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Emergency sign

This summer, I had a friend who was not feeling well and felt that she needed to go to the convenient care at the local hospital. I drove her to the hospital.  Her situation was resolved after three hour wait.

I waited while she was being treated, and there was much excitement during that time.  Two people were having their blood pressure checked.  One person came in with pink eye and chronic dry cough.  One person had a rash on their face (poison ivy).  A child had fallen on the play equipment.  A two year old was chased by his siblings and encountered the night stand and his nose was bleeding from a gash.  Another person had issues with their vision.  One person had been in a weekend brawl and was not feeling well from it.  A gentleman in a wheelchair was needing some attention.   And more cases I don’t have space to mention.
I don’t know whether the people being served had work-based insurance, marketplace insurance, or if they had to pay the whole bill themselves. But the hours spent there reminded me vividly that  we have insurance to take care of the risks we encounter.  The young mother whose child had a bleeding nose had come from work as her child had been under the care of her mother; even situations that seem safe do involve risks.
Many of the patients were younger adults, who sometimes feel immune to health problems. I hope the ones I saw that day had insurance.
Next open enrollment will be November 15, 2014 – February 15, 2015.  ~Susan


When Dad Speaks, I Listen…

father and daughter picWhen my dad speaks, I listen.  He is not E.F. Hutton but he is the best I have.  My dad is pretty soft spoken so you need to pay attention.
Recently I was reading an article that made me think of my dad.  Another daughter had a conversation with her father in which he shared his go-to mantra:  “A big part of wealth building is to spend less and live within your means.  When the good years come along, sock away as much as you possibly can, because you never know when a bad patch might arise.”
My father shared with me to put money in an IRA annually.  At the time it was $166.66 per month and then there was benefit at income tax time too.  By doing that 30 plus years ago – and compounding and the time value of money – I have a nice pool of money for retirement.
Another lesson learned from my father was the process of buying a car.  I personally hate that it takes much longer than I think it should.  When I was in college, my dad was purchasing a car for my sister and we were in the showroom for four plus hours. – Does my dad like to dicker? – Yes.  I remember when the papers were signed that he was within $200 of an earlier offer.  I learned it pays to do your homework!  Decades later, the Internet helps with that homework, so you can go in with a game plan – knowing what your vehicle is worth as well as what the sticker price is before you buy.
Dad does present lessons to remember.
~ Susan


More on the Finances of Freelancing

business card
Freelancing has advantages and disadvantages.  Some people prefer it, while others turn to it out of necessity.  Either way, it requires financial discipline and planning in order to be successful.  Earlier this week we discussed one factor: setting your fees based on full recognition of the financial realities you’ll face.  Here is a second major consideration.
You’ll need strong financial reserves and an annually-based financial plan. Your income will be irregular. Even if you’re working steadily, with lots of “billable hours,” the payments won’t come in on a regular weekly or monthly basis.  And if your work load is sporadic, you’ll see even more irregularity in income.

  • This means you will need to project your income for a whole year, and figure what “salary” you can draw each month.  In months when business income is above your “salary” you will bank the extra  so that you can draw from it in months when business income is lower.  Starting out with good financial reserves will improve your financial stabiliy.
  • You will also need to project business-related expenses for the year, including quarterly payments for income and self-employment taxes.  Use IRS form 1040-ES to calculate the amount you’ll need to set aside each month and send in each quarter during the year.  For Iowa, the self-employment income tax form is also called 1040-ES.  In other states, check with your Department of Revenue.  If your business involves other annual or quarterly expenses (insurance, licensing fees, etc), be sure to plan for them as well before deciding what monthly “salary” you can draw from your business.
  • Build retirement savings into your budget.  As a free-lancer, you don’t have a pension, so your later-life financial security is in your own hands.  Don’t assume that Social Security income will be enough to live on in retirement – you’ll need your own investments too.  Tax-advantaged options are available: an IRA or Roth IRA allows you to put away $5500/year (more after age 50); a Simplified Employee Pension (SEP)  or a solo 401(k) allows much higher contributions. 

 A good business plan is essential if freelancing becomes a way of life.  Contact your localSmall Business Development Center  for guidance.  ~Barb
Source: portions of this article were based on an article by Barbara O’Neill (2014). “Managing Labor Market Changes: Essential Skills for Entrepreneurs and Intrapreneurs,”Journal of Family and Consumer Sciences, 106 (2) 9-15. 


Freelancing as a Way of Life

In certain lines of business, people start out knowing they’re going to be self-employed (local plumbers and electricians, for example, or independent cosmetologists or private practice attorneys).  However, other people find themselves self-employed unexpectedly, as accountants or engineers or in other fields where they might have expected to be salaried employees.
An increasing percentage of American workers are now freelancers, piecing together their income by contracting with several different companies who need their services on a part-time or temporary basis.  Writer Helaine Olen coined the term “gig economy” to describe a situation where a worker goes from one “gig” to the next, with no regular paycheck.  
If you find yourself in a “permanent freelance” situation, whether by choice or by circumstance, you’ll face unique financial challenges which require strong financial management skills and plenty of good planning.
You’ll need to charge a higher hourly rate than you might expect.  Maybe your old job paid $50,000/year, so you decide to charge the equivalent, which is $25/hour.  If you do so, you will find yourself notably poorer than you expect, for a couple of reasons:

  • You face higher costs. As a self-employed person you pay 100% of your health and disability insurance and 100% of your social security and medicare taxes.  In addition, you need insurance related to your business.  You may also have additional costs, depending on the nature of your work.
  • You don’t get paid for every hour.  You’ll spend some of your time marketing your services to potential clients, and some of your time handling billing and collections and other administrative tasks.  In addition, when you’re sick or take time off work, you don’t have paid leave provided.  So the fees you collect from your clients need to cover some of the general time you spend  on your business as part of your “overhead costs.”
  • Without a pension, you’re responsible for your own retirement well-being, and you’ll need to draw from your current income to set aside money to create your own “pension.”

Stay tuned later this week for more key considerations for those who make freelancing a way of life.



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