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Daily Money Shot: What to do with the extra money from your raise

Jana is a freelance writer and founder of the mentoring program Bloggers Helping Bloggers. She's also the creator of Daily Money Shot, a personal finance blog discussing money at the intersection of life, family, pop culture and everything in between. Jana is a member of the Dimespring 30, a community of bloggers sharing their thoughts, experiences and perspectives on personal finance. 

Typical personal finance advice tells you that when you get a raise, you should not factor that money into your budget. You should use it for savings or funding your retirement or debt repayment. You should not adjust your standard of living just because you have more money coming in.

It’s good advice. After all, if we constantly adjust our standard of living in direct proportion to our increase in income we’ll always maintain the status quo. It’ll be hard to get ahead, and we won’t be as well prepared for our future or for emergencies. However, that advice isn’t always practical. There are several circumstances where it is necessary to incorporate a raise in your budget. Yes, it’s not the optimal choice, but there are times when we’re left with no other option.

READ: Daily Money Shot: Goals, not resolutions, for 2013

Let’s look at some of those circumstances:

Your expenses go up proportional to the increase in income. Let’s say, all at once, your mortgage, car insurance, gym membership and HOA fees go up. Most of those expenses are non-negotiable and if you don’t pay them, you get into a great deal of trouble. In this instance, your raise is virtually nonexistent and you need to use the money to cover these mandatory expenses. Yes, you can save money by canceling the gym membership or trying to negotiate a lower insurance rate but, for a lot of people, that’s not possible.

Your salary barely covers your bills. If you make minimum wage or you are struggling to pay your bills every month then a raise will give you a bit of breathing room. It’ll give you that cushion you need to feel a little less paycheck-to-paycheck. The raise might mean you’ll be able to stop juggling bills. You’ll be able to afford the necessities that you haven’t been able to pick up (like that new pair of shoes or the haircut). You might even be able to afford a few extras like the field trip fees for the kid.

READ: Daily Money Shot: Four questions to ask before deciding to live on one income

Something unexpected happens. And you need to pay for it on a monthly, ongoing basis. As much as we like to plan and budget, there are things that happen that we can’t prevent. Let’s say, for instance, you all of a sudden need monthly medication and doctor appointments to accompany it. Your childcare arrangement falls through and you need to use the raise to cover the new fees. Your grocery bill goes up because you have someone new residing in your house. There’s a host of events that can happen unexpectedly that, had it not been for the raise, you would not be able to pay for.

Whenever possible, it is advisable to use any sort of raise or increase in income as savings or some way of building a safety net. However, if you need to incorporate that money into your monthly budget, don’t feel guilty. It may not be the perfect scenario but if it makes getting through the month a little easier and less stressful, then go for it.

Readers, are there any circumstances where you would advice incorporating a raise or increase in income into your monthly budget?

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News

  • The British man who killed four people during a London rampage had made three trips to Saudi Arabia: He taught English there twice on a work visa and returned on a visa usually granted to those going on a religious pilgrimage. More details about attacker Khalid Masood's travels, confirmed by the Saudi Arabian embassy in Britain, emerged Saturday amid a massive British police effort to discover how a homegrown ex-con with a violent streak became radicalized and why he launched a deadly attack Wednesday on Westminster Bridge. The embassy said he taught English in Saudi Arabia from November 2005 to November 2006 and again from April 2008 to April 2009, with legitimate work visas both times. He then returned to Saudi Arabia for six days in March 2015 on a trip booked through an approved travel agent and made on an 'Umra' visa, usually granted to those on a religious pilgrimage to the country's Islamic holy sites. The embassy said Saudi security services didn't track Masood and he didn't have a criminal record there. Before taking the name Masood, he was called Adrian Elms. He was known for having a violent temper in England and had been convicted at least twice for violent crimes. Masood drove his rented SUV across London's crowded Westminster Bridge on Wednesday, striking pedestrians. Then he jumped out and stabbed to death police officer Keith Palmer, who was guarding Parliament, before being shot dead by police. In all, he killed four people and left more than two dozen hospitalized, including some with catastrophic injuries. The Islamic State group has claimed responsibility for the attack, calling him a 'solider' who responded to its demands that followers attack countries in the coalition fighting IS in Syria and Iraq. British officials said security at Parliament will be reviewed after new footage emerged that showed the large gates to the complex were left open after Masood rushed onto the grounds. There are concerns that accomplices could have followed him in and killed even more people. The footage from that day shows pedestrians walking by the open gates and even a courier entering Parliament grounds. Former Metropolitan Police commissioner Ian Blair told the BBC that changes to the 'outer soft ring' of Parliament's security plan are likely in the aftermath of Masood's attack. The new footage follows earlier video that showed slight delays and confusion during the evacuation of Prime Minister Theresa May from Parliament as the attack unfolded. Masood, who at 52 is considerably older than most extremists who carry out bloodshed in the West, had an arrest record in Britain dating to 1983. In 2000, he slashed a man across the face in a pub parking lot in a racially charged argument after drinking, according to a newspaper account. Masood's last conviction, in 2003, also involved a knife attack. One victim, Danny Smith, told The Sun newspaper that Masood had stabbed him in the face with a kitchen knife after an argument just three days after they met. Hundreds of British police have been working to determine his motives and are scouring Masood's communications systems, including his possible use of the encrypted WhatsApp device, to help determine if he had any accomplices. Still, police have released many of those they took in for questioning in the case. One 58-year-old man remains in custody for questioning after being arrested Thursday in the central English city of Birmingham, where Masood was living. Authorities haven't charged or identified him. A 32-year-old woman arrested in Manchester has been released on bail and faces further inquiries. Police said Saturday that a 27-year-old man arrested Thursday in Birmingham has been released. Eight others arrested in connection with the investigation had been set free earlier, including a 39-year-old woman who had initially been freed on bail but now faces no further police action, police said Saturday. Details about how Masood became radicalized aren't clear, although he may have become exposed to radical views while an inmate in Britain or while working in conservative Saudi Arabia. It's also not clear when he took the name Masood, suggesting a conversion to Islam.
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  • One day after 11 of 14 charges were dropped against him, an Atlanta man has been indicted in connection with women he allegedly held at a Sandy Springs house, the Fulton County district attorney said Friday. Kenndric Roberts, 33, was indicted on six counts of trafficking a person for labor servitude, six counts of false imprisonment, two counts of possession of a firearm during commission of/or attempt to commit certain crimes, and participation in criminal street gang activity, District Attorney Paul Howard said. The indictment means that Roberts will be held without bond in the Fulton County jail, Howard said. A judge had set bond at $80,000 on Thursday during a preliminary hearing. “It was distressing,” Howard told Channel 2 Action News on Friday about the previous day’s developments. “We thought it put our victims in a state of vulnerability. “We thought it was important that this defendant remain in jail.” Roberts was arrested March 8 after one of the women called 911, telling police, “I’m in a very bad situation, and I need to get help,” officers said. Eight women were removed from the house, police said. Six indicated they were held against their wills. Police also found expensive cars and an AK-47 in the 6,800-square-foot house, Carter said. Detectives learned the women were forced to dance at local strip clubs, according to a news release from Howard’s office. The money they earned would be given to Roberts. Police also said Roberts was a Gangster Disciples member and required the women to get gang-related tattoos as a sign of loyalty. In Thursday’s hearing, attorney Mike Maloof Sr. referred to Roberts as a “poor man’s Hugh Hefner.” “Everybody had grand designs on making money, and they lived well,” he said. “That’s not trafficking.”   In other news:
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