Well, sort of. More business-of-writing than the actual writing. Occasionally I get the urge to talk about things polite folk don't mention. Like, oh, money. But for anyone who is wanting or planning or being a freelancer, money takes up a considerable amount of thought, enjoyable or not. My advice, from observation and experience, is as follows.
LAG's Basic [and Updated] Rules for Going Freelance, specific to novelists:
1. Be under contract for at least two books in the next 18 months, for more than $10,000 a book. Twice that, if you have no other source of income (other freelancing skills, an income-producing partner, rental properties etc).
2. Have no continuing debt beyond your mortgage, and get that sucker as paid-down as possible (trebly true, these days).
3. Have four-six months of rent/utilities set aside at all times, so you don't have to panic about the day after tomorrow.
4. Maintain a year's worth of living expenses in your security/emergency account. And by that I mean money that is earmarked for NOTHING except all your contracts being canceled and your not being able to find another job for six months or more.
5. Be willing and able to cheerfully pick up another job on the side (my personal rule is, if my predicted monies fall below a specific yearly amount, it's time for a part-time job. End of discussion and start looking.)
6. Live reasonably. Note I don't say cheaply, but reasonably. Don't try to keep up with the Joneses -- pick and choose what is important to you, and let the rest go without bitterness -- nobody forced you into this life. For me, living out somewhere else would mean a larger place, and more disposable income. But emotionally and mentally I would suffer. So what's the money worth, then? Likewise, someone who needs sunshine and warmth should not go live somewhere with 8 months of winter, just to save a few thousand dollars a year. And if you NEED the latest tech gadgets, expensive cars, and Big Nights out? You're probably not going to be happy as a freelancer anywhere, unless you land the dream gig for life.
But most of all, really truly and seriously, you should not be a freelancer if you can't a) make and stick to a financial plan and b) be prepared for the plan to go pear-shaped.
Case in point to illustrate, and show why this is on my mind: I'd estimated $15,000 in contract money (as opposed to freelance money, which is tougher to pinpoint) for 2Q earnings. Only $3,000 of that actually ended up in my hands in a timely fashion, due to a series of events that were...frustrating, and totally beyond my ability to influence (aka "shite happens"). $3000, over a three month period.*
That's why, boys and girls and writers of all sizes, when the wise old voices tell you not to quit your day job, you should stare long and hard at the list above (or your own iteration of same) and think long and hard and then think long and hard again. Because unless you've got a) a fiscal safety cushion, b) a tolerance for uncertainty and c) the ability to put off or forgo indulgences...
And no, going into debt on your credit cards is *bzzzzt* not the answer, unless the question is "how to make the situation even worse."
Fortunately, the payments have come through, and 3Q is a kinder, more affluent quarter, so I can now pay back the monies I took out of the safety account. But it was a tight six weeks there that I did NOT enjoy.
Feel free to discuss, or add your own thoughts/experiences to this, in comments. It's about adding to the general knowledge, not hoarding it....
*thankfully, freelance came in to ease the pain a bit. But you can never count on that...
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suricattus- July 25th, 2008
busy
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Another is never carry a balance on the credit card and pay it off monthly
*nods* That's one of the major sub-categories of "no continuing debt" and I've ranted a little about that in this thread and elsewhere. I use credit cards to maintain records, earn points, and as a two-four week sliding loan. But the loan comes due and I pay it off in whole, and if I think there may be trouble paying it off, then I can't afford it.
The one exception to that is, as always, medical/emergency bills. Credit cards will save your life (possibly literally) if you're caught by a major disaster, and it will probably take you a while to climb out from under that. That's okay. That's what you keep your credit healthy for. IMHO, anyway.
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Number 6 should apply to everyone!
*really wants to go to WorldCon in Australia*
*really wants to go to WorldCon in Australia*
I totally get number 6, which is why I don't intend for writing to ever be my main income unless I've retired with a nice nest egg.
A thoughtful post and a good thing to pass on to those who are in the life.
As one of those voices advocating not giving up your day job I would add that most of these ideas are even fabulous for those of us who have full-time jobs given this shaky economy.
--claire (who is a pretty frugal mouse even in the best of times)
As one of those voices advocating not giving up your day job I would add that most of these ideas are even fabulous for those of us who have full-time jobs given this shaky economy.
--claire (who is a pretty frugal mouse even in the best of times)
(Anonymous)
I find it very useful to keep a priority list that begins with food, shelter and taxes. As soon as something comes in, I immediately peel off the amount I think it's going to cost me in taxes and put it in a short term CD that expires sometime around the corresponding April when it will be needed, plus I have one of those CDs you can add to that matures at the same time as my property taxes are due.
