Self Employment with the Happy Hour Ladies
Today is the last Friday of the month and my regular listeners know that on the last Friday of the month, I host the happy hour on the podcast where I gather great friends with me to drink cheap drinks and talk about money topics. Today we’re talking about self employment. An interesting side note is that all four of the happy hour ladies took the leap to self employment and we all took it in different ways and for different reasons. Today we share why we made those leaps, the lessons we learned after taking them, and some really important tips we want you to know so you can make the best decisions around self employment.
What are we drinking?
Melanie from Dear Debt — Bubbles
Tonya from Budget and the Beach — Chardonnay
Liz, Mrs. Frugalwoods, from Frugalwoods.com — Bota Box Night Hawk Black Red Wine Blend
Shannon — Sweetzer Cellars Pinot Noir
Podcast Notes
Melanie finished the third Lola Retreat in L.A. last weekend. The next Lola will be held August 16 - 18 in Seattle. Tonya will be speaking on a panel at that retreat.
Melanie suggested the happy hour ladies discuss self employment, because we are in the golden area of side hustling.
Many people who don’t already have a side hustle are thinking of starting one. Side hustling tends to be a hop, skip, and a jump to self employment full-time. This affects your taxes, your income, your time, etc. It needs to be talked about more.
Self employment looks glamorous from the outside, but it can make you insane, stressed out, and financially volatile.
Melanie had a full-time job in the non-profit space. She did a lot of side hustling, and a big one was writing.
Melanie was waking up at 6:00am and going to bed at 12:00am, in order to finish all of her work before going her full-time job. After reviewing her finances, she realized that her writing was bringing in the same amount as her full-time job.
In Melanie’s first year of self employment, she doubled her income from $30,000 to $60,000.
When Melanie quit, she had $40,000 in debt and only three months of expenses saved up.
Shannon recommends saving up at least six months to a year of expenses, before going out on your own. She learned that from personal experience. There are so many unknowns and it is good to be financially flexible.
Within the first year and a half of being self-employed, Melanie was hit with a huge tax bill, right after she paid off all of her debt, because she didn’t realize she was in a different tax bracket. Melanie was reserving 20 to 25 percent, but it wasn’t enough. She owed an extra $10,000.
After Liz had her first daughter, she realized it didn’t make sense to pay for daycare and go back to her job, since she was planning to quit in a year anyway. Liz had been saving everything she was earning, along with most of her husband’s income. It was not a crisis situation, because her husband still worked for his employer.
Liz and her husband bought their Vermont homestead while she was pregnant. She did a lot of freelance work after she had the baby and while they moved to Vermont. Once they moved, they also had rental income, because they rented their house in Cambridge.
She wanted to earn enough to replace her previous salary. After that, she transitioned into writing her book. She stopped freelancing when she started her book.
Liz recommends getting an accountant, because it is really complicated.
Tonya was forced into self employment, because she was laid off from the company she was working for at the start of the recession. She landed a big freelance job right away, but she was spending more than she was earning. She never really felt successful as a freelancer. For every podcast you hear of a person making six figures as a freelancer, there are about 500 to 1,000 others that are struggling to figure it all out.
You can make $30,000 as a freelancer and be really successful. Income is not necessarily an indicator of success.
There is a difference of being self-employed and having a spouse with a job and being single and living in a high cost of living area.
Shannon never had a side hustle leading up to starting the Gym. She wasn’t allowed to do anything with finance while she was working in that industry.
If you are so passionate about what you are about to build that you can’t sleep at night, you will find a way to make it work. Shannon has found a way for the past six years. She always felt 99 percent sure it is what she was supposed to be doing.
Shannon was able to have that opportunity, because she was married and her husband had an income and health insurance.
The Financial Gym is now valued at $10 million. Six years ago, Shannon would have sold it for $10 million. Now she wants it to be worth $500 million.
Shannon did do freelance writing to bring in extra income, when she was building the Financial Gym and going through her personal income.
There is essentially no overhead with writing as a side hustle. There are no large capital expenditures up front.
How much do you need to feed yourself and your family, and how much do you need to feed your business?
There is a right way to start a business, such as saving up prior to leaving your full-time job and making low cost choices. Don’t wait too long to find alternative sources of revenue for your business.
iFundWomen is crowd sourcing for women-started businesses. They’ve helped women raise over $3 million for their businesses.
Don’t go into credit card debt when there could be other people out there who love what you are about to build. Think of other sources first. There are easier ways to find people who are going to support you.
Melanie never felt like she would need to raise money for her business, but she wants to learn more about it.
If you need to raise money outside of friends and family, there are so many different paths and different ways.
Have more investors lined up then you think you will need. Shannon had really great meetings with people and thought they would invest and they passed on the opportunity. You can’t force people to write a check for you. It takes a lot of strength and is like going on 50 first dates. If you are really passionate about what you are building, you will find a way.
There have been about four times over the last two years where the Financial Gym was really close to not making payroll, because of investor timing, but paychecks have always been funded.
Don’t avoid building something because you need to raise money. Don’t let the capital scare you, there is plenty of money out there you just need to find it.
Top tips for people who are thinking of becoming self employed:
Melanie: Save more for taxes than you think you will need. Create your own accounts for sick time, vacation time, and retirement. Figure out different ways to monetize your income, so if one stream is down, you have others to support yourself.
Liz: It is helpful if you know your mission and purpose. What is the root goal? Are you trying to earn a certain income, pursue a passion, or both? Don’t serve too many different masters. You need to diversify to a point and then assess if it is consuming too much of your time. Where do you really want your best energy going? You only have a finite amount of time.
Tonya: You don’t have to do it. There is a huge push to work for yourself. For some people that is okay, for others it is not okay. Don’t follow the crowd. When you are freelancing, you still have clients and demands. Do what works for you. Don’t try to force it if it is not working for you. You don’t need to jump ship forever - you can go back to a full-time job.
Shannon: It is not for the weak of heart. If you try and it doesn’t work out, or if you don’t love it, you do not fail if you go back to a full-time job. It is important to say no when you need to, even if it brings in money. Sometimes you should say yes to things that don’t pay.
Don’t be afraid to quit, but don’t be afraid to stick it out. There will be some hard times that you need to push through, but you will get to something better. Don’t be afraid of the friction.
Self employment is a roller coaster. You can have ups and downs and sometimes all in the same day.
Go into self employment with your eyes wide open.
TAKEAWAY: My biggest takeaway is that self employment is not for everyone, but as scary as it is, don’t let it scare you away from trying it, if you think it might be the next step in your life path. Ask yourself what’s the worst that can happen if you make this leap, and I guarantee you the worst that can happen is some financial troubles. Everything we do financially is fixable, and building something can be a once in a lifetime experience that’s worth trying.If you want to work with my team at the Financial Gym to help you achieve your goals of self employment, remember that Martinis and Your Money Listeners get 15% off Financial Gym services, and our number one employer at the Gym is self-employed, so we’ve seen it all and know how to help you make and build a great business of your own. So head over to, or send friends to, financialgym.com.If you have any topics you would like for us to talk about during happy hour, please feel free to email me at shannon@finblonde.com or tweet to me at blonde_finance or join the private martinis and your money Facebook group and let us know. Until next time, take care!!