Budgeting Freelance Income

Last time I discussed my upcoming volunteer year/freelance year/career transition/whatever this is, I wrote about my no-income budget. But I do in fact hope to have some income! As a matter of fact, even though I wasn’t necessarily intending to start seriously scouting for editing and writing work until July, I’ve already found some. More accurately, I did “find” some by cold-emailing old contacts, but some was referred to me by generous friends–you know who you are! By the end of June I currently project I will have billed, though not necessarily received, around $1700. If this pace keeps up I might end up in better financial shape than I thought I would — whether that’s just depleting my savings more slowly than planned, or even adding a bit to them. (My favorite part is that the three projects I’ve either completed or booked this month use three different skillsets and came from three distinct sources. Diversification!)

Freelancing is where the old YNAB method of living on last month’s income really comes into its own. I’ll know in advance which months I’m going to have to be very strict about the no-income budget, and which months I can maybe loosen up a bit. I’m going to have to feel this out as I go along, but I’m thinking that up to $1500 of income a month will look pretty much the same as the zero-income budget (including health insurance premiums and setting some aside for taxes.)

However, if I make more than $1500/month, I’ll start by allocating any extra money this way:

25%: tax savings

20%: cash savings

10%: retirement savings (Roth IRA)

10%: gifts & donations sinking fund

10%: travel sinking fund

25%: slush spending

I think that’ll be a reasonable balance between saving and spending. What I want to do is to use freelance income both to extend the lifespan of my savings accounts (hence, the cash savings) and to supplement the bare-bones nature of that zero-income budget. 25% of freelance income allocated to slush means that I can go out to eat sometimes, or buy some music, or whatever.

I guess if I unexpectedly do REALLY WELL in the freelance game, and am making thousands of dollars a month, I will end up rethinking this. But since at least at first I’m not going to really hustle, so that I can focus on volunteering, I think this ought to be fine.

My Lowest Ever Money Moment

Sometimes I like to pause and reflect a little on how far I’ve come. Last week Facebook popped up a “memory” of the day, five years ago, I finished my dissertation. At the time I had about $19K of student loans, $5K of credit card debt, and maybe $1000ish in the bank. No retirement savings, no health insurance, no nothing. Also, I didn’t have a job.

But even that wasn’t “rock bottom” for me financially. I had some ideas about how to make some money (none of which I had to put into effect since I did get a job about a week later.) I felt I would manage.

What was not really manageable at all, was the situation I was in circa summer 2004. I was renting half of a basement apartment in Washington Heights for $600 a month, and almost a year into trying to get a freelance film career going. I was supporting myself, barely.* But I’d come off a film — and thus had my last income — a month earlier, and nothing else was materializing, despite my calling around twice a week to the few people I knew. Also, right at the end I’d picked up a bad cold, which had gotten better and then come back again, so I was spending a lot of time on the couch in my awful apartment feeling sorry for myself and not doing any of the self-improving things I should have been doing with all that enforced time off.

Then the cold got worse.

What had been a cough became what they call a “productive” cough — I started coughing up phlegm. It was painful. Then after a few days of that, the phlegm turned a poisonous-looking green, and I found that I couldn’t breathe when I lay down, and could only barely do it when I was sitting up.

It was clearly time to go to the doctor, but obviously I didn’t have health insurance. I recall searching the internet (did google exist then? I guess it did) to figure out if I could possibly have tuberculosis. It turned out that if I did there was a government program to pay for treatment, so I guess there would’ve been that.

Frankly, I was really scared at that point.

Anyway, I also searched for sliding scale clinics and found one about a 45-minute subway ride away. This was late evening, I guess, and so I planned to go first thing in the morning. I plugged my cell phone in to charge, setting it on the windowsill above the outlet.

After a night of cat-napping in between hideously painful coughing bouts, I got up, got dressed, and discovered that someone had reached in through the bars on the window and taken my phone.

SO. Off I went to the clinic, dragging myself down there on the subway. I was there when it opened, but I waited most of the day (coughing all the while) to be seen. When I did finally get seen, they tried to convince me I had asthma and made me sit with an inhaler for a while to see if it helped (it didn’t.) Eventually they agreed to do an x-ray, which they had a machine for on-site, which was the only good thing that happened that day. At that point I’d been out of contact with the world for most of the day; I needed a phone so my parents could call me, so the doctor could call me back with the x-ray results, so I could accept work if someone offered it to me. I went to the Sprint store and bought a phone as soon as I left the clinic — using a credit card of course, which is also how I’d paid for the clinic visit.

