This year has been full of fiscal ups and downs. After making a solid salary at a full-time job, I was laid off in February and ended up picking up part-time gigs which, while paying great by the hour, didn’t cover enough hours to meet my prior salary. And then I interviewed for a bunch of jobs and got a few offers. In the end, I landed a six-month contract with very strong hourly pay.
Breathe in. Breathe out.
A friend of mine recently asked me for advice regarding her promotion. After being stuck in dead-end retail jobs since graduating college two years ago, she finally landed a temp-to-hire customer service gig. On hire, her boss informed her that if she were to be hired full time she would get a raise.
1. If your company has a separate HR department, talk to your boss first. Your boss should be able to speak to HR for you, and determine what your pay rate will be.2. When talking to your boss, it is always wise to come prepared to discuss your contributions to the company or any previous work you’ve done that relates to what you will be doing for the company in the future.3. It’s good to show “you understand” the financial situation of the company. One line I like to use these days is – “I understand the economy is tough right now, and it is such an honor to be working for this company. However, I do hope to be compensated fairly based on what I have and/or may contribute to this company…”4. Don’t be afraid to high ball, within reason. I once was offered $40k for a job and asked for $50k, assuming I would maybe get a counteroffer of $45k. I was extremely shocked when my boss simply said “ok.” (I’ve also gotten a flat out “no” when trying to negotiate a $1200 a year raise at a different job.) Hiring is a complicated process but what’s most important to many bosses and hiring managers is to have the right people on their team. The difference of $5,000 a year may not mean a lot to a company, but it will mean a lot to you.5. Be ready to walk, if you want to walk, or even if you don’t want to. Apply for other jobs if you have to. Make it seem like you can get something else, even if you can’t. You always want to seem like not only the best person for the job, but a person that the company is lucky to have. Of course, you need to follow up with proving this while working at the company once hired or promoted. Right now, you need them to know just how great you are, without sounding full of yourself. Just be confident – it goes a long way.6. Think of your total compensation package and negotiate for better benefits (more time off, telecommuting days, etc) if the pay rate is set. You’ll be glad you asked for this later. Don’t let company’s fool you into thinking stock options are worth a lot more than they are. 401ks are only exciting if the company matches, and few companies do these days.7. Ask for a 3 month review. This is especially important when you’re first hired and if you’re willing to accept slightly less than what you would like to be making. At a lot of companies you have to wait for a year before getting a review and the raise that goes with it. It’s fair for a company to want to test you out a bit before giving you a significant raise, but ask that your work be reviewed within a set amount of time (3 months) and make sure to document your work over that time period and meet with your boss in 3 months to get that raise you deserve.8. Don’t be afraid to ask for what you deserve. I know, it’s scary to ask your boss for more money. As a shy girl (or guy), we’re likely worried about confrontation. We just want to be offered the things we deserve. Unfortunately, in the business world, that just doesn’t happen. Negotiation is expected, and you’ll feel so much better once you’ve done it.9. Dress really nice (for your work environment) on the day you ask for a raise (and the days prior and after).10. Be rational. You’re not going to get a pay bump from $30k to $100k in a year. Don’t ask for a raise every month. Use common sense and you may end up with some extra spending/saving money each year.
In this past year, despite being conscious of my poor spending habits, I managed to whack my net worth down from $26k at its highest to about $12k, where it is currently, give or take a few k.
Most of the damage was done on my trip to Israel, when I basically threw most of my financial wisdom out the window. The biggest problem, it seemed, was that because the trip was pretty much “free” (even for the week after the free trip, I stayed with my family all over Israel for “free”) it was easy to spend money for gifts and little items for myself here and there. Well, it all added up. Meanwhile, I was paying $1050 in rent for the month for my empty studio apartment back in Cali, and I wasn’t making any money either while I was on vacation. It doesn’t take a math genius to figure that out.
The good news is that as long as I stick to a tight budget this year, I should be well on the way to healing my ailing savings account.
While I need to just accept the fact that anything in my net worth involving the stock market is being kicked in the groin repeatedly right now, I can do quite a bit to get myself out of this financial rut and figurative debt.
According to my calculations, I’m about -$9000 in the “red” (not literally) in my cash accounts. My non-liquid savings accounts are at $21k, which includes those suffering in the stock market, so in reality my overall “net worth” is somewhere at $12k. I’m also getting another paycheck in a few weeks, though some of that will go to rent.
For the sake of my mental health, I’m going to use this entry to re-draft my budget, so that I have a very clear plan on how I can save $17,000 in one year. That’s really just about $1500 a month, right? I think that’s… well, that might be do-able.
