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Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: Mississippi Mudstache on March 14, 2019, 02:19:58 PM

Title: What do I need to know about moving from W-2 to contractor?
Post by: Mississippi Mudstache on March 14, 2019, 02:19:58 PM
So, I've found myself in a situation that is equally exciting and scary. My boss and I have mutually agreed to explore the idea of me moving from a full-time salaried employee to a contractor. The change would definitely involve moving from in-office to work-from-home and would possible a reduction of hours as well (subject to negotiation). The off-site work would be awesome, because I currently commute 50 miles each day. I'm nervous about the extra costs involved in contract work though - I don't need any equipment besides a nice laptop, but I would need to pay full self-employment taxes. Is there anything else I would need to watch out for? Advice from people who've been through it? Much appreciate any thoughts that you have.
Title: Re: What do I need to know about moving from W-2 to contractor?
Post by: bacchi on March 14, 2019, 02:31:51 PM
Health insurance? Who pays for software licenses? You'll need to account for unpaid sick pay and obviously unpaid vacations.

I think the most important thing is to remember your 1099 status. It's like hiring an electrician. The homeowner dictates the task ("I need a new outlet.") but doesn't dictate the time to show up ("You'll be here at 10am on Wednesday!). This means that, ultimately, you don't have to go to pointless meetings or start working at 9am sharp. This is easier said than done, though, and many bosses still treat contractors as employees.


I should add that converting from W2 to 1099 at the same company is risky and frowned upon by the IRS. Make it as clear of a line as you can. This is also to the employer's benefit.
Title: Re: What do I need to know about moving from W-2 to contractor?
Post by: noplaceliketheroad on March 14, 2019, 02:40:58 PM
Seems like a sweet deal for your employer. You do the same work, but now they don't have to contribute to your retirement, health insurance, PTO, sick days, give you physical space in an office... and they can lay you off/not continue your contract whenever they want. So I hope you are being fairly compensated for all you are losing in this deal. Don't let your new lack of commute cloud your judgement for how great of a deal your work is getting!

Depending on your income/industry, an s-corp might be a good idea. Same with a SEP IRA. Maybe check in with an accountant.

As a fellow work-from-homer, make sure to set up a space in your home that is specifically used for work. It's so, so easy to get distracted by home stuff throughout the day: dishes in the sink, laundry, cooking, cleaning that little mess over there, walk the dog again...

Best of luck!
Title: Re: What do I need to know about moving from W-2 to contractor?
Post by: seemsright on March 14, 2019, 03:14:41 PM
We got pounded with taxes when DH did the 1099 moonlighting gig. Make sure you fully understand how the taxes work for the 1099. In our case we had to pay 52% in taxes. It was still worth it because we understood how the taxes worked and he fought for a higher per hour wage.

If you write off your home office and other costs make sure you follow the rules and document to the Nth degree.

Protect yourself...a audit from the IRS does not sound fun. 
Title: Re: What do I need to know about moving from W-2 to contractor?
Post by: GizmoTX on March 14, 2019, 04:03:08 PM
You have to charge more than your salary amount to cover the self employment taxes you will now be responsible for, plus cover any employer paid insurance & other benefits that you have to pay to replace.

Be sure to deposit your self employment taxes quarterly to avoid penalties.
Title: Re: What do I need to know about moving from W-2 to contractor?
Post by: Mississippi Mudstache on March 14, 2019, 06:20:47 PM
Health insurance? Who pays for software licenses? You'll need to account for unpaid sick pay and obviously unpaid vacations.

I think the most important thing is to remember your 1099 status. It's like hiring an electrician. The homeowner dictates the task ("I need a new outlet.") but doesn't dictate the time to show up ("You'll be here at 10am on Wednesday!). This means that, ultimately, you don't have to go to pointless meetings or start working at 9am sharp. This is easier said than done, though, and many bosses still treat contractors as employees.