It turned out I had pneumonia (they called the next day after the x-ray was read.) Luckily it wasn’t a very serious case, as these things go; I took a course of really really huge antibiotic pills (also, of course, paid for on credit) and within a few days I could breathe enough to lie down. It took me nearly a month to be completely back to normal though. I’m forever grateful to Law and Order because in the middle of my recovery period they booked me for a day of PA work, which was money I desperately needed. But when I showed up with a terrible, very loud cough (I wasn’t contagious!) and too weak to do almost anything, they let me sit and guard all the personal stuff belonging to the extras and crew, just about the only job I could have managed in that state.

I honestly don’t know what I would have done if I’d had to be hospitalized. Probably still be paying off that debt today. But I wouldn’t have been in that situation in the first place if I’d had insurance, because I would have gone to the doctor well before the pneumonia stage.

It was a really awful day, though, that day. Stolen cell phone, sliding scale clinic, no idea where my next bit of work was coming from…. I hope I never get back to that place again.

What was your lowest ever financial moment?

*By the next year I was more than self-sustaining, and by the year after that I was in a union and pulling in perfectly respectable middle-class money, which I then gave up to go to graduate school, at which point it took me eight years to get back to the yearly income I’d been at. I don’t know, I don’t make very good decisions generally, I guess.

Paying Myself and the Minimal Budget

I’ve been talking a lot over on twitter about my day-to-day freelancing planning. I just built a website with my real name and academic accomplishments, including a “work with me” section for editing, indexing, research-for-hire, and things like that. I need to reach out to basically everyone I’ve ever met and let them know I’m available for those activities. I’ve already started scouting for other writing work, too. In an upcoming post I plan to talk about how I’ll use the proceeds of freelance work.

[Side note: my real name is not a state secret or anything. I just don’t want The Single Dollar to be googleable under that name, because I share my exact $$ numbers. If you are interested in my editing/research services, or know someone who would be, please get in touch and I’m happy to share that other site with you.]

However, my main intention for the next six months or so is not to be a thriving, money-making operation. I’m not going to be massively hustling. While it would be great to replace my current W2 income (given that I’d need to pay SE tax, healthcare premiums, and retirement contributions, that’s about $1500/week gross) I’d be well-satisfied with covering my monthly expenses (closer to $1500/month gross!) and, to be honest, I’d be just fine with making no money at all some weeks or even months. That’s the whole point of prioritizing volunteering.

If I turn out not to have income, my plan is to pay myself a $1000/month salary out of my Life Fund. At that rate, that fund will last for nearly 3 years with no income at all. I’m pretty sure I will make some money in there at some point 🙂

But ok, let’s assume there’s no inflow, only outflow. If I pay myself $1000 a month, here’s how I’ll use it:

Continue reading “Paying Myself and the Minimal Budget”

Net Worth Update: April 2018

Considering my big freelancing news, I probably should be more upset that April turned out to be a fairly high-spending month. After I finish getting paid for the academic year, it could be a long time before I see a substantial paycheck again, and it’s certainly true I need to immediately start belt-tightening. But it’s actually fine. I have about $18000 (gross, not net; I’m anticipating about $13000 net) coming in during the next two months, which is an almost unfathomable amount for me, so it’s hard to be too upset over a few hundred dollars extra this month. Anyway, for all the gory details…to the numbers! Continue reading “Net Worth Update: April 2018”

Transitioning Back to Freelance

This isn’t my April net worth update — that’ll come eventually. Preview: I spent a lot of money on travel, friends’ books, and family birthday gifts, and the markets were iffy, so, probably not great. However, I will get a really, really large boost in May, because (a) I’m leaving my job and for complicated reasons will get 2.5 months of salary payout (this isn’t a bonus. There are two ways to pay if you are hiring someone for a single academic year: you can either pay the person from July 1 to June 30, or pay them from August 15 to May 15, in which case you end up paying the summer salary when the person leaves. It saves them on health insurance, which is why I guess they do it; my previous employers all took the July-June route which was a lot simpler for me.) (b) I should also get paid for the summer class I’m teaching at the adjunct rate. It’s hard to know how much will be taken out in taxes, but I think I will get somewhere around $12000-13000 after tax from both of those combined. Whew!

Right, but this post isn’t about any of that. It’s about leaving my job. Since I was hired on a one-year contract, I had to decide whether to renew or not. I like many things about this job, but at the end of the day, it doesn’t pay enough to allow me to live a reasonable life in one of the most expensive cities in America, in which I have few ties. It also offers no stability — I could have worked here another year, maybe two, but not more than that. Those two factors together meant that, with some reluctance, I decided not to renew. Combined with that, though, I really want to volunteer on the 2018 fall elections back in the midwest, and I didn’t see any other academic jobs come up that looked so attractive to me that I would miss out on the volunteering opportunity. So, for the first time in six years, I didn’t apply to any teaching or research jobs. I may or may not do a freelance research project this summer (I should hear this week) but either way, by the end of September at the latest I will be completely free of school obligations for the first time in more like 15 years.

