One of my major goals for 2016 and beyond is taking my career in a new direction. It’s a little bit scary, sometimes a lot scary, and incredibly exciting. Last year I decided I needed to get out of a job I held several years too many because my stress was continually increasing, my compensation had plateaued, and my health, happiness, and family needed to come first. I had just dealt with it and sucked it up for a long, long time, but after many months of deliberating, I knew that the time had finally come for me to walk away. And I did!!
I am officially free of the chains of my old day job, and am now working on turning my side gigs into bigger gigs while also creating new gigs too. I’m still searching for full time work, but I would love to be able to make enough as a freelancer and independent contractor and go that route from now on. Assuming I can make enough money of course to maintain my lifestyle and still be able to build my savings each year. All of these changes have my gears constantly turning as I dive deeper into the world of blogging, freelance writing, content marketing, and other freelancing opportunities.
The Rising Wave Of Freelancers
I was reminded recently of a Forbes article I read a little while ago about the shift towards more people working part time because there is a rise in the number of freelancers and independent contractors. And hey, now I’m one of them! Maybe I’ll go back to a full time corporate job if I find the right fit someday, but time will tell. For right now, I’m gonna do my best to try and make it as a freelancer.
Several studies are sited in the Forbes article that have some impressive stats. For example, 83% of executives say their companies are using more contingent workers these days. And it’s estimated that in just five years from now, 40% of the U.S. workforce will be comprised of freelancers. 40%!! Another study reported that there are already roughly 30 million independent contractors and that in just four years, there could be an additional ten million added to this rising wave of freelancers.
The Pros Of Working As An Independent Contractor
So you may be wondering, what are the pros and cons of freelancing and leaving the full time corporate world of cubicle life? Let’s start with the pros. These are based on my own experiences so far as well as few of my close friends who have been working independently for several years.
Flexible Hours: One of the biggest perks of being a freelancer, as you can imagine, is being able to set your own hours. There may still be times when you have to work onsite somewhere, but usually you can have a good amount of control over which days and times you work. I’m actually looking forward to being able to utilize weekends to work a bit more so that I can use weekdays to run errands and travel. I don’t like crowds, so being able to do those things when the majority of people are at work is something I’m looking forward to.
Working Remotely: There’s a mixture of part time work out there that’s done remotely versus onsite. Some companies actually prefer freelancers to work remotely because they simply don’t have enough space in their office to fit everybody, especially if they have a lot of active independent contractors. Like a lot of people, I love being able to work from home primarily because it avoids commuting. The longest commute I ever had in my career was about 45 minutes door to door, which wasn’t that bad, but I sure don’t miss it! I like being able to wake up, and just start working right off the bat.
Less Boredom And Monotony: When you work for the same company for a decade like I did, things can get really boring, and you can start to feel like you’re just running in place even after making so much progress. So the nice thing about freelancing and taking on various independent contracting gigs is that you can mix things up. Being able to take on different projects keeps things fresh and it’s much harder to get bored.
Autonomy And Control Over Your Workload: The one thing I loved about the longer I worked in corporate, was the more power and autonomy I had. As a freelancer, you don’t have to wait as long as I did to get the luxury of autonomy. Plus, you can control your workload, something very few people get to do working at full time jobs. Stress really broke me down in my career, so I’m really grateful to be able to have full control of my workload now.
Tax Deductions: You may not know that as a freelancer you get to deduct a lot of expenses on your taxes that employees can’t. Examples of business expenses that contractors can deduct from their income include office supplies, software, subscriptions, conferences, and travel expenses.
The Cons Of Being A Freelancer
While there are a lot of benefits of being an independent contractor, there are definitely some downsides to consider too. It’s certainly not for everybody. And there’s a lot to think about and prepare before deciding to just quit your job and freelance. It’s easier said than done as I’m already discovering. But it can be done well with the right talent, hard work, and persistence as my friends have proven to me.
Unpredictability: If you’re uncomfortable with uncertainty and not having a regular paycheck, stick with your day job. When things get rough, independent contractors are usually the first to get cut. And as you can imagine, with the ever increasing number of freelancers out there, things are competitive, especially when you’re first starting out.
Treated As An Outsider: I’ve had several of my freelancer friends tell me that one thing they don’t like about independent contracting gigs, is they often feel they aren’t treated the same as employees. Even though they may be working just as hard, if not harder, than employees, people can have a tendency to view contractors as outsiders, and not as important or special as the full member of the team. It’s not a good feeling to feel excluded.
