A few financial goals for 2019

End of 2018 net worth report: $93,448, as of a few minutes ago (STOCK MARKET BLUES). I also have $3500 chilling in an unrelated account, waiting for tax season; I have no clue whether I held enough out of my freelance earnings or not, but I guess we’ll find out! My freelance earnings, by the way, totaled $13376, or $18876 if you count the adjunct summer class I taught via my day job. Not bad at all, considering I’m building up from scratch and also volunteering approximately half time. I would be pretty happy to repeat that number (doubled to represent a full year) in 2019.

I decided to make a few pretty lightweight financial goals for 2019, just to give some shape to my decisions moving forward. None of these involve an actual plan, and they are all subject to change — for example, if I get a full-time job again sometime this year (a possibility I am still debating) I will revise the savings numbers upwards. But here are my thoughts right now:

  1. Develop freelance income to an average of $3000/month over the course of the year. This is below where I want to be longer term — that would be closer to $5000/month — but considering that I am still building contacts and business, and will be continuing to work part time and volunteer part time through June, I think aiming for this average is pretty reasonable.

2. Increase my cash on hand to $50,000. Currently I have about $40,000 in cash savings, with a couple thousand extra in my checking account. So I’m aiming to add something in the vicinity of $8000-$10000. That would represent about 25% of my hoped for freelance income so this goal might be overly ambitious, but it’s something to aim for, anyway. If the market massively crashes I’ll invest some of this but if it’s just going to keep screwing around in the Dow 22,000-26,000 range I’ll keep it in cash.

3. Fully fund my Roth IRA. I contributed about $10K to retirement in 2018 (nearly all of it before I left my job at the end of August.) In 2019, I’d be satisfied with $5500 into my Roth IRA. If I do get a full-time job this is the goal that’s most likely to significantly change — I’d put more into retirement if that happened.

4. “Give” half my after-tax income. For a few years now, I’ve been aiming to save half my after tax income, and gotten pretty close, either going just over that or just under it. But in 2019 I want my mindset to be less about saving and more about giving, to my future self and to others. When I add my numbers up at the end of the year, I’d like to have spent about half on my living expenses, and about half on giving my future self care and options, and giving others gifts in the present. My bare-bones budget includes some charitable giving, but it’s pretty minimal — around $50 a month. Freelance income allowing, I’d like to increase that to $100/month. When I stop doing half-time service work after June 2019, I also want to increase the $$ giving line accordingly. I’m also starting a budget line for gifts for my godchildren and niece, who all constantly need clothing and books.

And that’s it! I am moderately optimistic about 2019, for the first time in a while, and I hope you are all out there enjoying the last day of 2018. Thanks for continuing to come along for my ride.

My absolutely gigantic emergency fund and why I love it

The stock market’s drop has me back well below $100K — though that’s also partly because I moved the money I’m saving for freelance taxes into its own account at a separate bank that Mint and Personal Capital don’t track. For most of the last six months I’ve had it in one of my regular savings accounts and showing up as part of my net worth, but I realized sometime this fall that it didn’t make sense; instead I should hold it separately as if I was having taxes withheld. In 2019 I’ll start paying quarterly taxes again (I’m glad I’m at least somewhat familiar with this process from back in the day when I freelanced in my early 20s) so it’ll be good to have a holding bank account that I just use for that money.

ANYWAY. That’s not really the main point here. The main point is that because freelancing has gone so well, even though I haven’t added to my savings since I quit my job I still have $40K in cash between what I technically call my “emergency fund” and what I call my “life fund,” enough for two solid years of not really thinking too hard about money or three years of bare-bones expenses (or probably like ten years if I move into a volunteer community and don’t pay rent or for food!) And even though freelancing is going well, I have zero intention of letting that fund drop.

The reason is that my work life is just too fragile. I don’t have a business like plumbing (everyone always needs their pipes fixed.) I do high-quality editing work, but at the end of the day, in order for me to make money people have to decide that they care about their writing enough to pay to improve it. When there’s another recession or if universities start closing their humanities departments right and left (or both) my current preferred income stream could be in trouble, and just at the time when other work could be harder to come by.

So, absolutely ludicrously gigantic emergency fund it is. Every morning I open my bank page and look at it and take some deep breaths. It feels good to have backup.

