Blogging and Writing Full-Time: Financial Changes to Come

Over a year ago when I finally allowed myself to “stand in my truth” as Suze says, I told my husband what I had been secretly chewing over for months. Admitting my desire to pursue writing full-time lifted a huge wave of anxiety off of me, and the knot that I typically keep in the muscles under my ribcage released. I could feel Paul’s excitement; he told me that he figured the only reason I was still at my 9-5 was because I was in love with it, and that I should immediately give my two weeks’ notice. What unconditional, beautiful support!

Since then we have had many conversations about the various aspects of self-employment. Being a writer, surviving by my pen, digging into the depths of myself and seeking answers to a list of unending questions is something I have wanted to do since second grade. I just didn’t think that it would ever be possible, or that my partner would be so supportive of me. Inadequate finances ensure that a lot of dreams never see the light of day, and I am certainly not immune to the necessity of bringing home a paycheck. So what has made my attempt at self-employment possible?

Giving Ourselves a Fighting Chance

Paul and I paid off our combined $25,000 in non-mortgage debts in 2010 (student loans, car loan, engagement ring) which added an additional $950 to our monthly cash flow. Over the last three years we diligently saved between 29-40% of our post-tax income and have a fully funded eight month emergency fund. We have also worked hard to pare down our monthly expenses by doing such things as paying cash for my beater car, preparing most dinners and lunches from home, using free resources to cover some of our entertainment costs and “extras”, etc. We will still have one steady income in the household, and it can just about cover our monthly expenses and retirement savings. And finally, I have built up my website working 30+ hours every week for the last three and a half years.

Financial Challenges Ahead

Still, we are certainly looking at some financial challenges moving forward. Here’s how our finances will change in the coming months:

  • Saying Goodbye to My Pension: This was the biggest financial hurdle in discussions with my husband on whether or not to quit my job. My heart sank when I called our pension office and found out how much per month in retirement I would receive if I stayed until 5 years (minimum for being vested). I thought it would be more than the estimated $363.46 per month. This is not a market-based pension, but rather is based on salary and longevity. While I will be giving up a risk-free monthly $363.46 check in retirement (starting at around the age of 65), I will be able to roll my contributions (6.45% of e3ach paycheck) and interest earned over the last four years into my Roth IRA where it will be invested for the next 30-35 years.
  • Taking a Cut in Household Income: I do not wish to share what my income was, but since I was working for the state you can assume I don’t have too far to fall. Throughout this process I made the realization that over four years, three merit increases, one promotion, and with receiving my Senior Investigator certification, my pay has only increased by $257 per month. This was not encouraging for me. Still, losing one income in the short-term is certainly going to hurt a bit.
  • Adding to Our Monthly Expenses: Two areas where we know our expenses will increase are health insurance and electricity (since I will be home during most days). We estimate that it will cost us approximately $130 per month to insure me through Paul’s employer.  It should be noted that our monthly expenses for gasoline and car insurance on my car should decrease.

I am not one for taking chances with finances, so this is truly a leap of faith for me. I am so thrilled and exhilarated at this once-in-a-lifetime opportunity. At the same time I feel a bit vulnerable and hope to not get lost in the unstructured freedom. Even so, we have safety nets in place and are open to the possibility of either success or failure. If worse comes to worse, I am well-trained in a field I am passionate about and have secured some great references. So, bring it on!

Are you self-employed, or have you thought about becoming so? What are the issues you have dealt with? Ultimately, what stops you from becoming self-employed?

25 comments… add one

  • I think we all have one or two of these moments in our lives when we just have to go for it. Usually it’s fear that holds us back. But I would rather face the fear and go for it than regret not trying later in life. Sounds like you have really thought this through and planned ahead by getting your finances in order. Looking forward to hearing how it turns out for you.
    Brian @ Luke1428 recently posted..Bikes, Lies and Video Games

    • FruGal

      I definitely think this is my time to do so. Who knows where life will lead me in 2013, but I am excited and ready for the possibilities.

  • NoTrustFund

    Congratulations on making such a well planned leap. I look forward to following your journey.

  • Yes…but how much will you save in gas by not going back and forth to work? And, have you called your auto insurance company and told them that you now work from home? It could lower your insurance. And think of all the new work clothes you won’t need! Cha-ching!

    You’ll save a lot more than you realize. :-)

    /J

    • FruGal

      I like to be conservative, but I am hopeful that I will save money by working from home to balance things out a bit.

  • Love the unconditional spousal support! Just to clarify, will you be getting your $350/month pension at age 65 or over, or will you not given you didn’t stay for 5 years?