Another is that I pay off my CC balance monthly. If I can't afford it, I shouldn't be charging it. I know that's tough, but it's also a great way to put a curb on what you think you want to buy. Sure, something like airline tickets are a big ticket that shows up on the card, but if I can't afford the trip I shouldn't be charging it either. It's the same reason I refuse to carry an ATM card. If I have it, I'll use it.
If you can't keep records, don't bother ... if you can't stand tracking receipts for business expenses you will never get your books to balance. And be ready to supplement your income any way you can. I've had a few lean months when if it wasn't for the "free food" of the garden/farm, and the farm income, I would've been hurting.
Don't forget to plan insurance expenses in the mix. And try living on the budget you created for a while before taking the plunge, adding in those little expenses you never think about until you've done it (like, oh, you forgot the $20 a week on coffee, the $50 a week on parking and the drunking fund? That's a quick way to blow your whole project out of the water).
Of course, I'm in that dangerous place now where my supplemental income is overtaking my writing time so it's almost like I have a "real day job" again ... Flexibility is another one of those needs.
Another is that I pay off my CC balance monthly. If I can't afford it, I shouldn't be charging it. I know that's tough, but it's also a great way to put a curb on what you think you want to buy. Sure, something like airline tickets are a big ticket that shows up on the card, but if I can't afford the trip I shouldn't be charging it either. It's the same reason I refuse to carry an ATM card. If I have it, I'll use it.
If you can't keep records, don't bother ... if you can't stand tracking receipts for business expenses you will never get your books to balance. And be ready to supplement your income any way you can. I've had a few lean months when if it wasn't for the "free food" of the garden/farm, and the farm income, I would've been hurting.
Don't forget to plan insurance expenses in the mix. And try living on the budget you created for a while before taking the plunge, adding in those little expenses you never think about until you've done it (like, oh, you forgot the $20 a week on coffee, the $50 a week on parking and the drunking fund? That's a quick way to blow your whole project out of the water).
Of course, I'm in that dangerous place now where my supplemental income is overtaking my writing time so it's almost like I have a "real day job" again ... Flexibility is another one of those needs.
That's pretty good advice for any freelance writer, actually.
I'd also caution people to think about their health-care coverage, whether they need to pay for it themselves or if it comes from a spouse's benefits. One bad accident or illness without insurance could destroy a freelancer. I've seen it happen too many times.
I'd also caution people to think about their health-care coverage, whether they need to pay for it themselves or if it comes from a spouse's benefits. One bad accident or illness without insurance could destroy a freelancer. I've seen it happen too many times.
Ah, stupid me, attempted to add some so-called sage advice from the last 10 years of freelancing, but on the not-usua-computer didn't realize I wasn't logged in. Stupid me.
Your list has some very good material on it and I'd just add a couple of reminders that fit in there:
Set priorities that have food, shelter and taxes at the top. Every time I get a bigger sum, I pump them into CDs that are due when taxes are due in accounts that allow you to add to them. I guess the income tax amount and the property tax assessment likely to be due and shoot for those numbers. All your other expenses may be negotiable, but you MUST have the top three to survive.
Another is never carry a balance on the credit card and pay it off monthly. You can't afford it it shouldn't be used. I also refuse to carry an ATM card because ready cash is spent cash.
Try to budget for technology. My experience over the last three weeks has included a lightning strike that wiped out almost all of my electronics,an ISP that is not working at home (thus I have to budget the coffee expense for going to the coffee shop to check email), and a major phone trunk line that wiped out all land lines in the area for a day. I've had some clients that required me to use software that I didn't have, things that I hadn't planned on.
I allow flexibility to pick up an odd job when I need one. Be wary, though, that these things can eat into your writing time. Don't forget to add insurance to the budget and don't neglect living quarters since a small roof leak that might cost $200 to repair will turn into a major expense if allowed to go a year or more.
Try living on the budget you create and tweak it for some months before you attempt to quit the day job. That's when you realize you forgot to include parking costs, that daily trip to Starbucks, veterinary bills, the stop at the liquor store and a slush fund for gifts, etc.
--M
Your list has some very good material on it and I'd just add a couple of reminders that fit in there:
Set priorities that have food, shelter and taxes at the top. Every time I get a bigger sum, I pump them into CDs that are due when taxes are due in accounts that allow you to add to them. I guess the income tax amount and the property tax assessment likely to be due and shoot for those numbers. All your other expenses may be negotiable, but you MUST have the top three to survive.