Freelancing, part 2

The last time I wrote about my freelance business, back in August, I was just getting started. I’m going to start this post by copying the numbers from that post, though to better accord with how I categorized the money in YNAB I’m going to change the headings to “income for month” — which reflects money actually received, rather than money billed.

Income for July 2018 (work completed in June)
Editing: $600.00
Blog ghostwriting: $150.00
Book review: $500.00 (note: this is very unusual and probably not repeatable.)
Total: $1250.00

Income for August 2018 (work completed in June and July)
Editing: $1428.00
Blog ghostwriting: $300.00
Total: $1728.00

Income for September 2018 (work completed in July and August)
Editing: $337.00
Blog ghostwriting: $1300.00
Total: $1637.00

And here’s how things have gone since then:

Income for October 2018
Blog ghostwriting: $1100.00
Editing: $2223.00
Total: $3323.00

Income for November 2018
Blog ghostwriting: $800.00
Editing: $302.50
Lecture honorarium: $600.00
Total: $1702.00

Income for December 2018
Editing: $401.00
Blog ghostwriting: $400.00
Bank Account opening bonus: $500.00
Pollworker compensation: $110.00
Total: $1411.00

Income for January 2019 (already received)
Blog ghostwriting: $800.00
Editing: $1825.00
Total: $2625.00

(I left out some pretty minor miscellaneous income from things like Ebates, selling some books on Amazon, cashing in credit card points, etc.)

Overall, I feel like things have gone well. Since I received my last real paycheck back in August, I’ve only had to transfer $1000 from my savings, and that wasn’t really a “had to” — I used that money to take a trip in November to see friends/godchildren, and to buy Christmas presents. And I’ve been putting aside money for taxes every month, not treating all this income like income I could spend. The really thin month there (“income for December,” ie, mostly money received during November) is partly accounted for by my election volunteering; I mostly stopped searching for work during the runup to the election and while I did do some after it was over, there was about six weeks in October and November when I did very little work for pay. I only made about $900 in November, and was able to add a bank account opening bonus to just barely cover my normal expenses for the month.

It’s maybe not obvious to the casual viewer, but I also see a pattern in the types of income that reflects some decisions I made earlier in the fall. The “blog ghostwriting” income was well over $1000/month for work I did in August and September, and I was grateful for the work and the money alike. But I felt it was taking up too much time I wanted for other things; I was getting stressed out about fitting it in. I’m happier with it settled at around $800 a month, which (except for an election-related dip) it has been for a couple of months running now. I can accomplish that much work in a reasonable amount of time, it provides some steadiness to my income, and it overall seems like about the right amount to be doing for now.

Meanwhile, the editing work, which is much more what I really *want* to do, has been increasing. This month I’ve been paid for one full book project and a couple of shorter articles; for the first time, my editing income will cover my entire basic January budget (the blog income will cover a conference trip I’m taking early in the month, so I still don’t think I’ll save anything much.) But more exciting to me is that in addition to that completed work, I’m deep into another full book project I’ll get paid for in January; I’m contracted with a historian to edit her book beginning in January; and I’ve also started a regular part-time gig as an academic editor working with dissertation student in (roughly) my field. I’m very excited about this, though it’s not going to make me rich. But I do think it’ll be a steady $500 or so a month (it’s by the hour, so it’s variable) over the long term, plus it’s work that I find very exciting. If I end up going back to a full-time job, I intend to keep this as a side hustle.

The reason I’m happy about all of this, in addition to the intrinsic satisfaction of the work, is that my calendar is starting to fill up more than a week out. I already know what I’ll be spending most of January doing for paid work (while keeping up my volunteering.) I even had to let the blog I’m ghostwriting for know that I needed a month’s hiatus because I have so much editing work lined up! It’s not a steady, well-paid career yet, but it’s beginning to seem like something that could be that way if I kept at this. A full calendar, even for a month or so, is a good sign.

[note: my net worth is a tire fire, we shall not speak of it until the stock market goes back up again or until I accept this is the new normal, whichever comes first]

Turns Out Stuff Costs Money

Hello! A new post! I’ve spent much of the fall either deeply immersed in volunteering, traveling, or sick. It’s been a good season (apart from the two week-long colds) and although I’ve barely logged into mint and have no interest in looking at my investment account balances, I’ve mostly managed to pay my way with freelancing rather than savings, although that’s been precarious for the last month or so.

