Give Yourself a Raise (No Boss Required)

When my boss revealed how shitty my raise was going to be, it didn’t bother me that much because I already had a plan to give myself a $1,800 per month raise.

You may be wondering how I planned to do this. No, I don’t have backdoor access to the payroll accounting program, just a plan to get out of debt.

give yourself a raise

When you are in debt, you don’t control your paycheck. I can’t tell you how many times on payday that almost all of the money was immediately transferred to my creditors. My real paycheck might as well have been $100.

If you’ve been following our debt payoff progress posts, you know that we are 3 payments away from being debt free, minus the house. This means we will have paid off about $100,000 in car loans, student loans, and credit card bills.

We were able to do this by following my 10 Rules to Eliminate Debt and Change Your Life.

These rules allowed us to pay off our debts from smallest to largest, building up a debt snowball payment that grew in size after each bill was paid off. It is now about $1,800 per month.

So when the remaining 3 payments are made on my student loan, we will suddenly have a large amount of money available – call it a windfall if you’d like…

I’m calling it a raise.

To me, I think it will be more satisfying than getting a raise at your job. It’s something we have done totally on our own, without relying on others. Granted, it is a little like patting yourself on the back for fixing something you broke, but it sounds more “bootstrappy” paying off your student loans as opposed to having your parents pay for it.

Paying off debt and reclaiming your paycheck only requires one person – you. At work you can do a good job and work your butt off, but ultimately, getting a raise will depend on your boss and whether they have money, whether they paid their bills, etc…

It all comes down to whether you think about your household as a business. I know I do. My wife and I work together on setting our spending and our priorities. I view myself as the CFO, helping to set our broad strategy, and my wife Katie is the CEO. She makes the plan happen.

Our family business is about to make a transition, much like a company that has taken on debt early to grow. It’s now time to wipe that debt from our ledger books and start moving some real money into the cash on hand category.

Much like a business, you must have a goal. But what makes a family different than a business is that I feel you should start with the end in mind. Like Rule 10, the Goal of Work is Retirement, our family business exists already knowing how it will go out of business (retirement).

Most small business owners don’t think about the day they will stop working. They need to fill their minds with thoughts of exponential growth and success, perhaps getting sold to a larger competitor one day, or maybe even buying up all the smaller competitors and becoming top dog.

The difference is optimism vs realism.

Debt Payoff Is Like Getting A Raise

So back to my original point, that debt payoff is like giving yourself a raise.

Suddenly you have more money that you control. Once you’ve gotten to the point where you are debt free minus the house, all your spending is YOUR choice. You don’t need to rush to pay off your house now because it is part of a longer-term wealth building strategy.

Now you can start putting money in a Roth IRA, or 401k, because if you’ve been following the 10 Rules, you are waiting to invest until debt is paid off.

I’m really looking forward to getting that big raise in a few months. I plan to hoard every penny of it in an emergency fund as part of my Job Loss Emergency Plan, as I plan to make a big career change starting in 2013.

I don’t know what that new direction is yet, but I know it must happen.

READERS: Have you ever given yourself a raise by paying off debt?

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59 Comments
  1. Hey John, funny, I was just chatting at work today about our upcoming pay review and my shitty raise last year. No doubt this year will be just as underwhelming! Your last few posts have been very good reminders for your readers about some of the big picture thinking that is required to find the drive to plow through their debt. It is tough. But the reward at the end is soooo sweet. I have been there (fully debt free inc house) and THAT feeling is like nothing else. It is my, sorry our, drive to get back there. p.s. love the CFO/CEO analogy…sounds familiar.

    • Thanks, Bec. I can’t wait to see what debt-free feels like. It better be good since I’ve been chasing it so long! :)

  2. Heck yeah.. What a great way to think about debt repayment. I am excited about a future where I get to choose what to do with my paycheck, instead of using a large chunk of it to fatten the wallets of some mega-banks.

    We are well on our way, but still have much to do ..
    jefferson recently posted..Using Credit Cards and Paying Them Off Immediately…Too Dangerous?My Profile

    • Thanks Jefferson. I liken it to that first dollar we earn as a kid. I’ll be smiling ear to ear and I’ll probably frame that first paycheck after debt freedom!

  3. nicely put, yes debt payoff seem similar to giving yourself a raise.
    SB @ One Cent At A Time recently posted..Carnival of Personal Finance #361 – The Mothers Day EditionMy Profile

  4. You bet, that ‘extra’ $1800 is going to feel just like a fat raise. Even better though: If you got an $1800/month raise at work, after taxes you’d keep maybe $1500. By completing your debt payoff project, you keep it all!
    Kurt @ Money Counselor recently posted..Debt Account AversionMy Profile

    • Good point, Kurt. I almost got a job with a raise that big, but I’m glad I didn’t because it wasn’t the right position for me at this time. This “raise” is gonna feel a whole lot more satisfying.