This is what I’ve been saving up that Life Fund for; while it’s at $22k now I’m going to put all of my big final payout in there, so I expect it to be at about $35K, plus my efund of $6K or so (this is all give or take a grand by the time I finish summer travel, moving back to the midwest, etc.) My expenses in Indiana are rock bottom, so I legitimately think that even without any income whatsoever I could live on that for several years (!) However, I very much hope I do have some income! I will be putting a fair amount of effort into volunteering, but I also plan to look for freelance work: writing, editing, and so on. (PS, if you have freelance work to pass on let me know! I will probably start pitching PF articles again, which I haven’t done in a while.) I’m really excited to work for myself again. Right now I have a ton of ideas about potential income sources, although many are in perpetually underfunded humanities areas so 90% of them will probably not pan out. But I think I can make it work, and get the flexibility to travel and to invest time in my community, which is what I really want to do. Eventually, whether it’s a year or three years from now, I think I’ll go back to ‘normal’ work, but right now I am mostly just very excited to have the freedom to try this out (ok, maybe 10% scared, so supportive comments are also welcome.)

March 2018 Net Worth Update

OK, we can tell how my April has gone by the fact that (a) my net worth update is five days late and (b) I typed “February” above and then had to erase it because my mind is like jelly right now.

It’s been a good first week of April actually! Taught some good classes on subjects I love, did a lot of professional writing — a LOT of it — and got the first copy of my new book in the mail. Just extremely busy. But now it’s Friday night, I met my biggest work deadline, and I have time to post some numbers.

March was a pretty good month. Here’s the spending:

That’s a bunch of green! I traveled the last week of the month, but had already paid for most of it earlier, so I just spent a little bit getting to the airport, basically. I went to see friends so I didn’t have to spend money when I was there. I got a haircut, bought some underwear, made my usual monthly donations.

Slush was the usual: a random collection of stuff! I went out to eat with a friend, bought a couple of new sheet pans, bought a book and a CD, saw A Wrinkle in Time, bought some coffee out, and paid for my Washington Post digital subscription.

What I’m most pleased by is that my food spending finally got under control. I chalk that up to only having school two weeks of March (we had a week of spring break and nearly a week of Easter break.) Turns out when I’m not teaching I find it much easier to eat cheaply!

Despite this good month, the overall net worth numbers don’t look great….

But that’s really just because of the markets. Eh. It’ll be fine. I wish things had gone just a little better because I thought I’d crack $80,000 in March, but hopefully I’ll get there in April. In the meantime, I ended March at $79765, an increase of $1405 — not bad for a month in which my investments lost over $1000!

Academic Economics

There have been a lot of articles in the last 5 or so years about the “adjunct crisis” and the economics of higher education, but I thought I might have a few readers that didn’t spend a lot of time reading Inside Higher Ed and might be intrigued/horrified about some of the weirdnesses of this industry. I’m going to number these, but they’re in the order they occurred to me, not necessarily in a logical or rigorous order.

1. First and foremost, how many students you teach has virtually no relationship to how much you make. If anything, it’s inversely correlated. Larger class sizes are typically lower level and are much more likely to be taught as freelance piecework by adjuncts, who make anywhere from $2500-6000 per 15-week class. Also, poorer colleges and universities typically have much higher teaching loads for full-time faculty as well; 4 courses a semester (usually called “a 4/4” — four courses in the fall/spring semester) is typical for a poorer college’s faculty, whereas a 3/2 or a 3/3 is more typical for an average college, and a rich college, which is paying its faculty more, is also giving them a 2/2 or even a 2/1 or 1/1 teaching load.

2. My personal salary history, post-grad school: $66K teaching a 2/3 (rich college, one-year appointmen); $48K teaching very little (rich college, research postdoc, taught 2 courses total in 3 years); $56K teaching a 3/3 (average college, unfortunately in a very expensive area so this doesn’t go far).

3. I’ve never adjuncted. I’m not saying I won’t in the future, but I would never try to do it full-time; it really would only be one or two courses on the side of something else. However, lots of people do try to make it work as a full-time income. They rarely make more than $20-25K a year.

4. How can colleges get away with paying so little? Oh lord. Well, because enough people are willing to take the money. Many of those people are currently graduate students, or recent graduate students trying to get full-time jobs and convinced that if they just do it for a year or two they’ll find something…. A lot of it, I think, can be chalked up to sunk costs. This is certainly part of why I’m still working in an academic job despite years of precarity. You spend 6-8 years getting a graduate degree, you’re good at teaching, you have experience teaching, the thought of retraining in something else is overwhelming/frightening, you don’t want to start over in a brand-new field at 35 or 40 or 50, so you keep doing what you’re doing.