Fixed Spending: $994.32
$635.12 – Rent (includes water & garbage)
$60.00 – TV / Internet / PGE (estimate)
$97.64 – car insurance
$146.78 – health insurance
$54.78 – cell phone
$400.00 – Food
$100.00 – drugstore / vitamins / cleaning supplies
$300.00 – gas
$100.00 – entertainment
$1600 – $1900 – approx “necessary” spending (+/-)
$4800 + $400 / month before taxes
about $2600 after taxes
So… saving $1000 a month, if I never ever go to the doctor, or buy clothes, or eat out… is possible. Right?
I’m also looking into seeing if I could get a cheaper health insurance plan since it’s not really doing me any good and it’s just for emergencies. I had to pay $65 to go see a doctor just to get antibiotics for my last UTI anyway, so why does it matter how high my deductible is?
Anyway, saving $1500 a month looks somewhat unlikely. However, I am overestimating my tax payments since they won’t really be exactly 50% of my income. They’ll be close to that, maybe 45% when all is said and done after self employment tax, but at the least, I figure if I’m saving 50% that will give me some extra dough at the end of the tax year to close out my Roth IRA for 2008.
Ugh, I feel like I’m making a lot of money, but it’s no where near enough. I wonder if I should look for another, better paying job. But I LOVE my job. I make $57k a year, though not really, since that’s on contract and no benefits or time off is included. So I figure I prob make about $50k a year in comparison to my past jobs. I just have no idea what I should be making. I charge some clients $50 an hour for work, but that’s all on smaller projects, I can’t justify asking for that sort of raise at my current gig, nor do I feel the work I do there warrants $50 an hour. There just isn’t enough work for me to do there in terms of work that I know how to do – writing. I do a lot of other things, but a lot of those tasks are literally shared with an intern.
Futz, I’d like to be making $65k a year w/ benefits. I have no idea if that’s a ridiculous amount to hope for with my experience and given that I live in the Bay Area. I’m also kind of frustrated with the fact that 40 hours per week at my company does not = full time. Granted, I work my 40 hours a week at random hours of the day and night, and they aren’t picky about it – but still, I just dislike that 40 hours a week no longer equals full time. To be full time at my company, I have to work 60 hours a week. But really, what would I do for 60 hours a week? I don’t even know how many hours I’m actually working… but I’m sure it’s more than 40. I need to start keeping track of where my hours are going. I just feel like… if I worked for an advertising or interactive marketing agency, I’d know where my hours were going, because they’d be spent writing, and I’d have something to show for all those hours. At my current job, it seems like I have little to show for the work I do. I’m so used to being a journalist, where every day you’re worth is in your clips. Here, it’s ideas, it’s finding bugs on the site, it’s doing a lot of little things that are kind of sort of in my job description… and I worry that I’m not doing enough, and I worry I’m doing too much, and I wonder how I can move up in the company when there’s really nowhere to move up to…
I assume that I’m going to owe $6132 in quarterly taxes (state and federal) in… 14 days.
I just transfered an extra $1000 into my ING for Taxes account, which now adds up to $5125.56
So I’m short $1006.
That means budgeting this month needs to be extra, extra tight. And I might have to dip into my liquid CD to pay my estimated quarterly tax.
April “Spending” Money $2410
Fixed Costs = $1422.28
$71.33 — Cable Bill
$129 — Health Insurance
$87.33 — Car Insurance
$57.62 — Phone Bill
$1050 — Rent
$27 — Gym Bill
Credit Card Debt: $882
to pay this month $500
Food? Taxes? Gas?
The Good News…
Still Owed for this month: $1325
($400 for marketing copy
$525 for marketing article
If I get paid all of this in time…
$1300 to taxes
$200 to food
$100 to Roth IRA
$152.72 Stays in Checking
Why am I so short? I shouldn’t be this short, but it will take me until the end of April to earn all the money I need to pay for my Jan – April estimated taxes. I could just pay less than I’m supposed to and hope that it all works out in the end. This isn’t entirely a stupid thing to do because I think based on last year’s taxes I could undershoot what I’m going to have to pay this year and still be penalty free. But I’d rather keep on top of things.
Also, none of this takes into consideration the fact that I have to pay to deal with 2007 taxes.
What have I done, oh what have I done????
Both of my paychecks arrived in the mail, so I finally got around to driving over to the bank and handing them to a teller. While I’m too modern for most old-fashioned interactions, financial or otherwise, I have to say I enjoy going to a bank and depositing my checks.
I found with direct deposit, I stopped paying attention to when money was going in… and when money was coming out. For some reason, actually filling out a deposit slip and asking the teller to put it into my checking account feels, well, it feels like my monthly celebration (albeit in my head) for all my hard work. It makes me feel like an adult, perhaps.
