I am now three (almost four) months into freelancing. It has been a mostly positive experience. I will write a post about the positives but I think it’s very important to share the negatives because there are negatives.
Before I get into the heart of this post please remember that I’ve spent almost 3 years reading and observing other people’s freelancing journeys. I anticipated that some of the things that cropped up would probably happen and so I was prepared mentally for some of what has come up. If you spend as much time reading other people’s freelancing journeys as I have you’ll notice some common themes. You’ll notice those themes in my post as well. So, here are some negatives that you should be aware of if you’re considering freelancing.
Umm, Where’s My Money?
People don’t pay on time (especially in the beginning). I’m just going to say it bluntly. I should say that I’ve read about this problem over the years but like most people you think the following “That won’t happen to me!”
Let me tell you-it will. In fact, after working the entire month of April I had several thousand dollars that was invoiced out at the end of the month that I was supposed to receive at the beginning of May. Every single check was late. Except for one. Please note that this issue has gotten better-but, it is something to be mindful of when budgeting.
That motivated a sister to change my initial money plan and will be replenishing my savings from May through the end of June BEFORE beginning my debt repayment. Please reference Tonya from Budget and the Beach’s post about freelancing HERE. Or, Sarah from Life, Comma, Inc.’s post about debt repayment while freelancing. Please notice what Sarah says about the arrival of payments (often late).
I am used to getting paid once a month from my previous job-but because I was given an expectation that I would receive money by a certain date I was caught off guard when all of my money arrived late. WoW! And, I am contracting primarily with established organizations that have other staff on payroll-not individuals so this was a bit surprising.
Basically, you’re like the Red Headed Stepchild. Now, I am working with some amazing organizations who are doing great work and whose missions I support…but, I have to admit this one issue has been frustrating.
Murphy’s Law-See above
Murphy’s Law will hit exactly when you don’t want it to. I had 6 months of savings when I left for Australia. One thing that of course happened when traveling was that my expenses were higher than I expected. Yep, was a bit of a bummer.
By the time I really started earning money (which was fairly quick) my savings was running super low. So, when I wasn’t paid on time that was incredibly stressful. Now, I wasn’t as stressed as I was in the past-but I was legitimately concerned about my ability to take care of my expenses on time.
Crap Everything Is Late
I switched to an all cash budget at the end of March. I felt that if there was a time to break my credit habit now was that time. The problem with going to an all cash budget and getting paid late and having a low savings is you have to wait to pay all your bills.
Yep, I had to wait. Huge ding to my credit. BUT, I would like to be very clear about my personal situation and credit needs for the future.
Most people use credit for the following:
- To buy a home (done)
- To buy a car (want to use cash)
- Trips (am good) and have mileage points
- To buy clothes (have too many)
- Won’t do a HELOC
Basically, I am over debt. And I don’t need it for anything. I’ve basically lost all desire to borrow for anything. I’ve exhausted every potential credit request because I’ve already been there and done that. I don’t need or want to use credit anymore until it’s time to purchase a new home with my future husband that I haven’t met yet. Pretty sure that gives me 2 years to clear things up.
And to be honest, I won’t be moving anytime soon as my mortgage is only $600 a month. Yep, $600 is all I pay on the Hobbitshire and I absolutely love my place 🙂 The average rent for a single bedroom in the Denver metro area is around $1275.
I would like to buy a car, but I want to purchase using cash. Currently I ride, use public transit, or take a taxi/uber at night. I am perfectly happy waiting as I save cash to buy a car.
A question of “Scale”
It’s easy to get caught up in the conversation of scale. How much work is too little or too much? I have a certain number of clients that I am hoping to consistently have and am getting closer to that number.
It takes time to build up or “scale up” a business. I could see how freelancers could spend a lot of time focusing on scaling up their business quickly. The concern that I have with scaling up a business super fast is that you need to be used to each client’s quirks so that as you add new clients you’re able to manage your old client’s needs in an efficient and responsive way.
Boundaries
It is very easy to forget to set boundaries with your clients (and yourself) when working on projects. It doesn’t make sense for me to work in such a way that inhibits my ability to meet people, take care of my health, and manage my home well.
