Personal Finance

Congrats on your raise; don’t go wild

Dear Dave: I just accepted a new job that will pay me $30,000 a year more than my old position. I’ve got about $55,000 in debt I’ve been working hard to pay off, and I know now I need to adjust my budget. Do you have any advice?

Mitch

Dear Mitch: The first thing I’d say is don’t go crazy on any big-ticket items while you’re paying off debt. Keep it simple, and go out to celebrate with a nice dinner after you get your first paycheck. Remember, the more you put toward debt, the faster it goes away.

For the time being, I want you to remain passionate about getting out of debt. Your thought process needs to be, “Wow, I got a new job making more money. I can get out of debt even quicker!”

Again, I’m OK with you adjusting a bit that first month and having a little fun to celebrate your good fortune. But after that, I want you to turn around and attack that debt with even more intensity than before. Then, once you’re out of debt, you can celebrate that with something a lot nicer.

Dave

Dave Ramsey is CEO of Ramsey Solutions. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey.

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