  5. We’ve given ourselves a few hundred dollars worth of raises over the years. We’ve got another $500/month in student loan payments and I can’t wait to get those knocked out!

    A $6k/year raise isn’t too shabby.
    Jason @ WSL recently posted..Our Journey to Financial Peace – April 2012My Profile

    • It’s always best to save those student loans for last because they don’t make me as angry as the cars and credit card did. By using the snowball I’ve been delaying my gratification, but in 3 months the snowball stop rolling and I can step off smiling.

      Thanks Jason!

  6. perfect way to interpret your debt repayment
    Sean @ One Smart Dollar recently posted..Money Saving Workout Routines for a Fit Recession-istaMy Profile

    • Thanks Sean. When you’ve been stuck in debt limbo as long as we have been, you start to think of little things to make yourself happy.

  7. I’ve actually never thought of it that way – good for you! I don’t have enough debt that it would feel like a huge raise when I pay it off. I make payments of about $200/mo toward my debt and I think that’s what’s so de-motivating about it. It’s not large enough to make things tight for me and so it’s sort of anticlimactic.
    Daisy recently posted..Life Lessons From My MotherMy Profile

    • Good problem to have! Lets you focus on increasing your earning power. Thanks Daisy!

  8. That is going to be a very satisfying raise. There’s no way you’d that kind of raise at a job. So to suddenly have that much extra money each month will be awesome. I’m sure you’ll be able to invest a ton and rapidly build up an impressive investment portfolio. Nice job John!
    Modest Money recently posted..Keeping Up With The Joneses In The Digital AgeMy Profile

    • Thanks Jeremy. It’s nice to see my net worth climbing that much each month and I can’t wait to try my hand at investing.

  9. DUDE get out of my head! You’re thinking the same thing I am, and you are SO right, it will absolutely feel like a raise!
    Frugal Portland recently posted..Alternate Ways to View DebtMy Profile

    • Ha! :) Glad to hear I’m not the only person who thinks this way (maybe we are both crazy!)

  10. Congratulations, all that hard work will pay off in 3 months, literally! I think having consumer and student loan debt has to be one of the most stressful things in life, so not only will you get a raise, but your mind will be more at ease as well. I’m looking forward to reading more about your strategy for saving and investing your raise.
    Monica recently posted..Americans Renouncing their Citizenship for Greater Freedoms AbroadMy Profile

    • Hey Monica – good to see you!

      When that’s all paid off I’ll be able to expand my topics here, but I’ll still stick to the same principles. Expect a lot about saving for my dream home in the middle of nowhere!

  11. That is such a great feeling! Congrats on your raise, John! You REALLY deserve this one. :)
    Stephen (Saving from Scratch) recently posted..Boomers versus Millennials: Are they right about us?My Profile

    • Thanks Stephen – the money well at work has been dry for a few years, so it’ll be nice to actually start making some money.

  12. I love that feeling of paying off a debt and crossing that line item off the budget. it definitely feels like giving yourself a raise! We’ve got one debt left and I am so excited for the day we can cross that “Student Loan” line off the budget and celebrate by going to an amazing dinner (paid for through a good groupon, giftcard or other discount, of course!)
    Jacob @ iHeartBudgets recently posted..Budgeting Basics (Part 4): Why You Should Get a Month AheadMy Profile

    • Hey Jacob – I plan to have a big party to celebrate too, maybe a BBQ. It is nice crossing those lines off the chart and sending the old payment somewhere new.

  13. Congratulations on your debt payment success and having just three payments left to become debt-free.

    I agree with you that paying off debt is similar to getting a pay raise, because, in both cases you’ll end up with extra money.

    I like that you view your household as your business with you as the CFO and your wife Katie as the CEO. Business owners always have to manage their business accounts, and it’s no different for homeowners and renters.
    Anthony Thompson recently posted..Self Management – More Classic Self-Management Books You Should Start Reading TodayMy Profile

    • Thanks Anthony – I enjoy thinking of the family as a business, that way we can all be small business owners (the kind that succeed, though :)

  14. That’s great, it looks like you’re making a ton of progress. It’s an exhilarating feeling once you finally pay off your last credit card…you should definitely go reward yourself!
    Kevin @ SpringCoin recently posted..A Debt Free TomorrowMy Profile

    • Thanks Kevin – I’m planning a big party and you are all invited! Seriously though, I’m still wondering if a debt-free party is distasteful. What do you think?

