Tag Archives: freelancing

Update on Life after hitting $500k and losing my job

My current psychologist is – interesting. She is unlike any psychologist I’ve had in the past and at this point I’m seeing her because she’s actually covered by my insurance at $25 a session and that’s not much more than the cost of a movie for pure entertainment value. I’ve only gone to three sessions with her thus far, but she is, in a very odd way, helping me work through my issues.

We are culturally very different – she’s an Indian who was a trained engineer, so she just approaches life quite differently. For instance, today when I shared that I was disciplined with a belt in my childhood, she mentioned that it’s normal for boys to be hit with a belt and not girls, and I stared at her and explained that I think that must be a cultural norm for Indians but not in the U.S…

Anyway, she has a very strange way of telling me how strong I am whenever I provide information about doing something in my life that isn’t wallowing in depression, and she always has her head slightly cocked to the side with a slight crazed gaze in her eyes, just a bit too intense in a room with high ceilings, bright white walls and two chairs. But I’m rolling with it… because I need help. Because I’m depressed and anxious and really unsure how to make life work.

I did have a pretty big breakthrough today – but she didn’t catch it or care. I said I had a drinking problem from 2001 to 2014. This is a pretty big deal as while I’ve admitted to drinking too much at parties and such before, I never fully admitted that I had an actual PROBLEM with alcohol, and for so long. This stemmed from her asking me the standard doctor question of “how many drinks do you have per week.” I answered, in my typical I don’t know how to answer that question fashion, that it’s either 0 or — too many on one night. I haven’t gotten that drunk in a while, not head spinning pass out drunk, so when I mentioned that I occasionally have one class of whiskey at night to go to sleep she seemed concerned (despite that this is much healthier than the once a week social binges that ultimately caused my DUI) — anyway, it felt good to say that I had a problem, to admit to this, and to really feel like I’ve distanced myself from this problem despite partaking in social drinking on occasion. Maybe I’ve just grown up. A little bit.

While I’ve grown up in some aspects of my life, I haven’t in others. I’m not sure what to do about this job situation, per the usual, but now that I’m back from my trip and looking at my bank account, I am tempted to jump into something with a consistent paycheck. I have one freelance project that may turn into something ongoing, but that’s still not enough to cover the cost of life – rent, food, health insurance, etc,  and having a child. There are recruiters reaching out to me about jobs in a position I’m qualified for on paper but don’t want to fill, and there are jobs I apply to that I don’t hear back from because I’m not qualified for them at all, at least on paper. It’s frustrating.

The best scenario would be that I build my freelance business quickly enough that it makes sense to be self employed for good, or at least long enough to gain experience in the areas where I actually want a full time job. But it’s also hard to turn down offers that pay $150k-$200k when I’m currently making $20k on unemployment and less than that if I start consulting, lose unemployment benefits, and it doesn’t work out. I can sell stock if needed, but I really don’t want to dig into my net worth if I don’t have to. I’m not in a financial crisis or anything, but the goal is to not cause one later in life when I’ve worked so hard to build a cushion.

I’m figuring I’ll have a full time job by October OR I’ll have 2-3 ongoing freelance clients that are happy with my work. Otherwise, I’m going to be in trouble. People tell me that I should just enjoy my time off but I have a hard time doing that.

Holy Sh… Estimated Taxes… WTF… as a Married Couple

Getting married is wonderful for so many reasons. Taxes is not one of them. Besides the horrific marriage fine levied by our tax lords if you happen to want to be an independent woman and continue working post tying the not, there’s also a whole host of tax intricacies which suddenly make TurboTax no longer a viable option and accountants your new BFF.

My husband is an independent contractor.  He usually makes anywhere between $80k and $110k per year, depending on how business is going. As a single person, he was able to take advantage of safe harbors designed to protect self-employed folks from overpaying taxes to avoid fines for coming short on estimated tax payments.

