Annual Raise Question

[Coleroo]

Re: Annual Raise Question

Unless its a high tech company with great growth, or fortune 500 I would not expect raises to be very high for people who continually stay in the same position, especially with hearing of so many lay offs and cut backs lately. What type of work does your hubby do? Is he in a management / supervisory position with a fast track career growth where a higher raise is expected? I think the bonuses sound GREAT, but youre correct to never "budget" for them in the present tense. One way you CAN budge for them however, is to open a savings account specifically ear marked for ONLY bonus money earnings.. then deposit ALL bonus money received in a one year time span (i.e. Jan 07 to Dec 07). Then, on Jan 1 of 2008, take the TOTAL amount accumulated in that savings account, divide it by 12 (months) and set up a once monthly transfer to your checking account and budget off of THAT deposit. Or you could devide the total by 26 and do bi-weekly deposits. By doing that you would create SECURE income for your budget every month, and essentially give yourself an "already taxed" raise for 2008.

For example,
Jan. 31 2006 - hubby receives $500 bonus; ignore it and deposit ALL into savings account
March 25 - hubby receives $150 spring fling bonus; ignore it and deposit ALL into savings
May 15 - hubby receives $1000 "good job!" bonus; ignore it and deposit ALL into savings
July 4 - hubby receives $200 independance bonus; ignore it and deposit ALL into savings
Sept 5 - hubby receives $600 laboring bonus; ignore it and deposit ALL into savings
Nov 23 - hubby receives $400 bonus for gratitude; ignore it and deposit ALL into savings
Dec 15 - hubby receives $1500 christmas bonus; ignore it and deposit ALL into savings

Dec. 31, 2007 - check your bonus savings account. There should be $4,350 (and some chunk change from interest accumulation.)

Take THAT number and divide by 12... 4350/12 = $362.5

You just gave yourself a GUARANTEED $362 a month tax free (taxes have already been paid!) raise for 2008. Set up a recurring transfer of $362 to hit your checking account on the first of EVERY month in 2008. Then begin the process again (sending in bonus money to that savings account and only withdrawing your set amount once a month from last years bonuses.)

Of course this would take a year of sacrificing that nice "pocket money" mentality that bonuses seem to put people in, but if your goal is to really focus on budgeting money that comes sporadically, this is a great way to self manipulate that monetary resource to fit YOUR needs (a set, stable budgetable amount)

Oh and 3% to 4% is typical around here in South Carolina it seems. I work in a large national non-profit call center as part of the staff / management team. We have 150 operators in our local center and they get anywhere from 2 to 4% yearly based on their performance and time at the company (some of them get nothing due to poor work performance). Staff raises around the nation for our company have been frozen for over 2 years now, AS WELL as any bonus we would have earned during this time. When times are tough for a company, and financial income is shaky, raises for those not on the "front line" seem to be the first to get shot down! A lot of my fellow staff members would love to see a guaranteed 4% increase right now along with loads of bonuses.

Also, the financial strategy from a company's perspective is that a raise permanantly affects their future bottom line, whereas bonus money does NOT - and can be given out when there is "spare money" lying around. In the long run, bonuses are good for the company - raises are best for the employee.

[LivingAlmostLarge]

Re: Annual Raise Question

Um, hopefully fast-tracked to a lot more money. He had heard from other coworkers that the raises had always been more generous and very little bonuses. It appears the company is trying to save money and lower raises and give more bonus money, so they don't have to do it every year.

[creditcardfree]

Re: Annual Raise Question

Military members received at 2.2% raise this year.

[MonkeyMama]

Re: Annual Raise Question

Hmmmm, I would consider 4% good.

I have had on average 10% raises my entire career, but that is a whole nother thing. The starting pay in my industry has more than doubled since I graduated in 1999. I get paid just enough to be paid a tiny but more than the new grads. Yet my pay has more than doubled in the last 6-7 years so I Can't complain. The last couple of years I got 5-6%, more of the same reason.

Frankly, my last 2 raises have gone completely to rising health insurance - doesn't leave any leftover. This year would have been the same but we opted for lesser coverage so we could start saving more.

I never really understood bonuses because again not part of my industry. But my boss used to pay us overtime as salaried workers. This became sticky legally so he pays it to us as a bonus every may. It's a bonus but it is not. HE doesn't have to pay it so I don't count on it. Pretty much I Consider it my IRA contribution - goes straight to my IRA.

I don't think the bonus system is the worst. We have a lot of small business clients, who on a good year love to pay good bonuses, to reward the hard workers especially, and often money is tight, so it gives them flexibility. If they paid everyone that in salary frankly they would have to lay off more people in hard times, etc. I think just another perspective- leaves options open for the employer.

Frankly I look at my entire compensation though as the big package. Salary, bonus, benefits, etc. IT is all considered. One piece of the puzzle does not tell the story at all and should be carefully negotiated for any job.

[LivingAlmostLarge]

Re: Annual Raise Question

Yep there was a jump substantially in medical premiums this year at the company which left a lot of the workers complaining. It took more than the raises, but less than the bonuses. I agree about the medical coverage. We love ours, and it wasn't that expensive to begin with. But I can see how people with families can complain.

[MonkeyMama]

Re: Annual Raise Question

Thought this was quite relevant.

When in Doubt, Offer a Nice Perk
Small-business owners are becoming increasingly creative in how they reward their staff members.

http://www.nytimes.com/2007/02/01/business/01sbiz.html

I have the feeling a lot of us savers would rather be paid better - plain and simple, than fancy perks. HAving been on both sides, I know I Would.

[tinapbeana]

Re: Annual Raise Question

depends on the perk... DH gets a company vehicle and a gas card as part of his job. they replaced his van with a new truck just last month.

the payment on that truck would be over $300, plus another $75 for insurance on the vehicle per month, plus another $100 per month for gas (AT LEAST!)... add in property taxes and registration fees, and it's about a $500 per month value.

he gets a 'vehicle allowance' added to his check and then removed for tax purposes, so we wind up paying tax on the 'income', which i feel is fair. the allowance is just over $300 per month, though, so we're still getting a pretty good deal