I’m still not logging into mint for a while 🙂 So instead of a net worth update, have this list of how money has recently been flying out of, as well as into, my accounts.

I’ve been thinking a fair amount lately about the balance between my expectation of spending little/no money and the reality of keeping my life running. This meditation didn’t actually start with the big unexpected car repair yesterday (more below) but rather with an L.L. Bean purchase a month or so ago.

Nice Clothing Costs Money

I am, to say the least, not a fashionable person. I don’t like shopping, always carry too much weight for my own tastes, and frequently wear the things I buy for years on end. I have a few one-week rotations (teaching clothes, summer tshirts/shorts/skirts, winter jeans/shirts), do a load of laundry every weekend, and then have a selection of dresses, suit jackets, and the like that I can pull out when needed.

Because of this I think I felt, a few years ago when I started to budget, that I shouldn’t really budget much for clothing. I basically bought no clothes while I was paying off debt, so I knew I would have to fill in some holes when that was done, but I thought after that maybe I wouldn’t need to buy anything for a long time.

But it turns out that I consistently and reliably spend around $1000 or more every year on clothing, even though I wear everything I buy for multiple years. It turns out, though, that things just wear out on cycle — this year I haven’t had to buy summer tshirts, but I did have to buy a new set of winter long-sleeved pullover shirts, the last set (from several years ago) having gone to their eternal reward. I haven’t bought sandals in several years, but both pairs I regularly used wore completely out this summer so I’ll have to replace them next year. And so forth. And buying the quality construction I enjoy wearing and that will stand up to 100+ trips through the washer or 1000s of miles walked isn’t cheap. So I just have to keep it in my budget unless I want to change my lifestyle dramatically.

Cars, sigh.

Yesterday my car demanded its annual blood sacrifice. The thing is, the car in question was free to me, and is 20 years old. Stuff happens, in this case, stuff like taking it in for an oil change and finding out the radiator is cracked and we really need to replace the original radiator hoses too. Cue unexpected $700 bill.

I mean, it’s ok. I have the money in savings, and voila, my parents hadn’t figured out what to give me for Christmas so they’re going to help me out too — I don’t “need” it but it’ll be nice to refill my emergency fund with that to some extent. But it’s just a really good example of the fact that keeping life running reliably does not have a zero cost. If I was poor, I’d be in worse shape — I wouldn’t have paid the bill, and would have just driven the car until the radiator gave out completely, then switched to the bus or something. I don’t know. Instead, I can pay the bill and keep going on my relatively merry way.

Health Insurance

Also yesterday, while I was spending money like a drunken car-repair sailor, I signed up for a 2019 Obamacare plan. I had to estimate my freelance income, and have no idea how this is really going to work out in the end (I won’t know for sure until I file my 2019 taxes) but at least for now I think I will get a subsidy and have purchased a plan that, including a separate dental plan, comes to $190 a month (after subsidy.) I haven’t had to go to a regular doctor in a couple of years; I just do a dental visit twice a year. So the insurance may end up not really mattering. But now that I’m nearly 40 and not broke, I do feel like it’s something I need to pay up for, since it’s accessible to me.

Christmas Presents

I am, for somewhat mysterious reasons, really feeling the present-shopping spirit this year. There have been many years where I’ve spent nearly nothing on presents, giving mostly homemade items. This year, though, I just kind of want to. My godchildren are old enough that they are interested in books; I have a baby niece that needs clothing; and I wanted to give some things to several friends, as well as to the kids and to my parents and brother/sister-in-law. Honestly, I didn’t really make a budget for this stuff. I’m just buying what I want, and will figure it out later, probably with money from savings. Not very fiscally responsible! Going forward I think I need an actual Christmas budget. I’ve never had one before, but I’ve also never had four or five kids in my life that I intend to consistently gift. I’ll add a “Christmas” line to my 2019 YNAB budget so I can save up throughout the year.

Conclusion

Things I like include maintenance/prevention and high-quality clothing, food, etc. I am not extravagant in any of those areas, but they really do cost money and are not expenses I can ignore in my financial planning.