My Quest for Creative Financial Freedom Pt. 3: Showing My Income Stats, and, Why I’m Putting 50% of Income Towards Debt & Savings BEFORE I’m Ready

Being a freelancer requires mastering the craft of money. Without sufficient financial IQ, one can never really get comfortable.

Here’s a question for you: Do you know exactly how much money you earn?

It is amazing that most of us have no idea where our money goes. We collect some paychecks, pay some bills, and hope the bank account doesn’t go below zero before the next paycheck comes in.

When I sat down to write this post, I needed to determine how much I earn, and from where it comes from.

The problem is - holy shit, I don’t really know! I have a general idea, but I don’t have concrete numbers. This is a huge weakness in my financial intelligence. I’m excited that this blog series is forcing me to push through the fear/confusion and truly understand what’s up.

But first… a Quick Financial Update

(note: If you don’t care about the specifics, you can skip to the “Why I’m Saving 50%” section of this post)

I gave an overview of my bank accounts in the last post (see below for links). Here’s the weekly update:

June 17, 2017 Personal Finance Update:

Assets:

Bank Account #1: Guilt Free Spending Account: $6
Bank Account #2: Business & Bills Account: $10
Bank Account #3: Emergency Savings: $60
Bank Account #4: Steem Power: 1,500 SP // $3,110

Miscellaneous Crypto Investments: another $200ish. will expand on this in future posts

Debts:

Credit Card #1: $5,639
Credit Card #2: $280
Money Owed to My Dad: $12,000

Notes: I’m very much in paycheck to paycheck mode, as you can see.

I’ve got to power down for a week to get some liquid cash into my bank account. On the plus side, I’ve cut out just about all extraneous expenses. I have no plans for any expensive meals out, trips, or non-essential new purchases.

My immediate goal is to build up to at least $100 in bank account #1 and #2 - I’d like to maintain that much at all times as a “buffer” and to get used to not going near 0.

On the debt side, CC #1 was at $6,000 when the month started - and I am SO happy to have slashed nearly $400 from the debt in the last two weeks!

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Back to that Income Stuff

Here’s my philosophy on earning income as a freelancer: Diversification is EVERYTHING.

I want to have 3-5 active sources of income, and eventually 2-3 passive sources of income, at all times. This way no matter what happens, I can walk away from a gig or lose an investment and not need to worry.

I’m very happy to say that I am currently pulling this off. Here are my sources of income right now:

Steemit

This has been a huge and unexpected source of income, and is the main reason I'm not working at Wal-Mart or some shit right now.

Textbroker

This is a oft-maligned text mill where freelancers often accept pitiful wages. I got my start here when I was desperate, earning a pittance - but keep it around because I’ve got a few private clients now at 3 cents per word, which is ok.

Constant Content

A much better writing site than TB, where I list articles about Social Media, SEO, Digital Marketing, etc, for 6 cents a word. The site takes a 30% cut and I sell about 60% of what I post, so I’m earning 2.5 to 3 cents per word here.

Again, private clients are where the money is at - I’m earning 6+ cents per word from my first private client on this site and hopefully will get more work at that level.

Private Client #1 (Tech Blog) - I’m writing for a tech company’s blog, around 10k words per month, for $600 each month. This is my first private gig that isn’t through a third party - and at around 6 cents per word, it’s a big boost from the content mills.

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The amount that I earn from each client changes from month to month - mostly because I’m on a huge upswing over the last few months. Here were my numbers for May:

May 2017 Income:

(numbers rounded to nearest $10)

Textbroker: $560
Constant Content: $540
Steemit: $500
Private Client #1 - didn’t have the gig before June, so $0 in May

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TOTAL MAY 2017 INCOME: $1,600

Hey, not bad! Considering I quit my job with no back up plan in December 2016 like a dummy, I’ve come a long way.

I fear that June 2017 might be a little slower - possibly my first month where the income doesn’t go up from the previous month.

