Week 26

A few weeks ago, I wrote about the challenge of finding balance between working full time and freelancing the hours I’m contracted for, let alone adding additional clients. Recently I’ve been analyzing my goals for 2019, business goals and career goals and thinking about how I will be able to accomplish all of them – especially because one goal is to have the ability to freelance full time by the end of 2019.

Over the weekend I worked through a budgeting exercise to learn what I need to do to make this possible. Here are the steps I took.

First, I added together:

1. Cost of my reoccurring monthly bills
2. Estimated monthly cost for health insurance (since I would no longer have employer health insurance)
3. Estimated monthly “set aside” dollars (money I’d set aside and not access, like a 401k)
4. Estimated “other” charges

Once I added #1-4 together, I estimated how much salary I’d have to make to meet those needs.

Then, I added 43% for taxes, which is what I would have to pay in Kentucky as an LLC.

Once I had that total, I divided it by 52 to learn how much I would have to make weekly.

Finally, I divided by 25, 30 and 40 to learn how much I would have to charge hourly to make these ends meet.

Here’s an example*:

1. Bills: $800/mo – $9,600/year
2. Health insurance: $200/mo – $2,400/year
3. Set aside: $500/mo – $6,000/year
4. “Other”: $2,000 – $24,000/year

Total: $3,500 per month (about $1,175 per week)
Minimum annual salary before taxes: $42,000
Minimum annual salary plus taxes: around $61,000

• To make $1,175 per week, working 40 hours per week, I’d charge a minimum of $29.38 per hour.
• To work 30 hours per week, I’d have to charge $39.16 per hour.
• To work 25 hours per week, I’d have to charge $47 per hour.

Currently, I have one client at $30 per hour (20 hours per week) and another at $35 per hour (5 hours per week). If I logged all 25, I’d currently clock in around $700 per week (subtracting Upwork fees). Using the above scenario, that leaves me with a gap of $475, which at $45 per hour, I’d have to tack on an additional 10.5 hours to my week. That’s 35 hours per week – 5 less than I’m currently working with my full-time job.

To make this a reality, I’d only have to work one more client at $45 per hour.

The goal would then be to secure higher-paying hourly jobs, end the lower-paying contracts, and be able to work less hours while also charging more money.

The other goal would be to charge on a per-project basis, where I’m charging closer to $100 per hour, and work even fewer hours while making more money.

It’s challenging to balance current clients while working full time. To build my business, I need either 1. More hours in the day or 2. To give up sleep and/or any/all free time. While I can’t grow without bringing on more clients, I also can’t bring on more clients with my current workload.

Sometimes I wonder if now is the time to take the chance. If I’m able to add on just one more client, is that a sign? In my head, worst case scenario, I can’t make ends meet, I have to tap into savings, and I have to get back into a full-time job.

But, it doesn’t seem so daunting once it’s broken down into smaller numbers!

So, questions for my readers:

1. How did you know you were ready to take the jump and freelance full time?
2. What mistakes did you make that you learned from?
3. What advice do you have for someone looking to make the leap?

*Note: I am not a math whiz. Some of these calculations may be inaccurate or estimates. But it helps prove my point!