Want to know the scariest thing about being self-employed? Your bank account statement.
When I had a job I knew that on the first and the fifteenth of every month I would get a check. More importantly, I knew exactly how much that check would be. I’d take it to the bank, put it in the checking account, my husband would log in to our online banking, pay all the bills, funnel some cash into the savings account, and we’d live quite nicely until the next paycheck.
Now we face a whole new reality. There are no more regular paychecks. While I am lucky enough to have a few steady clients who pay me weekly or monthly, I’m not naive enough to believe that will continue indefinitely. Knowing this, we made preparations before I quit my job so we don’t ever have to be afraid to open the bank statement.
- Pay off credit card debt and make a vow to never carry a balance on any card that charges you interest.
- Refinance the house: That half a percent change in interest rate can save you hundreds of dollars per month. And refinancing without a job might be tricky.
- Pay off the car(s): Then start socking away the extra $500 a month you’re saving.
- Stockpile some cash: What would it do to your stress levels to know you can live for a year with zero income?
- Buy what you need now: If you need to refurbish your home office, do it now. Buying expensive computer equipment when you’re just starting out on your own will only add to your money stress.
- Pay your bills early if you can: Back when I knew exactly what my income would be from week to week, it was easier to plan my bill paying. Now, if a bill is due next month but I have the money now, I pay it.
No, living debt free is certainly not the American way, but if you want to make it in the self-employed world, it’s a damn good start.
What did you do to prepare yourself for going solo? How do you deal with the crazy ups and downs of a freelancer’s income? Share your tips in the comments.
Paying deals/debts/bills before the deadline is such a relief and a way to manage my bank statements. I even had some discounts sometimes and you know it’s a good feeling to not have any penalties.
Hi Levi, thanks for the comment.
You’re right – and not only do you not have to worry about penalties, but if you pay the bill when it comes in, you don’t have to wonder if you forgot something.
I want to hug this blog post. One of the most important things for me is the pay bills early when you can ~ I do that as often as I can for two reasons. One, if I don’t do it early on when I have the money then I’ll forget what that money is for and head off down a rabbit hole ending up at the cross stitch shop buying sparkly fabrics and shiny threads, leaving said bill unpaid. Two, I find that if I don’t pay it early then it gets paid late — I can never seem to be just “on time.”
Hey Loretta – you’re so right about that rabbit hole! It’s hard to remember that the balance in the checking account is earmarked for something else – especially when faced with sparkly fabrics and shiny threads.
I really appreciate many of the suggestions you made here, Cindy! I’m not full time yet but hope to be by the end of this year. We do know we want to pay our cars off and stockpile some cash but never thought about buying a house.
Hey Natalie, Paying off the cars was the best thing we ever did. I was raised in the Great American tradition of buying a new car every couple of years and always having a car payment. Now that I’ve recovered from that, I can’t imagine having a monthly commitment like that again. Good luck with your own car-payment escape. It’s very rewarding!
Ha, me too! I’ve never known any other way. But like you, I am working my way out of these car notes. Hopefully, we will make it out soon!! Thanks again for the inspiration.