Safe harbors for estimated taxes for single, self-employed folks basically say that you can either pay 90% of your current year’s eventual tax bill OR 100% of your prior year’s tax bill. As a single person, this is pretty easy to figure out — even if it’s hard to guess what 90% of this year’s tax bill will be, you can pay 100% of your prior year’s tax bill and know you’re safe from fines, even if you end up owing more at the end of the year. If business isn’t going quite as well this year, you’ll get a refund, and you’ll give uncle sam a loan for a while, but it won’t be that bad.

Of course, getting married makes this all sorts of more complicated, requiring expensive accounting help to make sense of this mess.

Estimated tax safe harbor for higher income taxpayers. If your 2016 adjusted gross income was more than $150,000 ($75,000 if you are married filing a separate return), you must pay the smaller of 90% of your expected tax for 2017 or 110% of the tax shown on your 2016 return to avoid an estimated tax penalty.

Thank you IRS for an explanation that is not clear at all. It sounds like if your AGI is over $150k as a single OR married person you are considered a higher income taxpayer. This means Mr. HECC would not have been considered a high income taxpayer as a single person, but now that we’re married we’re well over $150k and he can no longer use the safe harbors for his estimated taxes.

Instead, we have to pay 110% of our 2016 taxes (including my taxes) in order to not get penalized this year. Suddenly, my W2 withholdings are no longer an annoyance of over or underpayment to the government, but they can result in substantial penalties.

So – we need an accountant, stat. I consider myself fairly financially literate and the IRS explanation of all of this is the most confusing thing I’ve ever read.

Are any of you married with one partner earning W2 income and the other self employed? How do you manage your estimated tax payments?

Unemployment: Month Two Begins

Where did August go? This is a question I ask EVERY August, but this August the disappearance of the month had more significance than the typical summer conclusion. As you know if you’re a returning reader, I lost my job the first week of August this year. I showed up at work one day and was told it just isn’t working out, was given a month’s severance, an amicable parting, and I was one of the 6.2% of Americans out of a job. Going through the five phases of unemployment has been challenging for me as I sit and apply to job after job with nothing panning out yet.

I’m still keeping my chin up… after all, it has only been a month… but looking at my bills piling up and my measly unemployment check I know I have to find work stat. The way unemployment works where it penalizes you if you get a temp job that pays less than your previous job is really unfortunate. In fact, instead of encouraging unemployed individuals to work part time while seeking full time work, it effectively says that you will lose your benefits if you take on any work that isn’t equal to what you were doing before, at least in terms of pay.

That said, $1800 a month, pre-tax, is not going to cover my fancy lifestyle… you know, the one where I pay 1/2 of a $2350 one bedroom, 850 square foot apartment in the Silicon Valley suburbs… and $400 for COBRA… and $100 for car insurance… well, there goes all of the unemployment money and then some. In many regions unemployment income at least covers all the basics, but here it barely covers my rent. I really need work, stat.

Unlike last time I was unemployed many years ago, just a few years out of college, this time around at least I’m landing interviews. But they aren’t going anywhere. I am struggling to get past that interview stage, mostly because my experience isn’t focused enough. I’m really not sure what to do – other than keep applying. I’d like to freelance and build a consulting career – but to do this I will basically have to give up my unemployment income and likely earn less w/ self-employment tax and such on a few small gigs until I can get enough work to support myself.

In order to freelance successfully I’d need to bill $150 per hour and work 40 hours per week, with a little wiggle room for weeks without 40 hours of work. That actually is somewhat doable – I can bill $100 per hour to start and raise it as I build my portfolio of happy clients. I’m currently designing two friend’s small business websites (for free) to get some samples for a portfolio to show both my copywriting and design chops. But basically I’d want to get to the point where I was making $100 – $150/hr and working 40+ hours per week. If I could do that life would be perfect.

However, right now I’m focused on applying to FT jobs and seeing if I can land any that I’d want to do… all while building up a portfolio of design and copy work so perhaps I can get some actual paid clients when my unemployment runs out, if I don’t have a real office job by then.

September Networth: $77,434

Will I or won’t I hit my goal this year of a $100k networth? It’s possible. I’m at around $77.4k right now.