I’ve been putting a ton of time into new Steem content, but shifted away from topics designed specifically to attract whale votes. Instead, I'm focused on content that really resonates with me and my audience. As a result, my followers/views/comments are way up, but income is down.

I’m confident this will turn around and end up becoming a stable base of great income in another month or two. But in the short term, it may be less money.

Also - I’m not tracking the value of my Steem Power going up in this - when Steem went up to $2+ last month, that was a huge increase in my SP value (gained $1,500ish). But I’m not “actively” crypto investing yet, so I don’t want to think about that - I’ll just count the money that I cash out as income for now. Investment gains will be a lovely bonus.

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Why I’m Putting 50% of Income Towards Debt & Savings NOW.

Here’s a quick recap from part 2, where I discussed how I distribute my income. It’s shifted a little bit as I refine the strategy:

10% goes into Crypto investments (just starting this - more in a future post)
5% goes into Emergency Savings
35% goes to pay off debts
30% goes into my “Bills & Business” checking account
20% goes into my “Guilt Free Spending” checking account

Technically, that means 40% go into debt / savings, and 10% into investments. But I’m a huge believer in blockchain, I think it’ll be 100x bigger than now in 10 years, so I frankly have no issue with counting that as part of my savings in a high-risk sense.

I talk to many friends and colleagues, mentioning that I put away 50% of my income. Every single time, it’s the same response: “That’s cool. I’m not in a position to do that.”

Oh yeah?

I earn $1,500 per month at current rates. I have minimum debt payments of around $200 per month - so that’s about 15% of my income. The other 85%, or $1,300, is what I’m left with.

Some people see that and say “wow, that’s tough as a 26 year old. You must live paycheck to paycheck.”

I say - hey, that’s plenty of money. I pay $300 in rent, another $400 to $500 a month in food / bills / necessities, and… that’s about it!

Some people say “I don’t live in a location that allows me to pay $300 per month in rent.”

I say - I sure as hell don’t want to live in suburban CT. It’s sort of my worst nightmare come true. But, here I am - and I’ll be here for at least another two or three months before I can even think about moving.

Once my income is high enough that I can pay more expensive rent AND put away 50% towards debts/savings/investments, then I’ll be out of here as fast as I can.

Some people say “But don’t you want to enjoy your life? You are only young once.”

I say that I’d like to never worry about money again by the time I’m 40 - and in all honesty, I’m a cocky motherfucker and I think I can do pretty well by 30. The true nightmare is to be 60 years old and still worrying, which seems to be where the “but why not enjoy it now?” mindset leads people.

Look, I know I might piss some people off. But I can’t lie. This is how I personally am thinking about money. Up until January 2017, I ignored money. Now I intend to crush it.

In July, things will change a little bit.

I’m opening a savings account to put away tax money. I’ll be saving 15% for taxes, though I suspect I won’t need that much (low income bracket FTW) so a lot of it may end up coming back to me. Furthermore, I want to start donating 5% of my income to Doctors Without Borders.

Both of those changes will start in July, and we’ll discuss it more in future posts.

For now, I need to stop. Holy shit, it’s been like 1,500 words here. This stuff takes work. There’s no shortcut or concise way to do it.

Right now, I expect a lot of skeptical people to either doubt me or think I’m a cocky ass for believing in myself. But - in a year or two, when I’m debt free and earning a healthy income - I hope this post will serve as an example of HOW I did it.

Next week I’ll wrap up the introductory stuff for this series. I’ll talk about my cryptocurrency investment plans and how I intend to use crypto as my secret weapon to build serious wealth. After that, these posts will get shorter (thank god) and will focus more on the day-to-day thoughts and tactics as I dig myself out of debt.

Thanks for reading :-)

Previous Posts:

Part 1: https://steemit.com/money/@heymattsokol/my-quest-for-creative-financial-freedom-pt-1-intro-explanation

Part 2: https://steemit.com/money/@heymattsokol/my-quest-for-creative-financial-freedom-pt-2-gawk-at-my-pathetic-finances

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