Focusing Your Income

I regularly read a couple of WAH forums to keep up with the latest information. Something that I notice time and time again is people falling short and needing money. What I see is that the money needs are for basics like groceries, stuff for kids, utility bills, and so on. These situations can be avoided with a little planning.

We all have more than one "egg" for income as some will dry up when others are in full flood. And some are steadier than others, guaranteeing regular income. I wonder how many people focus on the eggs that pay quickly, but are unreliable work wise, instead of focusing in the eggs that supply steady work but pay less frequently. The eggs that pay frequently take care of the "now" needs, but can you use them to get ahead?

I'll give something for you dear readers to chew on. Try to find a balance. If you can't save money for the long haul, work on having an emergency fund of a couple of hundred dollars for the short term. This can cover groceries, keep a utility going, and cover an unexpected bill. Doing this may entail some pain for a month until you can get the balance just right.

Stop focusing so much on places that pay quickly like Merchant Circle and ToneADay. They consume a lot more of your time for little pay. They hook people into working a lot because it feels like you're not using any brain power for a reward. I'm sure there are those who can do the job quickly and make it worth their while. Maybe not so much for the rest of us. Work a little harder at the more reliable but less frequent pay job. The money is there, you just have to be patient in order to get it.

I'm not suggesting that these gigs not be utilized at all. What I'm saying is get in and out quick. Figure out a goal for the day, or set a time limit. But don't spend 4 hours to make $30 when you're approved for a higher paying gig elsewhere. That's devaluing your time. Spend a little less time at them so you can devote a larger chunk to your higher paying jobs.

I realize that there are those who need the money yesterday. And in all honesty, you want to change things so that you're not constantly trying to get money yesterday. Instead the money will already be there because you planned ahead. It will take some time, probably a month to get there because of the way the higher paying jobs pay, but it's doable.

Congratulate yourself once you've managed to create a savings cushion. It shows that you've taken control of your finances instead of letting them control you!

Ticking Away The Moments That Make Up A Dull Day

Kudos to anyone who can figure out where the title to today's post came from! I'm using it to illustrate how we don't use the passage of time to value our money. We're so busy living from moment to moment that we don't think of where we'll be ten years from now. And the future is really something we freelancers should focus on.

There have been many laments in the media about how we're not a country of savers anymore. To an extent this is changing. Average account balances on credit cards are lower and more accounts for saving money have been opened. But is this a direct correlation to the fact that there are less jobs out there? And that the new jobs that open up pay less than before? Or has the American public figured out that saving's a good thing instead of playing keep up with the Joneses? Only time will tell if we've learned our lessons about free-wheeling spending.

What I'm getting to is that no one is really taught to save money anymore. It's all about instant wealth overnight. I'm sure there are those who get lucky and manage to grow their bottom line very quickly. But it really is about luck. Or being a good spreader of bovine fecal matter. Whatever the case may be, the rest of us folk have to work on our wealth in a tried and true manner.

The easiest way to get ahead is to put some money aside and forget it exists. Put it in a money market account, a CD, even US savings bonds. You want the money situated where you can access it in case of emergency and earning interest when it's left alone. Get there by setting aside a certain amount from every payday and make it inviolable. To borrow a phrase from Clark Howard, pay yourself first. He suggests 10% of every paycheck goes into savings. Your own situation may only permit so much extra. But take something, even if it's .5% and set it aside. Heck, take some pocket change or a couple of singles out of your wallet a few times a week. You'll eventually discover that you'll have a nice cushion after a few months to a year.

It should be much easier to keep saving money when you see what you've been able to do with it. Your effort is small, but the rewards are great. Saving money in this manner is simple but effective. You may find some peace of mind knowing there's something in the bank, possibly even easing up the feeling that you're living from paycheck to paycheck.

Squirreling money away sets you up for bigger goals. Once you've got a couple of thousand or so set aside, it's time to consider investing in long term funds. These are funds that have a steady rate of return over time but aren't meant to be watched day to day. It's entirely possible to have an amazing nest egg built up over the years and help pave the way for your larger life goals.

Gooooooaaaaaaalllllll!

The writing forums almost always have a current thread going about monthly and daily money goals. How many of you actually think about having one? Do yo think "nah, that's not for me" and go on about your business? Or do you find yourself falling short every month for various reasons? Let's take a look at why it's not a bad thing to set yourself a goal for the day, the month or the week.

It's a given that there are bills that have to be paid every month. Mortgage, rent, phone, electric, what have you. We also need to have food on the table and money for gas or transportation. I ask you this. Have you ever sat down and put all the numbers onto a piece of paper? It may surprise you how much you spend on stuff every month if you haven't. And this could be why some find themselves perpetually short.

Now, not everyone is a whiz with money. That's not a criticism, just a simple statement. It's possible to learn how to control your money and not fall short all the time. Set a goal even if you're not short all the time.

Sit down with pen and paper, or monitor and keyboard, and write down everything you spent money on. Do this every day for a week. Look at where it went to, and what came in. Did you buy one too many mocha latte's, and now you're short for a utility bill? Were you aware that a daily treat can actually shortchange you in that manner?

Now that you have this information at hand, you need to start acting on it. Do you want to be able to buy your mocha latte's and keep your utilities humming? Then set a goal. You now know how much you need in order to buy your treat as well as have the basics of life. Write this number down on a Post-It note and stick it to your monitor. Look at it as a carrot-and-stick kind of thing. Work until you've made that goal for the day, at the very least.

Lastly, learn to prioritize. The bills are still going to be there, even if the work is not. Use some discipline and go without extras for a while. You'll be glad you did.

Are You Aware That You Own Your Own Business?

Being an independent contractor, aka a freelancer, means you are in charge of your own financial destiny. No one else controls your income except yourself. Working for a 1099 may not feel like you're a business owner, but you truly are. You now qualify for business deductions that can be done on the schedule C or C-EZ. You're also responsible for paying quarterly self employment taxes if you make over $10,000 in one year. All of these details turn you into what the IRS considers to be a sole proprietor.

So what should you do with this nugget of information? Own it! Take full advantage of what it means to be responsible only to yourself (or you and your VP's if you have a family). Save all of your receipts for items used in the course of a business. Bought reams of paper and it went towards business work? Deduct it. Buy a new laptop for portability of workplace? Depreciate it. Enjoy the freedoms that are associated with being able to work your own hours. But most of all, take pride in being successful with what you do for a living.

This is my introductory post to my brand-spankin' new blog. I intend in future posts to address issues that affect freelancers and their finances, whether it be taxes or how to maximize your income. I welcome questions and suggestions for posts. Also welcome are questions about bankruptcy as I'm fluent in chapter 7 and knowledgeable about 13. Most of all, I hope to teach all of you how to fish instead of giving you one. :)