I need to be extremely frugal over the next four months to hit my goal.

As far as income goes, I’m expecting:

Potential September Income
Project A: $10000 pre-tax this month
Project B: owed $1600 + potential income of $3200 (pre-tax)
Project C: owed $300 (pre-tax)
Total: $14000 pre-tax… ~$9000 after tax.
I’ll prob spend $2000 this month on rent, food, insurance, gas, health, etc.

So if I can do +$7000 this month I’ll be at $84k.
That leaves $16k that I need to make in 3 months between Oct & Dec, or $5.3k per month after tax.
It’s possible for Project #C I will start a $5k-$10k per month contract for 1 month. That would help a lot! Project B will likely pay around $3200 pre-tax for part-time, though it’s not guaranteed. Project A is likely ending this month.
I plan to donate 10% of any income above $100k that I earn and 15% of all income above $120k, if I happen to earn that much, 25% of all income over $150k. It’s not much, but I like the idea of donating a portion of income I earn over $100k.

In Happier News

I finally got paid after weeks of negotiating post negotiating my fees with the one company. I might not have made as much as I expected, but at the very least it pretty much directly covers the extra $500 I had to spend today on my dental care that I didn’t expect.

It was nice to see that paycheck in the mail today, especially since today I also got my first iPhone bill statement which is $134 (for about 1.5 months.)

So I have $1050 worth of checks in my purse that I need to cash. My current credit card balance is $1700 (yikes) so all my side income this month is going directly to jail and not passing go, I mean, to the credit card company.

I had some old invoices I had to send out so I’m expecting a backlog of paychecks including the two I just got…

$550: company A blogs for October
$500: company B blogs, press release, etc for November
$450: company C illustration and copyedits
$475: company A blogs for November
>=$100: company A blogs for Dec (I’ve written 4 so far at $25 / blog)
>=$120: company B blogs for Dec (two written so far)

So my “side job” income from October to December will be at least $2195 and if I can get my act together and write 16 more blog posts this month it may be $2595 or $863 a month. Not bad… if I could keep that up I will be able to hit my goal of $10k side income in 2010… but it’s unlikely I will make this much every month next year (and this year’s income doesn’t count.) I just had some really good months for my freelance business.

If only my freelance income could add up to enough where I could quit my job. I’d give anything to have a flexible schedule again… I just want to be able to work when I want and take classes when I want. I want to take a painting class and a few web programming / design courses at the community college but they’re only offered in the middle of the afternoon or all morning, which is not possible right now. If my company goes under the first thing I’m going to do is see about building my freelance career again and taking some classes.

$10,000 (Extra) in 2010

Given my poor ability to stick to budget and control my spending splurges, I’ve decided that the best way to balance out my shopping addiction is to up my income by a significant amount. My goal is to earn $10k in extra income (preferably post tax) in 2010. This is totally do-able, although far from a certainty.

Granted, I am going to work hard at budgeting (with Mint’s iPhone app this may actually be possible. It’s harder to spend $1000 at Bloomie’s with your shopping budget in bright yellow, close approaching what you told yourself you would spend on clothes for the month) but even with budgeting, I think having a goal of side income is worth while, and one I can stick to in 2010.

I figure with self employment tax and my regular federal and state taxes, I will have to earn 40% more than 10,000 in order to end up with a net profit of $10k. So I’m just going to aim for $15k in extra earnings over the year, or about $1250 in additional income per month.

How do-able is this goal, really? I don’t want to set myself up for failure, but I think I can achieve this. The variables certainly hinder my plans, as there’s a large change I will no longer be in my current full-time position by the end of 2010 (either the company will fold or I will leave) and my next job may pay better but have less flexible hours or pay less and make the $15k extra income more of a necessity than a luxury.

Regardless, I’m going to approach 2010 as if nothing is going to change in my full-time income or freelance clients.

