When the cost of living spikes and inflation sets in, the economy is generally in the worst shape to take these kinds of developments. This is not Murphy's Law, but just the way that business works. After all, if business is good, then your raise is pretty likely to mirror the state of the economy and be enough or more than enough. On the other hand, if a business is suffering then it is less likely to be in a position to hand out good raises even when employees deserve them, and your lifestyle may suffer as a result.

Here are a few ways to deal with the problem without forcing a confrontation with your boss or leaving your current position:

Look for additional ways to provide service
If you are a contractor, then expanding your role in the company generally will lead to an expansion of your pay as well. Consult your boss to see if there are places that you could help out for additional hours or for extra pay since you are performing at a higher level. This can be a big advantage for both of you since if you can take over needed roles in the company, your employer will not have to spend the time and expense on hiring another contractor or a permanent employee.

Check out your benefits package
It is possible that you are paying for benefits that you could get cheaper elsewhere. As more and more people start working on a contract basis, individual health insurance rates are falling. If you are young and healthy, investing in catastrophic health insurance could be a way to save money and add some needed dollars onto a paycheck.

Make sure you are not withholding too much
While it is good to withhold money over the year so that you do not owe a huge amount of taxes in April, there is really no need to wait on a huge refund check when you could be saving and using that money throughout the year. Work with an accountant to make sure that you are withholding enough - but not an excessive amount - on your taxes. Your monthly income could rise dramatically when you repair this situation.