Saturday, October 9, 2010

The Money Book for Freelancers from a CART Provider's Perspective

This blog has been quiet for about a month, as I've been settling into my new CART schedule and pulling everything together for the first big release of Plover, the world's first free steno software (more details on the Plover Blog). I wanted to check in here, though, because there's a lot to write about.

First of all, I've officially survived the summer. The first month of the semester is always a little rough, because I'm working nonstop, scrabbling to get the vocabulary of each new class entered into my steno dictionary. The Latin class I'm CARTing is the most fun I've had in ages, but it's a lot of work to make Latin translate properly in realtime, even though I took three years of it in high school. This year I've also had to figure out the most efficient way to commute between the Bronx, Brooklyn, and Lower Manhattan, while adjusting to a more regimented schedule, after the freefloating months of summer. There's also the money factor, of course. It usually takes a little over a month for the first checks of the semester to start coming in, and quarterly taxes are due September 15th, well before the month is up. I managed to scrape up just about enough for the estimated payment and then sat tight, waiting to see which would come first: Autumn's first paycheck or the October rent bill. Things were looking grim for a while, and I actually wound up transferring some money from my long-term savings account into checking so that I could cover the rent, but fortunately the check came just in the nick of time and I was able to transfer the money back to savings immediately, which felt good.

So now the checks are coming in with a reassuring regularity, and I've decided to take the advice of Joseph D'Agnese and Denise Kiernan, authors of The Money Book for Freelancers, Part-Timers, and the Self-Employed, and start being much more mindful of what I'm doing with my income. I read the book this summer, but since summer is when CART providers go into "spend your savings and put whatever you're earning toward daily expenses and tax payments" mode, it wasn't really possible to start implementing their principles then, since it's focused on people with flexible payment intervals but nonseasonal, semiregular incomes. I must say I enjoyed the book, though. The authors are two self-described "dorkchops", both freelance writers who are unafraid to talk about the ways they fell short in looking after their bank accounts before figuring out their current system. It's a quick, light-hearted read, full of good information for anyone who's paying for their own business expenses (equipment, health insurance, retirement) and who doesn't collect a regular biweekly paycheck. The only real criticism I have is that one of the chapter headings quotes Ayn Rand -- not an appropriate financial role model, in my opinion -- but the overall philosophy of the book (slow and consistent savings patterns, balancing long-term and short-term goals, responsible management of debt) seemed inconsistent enough with Ms. Rand's style that I wouldn't be surprised if they just pulled the quote from a random assortment of money blurbs without considering the source.

Their taste in didactic mid-century fiction aside, the book is quite useful and surprisingly readable. I've already done the following, as of the past week or so:

* I've opened two additional savings accounts, alongside my current catchall account. I'd been putting money into that account fairly infrequently and trying to keep enough in my business account to save up for quarterly taxes, transferring money from business to checking whenever my personal account ran dry. The authors of The Money Book advise keeping several accounts open at a time, each with a distinct purpose. My catchall account is now my emergency account, and I've set a goal of keeping three months' income in it at all times. The two new accounts are for taxes and long-term savings, and the business account is now going to be used as an overhead account, with a certain amount of money per month calculated according to my fixed expenses plus my average spending patterns, which I track using The Money Book advises putting a certain percentage of each check into each account with every deposit. I'm going to try to keep to that, and I'll report back in a few months with a report on how it's going.

* I'm also now tracking my cash spending, using TrackIt: Expense Edition on my phone. Every time I spend some of the cash in my pocket, I write down what I spent it on, and when I run out of cash, I take that record to Mint and enter the information manually. Mint automatically deducts it from the most recent recorded ATM withdrawal, and the accounts stay in balance while reminding me what I spent my cash on.

* I filled out a number of The Money Book's worksheets, helping me to establish a reasonable monthly budget while making sure I was putting aside enough for the future. I found that being prompted to put down my top five goals in various categories such as Financial Security, Family, Career, and Skill Development was very helpful. When I was finally forced to be specific about what I wanted and how much money I needed, I was able to set out a much more concrete plan than the nebulous aspirations I'd been counting on until now.

* Fortunately my only debt is from student loans; I don't run a balance on any credit cards. That means that the debt-reduction section of The Money Book was largely theoretical to me, though it never hurts to get another reminder on the dangers of relying on credit. For people with significant amounts of "bad debt", I think the book would be a very helpful resource on how to prioritize payments and avoid sinking into credit traps again.

I'll probably read The Money Book again near the end of the year to see how well I've been keeping up with its advice. Then I'll report back here with the results of the experiment. Meanwhile, things are going quite well, and it's great to be working steadily again. Summer is nice, but Fall has always been my favorite season. The air is getting cooler, the nights are getting longer, and I'm back in the classroom, CARTing all kinds of fascinating stuff. I'm also feeling more in control of my spending habits and plans for the future. Life is looking good.


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