I should add that converting from W2 to 1099 at the same company is risky and frowned upon by the IRS. Make it as clear of a line as you can. This is also to the employer's benefit.

Thank you for the thoughts. I don't get health insurance through my employer. It's offered, but my wife's offering is far better. Software licenses are a good point - hadn't thought of that. Same with vacation/sick leave. I also know that there will be no 401k matching, which is a full 8% of my compensation. Just trying to get a mental account of my own costs so that I can rationally judge an offer when it's presented.
Title: Re: What do I need to know about moving from W-2 to contractor?
Post by: Mississippi Mudstache on March 14, 2019, 06:27:06 PM
Seems like a sweet deal for your employer. You do the same work, but now they don't have to contribute to your retirement, health insurance, PTO, sick days, give you physical space in an office... and they can lay you off/not continue your contract whenever they want. So I hope you are being fairly compensated for all you are losing in this deal. Don't let your new lack of commute cloud your judgement for how great of a deal your work is getting!

Depending on your income/industry, an s-corp might be a good idea. Same with a SEP IRA. Maybe check in with an accountant.

As a fellow work-from-homer, make sure to set up a space in your home that is specifically used for work. It's so, so easy to get distracted by home stuff throughout the day: dishes in the sink, laundry, cooking, cleaning that little mess over there, walk the dog again...

Best of luck!

My employer getting a good deal is no problem for me. I just want to be certain that the arrangement is mutually beneficial (and I certainly think that it can be). Starting an s-Corp is definitely something I would like to look into, and I hear your point about getting distracted by home life. I think that I have the sort of personality that would be encouraged to do my work efficiently, so that I can enjoy the freedom of not being attached to an office when my work is done. Part of my problem with my current full time arrangement is that it simply doesn't take 40 hours to do my job, so I get bored and frustrated that I'm not allowed to leave the office.
Title: Re: What do I need to know about moving from W-2 to contractor?
Post by: Mississippi Mudstache on March 14, 2019, 06:29:29 PM
We got pounded with taxes when DH did the 1099 moonlighting gig. Make sure you fully understand how the taxes work for the 1099. In our case we had to pay 52% in taxes. It was still worth it because we understood how the taxes worked and he fought for a higher per hour wage.

If you write off your home office and other costs make sure you follow the rules and document to the Nth degree.

Protect yourself...a audit from the IRS does not sound fun.

We paid negative income taxes this year, so my main worry with taxes is the extra 7.65% in FICA. This won't be moonlighting, it'll be my full-time job.
Title: Re: What do I need to know about moving from W-2 to contractor?
Post by: dandarc on March 14, 2019, 06:37:48 PM
With the new tax law, I've found it is a lot closer to a wash for me personally. Analyzing a "go from 1099 to W2" thing which could be coming up when my contract is up in about a year, I found that yes, half of FICA and employer-provided health insurance, and a 3% match are good.

But I'm losing my QBI deduction, and they have a SIMPLE vs. my SoloK so losing a ton of tax sheltered space there - that's like $10,000 of after tax income just from the lower contribution limit. Is the health insurance HSA eligible? I don't know yet, but if it isn't that's another couple grand after taxes in favor of staying 1099. Also losing 1/2 of the SE tax deduction means employer picking up half of FICA isn't quite as valuable as it looks at first. Depending on the exact terms, I'm finding the break-even salary to be just a few thousand less than my current 1099 rate * the hours I'd work if I was taking 30 days off - certainly not 10-20% lower that you might think at first glance.