Another is never carry a balance on the credit card and pay it off monthly. You can't afford it it shouldn't be used. I also refuse to carry an ATM card because ready cash is spent cash.
Try to budget for technology. My experience over the last three weeks has included a lightning strike that wiped out almost all of my electronics,an ISP that is not working at home (thus I have to budget the coffee expense for going to the coffee shop to check email), and a major phone trunk line that wiped out all land lines in the area for a day. I've had some clients that required me to use software that I didn't have, things that I hadn't planned on.
I allow flexibility to pick up an odd job when I need one. Be wary, though, that these things can eat into your writing time. Don't forget to add insurance to the budget and don't neglect living quarters since a small roof leak that might cost $200 to repair will turn into a major expense if allowed to go a year or more.
Try living on the budget you create and tweak it for some months before you attempt to quit the day job. That's when you realize you forgot to include parking costs, that daily trip to Starbucks, veterinary bills, the stop at the liquor store and a slush fund for gifts, etc.
--M
Another is never carry a balance on the credit card and pay it off monthly
*nods* That's one of the major sub-categories of "no continuing debt" and I've ranted a little about that in this thread and elsewhere. I use credit cards to maintain records, earn points, and as a two-four week sliding loan. But the loan comes due and I pay it off in whole, and if I think there may be trouble paying it off, then I can't afford it.
The one exception to that is, as always, medical/emergency bills. Credit cards will save your life (possibly literally) if you're caught by a major disaster, and it will probably take you a while to climb out from under that. That's okay. That's what you keep your credit healthy for. IMHO, anyway.
Re: #5. I know someone who lives a freelancer's life, but she has absolutely no cushion. She falls into a state of financial panic every month or so and is in constant danger of losing her home.
But just try suggesting she get a part-time job to add some stability to her life, and she'll scortch your ears.
But just try suggesting she get a part-time job to add some stability to her life, and she'll scortch your ears.
I know people like that too. Or they say "but there are no jobs!" even when I know for a fact that there are places hiring -- they're just not jobs they think are "suited" for them, or they're convinced that if they're not 100% full-time freelancers that they've somehow 'failed.'
I can understand that, a little, but it still strikes me as useless and potentially harmful baggage to drag around.... We are [or should be!] more than the sum total of what we do to pay the bills!
I can understand that, a little, but it still strikes me as useless and potentially harmful baggage to drag around.... We are [or should be!] more than the sum total of what we do to pay the bills!
words of wisdom and good sense that should probably be printed out and hung on fridge doors across the country.
Fantastic reality check, Laura! This one goes straight into the memories archive.
[P.S. You looked amazing in your Friday night sarong ensemble. The riding pays off. ;) ]
Edited at 2008-07-25 07:31 pm (UTC)
[P.S. You looked amazing in your Friday night sarong ensemble. The riding pays off. ;) ]
Edited at 2008-07-25 07:31 pm (UTC)
Even though I was totally cheated out of a win by the judges' sudden decision to prefer actual Hawaiian shirts? *grin* and thanks!
(I was a little nervous about baring the midriff, but it seemed to work out well...)
(I was a little nervous about baring the midriff, but it seemed to work out well...)
Great advice. I'd add that you should pare down to a minimum the people you owe money to every month. If it isn't the mortgage bank or a utility that helps keep you alive and healthy, chances are you don't really need it.
Oh yeah. I think I had that in mind with the "no continuing debt" bit, but it helps to spell it out specifically. I had to wrestle with that one a bit -- how much cable did I really need? Once you stop and think about your television viewing habits, it's interesting to see how small you can make the monthly bill...
I would add, if you are fortunate enough to have health insurance, whether employer-provided or otherwise, get a full physical before you try going freelance. And add health insurance premiums to your must-have expenses.
And if you do happen to have employer-provided health benefits, seriously, seriously re-think the whole idea of quitting your job in the first place.
Likewise with retirement benefits. If you can write while holding a full time job with benefits and a reasonable salary, consider waiting until retirement before trying to write full time. It is strange but true that for some people it is easier and more productive to write while working a full time job than it is when writing is the full time job.
And if you do happen to have employer-provided health benefits, seriously, seriously re-think the whole idea of quitting your job in the first place.
