About a week ago, my boss came to me to chat. The first thing she said was, “don’t worry, it’s a good thing. It’s about your annual salary increase”. Sweet! I am always thrilled with a salary increase, but having been at the same company for 4 years now, the amount my salary increased was no surprise. Every year, I get 3%, “which is the maximum yearly scheduled increase the company gives out!” So, my salary is a little bit higher and each paycheck gets a tiny little bump.
Currently, I don’t have a lot of leverage to ask for a larger raise as it wasn’t too long ago that I got a promotion that came with another bump (maybe 10% – whoopie!). I could also look at switching companies and getting a raise that way (and perhaps I should). As I thought about it though, I realized that over the past year, I have essentially given MYSELF a couple of raises that far outpace the 3% my company expected me to be ecstatic about.
Passive Income raise
I just recently bought my first real estate investment, a turnkey single family home in Indianapolis. Even after accounting for maintenance/repairs, for a tenant vacancy down the line and all the taxes, insurance, mortgage, and property management fees, I calculate that I’ll be cash flowing $290/month. With that, I just gave myself a $3,480 raise! I understand that thinking this way isn’t perfect. I parted with a down payment as well as closing costs. However, just in terms of my income, it’s essentially a raise.
I cut down on my expenses over the past year. I took a look at my budget and stopped wasting money in various areas. Early in 2013, I had slipped and was probably eating out too much. I probably spent too much at bars instead of inviting friends over for a cheaper, more delicious craft beer tasting. I developed my wardrobe plan and felt less need to spend money on clothes. I like to think of the money I was able to avoid spending and instead invest as another form of raise. I didn’t track my expenses as carefully early in 2013 as I do now, but I would wager that I cut my expenses by at least $150/month, giving me another $1,800 raise! But wait a minute. That money I saved was AFTER taxes. If I multiply that by 1.2 to estimate the before-tax value (to more accurately compare it to what a raise from work), I am giving myself a $2,160 raise!
My Total Self-Awarded Raise: $5,640
Unlike your corporate job, you are free to give yourself multiple raises per year! I’m not done giving myself raises this year. I plan on purchasing another rental property this year. I am hoping to launch a digital side hustle before the year is up. I plan on moving to a less expensive apartment in the Fall. Of course, I’ll keep you updated as I do all of this.
So give yourself a Raise
The next time you get a small raise at work, do something about it. You can always ask for more or look for a new job, but in addition, look for ways that you can give yourself a raise, whether through generating more income outside of work (investments, side hustles, etc) or by cutting your expenses. There are some amazing benefits of giving yourself a raise:
- You can give yourself multiple raises each year
- If you absolutely crush it at work, you may or may not even GET a raise. Your efforts to cut costs or generate side income are more often rewarded with a raise
- If you lose your 9-5 job, the raise you gave yourself is still in place (eating less into your emergency fund or generating cash flow to help you get through the lean times)
How have you given yourself a raise?
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