Tip 8: Give Yourself A Raise

As I’ve mentioned before, one of the easiest ways to save money is to start paying yourself $1 a day. In fact, I started doing that a month ago, and now I have $28 extra in my loan payback fund. The best part is that I never even realized it was gone. Since I have $7 automatically transferred into my payback account on a weekly basis, I don’t have to worry about accidentally spending it.

A $1 a day is a great start, but it would take almost a year to save up enough money to make a single loan payment at this rate. A simple way to speed this up is to give yourself a raise. Depending on your current financial situation, you can decide on how much of a raise you can give yourself. Every little step makes a difference.

I’m going to start small and give myself a $1 raise. This small raise will double the amount that I save every week, and I probably still won’t notice that the money is missing. Since I’ve been tracking my expenses, I know that I have enough income to cover this raise. It’s not much, but it’s a good start until I can afford to give myself a bigger raise.

If you can’t afford to give yourself a raise, then then there are two ways to fix this — cut expenses or increase your income. Ideally, you should do both. This is what I’m striving to do as I prepare to enter the real world next month.

As I mentioned in my 2008 financial resolution, I’ll be starting a new job in January with a nice salary. It’s going to be hard to cut expenses, since I’m moving to a city with a significantly higher cost of living. However, I’m going to try to maintain a similar lifestyle (”broke grad student style living”) despite the increase in income. This will allow me to save more money and give myself a bigger raise to start paying back my student loans next year. After a couple of months, I should have a good idea of my adjusted spending habits, and then I can determine how aggressively I can afford to pay back my student loans.

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