Of course for your case, you might want to ignore that 2nd part while negotiating and focus on "holy crap - I have to pay double for social security!?", and your numbers might be significantly different than mine.
Title: Re: What do I need to know about moving from W-2 to contractor?
Post by: shingy on March 15, 2019, 08:14:27 AM
I did something similar with my previous company a few years ago, but the difference was I went from full time to part time and in a different role. But, while negotiating the deal, I learned that it costs companies about 50% of a person's salary for taxes, benefits, physical space, etc, so a good rule of thumb is to take your currently salaried hourly rate and multiply that by 1.5 to get the hourly rate to target as a contractor. Good luck!
Title: Re: What do I need to know about moving from W-2 to contractor?
Post by: Mississippi Mudstache on March 15, 2019, 09:07:40 AM
I did something similar with my previous company a few years ago, but the difference was I went from full time to part time and in a different role. But, while negotiating the deal, I learned that it costs companies about 50% of a person's salary for taxes, benefits, physical space, etc, so a good rule of thumb is to take your currently salaried hourly rate and multiply that by 1.5 to get the hourly rate to target as a contractor. Good luck!

Thanks, that sounds like a useful rule-of-thumb. I'm hoping to move to part time as well, but it would be structured as a "glide path" to ratchet back some responsibilities to something like 3 days/week over a period of months. My boss is trying to give me the space to pursue some personal goals while still keeping me on board. I'm really hoping this is an arrangement that works well for both of us. He is actually an MMM-follower too, and I'm about 99% sure that's he's technically FI, but he's very type-A and the business is his baby so I doubt if he'd ever give it up. He realizes that I don't operate the same way that he does, so I'm actually really grateful that he's willing to consider non-traditional work arrangements for me.

With the new tax law, I've found it is a lot closer to a wash for me personally. Analyzing a "go from 1099 to W2" thing which could be coming up when my contract is up in about a year, I found that yes, half of FICA and employer-provided health insurance, and a 3% match are good.

But I'm losing my QBI deduction, and they have a SIMPLE vs. my SoloK so losing a ton of tax sheltered space there - that's like $10,000 of after tax income just from the lower contribution limit. Is the health insurance HSA eligible? I don't know yet, but if it isn't that's another couple grand after taxes in favor of staying 1099. Also losing 1/2 of the SE tax deduction means employer picking up half of FICA isn't quite as valuable as it looks at first. Depending on the exact terms, I'm finding the break-even salary to be just a few thousand less than my current 1099 rate * the hours I'd work if I was taking 30 days off - certainly not 10-20% lower that you might think at first glance.

Of course for your case, you might want to ignore that 2nd part while negotiating and focus on "holy crap - I have to pay double for social security!?", and your numbers might be significantly different than mine.

The expanded tax-exempt retirement space is definitely a check in favor of 1099 work, but I don't know how useful it will be for me personally. I can save up to $43,000 annually, tax-exempt, under my current arrangement. I usually struggle to save any more than $40,000/year as it is. Thanks for sharing your thoughts on the break-even for the move from 1099 to W-2. All of the things that people have brought up - FICA, income tax, vacation & sick leave, 401k matching, software, office space, etc. are things that I can calculate and account for; I just want to be sure I'm not overlooking anything major when I run the numbers.
Title: Re: What do I need to know about moving from W-2 to contractor?
Post by: BlueHouse on March 15, 2019, 11:03:05 AM
Companies think they're going to get a great deal when an employee goes contract.  They shouldn't. 

Think of it this way:
Now YOU have to pay for all fringe and benefits
Now YOU have to pay for all overhead and expenses (including time you spend looking for business, running your business, meeting regulatory reqs of your business, etc)
Now YOU are responsible for all sick days, vacation, etc.

You mention that they don't have to pay you for health insurance because you use your wife's.  So what?  That's a benefit and you are entitled to it whether or not you choose to use it.  If you don't use it, instead of ACME corp pocketing the savings -- you do.  Another way to look at it:  Would you have to quit your contracting role if your wife lost her insurance benefits?   

So take your current hourly wage and multiply it by 2 or 3 and that's a rule of thumb for ONE WAY to get a realistic hourly pay rate.
You can also build a spreadsheet that lists ALL monthly expenses and burdens and start there. I used to have a worksheet for this but can't find it at the moment.  I'll look for it over the weekend and post it when I do.

