In early 2018, I took a leap of faith into the unknown and quit my steady, fulfilling W2 corporate job for the turbulent waters of self-employment. I’d talked to countless entrepreneurs through the podcast and knew many successful entrepreneurs. How hard could it be if I were surrounded by people making a comfortable living?
Turns out the answer is really freaking hard.
It takes a special sort of person to plant their feet on the ground, throw out their elbows and say, this is where I stand and this is how I am going to make money.
Have you heard the saying about the plane and the wind? Henry Ford said, “When everything seems to be going against you, remember that the airplane takes off against the wind, not with it.”
I was the plane. Struggling to find my niche and make money off my endeavors online was the wind against me. It turns out as unhappy as I thought I was sitting in a chair at work for 8 hours a day, I was even more unhappy with sitting in a chair at home for 10 hours a day.
Despite several pivots, I just wasn’t able to succeed in being my own boss.
Now, however, I’m realizing that I had a lot going on in the background to even be able to let me make that leap. I exercised a ton of privilege to be able to try out self-employment and land on my feet at the end. I’m going to cover the finances of my self-employment stint, how it impacted my long-term plan, how it impacted my short-term plan and some of the lessons I’ve learned.
Fighting for Pennies
I was completely unprepared to handle the mental shift from high-income tech worker to struggling entrepreneur. I never realized how ingrained that was in my sense of self. It was very humbling to realize my time wasn’t worth more than about $10–25/hr, depending on what I was doing. I was making $50/hr at my corporate job, and that came with benefits!! I was fighting for pennies and having to pay for health insurance.
From March to October 2018, what I consider the main time chunk of my self-employment phase, I made $2,030.85.
Now that I’m working again, I made that much money in my first paycheck. 2 weeks worth of pay at a W2 job pays the same to me as 8 months of self-employment. I would also like to point out the level of actual work done was about the same as I didn’t have accounts for the first 2 weeks and there was nothing to do at work.
Related post: A Fiery Millennial’s Money Diary
With what I was doing freelancing, I saw no reason to stay a freelancer and fight for poverty level wages. Because of the lifestyle choices I’d made in the past (getting a cat, having possessions that mean a lot to me, dating my ex-boyfriend), I was unable to life the life I thought I would have as a freelancer. I did travel, but not as much as I wanted.… especially at the end as money reserves ran low.
Most of those spikes are moving money from my savings or getting money from the house sale/family. It looks like I made money, but I did not.
I wasn’t happy and wasn’t leading the life I wanted. So, I went back to W2 work.
Long term Impact
Long term, this 8 month period will be a little blip on the radar. It’s unfortunate the end of my freelancing time came at the same time the market went down, as that exacerbated the impact on my finances.
I’ve included a screenshot of my net worth timeline from Mint below. Ignoring the spikes from buying and selling my house, you can see I was on a clear upward trajectory but it leveled off and even went down a bit towards the end of 2018.
You can see that I am just about at the same level I was in November 2017. I consider only losing a year of progress negligible in the long run.
Honestly, the biggest hit to my finances the last 2 years was the rental property. I spent a lot of money on it and didn’t recoup all of the money I put into it.
Because I recognized that life wasn’t working out, I got out before I was ruined. I have a few thousand in debt on my credit card (or had, it’s mostly paid off now). I had to live in my parent’s basement for a month before I was able to start my new job. I intended to start a job before then, but I had to pass my Security+ test first.
The effect on my finances would’ve significantly magnified if I didn’t have several factors going for me. I have several layers of privilege and used most of them in 2018.
I was privileged to have a friend be able to fly in and help me drive my stuff back to my hometown from Minneapolis.
I was privileged to have a friend with an empty room to be able to store my stuff indefinitely. (There’s a non-zero chance it’ll be haunted when I go back for it, but I can handle that).
I was privileged to be able to stay with my parents for as long as I needed. My mom’s rule is she carried me for 9 months of pregnancy, so I can stay up to 9 months as an adult with them. I am privileged they had an empty room in their house, that that room wasn’t needed for other family members’ housing. I am privileged they are able to afford a house big enough for me to stay in without being all up in their business. I am privileged they could afford to put extra food on the table to feed me (although I did contribute to the house with groceries and chores).
Not only that, I am incredibly privileged that my parents could help me out financially. My siblings have borrowed money from my parents in the past, although I never needed to. Without that check (for $2k) I would’ve had to cash out more investments or put more expenses on the credit card to pay later.
That brings more levels of privilege to light. I had a high paying job in the past, so I have several credit cards with high limits. If you have been financially strapped for a while, you won’t have the same access. I was also privileged to be able to save up enough money to have significant reserves. It would’ve been better if those reserves had been cash, but I made it work.
All of these layers of privilege allowed me to escape my freelancing stint with nothing more than a glancing blow to my finances.
I have friends that would not be able to absorb the short-term hit to their finances with moving expenses, deposits for a new place, and waiting until their new paycheck starts.
I would also like to point out I am very comfortable moving to a new location and leaving behind any sort of support network I’ve formed. If you have family that depends on you, it will be much harder to move to a completely new area and start over from scratch. I am used to being far away from friends and family. With the advent of the internet, I can stay in touch with friends long after we stop living across town from each other.
Being part of this FIRE community has also been helpful as I basically have a built-in network of friends wherever I go. It’s much easier to move to a new place when you know people there who will help you find the best place to live and figure out the best places to go.
I’ve learned several things from my self-employment adventure and subsequent search for employment.
I learned I am who I am, no matter what I’m doing. Who I am doesn’t depend on what I’m doing or where I’m living. I make the best of any situation I find myself in. Rolling with the punches is key to my happiness levels. I only stress about things I can change. Anything else (mostly) rolls right off my back.
I learned I have a set amount of money I feel comfortable spending each month. Surprisingly, that amount is higher than I thought, which mostly renders my previous plans for early retirement useless. I love the hustle and bustle of big cities and am willing to pay more for that lifestyle experience. Thus, I need to go back to the drawing board and figure out what I want from my life!
I learned not having money coming in and not enough stockpiled up for early retirement makes me really stressed out. I learned I’m actually quite content to go to work every day as long as I feel fulfilled and make a difference with my efforts. It turns out I don’t hate working — but I do hate going to an office and sitting around doing nothing. I’ve begun a quest to find a job where I don’t mind going to work every day. Stay tuned.… there could be some movement on that front in the near future!
So, long story not short, I am blessed to have been able to take the chance on freelancing and figure out that’s not the lifestyle for me. If that’s not the lifestyle for you, that’s perfectly ok. You do what makes you happy!
Thanks for reading! Do you like getting a steady paycheck or do you like the adrenaline rush of self-employment? Sound off in the comments below!