In any case, these days I don’t have a direct deposit option. At least now the reason for this makes sense. At my first salaried job the company didn’t do direct deposit because the whole company had money problems and the big boss was afraid of paying everyone’s paycheck at one time. Yea, I’m kind of glad I left that company.
Nowadays, though, as a freelancer, it’s even more unlikely for a company to offer direct deposit. And that’s fine. Even though checks are easier to lose or to forget to deposit, they’re still getting something on paper for all your work. That paper isn’t worth much until it’s turned into a bank, so many would say my desire to be paid by check is absolutely ridiculous. Still, it’s kind of nice, to go to a bank, when they’re not busy, and wait for the transmission of money to take place.
Slowly down that process maybe helps me slow down on my spending too. Just a bit.
While working 60 hours at a salaried job each week seems beyond boring, diversifying one’s time and one’s ongoing work portfolio can lead to professional fulfillment on many levels, including by not limited to one’s bank account.
I recently found out that in order to be a full-time salaried employee at my current company, I need to sign on for 50-60 hours a week. While I love my job AND the company, that’s still not enough to have me sign every possible work hour away to one job.
Besides boredom, the reason to keep my ‘after 40’ job hours open is because some of my other opportunities pay much better than what I’m spending most of my week on. At my 40 hour per week job I make about $27 an hour right now. But I’m also taking my late evenings to work as a freelance marketing writer, with projects I’m getting paid $50 per hour for.
I’m not sure what my value is as a full-time employee versus freelance, but for some reason I feel like my $50 per hour charge as a freelancer is justified, while I could never imagine asking my freelance full-time employer for such a raise.
When it comes down to it, I’d rather make slightly less at my “day job” and use the opportunity to pitch my writing skills for extra income that ultimately covers health insurance and other things I need.
That brings about the question… how much can I actually make in one month without not sleeping and going completely insane…
Monthly Potential Income
1. $4800 — Gig 1. 40 hours per week (on contract)
2. $400 — Gig 2. Approx 8 hours, or 4 projects per month at $50/hr
3. $250 — Gig 3. 10 hours of administrative Work at $25/hr
4. $400 — Gig 4. 8 hours of research & article writing at $50/hr
$5850 per month
Which is a lot of money. Sort of.
Minus $2340 ((40% taxes (25 % tax bracket + 15 % self-employment tax))) that comes out to a grande total of…
$3510 per month after taxes, or a net income of $42,120 per year.
That’s still pretty good, I think.
While I’ve gone through periods of working part-time gigs and freelancing for a little extra cash on the side, 2008-2009 will be the first year when I’m likely going to be a contractor all year long. I love the freelance lifestyle, as I can finish my work hours when everyone else is asleep, or get all my hours done straight through and leave myself time to relax for an extra weekend day, if possible. There are so many things I love about being a freelancer (albeit one with a stable freelance gig) that I’d be hard pressed to give it up.
One thing that might, just might be able to get me to give this wonderful lifestyle up is taxes.
Just trying to figure out how to sort out my taxes owed as a freelancer seems like a giant nightmare. On top of that I now have Prosper taxes (which sounds like it will be worse than a nightmare to file) and my various stocks, ETF and mutual fund accounts to tax…
Originally I thought sorting out my taxes would be simple as taking 25 percent of all my income each month and putting it into a highish-interest ING savings account. Come tax time, my tax money will have made a little money (although that will be taxed to) and if all worked out as I originally thought, the money in that account would certainly cover all my state and federal taxes… plus I would have saved some money by holding off on paying it throughout the year.
Given that I finally stopped to smell the dead roses, I did a little research and found out about the “Self Employment Tax” which seems to be another 15.3 % on top of the 25%. So does that mean I should be putting 35% of my income each month into my ING “for tax season” account?
And then… apparently freelancers are supposed to pay an estimated tax each month. What I don’t understand is if this is for the convenience of the freelancer (don’t have to worry about spending all your tax money and being in serious trouble come April 15) or if it’s actually required by law to pay taxes on a monthly basis instead of in one lump sum at the end of the year. If it’s not illegal, I really don’t understand why more people wouldn’t just do what I think I’m doing with this savings account and getting a few extra dollars on the money that will ultimately go to the IRS at the end of the year. But maybe I’m thinking about this all wrong.
I’m, quite frankly, terrified of tax season next year. This year is complicated enough with my two full-time jobs and freelance earnings. But next year? Well, I know I’ll have to hire an accountant. But what is it I should do now, as it starting 1.5 months ago, to make my life bearable next year… and more importantly, so I don’t accidentally end up in jail for tax fraud out of ignorance and confusion?
ps: I think I just found my answer… (I guess I do have to pay in advance!!!)