    I think you’ll be able to make a good amount of income online now that you’re dedicated.

    S
    Financial Samurai recently posted..The Proper Asset Allocation Of Stocks And Bonds By Age

    • FruGal

      Great question–I chose to leave the pension behind. I get the money that I contributed over the last four years (6.45%), plus the interest earned on it. I will be rolling this into a traditional IRA to be invested. Thank you for the vote of confidence!

  • You should be able to write off a lot of expenses that can make up for the income loss, like internet, part of the housing fee if you work from home, some travel, etc.

  • Congratulations!!! I knew Paul would be 100% supportive…you two are just too great together. :-) Sounds like you have everything well in hand, so good luck!!!
    Crystal @ Prairie Ecothrifter recently posted..Saving Money on Renovations

  • Your husband sounds amazing. I love that he instantly told you to go for it! This is a great breakdown for anyone thinking of taking the same leap to look at and compare their own lives to – there’s a lot more to think about than just a paycheck but it sounds like you two really lined up your ducks before making this decision!
    Shannon-ReadyForZero recently posted..How to Get Out of Debt

    • FruGal

      Thank you Shannon! I am a truly lucky person to have him. Of course it wasn’t right for us to take the leap at the time, but it was truly a vote of confidence for him to be 100% behind me.

  • How wonderful! Congrats! Having your husband’s support will be key! Sometimes we have to take that chance, and I think it’s great. I am a SAHM right now, and I am debating about whether I want to go back to teach in 3 years or stay home and write. I have this passion for teaching, but it has been 3 yrs since I’ve taught. Staying home is looking more appealing every day. We’ll see.
    Jules@Faithful With a Few recently posted..What I Learned About Contentment From Watching House Hunters

    • FruGal

      Hi Jules! That is a big decision to make. Since it is 3 years from now, perhaps it will become more clear for you which path you should take.

  • Tara of Mad Max and Family

    Congrats! What type of writing are you going to do?

    I’d love to be able to work from home…and I do have some ideas…but I also know that (esp at first??) it would be a huge HHI cut …and it might end up just being even MORE work for me if I am running my own business. I hope to work less…although I am thinking about starting an etsy shop on the side ..hmm! I never thought working FT would be so difficult, but it is – esp now that I have kiddos.

    -Tara
    http://madmaxandfamily.blogspot.com
    http://blog.chron.com/madabouttown/

    • FruGal

      Hi Tara!

      Right now I am mainly focused on writing about money, but I definitely want to branch out. I think running your own business is always more work, and definitely knew that going into this. If you are looking to work less, it sounds like you might want to figure out more passive forms of side income. I will be working on these myself!

  • mike

    Congrats Amanda,
    It sounds gutsy but not irresponsible. If I had the same passion in some sort of venture I`d do the same. The only big advantage I see with working for a good employer is the long term benefits and that means hanging in there for years. I`m coming up on 33 years in the oil and chemical business with the same company. I still need another 6 or 7 to comfortably retire but at this stage you really reap some great rewards. I consider myself very lucky to have avoided numerous layoffs that many of my coworkers didn`t and this is why its` paid off. At any rate may the force be with you….

    • FruGal

      Thank you Mike! You are right, hanging in for years will definitely pay off with a company. Being only 6-7 years away from a comfortable retirement–way to go!

  • You are brave, and you did the right thing! I am about to do the same….13 years in a pension system with a really comfy salary/pension/benefits package at the top of the pay scale. And I am going to give it all up to pursue my passions. This is our chance. I am with you!!
    Tony@YouOnlyDoThisOnce recently posted..Guest Post: A Beginner’s Guide to a Minimalist Home

  • Amanda: This is all good. My father has said to me many times “There is no such thing as a good job.” Well most people must work for others, but if you are lucky enough to have your own gig it is the best deal in town. I have been practicing law on my own for the last 35 years and my only boss is my loving wife. This move you are making is the best thing you could ever do for yourself. The rest are just details. Congratulations.
    STEVEN J. FROMM, ATTORNEY, LL.M. (TAXATION) recently posted..Estate Planning 2013: Now What? A Must Read For Everyone

    • FruGal

      Hi Steven,

      Congratulations on self-employment for 35 years! That is awesome. It looks like you work on taxation law?

      My father and two uncles have been self-employed for most of their lives, so I think it’s partly in my blood. Well, that and from the dariy farm we all grew up on (several generations). It took a lot of work and was exhausting, but I think it made us all a bit stronger on our own.

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