The closest to a sure thing is the $500 / month I make writing 20 entries per month for a blog. Beyond that, I have another client that I just started working for and I think I can make an average of $150 / month for them if they keep me on. That leaves another $600 to earn per month. I can earn this a variety of ways… through blogging (I’ve made about 8 dollars in AdSense Ads for the last five months so I doubt that’s really going to help), trying to get other freelance writing gigs, or doing random jobs that pay decently on the weekends. I’m not sure what yet, but I’ll have to figure that out. If my uncle’s business picks back up, maybe I will get to write for him again as well. That was a good, stable side gig until the economy flushed itself down the toilet.

Do you think it’s possible for me to earn an additional $1250 a month outside of my full-time job? Do you have any suggestions for what I should do to earn the income?

Why I’m Glad I’m not a Full Time Freelance Writer

I was reading a post the other day about setting your rates as a freelancer, and it made me ever the more grateful for my current full time employment. As much as I love the freedom of freelancing, negotiating fees is a pain in the ass and something I’m not good at.

Case in point, I obtained a new client by responding to a posting on Craigslist for a blogger. Originally, we agreed on a fee for the blog posts which was a little on the high end for them but what I thought was fair for the amount of work and the going rate for this type of work. Then the marketing guy decided that I would be writing all sorts of content for the company, and that’s when things got messy. I quoted them a rate for some specific types of projects which was obviously higher than they wanted to pay, but they agreed. Or so I thought they agreed.

A month or so later and my main contact has apparently either left the company or doesn’t want to be involved in managing the marketing writing anymore. While there seems to be some recollection of our agreement around the office, no one thinks the work I did should be paid what we agreed on. I asked originally if they’d prefer to pay per hour or per project, and they said per project. The per project fee is designed to include edits, but they chose ultimately not to give me a chance to edit any of the work and instead do all the edits in house. That’s when things got really messy.

I wasn’t sure what to do in that situation. Do I offer a lower rate because they chose to do all the edits in house without sending the work back to me with feedback? Maybe I should have, but it seems like regardless of what I quoted them they would have been upset, and convinced themselves that I did little work on the assignment and basically they shouldn’t have to pay me much of anything.

On top of that, I was assigned blog posts that were structured a certain way and rather short. Again, I was going to offer a lower fee, but had I offered a lower fee for these posts they would have probably come back and asked for even lower than that. So I put the posts on the invoice as full blog posts. Honestly, I think this is fair because some blog posts are longer and others are shorter – and that is what happens when you pay per post instead of based on length (word count) or hourly.

Within a month the contact I had at the company handed me off to another woman (who seems to be much better at advocating for my cause, though she is in a tough spot because she also writes for the company and is undoubtedly getting paid less than I would be on an hourly rate, even though after you look at insurance and self employment taxes perhaps her rate is closer to mine than she thinks). She is working with me and now assigning me blog posts and I think a lot of the drama has passed. I dislike that the company now thinks I charge too much for my work, but I personally think I don’t charge that much for a for-profit company and for marketing and PR writing. If I were a full-time freelance writer, I’d need to charge that much to get by. Luckily I’m not one anymore, which makes it easier to step back and say, ok, I’ll take $400 less than you’d owe me if you paid what I thought we had agreed on. I’m glad I have the luxury to accept that with only a tiny bit of bitterness and be done with it. I won’t be writing anything other than blog posts for the company, and this is best because we all agree on how much I’m owed per post. Everything else was getting too confusing and uncomfortable on both of our ends.

I’m also compromising because otherwise I wouldn’t get paid, or I wouldn’t have the opportunity to keep doing work for them. It still pays fairly well and it’s a nice side income stream. It’s worth compromising here, but makes me more hesitant than ever to go back to full time freelancing.

Freelance Side Jobs: Am I in Over My Head?

My basic personal finance rule is that if I’m going to splurge on something, I need to earn at least that amount in freelance income over the year. My base salary ($60k) pays for my rent, food, bills, and savings. Anything on top of that should be earned separately.

While I put 45-50 hours into my full time job each week, there’s always extra time when I’m sitting around thinking I could be earning more money.

