emergency Funds vs. CD Ladders

Filed Under Emergency Preparedness, Money Management, Personal Finance | 2 Comments

My husband and I have been debating what to do with our emergency fund. Should we keep it all liquid in an online savings account currently earning about 1.22% interest or put some it in a CD ladder? There are pros and cons of both options, so really it comes down the size of your fund and how liquid you need it to be.

Fully Liquid Emergency Fund
Right now our money is in a savings account earning a piddling amount of money in interest. Because the Fed rate is 0%, savings interest rates are low. For a while, banks were offering high teaser rates, but those don’t last long.

However, we chose to keep the fund fully liquid for the time being so that we would have full access to it while my husband is on disability. We haven’t had to tap it, but it’s there if we need it.

So here are the pros of the liquid emergency fund:
Always available. If your roof caves in during a storm, the money is ready to go. No need to wait for the funds or get financing in the interim.

Easy to access. We just transfer it from our online savings account to our checking account. It takes about three days for the interbank transfer.

No fees for withdrawing. We can take our money out anytime we want and we can add money to it whenever we want.

There are also cons to the liquid emergency fund:
Low interest rate. If you want to make money off your money, then a savings account isn’t a lucrative way to do that.

Temptation to spend it on non-emergencies. If we had less self-control, we might use that money for other purchases because it’s so easy to access.

CD Ladder Emergency Fund
You should always keep some money fully liquid. I’d keep at least one mortgage payment in cash – you never know when the bank will screw up (or when you and your husband will accidentally overpay the mortgage.) However, once the minimum is covered, you could move some of the emergency fund into CD ladders.

Pros of the CD ladder emergency fund:
Higher interest rate. Rather than 1%, CDs typically earn 4% or more. Not a huge amount, but a lot. When you ladder it into 1, 2, 3, 4, and 5-year CDs, interest rates climb with each year.

No temptation to spend it. If you want to break open a CD early, you usually have to pay a penalty. You can get no-penalty CDs, but the interest rate is lower.

Cons of the CD ladder emergency fund:
Difficult to access. If you need the money to fix your caved-in roof or overhaul the engine on your car, you either have to wait until the CD matures, and then wait for them to send you the money after you request it, or you have to break it open early and pay the penalty. In the meantime, you might have to get financing to cover the repairs, and that could cost more than the interest from the CD.

For now, we’ll stick with our liquid emergency fund, but we may start CD laddering as it grows. I’m thinking the right ratio would be 50% cash, 50% CD ladders. Then we would have enough to cover the initial emergency cost, and would be earning more interest on the rest in case a serious emergency (like a massive earthquake) develops.

Apr

9

Will the Cost of Life’s New Necessities Lead Us to the Poorhouse?

Filed Under Budget, Expenses, Money Management, Personal Finance | Leave a Comment

Last Friday, NPR’s Marketplace had an interesting report on the true cost of all our modern necessities. Taken individually, we don’t really think about what all these things cost us, but taken together they add up to quite a bit of our budget. So, how did we get here and do we really need to be here?

Life in a Simpler Time
People like to hearken back to a simpler age, the 1960s, when talking about how a family could afford to live on one income, and yet they puzzle over the fact that a TV or refrigerator cost ten times more (when inflation is factored in). How could these families flourish on less income and still buy these things?

It’s simple – they didn’t buy as much stuff, and they didn’t have as many supporting expenses for that stuff. Back then a TV cost $300-$500 (more if you wanted color), which was a much larger chunk of the average $5500 income than a modern $300 TV. But, they only had one TV. And they didn’t have cable. So, they paid for the TV and the electricity to power it, and that was it. Since there were only a few channels, they didn’t watch as much of it, either.

Where the Money Goes Today
Household Incomes are ten times higher than the 1960s (although really, they’re only double when adjusted for inflation), yet TVs cost about the same as they did back then. The difference now, is that most families have two or three of them, plus cable, a DVR or two, and DVD player or two. Then you need stuff to watch on that, so add on a movie subscription, too.

Or, let’s look at telephones. Again, most families only had one. It had a cord and they probably rented it from the phone company. Long distance was expensive, so they didn’t make many of those calls. I can’t find an exact cost for the average phone bill, but let’s just go with “less than now.”

Flash forward to today. In addition to a home phone (if you have one), there are cell phones for every member of the family. Some of those have data or texting plans.

Of course, you also need to add in internet access and computers with which to access them.

Want music? Well, then, you’ll need an MP3 player and maybe a CD player.

