Free money
If you get a bonus, see if you get the whole bonus pre-taxed if you have the ability to send it right to your tax deferred retirement account you have through your employer. What I mean is, if you get a bonus, can you have it deposited into your retirement fund account through a payroll deduction? If you can, can you put the whole amount in pre-taxed. That’s what I did.
Most folks use their bonuses to help pay off Christmas debt or go on the family vacation. You lose so much of it in taxes, it’s outrageous. I may have done it once in my career but then realized how much money I lost so I stopped. Take the whole amount and pretend like you don’t even get a bonus. Put it all away in a tax deferred account through your place of employment if they allow you to do that. If you can’t do that, then at least put it in to your Roth IRA.
I would argue with my co-workers about this. They would moan and groan about how much money they lose in the bonus when they take it. When I ask what would happen if they took the bonuses away from us, they would say they were screwed. Why? Because they spent money they didn’t have. They put things on a credit card and relied on the bonus to pay off the bill. That is insanity to me. That madness has got to stop. Never ever rely on a bonus. It’s a bonus, not a salary guarantee. Stop pissing and moaning about money you were lucky to get.
No bonus but higher hourly rate
Since I had this topic planned months ago, things have changed. We no longer get a bonus anymore but what the employers did was roll the bonus into our salaries. This is now a guaranteed amount of money in our paychecks. So essentially, we got a raise which then increases my hourly rate which also increases my overtime rate. Win win. Some in the department still pissed and moaned about this. Unbelievable. Yes, I know, I don’t get $3500 dollars pre-taxed anymore as a deposit into my retirement, I just have more money in a paycheck now which still allows me to max out my ROTH contributions and my 457.
Competitive raises
I have another sweet bonus type news! Our fiscal year begins on July 1st of each year. We have gone through what is called a compression study and I guess that’s where they analyze our pay scales and compare them to the surrounding jurisdictions and decide whether we have been getting comparable pay or not. Well, I guess we haven’t been getting paid so good so they decided to up everyone’s salaries to bring us up to speed. No complaints here.
Do what you love and the money will come
If you look back at my post on May 8th, 2019. I posted my pay scales in the fire department. Well the amounts I posted were what I grossed those years. It was too much work for me to go back and see what my base rates were for those years. Yes, I know that the numbers might be skewed a bit give or take a few grand but the numbers are still relevant.
So, if my base pay for 2018 was $89,536.71 and add roughly $5600. for ALS (medic pay) plus time and a half for holidays and overtime, I grossed $109,604. Not bad for showing up to work at a job I love doing. Well, now tack on $22,383.06 to my base pay bringing it up to $111,919.78! Add my ALS incentive of $5600 and 10 Holidays at 1 ½ time pay and any other overtime I might do. Not bad.
Closer I am to FI…..see what I did there? Indigo Girls fans? Anyone?
This will definitely get me to FI so much quicker. With dedication, I should be able to max out my Roth and 457. I will need to make sure my AGI does not go over the 135K which would prevent me from contributing to my ROTH because I make too much money. I believe that is the cut off for that. I’ll have to do some research.
Anyway, I’ve always been a proponent of finding the job you love even if it doesn’t pay you well in the beginning. The money will eventually come. Some folks are going to look at me like I’m nuts for leaving a job that pays me 6 figures. Alas, the quality of life is what its all about. Young enough still to spend my time with my family while we all still have good health. That’s the real deal.