Freelance writing work has always been a great side project for me that pays fairly well, but I need to be careful not to sign myself up for too many extra gigs. It’s easy to do that — as the potential to earn extra income and increase my pleasure spending per year is great.

I currently write for a blog and earn $25 / post; each post takes me about 30 minutes to write. I can write up to 20 posts or $500 worth per month. I’ve been on and off with it for the past year, but I’ve been trying to hit the 20 post limit each month now by writing in the early mornings before work.

Last week I replied to an ad online for a blogger and found out this blogging job was more like writing long feature articles than quick blogging. They take me a lot longer to write than the short ones for the other gig, and require more research, so I’m charging more for them. At first I thought it was just a few blog posts they wanted, or maybe a couple a week ongoing, but it turned out the CEO liked my writing and background and wanted to meet me and discuss an ongoing writing gig including some tech writing, article writing, and press releases. He knows I have a full-time job that is my priority during the day, but if I can do some extra side work on the weekends, then I’ll do it, and do it well.

It’s just that I don’t want to spend every waking moment of my life working. It’s not that bad because I enjoy researching technology news and writing about it, and I hated doing that full time, so it’s fun as a hobby almost to do it on the side. Yet I want to make sure that the quality of work I do meets my personal high standards. And that means my life becomes devoted to work.

On top of that, I’m taking these classes and just extremely busy. I like being busy, and I like making money, but where do I draw the line? How much free time do I really need each week? I’m so often bored on the weekends, I’d rather be earning extra income than being bored and probably going out and spending money.

If you earn freelance income on the side, where do you draw the line? How much extra work is too much?

Blogger Interview Tuesday w/ Mrs. Micah

I’m inspired by so many personal finance bloggers out there in cyberspace. That’s why I’m starting this interview series. Every other Tuesday I’ll (try to) post an interview with a top personal finance blogger. A special thanks to Mrs. Micah of Finance for a Freelance Life for agreeing to be my guinea pig. 🙂

Q: Mrs. Micah, what’s your blog about?

A: It’s hard for me to define my blog. It’s a personal finance blog, crossed with a freelance blog, crossed with a personal blog. I don’t write a lot about financial products or investing, I prefer to look at how our attitudes impact our finances or write abot practical financial steps people can take.

Q: Most people who write personal finance blogs have written about other topics before, and fell into PF blogging. Why did you start your blog Finance for a Freelance Life?
A: I started the blog just after getting married, when the reality of my husband’s student loans registered with me. He’d been open enough with a general amount, so I knew what I was getting into, but I hadn’t thought too much about how it would affect the next 10 years of my life.

Q: Did you write blogs before this?
A: I’ve been blogging for years, actually, I started at least 8 years ago. I’m not a financial professional, I write abot what interests me and I don’t want it to be taken as professional advice. I try to do good research and offer helpful suggestions/tools on the blog so that it can provide useful financial information.

Q: If you could tell yourself something 10 years ago relating to your financial habits that you know now, what would it be?
A: I think the younger me was pretty financially disiciplined. But I would tell her to make use of high-interest savings accounts, CDs, and even start saving a bit for retirement. I saved a good bit, but I was only earning 0.2% interest on my savings! I’m not sure when high-interest savings came into vogue, but I know CDs were available.

Q: What’s the one biggest mistake you’ve made in your financial life?
A: I used to think that all I had to do was save money, I was scared of investing or using higher-reward banking tools. As I said above, I’d tell my younger self to get more on the ball about this. Because I’m still quite young, I don’t feel like this has caused a major financial problem in my life but I do wish I could change it. Or you could say that the biggest financial life mistake was marrying someone with $100k in student loans. But the rest of my life doesn’t think it was a mistake, so I’d do it over. 🙂

Q: What financial advice do you have for people in their 20s?
A: It’s not too early to start saving for retirement. And you don’t have to have it all right away. Just because you got married or had another life event doesn’t mean that you now need a house, etc, if you can’t afford one. Don’t let your finances get you down, there are plenty of ways to enjoy life without spending much.