What My Family Spends on New Necessities
Just as a real life example, here’s what my husband and I spend on our “necessities” for one month:

$88.40 for cable with DVR (one TV, one Premium channel, one upper tier package)
$66.33 for home phone and internet bundle (no long distance or other frills)
$95 for two cell phones (no data or texting plans)
$9.99 for Real Rhapsody (music)
$19.99 for Blockbuster Total Access (3 movies at a time)

Our total is $279.71 per month.

Of course, we get reimbursed $90 a month for our phones, although that’s taxed, so we’ll call it $75 a month. That brings us down to $204.71 a month.

Additional Costs of the New Necessities
Since we’re spending all this money to entertain ourselves and stay connected, we have to earn at least $2456 a year to pay for all of it, on top of our actual necessities like food and shelter. We probably need two incomes to pay for all our new necessities, so that also means daycare, extra commuting costs, as well as less time to enjoy all those modern benefits.

I’m not suggesting that we give up our cell phones and broadband access, I am suggesting however, that we all take a hard look at how necessary the things in our life are and what we can cut. If we had to, we could cut Real Rhasody and Blockbuster easily. We could also reduce our cable bill. The home phone I insist on keeping because we live in earthquake country and landlines/corded phones have never failed me in a major earthquake.

What could you cut?

Apr

2

When Have You Played the Financial Fool?

Filed Under Personal Finance | Leave a Comment

It’s the day after April Fool’s Day, but a family emergency prevented me from posting this on the actual day of fools so I’m posting it anyway. This is all about the times I’ve been a financial fool. Some of them are doozies.

Not Selling a Stock When I Knew I Should
This one goes all the way back to 1999 and the days of the tech bubble. There was also a bubble in genome stocks. One day I realized my stock had increased 988% from the purchase price. If I’d sold that day, I would have earned $12,000. Instead, I decided to wait one more to get it to a nice 1000% increase. Then I would sell. My intuition was screaming at me to sell, but I didn’t listen. That very night after the markets closed, President Clinton gave a speech that made it sound like he was reversing gene patent law. He wasn’t, but the bubble popped. I wound up selling it at a 300% gain, which isn’t bad, but nowhere near what it could have been. I was a greedy fool, plain and simple.

Being Talked Into Buying Something I Didn’t Need
This was a recent frugal failure and I’ve blogged about it before. When I bought my sofabed, I was talked into buying not only sofabed sheets (which are weird and impossible to fold), but fabric protection. I wasted $170 (plus tax) for no good reason! Definitely foolish.

Being Too Honest
My first job was with a television show where I was paid $6 an hour. Rather than pad my hours, I was 100% honest. I was also 100% honest with my mileage, even though I was entitled to $100 a week in mileage and driving was part of my job. After about a month, the studio accountant spoke to my supervisor, who came to me and told me that I needed to mark at least 12 hours per day on my timecard and make sure I got the full $100 in mileage. I barely made enough to live on, and I could have earned far more that first month if I’d known more about the studio system. I’m a very honest person, but that’s not how Hollywood works. We were paid so low because we were expected to lie.

Spending Too Much on Brake Service
The first time I needed to get my brake pads replaced, I went to Midas and was completely scammed. They told me all sorts of things were wrong with the brakes. I wound up spending $400 on unnecessary work. To make matters worse, the brake pads they installed squealed terribly. I returned twice to have this corrected, and they said it was normal. I visited another Midas franchise about the squealing and they tried to tell me that my calipers needed to be replaced. They could do the work that day for $800. A deal, they said. I didn’t believe them and went to Goodyear – my first time there. Nope, the calipers were just fine. I also had the squealing pads replaced at Goodyear. The new ones didn’t squeal. Incidentally, I did end up having the calipers replaced about two years later, but Goodyear took me under the car to show me the torn boot and caliper damage.

I’ve been fortunate that I haven’t been extremely financially foolish, but losing $12,000 out of pure greed is certainly a hard lesson to learn. When have you played the financial fool?

Mar

16

Budgeting for Disability Leave

Filed Under Health Costs, Marriage and Money, Money Management, Personal Finance | Leave a Comment

My husband has been on surgery disability for several weeks now and we’ve learned a few surprising things about the process, the first of which is that it’s really not that much of a financial strain. Of course, we earn more than we spend, so it might be more difficult for families that are on the edge.

Total Reduction in Income
My husband’s income, after taxes, is reduced by about 25%. State disability income isn’t taxable, but the 5% bonus we’re receiving through his employer’s private disability plan is. If you’re planning a disability, find out if your benefits are taxable and budget accordingly.