5. So why don’t colleges just fire all their full-time faculty and move entirely to adjuncts, if there are so many people willing to work for those wages? Well. That’s kind of where we seem to be heading; we’re roughly halfway through the slow-motion disaster of university labor casualization. You may have seen the recent headline about one of the University of Wisconsin’s campuses eliminating a bunch of majors — English, philosophy, so on. This is really a labor story. Here’s the deal. UW-Stevens Point is going to keep offering lots and lots and lots of English classes, trust. They will probably also offer a fair number of philosophy courses. But eliminating the major means that they will not have to have any full-time faculty in the English department (or whatever), because for whatever weird reason (I confess I do not really understand why this is so, but trust me, it’s empirically true), having full-time faculty is now mostly tied to having majors, not having students in classes. Eliminating the major means eliminating the full-time faculty and replacing them with adjuncts.

I could tell so many stories in this vein — the number of reasons administrators can offer for why they are going to use contingent rather than full-time faculty labor is legion. The upshot is they’re going to keep doing it as long as they can get away with it, which is probably going to be for a long time.

6. Where exactly is all your tuition/loan money going? That’s going to vary depending on type of school. State schools in the U.S. have lost a lot of state support over the last few decades — a trend accelerated by the recession. There, rising tuition is probably mostly going to fill in the gap created by your state’s legislature, though again, there’s variance state to state. At private colleges, it’s more likely to be going to facilities, maybe administrator salaries (extra vice-presidents of this or that, lots of marketers and fundraisers). Athletics is an issue, but I think less of one than we often think, at least financially (the distorting effect on other areas of campus life is another post.) Lastly, there’s Baumol’s cost disease: higher education is a service provided by people, not a manufactured good, so it’s just gotten more and more expensive over time, like medical care. And like medical care, there hasn’t been adequate government support as that cost has grown. So individuals are bearing that extra cost. Some of those individuals are tuition payers (tuition going up), and some are faculty members (salaries going down).

Hi, my name is C, and I’m a coffeeshopper

I’m not sure the twelve-step analogy is even a good one, because showing up at a meeting suggests you want to be cured…and it’s not clear that I do.

I’ve been needing for a while to crack down on my slush budget; I’ve been consistently $40 or $50 over basically every month for over a year. I can reroute the money from other places, of course — sinking funds, mostly, and sometimes minor extra income like a payment from Ebates or whatever — so it’s not like I’m taking on debt. But it bugs me. I typically allocate $150-180 to slush every month, and that feels like it ought to be enough!

So, what’s going on? Right now I only have data going back to August 2017. I didn’t pull the numbers together completely, but at a glance, I’d say that about 1/3 of my slush spending has been for subscriptions (hulu, amazon prime, the Washington Post), the occasional book or CD, and the occasional movie/theater/music ticket. A bit more has been to catch-all household-supplies purchases (a target trip or amazon order once every few months).

The rest is all on food.

I know partly what’s up with that. I am perfectly capable of cooking all my own vegetarian meals from scratch and living on under $300/month for food, but do I always? Heck no. I go in bursts on cooking, and other times default to buying meals out or more expensive but doesn’t-need-cooking food from the grocery store (I’m partial to cheese and crackers, and I mean expensive cheese.) The cross-country move has exacerbated that; I’m not living in my own house here, which makes cooking more of a pain, and also it’s a much bigger city than my previous one, with way more places to eat and substantially higher prices.

But wait, didn’t the subject line of this post say it was about coffeeshops?

Yes! The problem here is that I don’t have much willpower when it comes to food. That’s true for regular meals, as above, and it’s also true for coffeeshops.

I love, love, love a good coffeeshop. I especially love them when I need to do a stack of grading, because grading is the worst and most tedious part of my job, and it just helps to do it in a place with a nice latte. I will know that it’s nearly the end of the month, and I’ve already overspent, and still…. I feel about them the way some people feel about dating men that are clearly, obviously bad for them. I met a coffeeshop this weekend with the most beguiling pastry counter, the loveliest wooden tables, the nicest staff, the greatest windows, and what I’m saying is if I was in a bar and this coffeeshop walked up to me and said “How about handing over all your money” I would’ve said “HEY, handsome.” This morning I wasn’t teaching (but I did have my usual grading pile) and I drove over there and spent $19 for a totally delicious breakfast plus two uninterrupted hours of student papers and I’d do it again. In fact I definitely will do it again, because there’s no use pretending I’m suddenly going to be a different person than I am.

The only shred of hope here is that this infatuation might inspire me to eat more of my other meals at home, rather than paying for cheaper, but subpar, sandwiches and pizza. Maybe in March I can rebalance so I’m spending roughly as much on slush, but focused on things I’m more excited about?