'Beware 'acting up' pay rises, they may be fool's gold' blog discussion

Former_MSE_Helen

This is the discussion to link on the back of Martin's blog. Please read the blog first, as this discussion follows it.

Read Martin's "Beware 'acting up' pay rises, they may be fool's gold" Blog.

Please click 'post reply' to discuss below.

summer2222

This is very true for me, my work give a 20% payrise for the first year after you return from Maternity leave (as an incentive to make sure you return)

This is great for me at the moment as have been struggling, but am trying to save the extra and live without it as I dont want to be in the situation of relying on it and then it not being there in a years time!

Will see how it goes :-)

Mikeone

I'm lucky enough to be in this position at the moment. Fortunately(ish) it's for a pre-determined amount of time so I have been able to plan the additional cash appropriately.

Have to say, had I not been using MSE for so long there's no way I would have been disciplined and savvy enough to do this, so thanks Martin!

:money:

wanchai_2

Very good point Martin

bribri_2

Nothing against the points in the blog, but I thought it was also going to mention something about being careful of crossing thresholds e.g. higher tax bracket, claw back on Child tax credit etc.

Oblivion

Perhaps it was my accountancy background but I was always very personally disciplined about how I regarded a temporary hike in salary, be it for covering an absent post or for overtime required to get an important task completed.

The extra money always went, without fail, into a savings account to earn interest (this was back in the days when you could earn decent interest of course) and remained there untouched. The result is I now have a very nice nest-egg to make my retirement a comfortable one.

oldvicar

Who "Acts Up" in MSE Towers when Martin goes on his holidays?

Tojo_Ralph

MSE_Helen wrote: »

Why it’s fool’s gold .... We readjust our spending patterns at speed when they’re on the way up – but find it far more difficult to reduce spending on the way down.

Whilst the article does have a degree of balance, the whole basis of this argument is reliant on this stated fact being true, which of course it is not.

Yes there will be a minority who strain at the leash to spend every last penny a temporary pay rise brings with no thought to what happens when their pay reverts back to normal, but I would like to think that people of more sound mind (the vast majority) would see the increased income for what it is..... temporary.

meher

Tojo_Ralph wrote: »

Whilst the article does have a degree of balance, the whole basis of this argument is reliant on this stated fact being true, which of course it is not.

That it isn't, is a fact?

Tojo_Ralph wrote: »

I would like to think that people of more sound mind (the vast majority) would see the increased income for what it is..... temporary.

may be the concern isn't about whether they are the vast majority or those with a sound mind; rather about overconfident people

surely the interest on purchases of goods, services, loans and other commitments taken on at the time don't vanish when you decide the hi fi lifestyle is over - it continues

meher

as an aside, I used to think that base pay is always protected - may be I've been wrong

Tojo_Ralph

meher wrote: »

That it isn't, is a fact? may be the concern isn't about whether they are the vast majority or those with a sound mind; rather about overconfident people. Surely the interest on purchases of goods, services, loans and other commitments taken on at the time don't vanish when you decide the hi fi lifestyle is over - it continues

The article states that "We readjust our spending patterns at speed when they’re on the way up" which is an inaccurate statement. Had it stated "Some people may increase there outgoings as their income increases" it would have had a degree of truth about it.

With regards to the need to make loan repayments, that is a given, however as previously stated, the vast majority of the population are not stupid enough to treat a tempoary pay rise as a permanent one .... Hence they do not increase outgoings, they do not take out loans they cannot repay and they treat the pay increase as what it is, temporary.