If you are among the lucky few that recently received a pay raise or will be getting a pay raise this year, you are probably wondering the best way to put this extra money to good use. 


The most important thing to remember is not to increase your standard of living (expenses) to match your new income. It's amazing as I look back over the years and see how my standard of living increased to match (or sometimes, exceed) my income. If I was living comfortably on $30,000 a year, why couldn't  I continue to live on $30,000 as my salary increased. Just because my salary increased should not have meant that my expenses increased along with it?


Two years ago, I made a conscious effort to be sure that my as my salary increased, my expenses stayed the same or decreased.  If my expenses did increase, it was because I was sending more money to my savings accounts and not because I was taking on another bill to pay each month. 


If you will be getting a pay raise or recently received a pay raise, here are a couple of good things to do with the increase:

• Debt Payments. If you have high interest debt you can direct the additional income towards knocking out your debt. Once you get rid of the debt, your raise will have have a double positive effect. You're income will increase from the raise and you'll have the additional money you aren't sending to your debtors. If you have a mortgage, how about sending that additional money in to knock down your principal and own your home a few years sooner?

• Savings. Are your savings accounts looking a little skimpy? Direct the additional income into those accounts to fatten them up.

Don't use a pay increase as a reason to increase your expenses. Do you really need a larger house or a new car? Those things usually mean larger monthly payments. 


Don't get me wrong, I'm not saying you should not have a little fun with your money; but don't go overboard. Make it a one time expense instead of one that occurs monthly. 

Did you get a raise recently? What did you do with the increase?

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The first full month of my new zero-based budget was a success. My new budget plan is to set aside the amount of money I plan to spend at the beginning of the month in my checking account and any deposits are sent to my money market account. Once the money in my checking account is gone, I can’t spend any more money for the month.

Income: 

My income was a little bit higher this month due to getting my company bonus. The majority of the bonus was deposited into my rental property savings account to cover some upcoming maintenance items that need to be completed.

Expenses:

Nothing really out of the ordinary this month. I budgeted $4100 to spend for the month and I spent a little over $3800. The difference of $296.38 was transferred over to my money market account to zero out my checking account. On February 1, I’ll transfer another $4100.00 to my checking account and start all over again. (Note: The mortgage amount includes the mortgage for my primary home and my rental property).

I really like this new method and I think I’ll stick with it. Instead of trying to allocate money to several categories, you allocate money for the month. To me, it makes budgeting easier.

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I’m sure you guys have probably heard this by now but if not, there are several Toyota models being recalled due to two different safety issues.

The first recall, "Floor Mat Entrapment," regards the potential for an unsecured or incompatible driver's floor mat to interfere with the accelerator pedal and cause it to get stuck in the wide-open position.

The second recall, "Pedal," is being conducted because there is a possibility that certain accelerator pedal mechanisms may mechanically stick in a partially depressed position or return slowly to the idle position.

Here is the list of Toyota vehicles involved in the recall:

* 2005-2010 Avalon
* 2009-2010 RAV4
* 2007-2010 Camry
* 2008-2010 Sequoia
* 2009-2010 Corolla
* 2005-2010 Tacoma
* 2008-2010 Highlander
* 2007-2010 Tundra
* 2009-2010 Matrix
* 2009-2010 VENZA
* 2004-2009 Prius

If you aren’t sure if your vehicle is involved in the recall, head to your nearest Toyota dealer to get it checked. This is a huge recall that can affect the safety your vehicle.

You can also check your Vin number (17 digit number on the left front dash or checked the drivers door). Vin numbers that begin with “J” are not subject to the recall.

Are you a Toyota owner? Is your vehicle affected by the recall? Have you had it repaired?

According to the Wall Street Journal, personal bankruptcy filings are up 32% from 2008. Sometimes, your personal financial situation is so bad, bankruptcy is the only option. While bankruptcy may wipe your financial slate clean, unfortunately, it will also kill your credit score and stay on your credit report for at least 10 years.

While filing bankruptcy may hurt your credit for the first few years, you can take steps to rebuild your credit.

The first and most important thing to remember is to not to get back in a situation where you end up over your head in debt. I’m not saying that all bankruptcy filings are a result of irresponsibility. Bad things happen to good people. People lose jobs unexpectedly, people have health problems, people get divorced, etc. I will say it again, sometimes bad things happen to good people.

The second thing is to pay all bills on time. Even though your utility companies or cell phone companies don’t show up on your credit report, they will likely show up on your credit report if they go into default.

You will need to demonstrate to future creditors that have learned your lesson and you can be responsible. One way to build or rebuild your credit is to apply for a secured credit card. Secured credit cards work like regular credit cards except that your credit line is usually secured by a savings account that you maintain with the bank. Many of these cards don’t have a monthly and/or annual fee. You can find a list of prepaid cards here.

Building your credit score up will not happen overnight but with patience, time and responsible behavior, your credit score will improve.

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The other day, some of my co-workers and I were discussing the amounts that our paychecks changed due to the increase in the cost of our benefits. 

I asked one of my co-workers if her paycheck changed and she said she did not know. I thought she was joking but after awhile I realized, she really did not know. 

She could tell by the look on my face that I thought it was weird that she didn’t know how much her paycheck was. Her reply was that she doesn’t know exactly how much her paycheck is, she just looks at the first 2 numbers in the email. (We get an email 2 days before payday telling us the amount of our direct deposit). 

We ended our conversation with her saying that her paycheck probably only changed $20 or $30 bucks but that is such a small amount amount that it really doesn’t matter. 

Do you think the small amounts don’t matter? If so, I have to say that is not the best way to think about your personal finances. The small amounts DO matter. Saving $30 bi-weekly will give you $780 after a year. That may not seem like a lot of money but if you have NO savings right now, $780 is a huge amount of money. 

When I was younger, I would not pick up a penny because it was only one cent. My grandmother would always tell me, “son, pennies make dollars”.  I didn’t think much about it when I was younger but now, I have no problem picking up a penny. 

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