Raises at my company this year were… disappointing to say the least. The average raise across my division was 2%.  I got 2.01%, or $1800. Our division had a good year, which just ended a few months ago, but the outlook is not very good for this year so raises are low. Also, with the job market being so poor, the company knows that they don’t have to pay as well as they would in good times. I guess that’s the breaks.

Anyway, the good news is my income did go up $1800 this year! There are a lot of employed people seeing salary freezes this year, not to mention all of the unfortunate unemployed. So, after some initial frustration at this being the lowest raise I’ve ever received, I can now see how lucky I am to have a good, secure job that pays well. I guess at times like this you should count your blessings. Hopefully you end up counting higher than you would initially think.

The Numbers

Last year I got promoted into a position with a published salary range of $86,300 to $143,800, making $89,750. I got an extremely large raise last year due to being promoted, because my salary had to be pushed up into the proper pay scale.

The $1800 increase makes my new salary $91550. Unfortunately, the published salary range for my position went up this year as well! This year, people in my position make between $88,000 and $146,600. In other words, the minimum salary for someone in my position went up by $1700, while my pay went up by $1800.  So I’m $100 further above the minimum than last year, which kind of makes me want to laugh and cry at the same time. Think positive Paul!

With my wife making $12.72 an hour, 36 hours a week on average, our current yearly income is $91,550 + $23,250 = $114,800 before taxes. Pretty damn good for a couple just out of their twenties, if you ask me.

The 401k

Now, last year after I got a very good raise, I decided I could afford to max out my 401k contribution, which I did. Maximizing the 401k turned out to be 18% of my pay, or $16,114. The limit that can be contributed pre-tax last year (and again this year) was $16,500.

What I had hoped this year, before I learned about my raise, was to actually be able to reduce the percentage of my income I put into my 401k. I had hoped that 18% of my post-raise income would be above the $16,500 limit, forcing me to lower my contribution, and therefore giving me more take home pay to do other things with. Unfortunately that didn’t work out. 18% of my new income is $16,479, which as you can see is still under the yearly limit. I guess I’ll have to wait until next year! On the plus side, this is the first year that I’ve gotten a raise after which I won’t be raising my 401k contribution.

The Plan for the Extra Cash

Technically, I’ll only be taking home some fraction of the $1800 raise, since 18% of it will go to my 401k, and then another 30% or so will go to taxes (someday I should probably figure out exactly how much gets taken out of my pay for taxes). So that doesn’t leave much left to actually use. Nevertheless, some ways I plan to use the money are:

• Saving for a down payment on a larger home
• Saving for my car dilemma
• Investing in something other than retirement accounts. This is wide open, and I hope to use the blog to help decide when, where, and how to invest.

Here’s to a new work year, and to a better raise next year.