Invoicing: Another pain point that comes with independent contracting is having to create and track all of your invoices. Believe it or not there are a lot of companies out there who are horrible at paying their bills. Even large companies with plenty of money in the bank! They have some great templates to help keep your business flowing like it should. It takes a lot of organization and persistence to keep track of your invoices and follow up on getting paid when you’re an independent contractor. If you can find way to automate things fantastic, but chances are you’ll have to bug people to pay you and that can be frustrating and stressful, especially if you’re tight on money some months.
Lack Of Benefits And Labor Law Protections: Legally, employers aren’t able to offer independent contractors health insurance benefits. Additionally you can’t get many other benefits that employees enjoy such as 401(k)s, paid sick leave, paid vacation days, profit sharing, and bonuses. Having to setup your own health insurance and retirement plans can be a PITA, especially when you have to fork over the costs, figure out everything on your own, and lose out of benefits like employer match on 401(k)s.
Supply Your Own Equipment: Some companies have really strict IT security rules and corporate policies that don’t allow contractors to use any company equipment or have access to certain files. So you have to be prepared to have all of your own equipment to do the work involved. That can be expensive and mean a lot of electronics and supplies, depending on your line of work.
Here are some additional freelancing articles on Untemplater that may interest you.
Personal Finance Goals For Freelancers
How To At Least Triple Your Money As A Freelancer
Top 20 Wish List For Entrepreneurs And Freelancers
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I’ve been blogging since 2010 and it has allowed me to break free from the corporate grind to travel, work from home, consult for companies that I like, and do so many more things I’ve always wanted to do but couldn’t. The income is relatively passive as posts I’ve written years ago are still being found through Google and generating income. What’s better than making passive income and creating a valuable asset you can one day sell for a multiple of annual income? There’s not a week that goes by where I’m not thankful for starting this site!
Helen Evans says
Thanks, it is a great post! For me the biggest minus of freelancing is instability of income, you never can count on a definite some of money, one month may be extremely successful and the other one you may have an empty fridge. It is perfect, when you have a set of constant customers and always have orders, but it’s not my case. yet
Thanks Helen! Glad you enjoyed it. Yes, the instability never seems to go away in my mind either. We have to celebrate those big months but not get carried away with what we do with the money. I’ve been practicing putting things I want on my wish list before making purchases. It really helps curb the “rush” of buying something and has been helping me avoid getting certain things all together.
I really like this article. It goes to show it’s not always rainbows and butterflies when you’re a freelancer, especially if you’re a newbie. It get’s better in time though. For me personally, these pros overcome the cons, and I love being a freelancer no matter how difficult it may be sometimes.
Yes, there are growing pains for sure, and things can seem slow in the beginning or at other random times. Thanks for your comment!
The world of freelancing does sound exciting and absolutely terrifying at the same time. Ever since I started to make a bit of money off of blogging, I have always thought what it would be like to set my own rates, hours and be location independent. Being able to sleep in would be a HUGE BONUS for me.
At the same time, the thought of having not having a steady income and paid sick leave/vacation scares me too. I’ve reached the point in my job where I’m not exactly stressed at the job itself, but stressed more so that I haven’t moved on and many opportunities aren’t being presented within my organization.
Sounds like you are a night person. 🙂 I am naturally more of a night person, but I’m trying to get up earlier as I find I work a lot better in the mornings nowadays than in the evenings. The lack of reliable, consistent income is a huge adjustment, which is why I have been saving so aggressively for so long.
I wish you all the best with your job situation. I know how frustrating it can feel when things seem to have plateaued at work. It’s a good time of year to brush up your resume and see what’s out there in your industry to see what other options are out there for you. It takes time to search, but it’s worth it if you’re unhappy at work now. Good luck!
Jason @ Islands of Investing says
Hey Sydney, what a great summary of pros and cons of freelancing. I must admit, this idea crosses my mind from time to time, but I tend to get overwhelmed at the idea. Sounds like once you get set up and get some momentum it really starts to pay off though! Best of luck with making this a full time gig Sydney, look forward to hearing how you progress with this!
I know what you mean about feeling overwhelmed by it. It is a big step, and there’s definitely a lot of risk that comes with it. Thanks for the luck!
That’s great that you wanted to break free and did. Good for you. It can be liberating to get away from stress that can potentially be toxic to us. Life is too short to be stressed and dissatisfied with situations. I’ve been thinking of adding a writing gig…we’ll see.
Thanks Squirrelers! Having less stress is priceless. And having more flexibility to take care of my parents is a big bonus too. I always felt stressed and worried not being able to take a lot of time off of work to go visit them in the past since they live far away from me. One of my goals is to go visit them much more often now.
