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Dave Ramsey says: Avoid blowing raise on big-ticket purchases

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Dear Dave,

I just accepted a new job that will pay me $30,000 a year more than my old position.

I’ve got about $55,000 in debt I’ve been working hard to pay off, and I know now I need to adjust my budget. Do you have any advice?

— Mitch

Dear Mitch,

The first thing I’d say is don’t go crazy on any big-ticket items while you’re paying off debt.

Keep it simple, and go out to celebrate with a nice dinner after you get your first paycheck. Remember, the more you put toward debt, the faster it goes away.

For the time being, I want you to remain passionate about getting out of debt. Your thought process needs to be, “Wow, I got a new job making more money. I can get out of debt even quicker!”

Again, I’m OK with you adjusting a bit that first month and having a little fun to celebrate your good fortune.

But after that, I want you to turn around and attack that debt with even more intensity than before. Then, once you’re out of debt, you can celebrate that with something a lot nicer.

Congratulations, Mitch!

— Dave

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