Freelancers have to be very comfortable managing client expectations. I try very hard to connect with clients early in the day so that we can do what we need to do earlier in the day and then I can do what’s important to me.
Become Addicted To Making Money
Yes, this can become a negative. I want to grow my income but I don’t want to do it in such a way that hurts my quality of life. I’ve already spent the past 3+ years dealing with a horrible quality of life. I don’t want to accidentally backslide into a crappy quality of life where all I do is work in a way that I’m not controlling.
Do I Regret My Choice?
Do I regret becoming a freelancer? A resounding NO. Earlier this year I wrote a post about Introducing discomfort into your life to create change. I am 100% convinced that I’ve still made the right choice for my life.
I’m an adult and I was 100% aware that by making my choice that I opened up myself to a number of risks. Risks as a freelancer include: not being paid, losing gigs, tax liabilities, and late payments. But aren’t these the same type of risks that you could experience working for a traditional employer?
Businesses close, you can be paid late by your employer, and you can be asked to work more and not be compensated for it. You can also be laid off.
Remember
Regardless of working for yourself or for anyone else you should do the following:
- Save your money.
- Keep your overhead low. Even with my debts my overall expense load is pretty low.
- Have a well stocked pantry-LOVE IT!
- Have a good number of personal products and household items-DONE
- Break your habit of consumption. DONE.
- Have a plan B. I have one.
- Pay off your debt-post will be coming at the end of June about paying off debt with a variable income.
I will share my income update this Friday, my new income challenge for Friday, and some Link Love. A the end of June I will talk about how I’ve changed my budgeting system (I need to see if it works) and more thoughts on freelancing.
What Do You Think?
Are These Negatives What You Were Expecting?
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Unfortunately the accounting department doesn’t see a freelancer the same as an employee. They would never run payroll late, but if the checks go out a week or so late it’s no big deal.
Exactly! The payroll is being run on-time because the on staff employees are being paid on time. I am being paid within a week or so of when I’m supposed to be paid so I’m now making adjustments based on that premise.
Yeah the money aspect is never fun. Do you use an invoicing system? I use freshbooks and I’m really happy with it. I have notes for late payments that they will get charged a certain percentage, yadda yadda. I can send that to you if you like? But mostly you do just have to be assertive with getting paid. I’ve grown a pair since I’ve started and have gotten more bold in asking…but, you have to be careful at the same time not to rock the boat. It’s a delicate balance.
I absolutely use Freshbooks! I love it. I would love to see the notes re: charged for being late. I think that would be super helpful! And-YES, you grow a pair when it’s you $$$ and time. LoL.
I’ve only been freelancing for about 4 months and I’ve dealt with late payments as well but luckily most of my clients pay on-time and that really puts me at ease. Staying organized and trying to ‘scale up’ my side business are issues I’m running into since I still work full-time. I want to grow my freelance business but I’m always short on time and I don’t want to compromise my quality of life too much because I know I could regret it if I do. It sounds like you’re doing an amazing job so far though and I can’t wait to read more from this series!
Chonce, there was just no way I could “scale” up my business with the schedule I was on. I was a hot mess! Especially because I wasn’t doing well when I started blogging. Quality of life is so important and I really struggled with that in the final year working my job.
That’s so annoying but I see how it happens. I once worked for someone who never paid a single invoice until he got final notices! It was insane. I’m not sure if you do this already, but you may want to include a note that your invoices are due within a certain time frame and then late charges accrue after that date.
WoW! Tony mentioned that as well. Things have smoothed out for the most part, but I will be adding more clients so I need to think about that before I add them. I really appreciate the suggestion!
I totally love this! I’m learning from you in my own journey. Rock on Michelle!
There are some negatives! But, I had a lot of negatives with my regular job too LOL! I also really appreciated some of the advice that my friends gave me as well as a result of the post.
This is great information and very insightful.. Loving these post on freelance/self-employment. Maybe one day I’ll make the change !!
It’s a very interesting work situation. I’m having fun with it so far!
The thing with freelancing is that you can plan and plan ahead but sometimes things just don’t work the way you want them to, especially for newbie freelancers. Unpredictable situations can happen any time, and that means you should always have a back up plan.
You are 100% right. I’ve been very fortunate but I did (and do) have a back up plan.