What To Do About Debt, Retirement, Tax Refunds, and Raises

Find out the best strategy to destroy your debt, win in retirement, and what to do about tax refunds and raises!

More than likely you have a few questions each year about what to do about your current debt, retirement, tax refund and raises.  In this article, I will give you some insight as to how to get the ball rolling in your favor to take advantage of your income!

Isn’t it interesting that no matter how much money you make, you never feel like it’s enough?  No matter how many raises you have received over the years, how many tax refunds, or other chunks of change you have been given, you are no better off today than when you were younger.  Maybe you look back over the years and are amazed how you survived on the income you made years ago before all the raises.

So why is this?  Why are we as broke today (or more) than when we first started our careers?  Certainly, we make more now than when we did 10 years ago, but we are no better off today than we were back then.  Sure, inflation does play a role in the equation.  Things are more expensive today than they were 10 years ago, but your income has gone up a bit as well.

What Did You Do With All Those Raises?

Think back over the years.  Each time you received a raise – what did you do with it?  If you received a promotion at work – what did you do shortly thereafter?  If you’re like most people, the more money you make – the more you get to spend!  I am amazed as I walk around the work parking lot and see all the new trucks and cars.

There are many new employees at my job and most of the vehicles they own are newer and much more expensive than mine.  I also make much more money than they do.  So what’s the deal?

Many of us fall into the trap of spending what we make.  Often, that raise or promotion means we get to reward ourselves with a new truck or a bigger house, right?  Unfortunately, the more we make, the more we feel like we can put ourselves further in debt!

I’m willing to bet that most of what you own is nicer and more expensive than the things you had 10 years ago.  Why are we programmed to think, that because we earn more, we must spend more?  I want to open your eyes to a different way of thinking – a radical way that will give you the ability to prosper and thrive financially; much more than you ever thought possible.

What You Should Do With Those Raises

man wearing black and white stripe shirt looking at white printer papers on the wall


In my line of work, the new employees receive raises each year for the first 7 years of their career and then they “top out.”  After that, they receive longevity increases each year if they stay in the same position.  Others choose to promote to a higher rank where they enter another pay scale.  Not so often, we receive raises across the board in new contracts.

With that being said, I challenge you to act and think differently when your next raise/bonus/tax refund comes into play.  When you get that raise, do not change your spending.  Depending on where you are in The Debt Payoff Playbook, you are either paying off debt or working on retirement.

When you get that raise or pay increase, rather than buying something new, put the amount of the raise towards either your debt or retirement.

By deferring this increase in funds towards an intentional goal, you will avoid falling into the trap of “spending more because you make more.”  Early on in my career, I got into the habit of increasing my retirement contribution amount by 1% each time I received a pay increase.

By saving the increases for when I received a raise, I never noticed an impact in my take-home pay.  I could add more to retirement without sacrificing more than I already did in my monthly budget.

The same goes for debt.  When you receive a raise or a tax refund – fight the urge and temptation to spend it on “fun things.”  These things are fleeting yet your debt stays with you.  If you get rid of that debt quickly, you will be able to buy more “extras” without going further into debt.

Fight Those Urges To Reward Yourself With More Debt!

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I get it – I really do!  I have promoted twice in my 14 years in this career, and seeing the bigger paycheck and the feeling of accomplishment tugs at you to buy something you never could afford before.  This is not to say that you should not reward yourself – just do it the right way.

If you really want that newer truck, save up cash with all that extra money you are now bringing in.  Budget that truck into your monthly savings and buy it!  Rewarding yourself is not wrong – you have earned it!  Just as long as you do not reward yourself with more debt whether that be a bigger house, with a much bigger mortgage payment, or a fancy car with a $700.00 monthly payment attached to it.

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Tax Refunds And Debt

You and I both know that getting a tax refund is great because most of the time it is unexpected.  What do most of us do with those refunds?  You guessed it, we use it as a down payment for a new truck/boat/motorcycle or go on a fancy vacation.

We spend it nearly as soon as we get it.

Can you imagine receiving that refund and immediately spending it all to pay down debt?  Yeah, it’s not fun and you feel like it was all wasted – because that’s how I have felt.  The problem is, if we ignore those debts and constantly reward ourselves, we will never defeat our debt.

I challenge you this tax season.  If you receive a refund, congratulations!  Now take that refund and put 90% of it towards debt or financial goal you have.  The other 10% I give you permission to squander 😉

The only way you will ever feel the burden of financial stress lifted from you, is by drastically changing your spending habits.  If I get a tax refund this year, all of it will go towards my mortgage – just like it did last year.  It is not a fun feeling, but I know when that mortgage is paid off, I will look back and feel that it was all worth it.

How Do You Want To Live?

photo of pathway surrounded by fir trees


The biggest challenge I personally face as a Financial Coach, is helping people shift their mindset to a new way of thinking.  Many of you are stubborn and are not at the point where you are willing to change your lifestyles.

You are not willing to cancel that upcoming cruise that will go on a credit card, and you’re not willing to sell your expensive vehicle to buy an older one.  I get it and I understand, because I have been there.

Someday you may snap out of it, but only when you have had enough of being a slave to your money.  When and if that happens, know that you can always reach out to me and I will be here for you as you start climbing out of the hole you have dug!

For those of you who have hit rock bottom and are sick and tired of the debt collectors calling the shots – that is awesome!!  The only direction you have to go is up, and I can hardly wait to be there with you to cheer and guide you along!

You can and will win at this money game, you just have to refuse to lose.  The only person controlling your spending is you – it’s time you took charge and built a financial legacy on which to stand and be proud!


If you have hit rock bottom and are willing to change your spending habits to free yourself from financial stress, I congratulate you and I look forward to observing your progress!  If you are still reluctant – as harsh as it may sound, I hope you either snap out of it on your own or hit rock bottom sooner than later.

The sooner you are able to change your spending habits, the better.  The hardest part of this entire process is a change in mindset.  It’s all in your head – let’s get you on the right path!

If you found this article helpful, please share it across social media with the sharing buttons below!  Also, if you have not subscribed by my blog via email, please, please do so below!  I look forward to cheering you along – you deserve to get out of this mess and relieve your stress.  You work too hard to be this broke!
-Ryan

About The Author

Ryan Luke

Ryan Luke is a father of three, husband, financial coach, and full-time police lieutenant. His inspirational story about his struggle to make ends meet, to paying off his home in less than 10 years, has been featured on MarketWatch and other media outlets. To learn more about Ryan or to send him a message, visit his contact page here.

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