I found out today that I got a 4% raise! This raise is retroactive from March 2008. In this economy, I was expecting a whole lot of nothing, so this came as a pleasant surprise.
The raise will add about $60 after taxes to each of my paychecks. I get paid bi-weekly. I got a major promotion and raise in May of 2008, so the retroactive sum for those first few months will be smaller. Still, I hope to get an extra $1,000 in income before the end of the year. And take a wild guess where it is going to go!
But not so fast. I think it is important to keep in mind that as important as paying my debt off is, I have a few other goals as well.
First, I have about $950 total between my savings and checking accounts right now. Some of that will inevitably be spent between now and the next paycheck. I’d like to get to the point that at the end of a pay period, my checking and savings accounts add up to $1,000, not including spending earmarks. This mini-emergency fund should be more than enough cushion for right now. I don’t have a car and therefore don’t have to worry about emergency repairs. But I also don’t want to have to run to a credit card if something comes up.
Second, I have two major expenses coming up. I am applying to law school and have to pay application fees. That will run a bit under $500. Christmas is coming up, and I expect to spend about $200 on presents. I also earmark $150 per paycheck for these expenses.
I think it is important to pay myself first. This means funding my mini emergency fund and paying for the applications before paying off the debt. And I couldn’t bear to cancel Christmas!
I don’t like to count my chickens before they hatch, so I will hold off on making any final allocations until the money is in the bank. But it sure feels good to think about it!