Likewise with retirement benefits. If you can write while holding a full time job with benefits and a reasonable salary, consider waiting until retirement before trying to write full time. It is strange but true that for some people it is easier and more productive to write while working a full time job than it is when writing is the full time job.
Very true, all of it -- some people really truly are NOT cut out to be freelancers for reasons other than pure finances. But that's another topic of chewing over entirely...
I wouldn't argue with any of that, in a before-you-take-the-leap sort of way. On the other hand, as someone who took the leap thirty-some years ago and is still trying to stay in the water, just running through your numbers:
1) Yup. For the twice-that measure, as I have no other source of income.
2) Nope. Debts come and go, in proportion to income. Right now, lots of debts. So far, this has always been survivable.
3) Nope. Did have; spent it, when the rains came.
4) Ditto.
5) Nope. No skills and no experience: after a lifetime of self-employment, I am unemployable otherwise.
6) Yup. Mostly. I tend to be good, except when, y'know, I'm not.
Still here, though.
1) Yup. For the twice-that measure, as I have no other source of income.
2) Nope. Debts come and go, in proportion to income. Right now, lots of debts. So far, this has always been survivable.
3) Nope. Did have; spent it, when the rains came.
4) Ditto.
5) Nope. No skills and no experience: after a lifetime of self-employment, I am unemployable otherwise.
6) Yup. Mostly. I tend to be good, except when, y'know, I'm not.
Still here, though.
There's a difference between "I'll take the emergency debt-hit now and pay it back ASAP" and "continuing debt," though. Continuing debt costs more than the original hit, in terms of fees and interest, especially after six months or more...
In an ideal world, you're your own lender (see: emergency funds) and rebuild that, rather than paying a third party. Next best, a short-term loan, either from friends/family (with appropriate paperwork) or a bank loan. Worst case, and the one that kills many a freelancer, is credit card debt. I can't agree ever with anyone who thinks it's acceptable finance [freelance or otherwise] to run a long-term credit card debt, short of serious medical fees.
Talking with the tax guy yesterday, and he said that the majority of small business go under not because they don't have a good product, but because they underestimate the vagaries of cash flow, both receiving and paying. Having a cushion of even a few thousand dollars can make all the difference.
As to 5 -- off the top of my head, what about retail? There are a dozen things I'd rather do than ever go back to selling clothing (including ditch-digging), but in a terrible pinch, I suspect I can still wing it (okay, maybe not the all-night inventory sessions. Those killed me even when I was 20!). You don't exactly need specialized skills to clean out a changing room, or get a different size of shoes from the storeroom, if you're not bucking to become store manager....
In an ideal world, you're your own lender (see: emergency funds) and rebuild that, rather than paying a third party. Next best, a short-term loan, either from friends/family (with appropriate paperwork) or a bank loan. Worst case, and the one that kills many a freelancer, is credit card debt. I can't agree ever with anyone who thinks it's acceptable finance [freelance or otherwise] to run a long-term credit card debt, short of serious medical fees.
Talking with the tax guy yesterday, and he said that the majority of small business go under not because they don't have a good product, but because they underestimate the vagaries of cash flow, both receiving and paying. Having a cushion of even a few thousand dollars can make all the difference.
As to 5 -- off the top of my head, what about retail? There are a dozen things I'd rather do than ever go back to selling clothing (including ditch-digging), but in a terrible pinch, I suspect I can still wing it (okay, maybe not the all-night inventory sessions. Those killed me even when I was 20!). You don't exactly need specialized skills to clean out a changing room, or get a different size of shoes from the storeroom, if you're not bucking to become store manager....
Good advice generally. I wouldn't advise retail in the current climate in the UK - it's taken a massive punch to the gut with the current credit crunch, and a lot of retailers are laying off staff, not hiring. I am applying for part time university work to keep not only the writing, but the retail business, afloat - it is that bad, and we have had to react quickly to try and estimate turnover and reduce overheads accordingly. Just about done it, but rates and VAT are likely to be a killer. We are heading fast towards a recession, the property market is dying on its feet, and moving is not an option in the UK for many people. Frankly, if a new writer told me they were thinking of going freelance, I'd tell them to hang onto the day job at all costs until there's an economic upturn.
OTOH, my editor informs me that fiction is selling well - probably because people need an escape and can't afford to go anywhere. At least we don't have the medical side of things to contend with in this country, Chas.
OTOH, my editor informs me that fiction is selling well - probably because people need an escape and can't afford to go anywhere. At least we don't have the medical side of things to contend with in this country, Chas.
2008-07-25 02:44 pm (UTC)