Title: Re: What do I need to know about moving from W-2 to contractor?
Post by: Mississippi Mudstache on March 15, 2019, 11:22:54 AM
Companies think they're going to get a great deal when an employee goes contract.  They shouldn't. 

Think of it this way:
Now YOU have to pay for all fringe and benefits
Now YOU have to pay for all overhead and expenses (including time you spend looking for business, running your business, meeting regulatory reqs of your business, etc)
Now YOU are responsible for all sick days, vacation, etc.

You mention that they don't have to pay you for health insurance because you use your wife's.  So what?  That's a benefit and you are entitled to it whether or not you choose to use it.  If you don't use it, instead of ACME corp pocketing the savings -- you do.  Another way to look at it:  Would you have to quit your contracting role if your wife lost her insurance benefits?   

So take your current hourly wage and multiply it by 2 or 3 and that's a rule of thumb for ONE WAY to get a realistic hourly pay rate.
You can also build a spreadsheet that lists ALL monthly expenses and burdens and start there. I used to have a worksheet for this but can't find it at the moment.  I'll look for it over the weekend and post it when I do.

Ha, thank you for tempering my excitement. I want to go into this with open eyes about what is in store. I'd love to see the spreadsheet if you're able to dig it up.
Title: Re: What do I need to know about moving from W-2 to contractor?
Post by: Laserjet3051 on March 15, 2019, 12:28:57 PM
Aside from the direct fiscal implications discussed above, as a 1099er you will be taking on ADDED RISK. Thus, your goal will be to:

1) Identify the added risk, this includes all of the HIDDEN risk.
2) Manage all of the risk identified in #1. There are many strategies available, some being very creative, others rather simple (e.g. General Liability insurance).
3) Monetize the added RISK.

dont underestimate how much risk is really hidden or at least not overt.
Monetizing risk is hard stuff, how much $ is taking on that extra risk worth?

Even the IRS has a short discussion on the "fiscal value of taking on risk" as a contractor in one of their documents pertaining to "reasonable salary" for an S-Corp owner.
Title: Re: What do I need to know about moving from W-2 to contractor?
Post by: Mississippi Mudstache on March 15, 2019, 01:22:33 PM
Aside from the direct fiscal implications discussed above, as a 1099er you will be taking on ADDED RISK. Thus, your goal will be to:

1) Identify the added risk, this includes all of the HIDDEN risk.
2) Manage all of the risk identified in #1. There are many strategies available, some being very creative, others rather simple (e.g. General Liability insurance).
3) Monetize the added RISK.

dont underestimate how much risk is really hidden or at least not overt.
Monetizing risk is hard stuff, how much $ is taking on that extra risk worth?

Even the IRS has a short discussion on the "fiscal value of taking on risk" as a contractor in one of their documents pertaining to "reasonable salary" for an S-Corp owner.

Duly noted. Also, how does one value the risk of living a miserable life, stuck in an office 40 hours/week for 20 years, simply because one is afraid of assuming the faintest whiff of financial risk? There are other things in life that I'm keen to try - both business ideas and otherwise - and I've decided I'm not content to sit behind the desk for 10 more years (approx. countdown to FI) before I try them. My current work and home life situation allows me no wiggle room. The work situation is changeable; my home life is not (kids will get older and things will change, of course, but that will happen on its own schedule and not on mine).
Title: Re: What do I need to know about moving from W-2 to contractor?
Post by: BlueHouse on March 17, 2019, 11:05:56 AM


Ha, thank you for tempering my excitement. I want to go into this with open eyes about what is in store. I'd love to see the spreadsheet if you're able to dig it up.