  15. Nope, but I have given myself a pay rise by simply joining a union. (http://eemusings.wordpress.com/2010/05/19/mo-money-mo-problems/)

    Congrats on (practically) clearing that debt!
    eemusings recently posted..Working from home: a mixed bagMy Profile

    • Thanks ee – headed over to read your post now. Unfortunately I’m prohibited by law from joining a union, but we receive a lot of the same pay and benefits.

  16. This is very great post. especially for those who are struggling for debt. congrats anyway!
    Carol recently posted..moving companiesMy Profile

  17. I have never thought about it this way before but you are so right. It is like a raise. Next time I am helping someone with their debt repayment plan I will share this thought with them. It’s very motivating.
    Miss T @ Prairie Eco-Thrifter recently posted..Why Buying Green Is Not Always Eco-Friendly.My Profile

    • Thanks Miss T. Motivation is the direction I’m shooting for. We need anything we can get when buried in debt.

  18. It will be really really soon when you’ll get your debt all paid off!! Woot woot! And then it will be like suddenly getting a raise, nice job! :-) When it’s all said and done you’ll have to post about how long each debt took to pay off, etc. Details!
    TB at BlueCollarWorkman recently posted..Work Stoppage for a ProtestMy Profile

    • Oh man – I think it was the cars since they were the biggest chunk. That will be my epic debt free post!

  19. Congrats on creating your own raise – something not a lot of people are able to do. As shitty as your raise was, at least it’s something. I know a lot of companies have eliminated raises (or enforced paycuts) or even worse…

    Did your boss say whether the raise was based on performance or were external factors a big reason?
    funancials recently posted..Organizing My LifeMy Profile

  20. I definitely agree that paying off debt is akin to giving yourself a raise. I think that’s a fabulous way to frame that. BTW, I love your statement “most small business owners don’t think about the day they will stop working. ” I think too often people don’t consider emptying themselves into something that truly interests them.
    Roshawn @ Watson Inc recently posted..Is Money Real?My Profile

    • That’s a good observation Roshawn. I’ve emptied myself into this debt payoff and there’s not much left of me.

  21. Great post John! This happened to me when I paid off all of my consumer debt, which happened to be my only debt at the time. I felt amazing and it was a HUGE raise. Instead of 90% of my paycheck going to credit card companies, it was now going to myself. I wasn’t able to spend it still, but at least it was going to my 401k, roth, stock purchase plan, insurance and regular savings.

    When you talked about your family being a business – it reminded me of a post I wrote about my relationship being a business – http://fromshoppingtosaving.blogspot.com/2011/10/thriving-business-our-relationship.html

    Great minds think alike! I will have to read in your archives and learn more about how you aggressively paid off over $100k. The BF has close to $100k of school loan debt and I will be taking out that much as well for law school. Not fun, but I expect to pay it all off as soon as possible on my own.
    From Shopping to Saving recently posted..How To Tell If You Are a ShopaholicMy Profile

    • Wow, 200k for school? He will likely get a high income job no doubt. The “aggressive” part came a few years ago and was preceded by what I call one step forward, 1.5 steps back.

  22. I’ve thought along similar lines myself (with my house mortgage). We think alike!

    Check out this article, I think you’ll get a chuckle out of it! Paying off your mortgage is like working at a second job.

    Cheers! :)

    • Hey Don, good to see you. Paying off debt definitely feels like a second job. Actually it feels like my first job and my day job is my second. Thanks for reading.

  23. Hi.. I think this is a very important post especially to people who have a lot of debts..Sometimes, when the time comes its a salary day, all you have for yourself is a small amount..
    Gisele recently posted..A Review Of Panic AwayMy Profile

  24. So it’s up to you to make the first move. And no matter how good you are at hard-nosed negotiating, when it comes to asking for a raise, doing it right is definitely an art.
    Crystal recently posted..The GoPro Video RevolutionMy Profile

  25. Yep! almost $600 every 2 weeks! Don’t get those types of raises too often :)
    Cassie recently posted..The Bane of My ExistanceMy Profile

    • Sweet – good to see you Cassie. That’s a pretty good raise!

  26. Congratulations on being so close to paying off your debt! As hard as it can be to remain diligent in paying things off (which usually equals sacrificing something in your lifestyle) it’s so worth it when the money you make goes to you and not to a creditor! Keeping an eye on that “raise” you’ll get when debt is paid off is one great motivational factor!
    Shannon-ReadyForZero recently posted..ReadyForZero Success Profile: ChadMy Profile

    • My luck I’ll lose my job right when it happens! Just kidding – I shouldn’t say that.

      Thanks Shannon for stopping by!

  27. If paying off debt is like a second job, I definitely have 3 jobs! I recently paid off all my debt and feel like I just got a huge raise for sure – except not really because I’ll be pretending I didn’t and throw the extra money towards savings. Still a great feeling though!!
    LittleFrugalista recently posted..Should parents fund adult children just because they can?My Profile

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