Q: What of your financial goals were the most rewarding to reach in the past?
A: When I was 16, I set the goal of buying a new violin. Saved like crazy and was able to find one I still enjoy playing. Then when I was 17, I went to Europe to visit my aunt and uncle. They paid for a good portion of the trip, but I covered a lot of it.

Q: Do you have any financial goals for 2009?
I’d like to pay off the car in 2009, get that out of the way. We’ll do this by using my blog income, my consulting income, and Micah’s teaching income while living off my library job. It should be doable. My goal is to put at least $1k/month towards it. I’m going to have to figure out whether or not that’s realistic. I’ll be writing about it on my blog once I get logistics figured out. I plan to have that done by mid-January, when I get my 2nd paycheck.

Q: It’s great that your blog is profitable, congrats! Do you have any tips or tricks to share on how to earn more revenue on a blog?

A: My blog does earn quite a bit more than the average one. I think it’s important to make sure your blog is at least somewhat search engine optimized, at least using plugins like All In One SEO or Headspace2. That shouldn’t be done at the expense of content, but it’s important to make your content available. Good search engine traffic will affect both PPC ads and CPM ads. And give it time. I made no money for almost 6 months at the beginning and then things took off.

Q: You write a lot about the challenges of a freelance lifestyle. What are the biggest challenges of being a freelancer and how have you dealt with them?

A: I think the biggest challenge is having faith that you’ll be able to find work. Otherwise the freelance life is terrifying. And sometimes I was truly terrified. It wasn’t rational, I knew I’d look for work and had found work in the past, but it was still frightening.

Other challenges include taxes, for which I’m hiring an accountant, and handling rates with clients. The latter can be quite difficult, depending on the client. It’s partially a matter of not wanting the client to get upset and partially how the client interacts. Some have a great sense of boundaries and others aren’t sure. I expect some of that comes from how I’ve communicated with them about what I’ll be doing. Financially, you can’t be doing 10 hours of work priced at only 5 hours.

Q: Do you have any tax advice for other independent contractors?

A: Save all expense receipts, log them in a spreadsheet as well as keeping hard copies, and turn them over to your accountant to help you figure out which can count as unreimbursed business expenses. Also keep detailed spreadsheets of your earnings (along with dates and client names, I also include the nature of the work). And reserve some of your income for taxes so you won’t have to come up with anything you owe at the last minute.

Q: Who are your favorite bloggers/writers?

A: One of the bloggers I’ve been enjoying the most recently is Vered at MomGrind. I’ve been reading her blog off and on for a while now, but I really started appreciating her voice this fall. Maybe I’m wrong, but I don’t feel like she has any kind of agenda. She just writes, she’s a good writer, and it’s always interesting or funny.

Q: What free/low-cost thing or activity makes you happiest?
A: Reading. I love stories, I love learning about new subjects. And I like mixing it up with mysteries, thrillers, classics, paperback romances, and then non-fiction. One of my favorite things to do is sit down with a good story and have an hour to lose myself in it.

Balancing Freelance Losses Due to Economy

My stable $400 a month gig has been reduced to… well, I’m not sure yet, but $250 or $300 a month. I’ve come to rely on that extra cash (it covers almost all of my rent, which is, by the way, going up from $612 to $670 in January) – so I’m exploring new cash-making opportunities and side projects.

The latest is a blogging gig that pays $25 a post. I’m starting out at twice a week with 200 word posts, and that’s pretty easy to do. Even if it takes 45 minutes a post, that’s $50 for less than 2 hours of work. I can write more too, if I have time. I like that, I just don’t want them to come to expect 5 or more posts a week from me. That’s why I left my blogging gig, and that paid a lot better.

Still, if I could make an extra $200 a month in blogging that would at least balance my losses. Supposedly I could make up to $500 a month – which would be good to strive for if I can do that and still maintain my 40-hour a week gig.

Plus, I need to keep writing things that I can share professionally (like, stuff other than this blog.) It’s good to stay in the writing habit. The analytical section of my brain needs to be worked out again. It’s getting flabby.