Bad. Ass. BADASS!!!! Two words or one, that is what you are, Sydney, really admire your courage and look forward to reading about your path. I admire what you did, and wish I had your fortitude; you saw the situation with clarity, and acted. Many years ago, I also saw that situation…and froze!:-) You will have no regrets, and while it may be difficult to place a value on a LACK of environment I do hope you will enjoy waking up every morning without that pit in your stomach. Thanks for sharing your journey, Sydney!
🙂 Thanks so much! Walking away has definitely given me a huge sigh of relief. I have different things I worry about now, but all that toxic work stress is gone. I feel bad for my ex-colleagues who are still there and suffering without side gigs to hop to. But at least several of them are hopping to new full time jobs where they are treated better. When we’re unhappy it’s up to ourselves to take action!
Justin @ Root of Good says
I never intended to become a freelancer in early retirement but it happened anyway. Financial Samurai was persuasive enough and that was my first freelance gig. I have since moved on to a few other one time or recurring gigs and spend 2-6 hours per month at it.
I think you hit all the highs and lows of freelancing. I managed to pay zero federal income tax on my freelance earnings in 2014 thanks to setting up a solo 401k at vanguard and contributing everything I made (self employment tax is another story… 🙂 ).
I have a template for invoices, and it takes under 5 minutes to research work completed for the previous month and prepare the invoice for a given client. I invoice on the 1st of the month (my google calendar emails me when it’s time). Easy enough for me.
Tax time wasn’t bad at all as I have a spreadsheet where I track all income and expenses. Record keeping isn’t too difficult (a few minutes to update the spreadsheet occasionally).
I think I feared freelancing because I thought it would be complicated to “run a business”. I found out it was the opposite as long as you stay organized and develop a decent system from the get go. Now I focus 95%+ of the few hours per month I spend on freelancing on doing actual work and under 5% on admin tasks. Doing the actual work is fun, the admin stuff not so much.
That’s a good ratio of 95% core to 5% admin. I don’t mind the admin stuff too much because I usually tune into The Office while I get through it to make it more fun.
Great job with your solo 401k! It feels so good to put money aside and get tax breaks doesn’t it? But yes, self employment tax is a “biznitch.”
I used to be super intimidated by running a business too. Most of my stress in the beginning was from not understanding all the different tax rules and the various state reporting filings. California is a terrible state to do business in from a tax and paperwork point of view, but at least I like living here. 🙂 Now that I set up my own reminders of the different filings it’s made things a lot more straight forward.
Paul @ The Frugal Toad says
I’m sure you will hit it out of the park as I know you have ben preparing yourself for this for a long time! Since I have children that depend on me I have always been very reluctant to give up the security of a full-time career and all the benefits that go along with it. Best of luck with your new goals Sydney!
Thanks Paul! Yeah it has been a long time coming. And the only person I can blame if I fail is myself! So I gotta make the best use of my time every day.
Gen Y Finance Guy says
It is a very interesting trend indeed. But it makes a lot of sense when you put it into context with how the internet has enabled us to break free from the corporate grip. But even on the flip-side, I think corporations are starting to see the benefit as well.
It allows them to get the best talent from all around the world, and maybe even allows them to save some money due to geo-location arbitrage. They can maintain less office space and buy less equipment and save a butt load on benefits and payroll taxes.
Happy that you are making your way through this new world order. I am looking forward to following you full-time into this world someday as well. For now I am just a dabbler until I can confidently replace my JOB income.
Whether its your goal of turning a side-hustle into a main hustle or not, I think the tax benefits alone are worth it for everyone to have a side-hustle.
The Internet is such a luxury. I still remember what it was like without it, but I can’t imagine ever being without it going forward.
Yeah the tax benefits are really nice. There are still so many complicated tax rules to consider as a business owner, especially in California, but the benefits are worth learning the tax rules and taking advantage of more deductions! 🙂
Money Beagle says
Good luck. Sounds like a lot of big changes ahead. You should pencil in on your calendar to write a post in one year to look back and see how it all went. Chances are when you look back, the fears and such that you have today will be replaced by confidence, success, and new ideas ahead.
Thanks! Yeah, lots and lots of changes. That’s a great idea about setting a 1 year reminder to review how the next twelve months goes! I definitely hope I will be smiling and feeling good on the other side. 🙂
Financial Samurai says
I love freelancing more than having a day job for sure! So much more exciting and also much more lucrative as well.
Once you get one gig, others will follow. Freelancing is another X Factor I did not anticipate when leaving my job in 2012!
Best of luck!
Yeah hopefully it’s the hardest in the beginning and gets easier. You’ve definitely been an inspiration to me with all the fantastic gigs you’ve taken on. Thanks for the luck, I need it!