Monday, October 22, 2012

Easy to Become a Freelancer, Harder to Stay One

I found it super simple to fall into my freelance work role. Quitting my job was a snap. Sure, I gave plenty of notice, trained my replacement, and had some qualms about leaving the only career I’d ever known in an attempt to try my hand at something with which I had no experience, but hey, I’d rather take a chance than to be left wondering if I’d been able to do it or not.

The problem with this scenario was that while I was willing to train the guy who was replacing me at my previous job…there was no one to train me as a freelancer. And as I was about to find out, it was certainly easier to become a freelancer than stay one.

Short-term Issues
There were numerous hurdles that I began to encounter as soon as I left my regular work role. There was a significant cut in pay -- not to mention benefits -- with no clear path to replace that lost income. There was however, very little drop in my expenses, meaning that I had to bridge the gap between income and expenses with work that I had not expected to do. Building up these income streams took time, and in the meantime, I had to cut expenses to the bare minimum.

But there were also other issues that I began to realize came with my move that I hadn’t fully considered the effects of before I left my previous work role. The loss of perks like free lunches, free dry-cleaning, free downtown parking, and even just the loss of regular social interaction with co-workers started to settle in upon me. There were no longer employer-sponsored health care or retirement plans. And I quickly began to lose many of the network contacts I once had, which became a concern as I began to contemplate whether it would be as easy as I thought to reenter the field I left should it become necessary.

Longer-term Issues
But I was soon to find that those initial hurdles would be nothing compared to the issues and questions that I’d be facing about my career choice over the next five years.

First off, there was the question of Social Security. No, it wasn’t the fact that I had to pay both sides of the employment tax for this aspect of my retirement (although that was certainly a factor); rather, it was that my greatly reduced income was cutting into my potential future income from this retirement benefit. Add to this that not only was I not getting the employer’s contribution to a sponsored retirement account, but due to my miniscule gap between income and expenses as a self-employed individual, I was no longer able to contribute to such a fund. My decision to become a freelancer was significantly impacting my retirement future.

Next up, there was the uncertainty that came with the role. Sure, income levels fluctuated, but it was more than that. There was the career future uncertainty as well. In my previous role, there were clearly defined roles, career paths, annual evaluations, bonuses with set goals, etc. In my new role as a freelancer though, very few things were set. Answers to questions about whether I should stick it out in my freelance career or go back to a more stable job, whether I should try new lines of work and income relating to my current role or stick with what was working at the moment, and similar questions were only to be answered by time, hard work, belief in myself, and perseverance.

Therefore, if you’re thinking about moving into a freelance or self-employed role, I’d say think hard. Don’t just consider the freedom that comes with such a role, but think about all the other things that may come -- or not come -- with being self employed. And don’t just consider the immediate effects, but the long-term effects that can come with the move into the world of freelancing.

3 comments:

  1. SS is now on the table and one of the ideas is to pay the lower earners higher benefits, and the higher earners lower benefits so they will spread the wealth, so maybe you will make out just fine in the end anyway.

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