(Thanks to the IRS for explaining, in fairly clear language, how I can give them my money)
When To Pay Estimated Tax
For estimated tax purposes, the year is divided into four payment periods. Each period has a specific payment due date. If you do not pay enough tax by the due date of each of the payment periods, you may be charged a penalty even if you are due a refund when you file your income tax return. The payment periods and due dates for estimated tax payments are shown below.
|For the period:||Due date:|
|Jan. 1 1 – March 31||April 15|
|April 1 – May 31||June 15|
|June 1 – August 31||September 15|
|Sept. 1 – Dec. 31|| January 15
next year 2
|1If your tax year does not begin on January 1,
see Fiscal year taxpayers, below.
|2See January payment, below.|
Janet Adams does not pay any estimated tax for 2007. She files her 2007 income tax return and pays the balance due shown on her return on January 24, 2008.
Janet’s estimated tax for the fourth payment period is considered to have been paid on time. However, she may owe a penalty for not making the first three estimated tax payments. Any penalty for not making those payments will be figured up to January 24, 2008.
The 15th day of the 4th month of your fiscal year,
The 15th day of the 6th month of your fiscal year,
The 15th day of the 9th month of your fiscal year, and
The 15th day of the 1st month after the end of your fiscal year.
You do not have to make the last payment listed above if you file your income tax return by the last day of the first month after the end of your fiscal year and pay all the tax you owe with your return.
Ok, now I just have to figure out exactly how much I have to pay them. Hmm.
Here are some helpful links I’ll be reviewing to help me figure out just that, and I’ll report back here when I actually understand what I’m talking about:
Once I do understand all this, I can work as a freelance freelance accountant. 🙂
I apologize for taking forever to update this blog. Life has been a wee bit crazy as of late, but despite all of the chaos I think in the long run all that has gone down will be for the better. In short, at the moment I am unemployed. Basically, I quit my job, although of course it wasn’t nearly that simple. In the brief hour or so I had to decide between forced resignation and firing, I chose the former. I’m still not sure if that was the right decision given that I cut myself off from unemployment benefits, but given that the parting was amicable, it seemed in my best interest to keep things that way and not have to force my boss to fire me.
Anyway, it seems like I’m back to square one. Funny that. I spent a year and three months building up my career and I really had gotten far. Too far, to be honest. I just jumped way ahead of my capabilities at this point in my career and experience. My boss even commented in our closing conversation that I’m really good at what I do, I just need more time to nurture my skills in a more stable journalism environment, preferably at a magazine. I’m not really such such a job exists these days, nor am I sure I’d want it if miracle of miracles it was offered to me. Right now I’m going through a massive re-evaluation of my career plans and goals. I’m really interested in pursuing web design and copy writing, but I’m not sure what kind of openings there would be in those areas for someone with my particular background.
For the time being, I’m doing some freelance web and writing work, and I’m going to take a trip to the local temp agency to try to land some short-term gigs until I figure this all out. I’m a wee bit nervous about the whole health insurance situation — I’m insured until the end of the month on my current policy and then it’s either dealing with expensive Cobra coverage or trying to figure out if the alternatives are any cheaper. The whole situation isn’t very good given that I’m finally on medication to treat my depression and, well, I might not be able to obtain insurance that will help pay for the condition. Ugh. It’s fine, though, I’ve been through worse times before. To be honest, I kind of feel relieved right now. I know that I did my best and it just wasn’t the right job for me at this time. Being unemployed sucks, but hopefully I won’t be job-less for long.
My first paycheck for my new job was direct-deposited into my checking account. After taxes, it looks like I make $1,588.19 twice a month. So that’s like $3200 per month, which is hopefully how much I should be making after taxes (last year I ended up owing like $500 in taxes because I guess I didn’t have enough $ taken out.)
That’s very exciting. Up until June I was making $2200 a month. So I’m basically making $1000 more a month. That seems wrong, though. I feel like taxes should take out more, since I was making $35k before and now I’m making $50k. Hmm.
So in July, with my $300 in freelance work, I took in about $1888. Plus I guess I can count the $450 in rent money I earned last month letting my friend crash at my apartment while she looked for a place of her own. So I ended up making just about as much as I would have at my old job this month…
That’s not too bad, being as I took two weeks off for the month. It’s still not great, as $1050 of that went to rent, and I certainly spent more than $800 this month on random odds and ends, car keys being lost, gas, and cocktails. The good news is that next month I might break even. I might even put some money into my savings account. I might even, by then, figure out how I should actually be investing my money, as opposed to watching my mutual fund account depleting.