If you are an employee, you can get a 40% pay raise without ever asking the boss. And it's all tax-free. Similarly, if you are an employer, you can show each of your employees how they can earn a 40% pay raise and it won't cost the employer a thing. Before writing me off as being a pair short of a full deck, read on.

The following information is based upon figures gathered in the late 90's from U.S. Census Bureau, National Association of Realtors, Chicago Title and Trust, Bankcard Holders of America, and Ram Research. Though the figures will vary today, the net affect is the same since income has risen proportionately but debt load remains the same.

1. The average household income = $3935 monthly or $47221 annual. 2. The monthly mortgage average (without tax and insurance) = $662 3. Average car, credit cards, and loans = $568 4. Therefore, the average total debt = $1230 5. Debt Load Average (% total debt to income = $1230 divided by $3935) = 31.3%

Therefore the average family's present lifestyle could be maintained with 31.3% (or $1232) less per month without debt. Another way of looking at the same information is that if the average family were debt free, their current annual income ($47,221) would be comparable to a family income of $71,428 annually with a 31.3% debt load.

But I said in the beginning "40%", didn't I? What was I thinking of? How could I have made such an error? It's only a 31.3% pay hike. By the way, since you gain this increase by paying off debt, is this taxable? I don't think so! Therefore, we need to compensate for a post-tax versus pre-tax pay raise.

You can conservatively add at least a 10% tax relief since this is a post-tax raise in pay. Our pay raise goal now easily exceeds 40%. Give yourself a real pay raise... Get out of debt! (To learn more about getting out of debt, check out the article Debt Destroyed By Magic Bullet)

What's Wrong With a Traditional Pay Raise?

What's wrong with tax cuts and a pay raise? Not a thing as long as it leads to increased wealth. Unfortunately, it rarely does. It usually just leads to increased income. So, what's the difference?

Realizing that I am swimming upstream while most others are swimming down, I cannot help but be disillusioned. When was the last time a national pay hike or tax cut kept pace with the overall inflation and shrinking dollar? How come with all this extra money we keep coming up with, we are no better off then we were? Throughout my military career, I was always amazed that about 2-3 months prior to a federal pay raise, local prices near military bases went up. By the time the money actually arrived, inflation had already destroyed the increase. To make matters worse, not only do prices increase just before a pay raise, but we usually turn around and commit the raise to some new monthly payment purchase. "Oh yeah, now I can afford that new High Definition everyone is talking about." When will we learn that more money does not necessarily increase wealth?

Become "Un-vulnerable"

I use to know a homeless fellow by the name of Pete. Pete use to be well off but fell onto bad times. Today, however, he is considered local color because of his spectacular wardrobe- straight out of Daniel Boone, Jedediah Smith, or Snowshoe Thompson. Pete is so colorful, tourists have their picture taken with him.

But Pete lives on the street. Yet, he is less vulnerable than most of us. Why? His income versus output is more positive than for most of us. He doesn't owe anything to anybody. No one can take anything from him. He is completely independent. He is financially "un-vulnerable"

You can be "un-vulnerable" also and you don't have to become homeless. You simply need to give yourself a real pay raise... Get out of debt

Wealth Has Nothing To Do With How Much You Earn

It's been said that the best way to help out the poor, is not to become one. I can relate to that! So, I am not suggesting that we all become miniature Pete's as suggested above. But we can learn a lot from him as well as an even more authoritative source- the bible. "...And the borrower is the lender's slave." (Proverbs 22:7) When you owe someone, they own you.

Now here is the point. Wealth has nothing to do with how much money you earn. Wealth is rather that sense of being financially independent, financially un-vulnerable. And unless you are completely out of debt, you are a slave to whomever you owe money. On the other hand, if you are debt free including your home, who can touch you? You then have the option of investing the money you use to waste paying bills. You can buy items cash and get the leverage cash can bring to the bargaining table and still remain out of debt. You even have the option of reducing the need to bring in a paycheck by living on less with a simpler life or a life more to your choosing.

Give yourself a real pay raise. Get out of debt.