Freelance vs Physio

Hi all

Just got these wise words from Martin Hawes about the extra work question:

Steph

Thank goodness Matt got rid of those bought lunches. Think of it this way: $8 per day is $40 per week, $168 per month, or around $2,000 each year. If you saved that money at 5% interest, in 30 years you would have almost $133,000 - see for yourself using Sorted’s regular savings calculator. Expensive lunches! (You would be even better off if you applied that $168 per month to additional mortgage payments.)

When I think about whether Matt should freelance or whether you should take on part-time work, it’s a more difficult question. Financially, you would be better off having Matt doing some freelance work. By the time that you have paid childcare and transport costs, there will be more money from Matt’s work than yours. Especially since his hourly rate is higher.

However, there is another really important factor: being out of the workforce means that you risk losing your employability. This affects a lot of people – especially women. A few years out of the work force leads to a loss of your network, and a loss of your currency within your profession. It can be very hard to get these things back when you need to. Lots of women, in particular, find that when something bad happens (death or illness of their partner or marriage breakup) that it is hard to get back into their professions and they no longer have the ability to earn a good income.

I know that you will be better off in the short-term if Matt starts freelancing. However, in the longer term I think that you would be better advised to get yourself back in the game by doing some part-time work. Doing this means that you will have a bit more income to help your budget. You will also maintain your professional currency, important if you are struck by one of the Three Ds (Death, Divorce or other Disaster).

And when Caleb gets bigger and you can go full-time, you will be able to earn more than Matt would ever earn freelancing.

Martin

Thanks again Martin, some strong arguments there. But I'll keep an open mind until the voting finishes on Monday.

Have a great weekend everyone!

Steph

Week 3, Question 2

Poor Matt. No more bought lunches.

Now I do feel a bit sorry for him (truly!) so in solidarity I’ve decided to cancel my gym membership as well.

So together we’ll have shaved about $280 a month off our budget. And no doubt we’ll find some other ways to save thanks to all your great suggestions.

The last message from Martin Hawes really got us thinking though – that budgeting isn’t just about cutting spending but also looking at opportunities for increasing income.

So we’ve also come up with a couple of ways we can earn a bit extra to get us out of the red.

Matt thinks he can pick up the odd bit of freelance graphic design work to do on the weekends. Maybe 5 hours a week (around $200 after tax) – but the downside is he’d have less time to spend with Caleb (and me of course!)

The other option is me doing some locum physio work for one day a week.

Working 8 hours I’d probably earn about the same as Matt’s freelancing – and we’d have to pay for child care - but it would be regular income we could bank on.

What does everyone think?


Steph

Week 3, Question 1

Thanks to everyone who voted and commented on our last question – going cold turkey on our spending was another clear winner. Martin Hawes has given us some tips about how we should go forward with our budget which I’ve included below.

This week's question should get some good discussion going - it certainly has in our house!

Matt and I have been debating which “luxury” to ditch first. Top of mind were the lunches Matt buys each day vs my gym membership and Pay TV subscription. Not sure how I ended up having two items on the table but there you go. Come on girls, stick up for me here!

Anyway, here’s what Martin has to say about budgeting:

Matt and Steph,

A budget is not all about scrimping and saving. It is deciding what you want to spend your money on, doing the things that give you good value and life enjoyment and not doing the things which don’t. (Your gym membership might fit into the first category but Pay TV???)

When you take another look at your budget on Sorted, you should keep a few things in mind:

1. A budget has two sides: income and expenditure. A dollar of extra income is as good as a dollar cut from expenditure. Is there any work that you can do, Steph? Matt’s income is good, but can he improve it even further? When did he last ask for a pay rise? Don’t ignore the income side of the budget – it’s not all about taking a
   chainsaw to expenditure.
2. Have you got any records of what your expenditure has actually been? It is much easier if you can look back to see where money has been going in the past.
3. You need a way to monitor your performance against the budget. I can guarantee that your actual expenditure will not be what you planned in the budget and you need to know what differences there are.
4. Watch out for “petty cash” – money that comes out of the pocket for little things. For example, Matt’s brown bag lunch might not sound a lot, but it sure adds up. If he spends $8 on lunch each day that’s $40 per week, $160 per month and $1920 per annum. Go on a money hunt, to find what those small things are - Carla’s idea of a little notebook is great.
5. Don’t make the budget so tight that you can’t stick to it. It’s a bit like dieting: if you make it too tough you are likely to throw in the towel and give up!
   

Thanks Martin - some good food for thought there! Let’s see how the vote goes over the next few days.

Steph