I’m still working, so the total reduction in monthly income is closer to 15%. It’s something, but not so much that we really feel a pinch. I will also be interested to see how this affects our Federal taxes. We planned our withholding around our full incomes. If my husband is out for three months rather than the initial six weeks we estimated, that’s a full quarter of his annual salary, which may bring us into a lower tax bracket. If that’s the case, our total reduced income will be closer to 12%.

Total Reduction in Spending
We figured we’d see some reductions in spending, but we were stunned by the size of the reduction. We’re spending anywhere from 33%-50% less on our credit cards each month. Not only is my husband not eating out at all, or driving, or getting dry-cleaning, but I’ve also been seen some of my expenses go down. I expected our grocery bill to go up a lot, but it’s only gone up $15 a week or so. In addition, we have an FSA this year, so we’re no longer paying for prescriptions or co-pays.

The weather has been relatively mild, which has helped from an energy perspective. We had to use the heat during the day for about a month, but it was only heating the house an additional 3-5 degrees, so it wasn’t a big jump.

Planning for the Reductions by Stockpiling Cash
Once we knew the surgery was coming, we immediately put all major purchases on hold. We had planned to buy furniture, have some work done on the house, and buy me a car. None of that happened. Instead we funneled all our excess income into savings. Combined with our emergency fund, we had more than enough to cover the lost income and the gap between applying for benefits and receiving them. We’d expected that to be four weeks, but it was only three.

Pre-Pay Bills Whenever Possible
Before my husband’s surgery, he scheduled most of our bills for payment through our online banking. That way I didn’t have to worry whether a bill was due while sitting in the hospital. We were very glad he did that when his computer died the day before he went into surgery. Yes, I could access online banking from other computers, but I couldn’t use Quicken or access our budget. Let me tell you, not having access to Quicken or our budget for three weeks was very upsetting for me.

Between the FSA, reduced spending, and reduced income, we’re only falling about $600 a month short of our usual budget. That means we’re saving a little less, but far more than we were expecting. Recovering from surgery is tough, but the financial aspect doesn’t have to be if you plan carefully.

Mar

8

Don’t Blow Your New Pay Raise

Filed Under Money Management, Personal Finance | Leave a Comment

It’s been a rough couple years for employees. Many lost their jobs, and those who kept their jobs were unlikely to receive raises and bonuses. However, the economy is on the mend and many employers are finally able to offer raises. If you’re among the lucky recipients, you might be tempted to resume your prior spending levels, but I’m about to argue that you shouldn’t do that. Instead, use this as an opportunity to do one of the following. After all, you’ve survived this long without the extra money, you can keep doing it.

Pay Down Debt
If you received a pay cut, or couldn’t cut spending enough to avoid debt without a raise, then use the new money to pay down any credit card or other debt you’ve built up in the last two years. Since you weren’t used to having the money, you won’t miss it. If you use it to pay down debt, you’ll even wind up ahead of where you started because you’ll pay less interest and move through your debt faster.

Rebuild Your Emergency Fund
If you had an emergency fund, it may be depleted at this point, especially if you received a pay cut. If you’ve gotten used to spending less and aren’t creating new debt, then use the raise to rebuild the emergency fund. Another emergency could happen at any time, so it’s important to restore it as much as possible.

Boost Retirement Savings
Many employers cut their 401K matches last year, but are now restoring them. If you reduced or stopped contributing to your retirement, use your raise to start contributing again. Especially if your employer is resuming matching funds. If you don’t get matching funds, consider using the raise to open a Roth IRA or traditional IRA.

Replace Worn Out Appliances
Okay, this is a spending one, but if you have an appliance that is due for replacement, now is the time to do it. Some states have already run their Cash for Appliances programs, but other states are just ramping up. If your state is in the latter group, wait until it starts and then use your raise to replace your appliance and claim your rebate. While you’re at it, check for other rebates from your local utility. You could cover a significant portion of the cost by combining rebates.

Make Delayed Home Repairs
If you delayed any home maintenance because money was tight, now is the time to do it. Continuing to delay maintenance could lead to higher replacement costs later when it’s an emergency. Spring and summer are on the way, which is the perfect time for home maintenance.

Set New Savings and Investing Goals
You’ve already missed part of the new bull market, but there’s still quite a way to go. If you’ve already funded your retirement and rebuilt your emergency fund, consider investing in a regular brokerage account, starting a CD ladder, or increasing your general savings. If you really need a vacation, then you can set a savings goal for that and set aside your extra pay for that.

Of course, you can also go out to a nice dinner with your new raise, but don’t let it become a habit again. There’s no reason to give up your newfound frugal ways because you have more income. Have a little treat every now and then, but otherwise stick to your goals. You learned to live without the money once. You can continue to do so.

Are you getting a raise? If so, what do you plan to do with it?

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