How much freelance work do you complete while you travel? I tried to fit in a full month of work plus a trip to Alaska into April — and ended up spending every possible minute writing.
First, let’s check in with my freelancing stats. Here are the numbers for April:
Completed pieces: 60
Work billed (including prorated work): $5,516.81
Earnings received: $3,688.86
As my career has evolved to include more projects that take longer than a month to complete, the way I approach saving and budgeting has to change as well.
I created my $5,000/month income goal at the beginning of 2015 both because it was an achievable stretch goal for me at the time, and because it was an amount of money that covered all of my major financial needs: Living expenses, business expenses, savings, and debt repayment — with a little “Fun Money” left over.
In April, I had to take money out of my savings account because my freelance checks didn’t cover all these financial needs. In May, I’m expecting to receive a large number of freelance checks — around $10,000, I hope — but I can’t treat those checks like spending money.
First, I’ll continue my habit of putting a percentage of each freelance check towards taxes, savings and debt repayment. (I’m putting 22 percent towards taxes, 10 percent towards savings and 20 percent towards debt.)
Then I’ll pay back the $1,500 I took out of my savings account in April.
Then I’ll pay my living and business expenses.
I should have a chunk of money left over, and although I’ll spend a little of that on fun, I’m going to save the rest for the next month I don’t get a lot of freelance checks.
I’m used to earning about the same amount every month, give or take a few hundred bucks. Now, I’m going to need to get used to big check months and smaller check months — and budget accordingly.
Setting aside more money for freelance taxes
April is tax month, and although I did pretty well with my estimated taxes this year, my CPA and I still discovered I had slightly underpaid my 2015 taxes — which meant writing a check instead of getting a refund.
What happened? Well, after talking with my CPA in 2014 about my probable tax burden, I set aside 20 percent of everything I earned in 2015 and made my four quarterly estimated tax payments. It turns out 20 percent wasn’t enough; my actual 2015 tax burden came out to 22 percent of my 2015 earnings.
This means I’m now taking 22 percent out of every incoming paycheck and putting it into a special savings account I’ll use for estimated tax payments.
As a reminder: I live in Washington State where there is no state income tax, so my tax burden is likely to be different from yours. If you want to estimate how much you need to set aside for taxes, my best advice is to talk to a CPA who has experience working with freelance writers.
Also, let your CPA know if your income changes significantly during the year. Some CPAs will give you estimated tax vouchers (that is, they’ll give you pieces of paper that tell you how much to pay on each of the four quarterly estimated tax dates) based on how much you earned in the previous tax year.
But if you get a boost or a drop in income, those vouchers may no longer accurately represent your tax burden.
I’m not a tax adviser, but I can advise you to find a CPA. You don’t have to wait until next April, either; if you haven’t yet had a conversation with a CPA about what you expect to earn as a freelancer and what you should be prepared to set aside for taxes, make that appointment.
It’ll be a smart business move — and CPA fees are tax-deductible!
Checking in with my freelance workload
In last month’s Tracking Freelance Earnings, I wrote about phasing out some of my old freelance metrics, such as per-piece earnings, and focusing on two metrics of success:
- Did I meet my $5,000 monthly earnings goal?
- Was my workload manageable?
I’ve already written about my earnings, so let’s take a look at my workload.
In March, I did pretty well in terms of manageable workload. In April, however, my workload felt unmanageable — which is to say I worked a lot of evenings and weekends, and in many cases squeezed work into every possible minute.
I traveled to Alaska in April for Alaska Robotics’ Mini-Con and Artist Camp (and led a panel on making art and making money), and I had so much work I was literally writing articles in the 20 minutes between clearing airport security and needing to board the plane.
Once I was on the plane, I opened my laptop and kept writing during the 15 minutes between finding my seat and the “please put away your electronic devices” announcement, and re-opened my laptop as soon as we were in the air and it was safe to continue working.
I think April’s workload would have felt slightly more manageable if I hadn’t also had the trip to Alaska, but I also assumed that I could complete a standard “month of work” even though I was going to spend several workdays on a plane or at an event.
The truth is, even though I can almost get a regular freelance workday out of a travel day (by writing in the 20 minutes between security and the gate, and so on), it’s twice as exhausting.
I need to accept that if I’m going to be traveling, even for work-related reasons, I can’t also treat that time as “writing time.”
Yes, I’m probably going to still look at a three-hour flight as a chance to get a little writing done. But I can’t be the person trying to get out as many words as possible before the flight attendants tell everyone to close their laptops.
If I’m going to balance writing and travel, I need to find a better balance — and that’s something I’ll need to start thinking about a few months in advance, so I can continue to hit my income goals, meet my clients’ needs and take the trips that help me grow my career.
How do you balance writing and travel? Also, do you have a CPA? Let’s talk travel and taxes in the comments.