See if this works for you

Title: Re: What do I need to know about moving from W-2 to contractor?
Post by: BlueHouse on March 17, 2019, 11:08:49 AM
Setting rates:

The main strategies for setting consulting fees include:
Strategy   My rate would be: 
1.   Doubling/tripling your hourly wage         .   $200 - $300/hr
2.   Using a daily rate for consulting        $1600 - $2400 / day.
3.   Setting consultant fees strategically using real-life data      $160/hr * assumes very low risk and very few expenses.
4.   Charging what everyone else charges   $185 - $240 / hr.
Main Strategies for Setting Fees  (sample data –calculations are from the web)
1. Double/triple your hourly wage as basis for consulting fees
To set fees, some consultants simply take the hourly wage (plus benefits) that they would earn when working for someone else and then double or triple it. If you're doing this, you'll probably find that tripling your hourly wage is the best move. Some consultants choose a triple rate because of what they call the rule of thirds -- one third goes to your real wage, one third to expenses, and one third to administration, low utilization and bad debt.
 ($60,000 salary + $15,000 benefits) / (48 weeks * 40 hours) =
= $75,000 / 1920 = $39.06
= 78.12, rounded up to $80 per hour
 Or $39.06 x 3 = $117.18, rounded to $120 per hour.
Of course, this assumes you use an hourly rate for your consulting services. Many people work out an hourly rate, but actually charge by the half-day, day, project or another arrangement.
2. Setting a daily rate for consulting (per diem rate for consulting)
To set a daily rate, simply multiply the hours you work in a day by the hourly rate from the above example.
8 hours * $80 hourly rate = $640 per day
 3. Setting consultant fees strategically using real-life data
This strategy involves several steps:
Setting a consulting fee based on working days
In this calculation, you base your charges on working days per year.
52 weeks in a year
Allow six weeks for vacation, stat holidays and sick time.
= 46 weeks
46 weeks x 40 hours = 1840 hours a year
 Determining your billable hours as part of your consulting rate
As noted above, you have 1840 working hours available each year. However, what percent of your time will be spent on work that brings in money, as opposed to work that helps you find clients but for which you aren't actually paid?
 100% possible hours
- 20% spent on administration, running errands, paperwork, etc
- 20% spent on marketing, networking events, website management, etc
- 10% spent on other non-billable work
------------
  50% spent actually working for pay
1840 hours x 50% utiliization rate = 920 billable hours
 
Considering bad debt rate as part of your consulting fee
Despite your best intentions, not all your clients will pay you. Some will take weeks or months to pay, but a small percentage will never pay the bill. So consider this in setting your fees.
 Collection rate: 97%
 920 hours x 95% = 874 hours
 
Rate of Pay as Basis for Consulting Fees
How much would you earn if you were paid a salary at a company?
$60,000 base salary + $15,000 in benefits = $75,000 salary
 
Salary / Billable Hours = Hourly Consulting Fee
$75,000 salary / 874 billable hours = $85.81
 
Overhead rates for consultants
Most consultants need to allow for:
•   Internet
•   telephone
•   cell phone
•   office gadgets
•   Internet connection
•   laptop or desktop computer
•   printer
•   printer toner/ink
•   shipping and postage
•   subscriptions
•   professional associations
•   business licenses and permits
•   accounting 
•   legal services (in some cases)
•   home office supplies
•   paper
•   stationery
•   business cards
•   office furniture -- desk, armoire, chair, shelves, bookcase, filing cabinet, lighting, etc.
•   insurance -- health, life, disability, liability, etc
•   car -- insurance, maintenance, gas, lease
•   advertising and marketing
•   meals and entertainment for professional purposes
•   continuing education
•   professional meetings, conferences and tradeshows
•   cleaning supplies and cleaning services
•    rent or mortgage interest
•   utilities
•   maintenance and upkeep
•   property taxes
•   other
Divide the total cost of your overhead by your billable hours:
$5,000 overhead / 874 hours = $5.72
$5.72 overhead + $85.81 fee = $91.53 fee
 
Profit margin and consulting fees
 As a consultant, you're taking a risk and running a business. So it's reasonable to expect a profit margin on your fees. Consultants usually mark up their fees by 10% to 33%.
 $91.53 + 25% mark up = $114.41
Since consultants tend to round to the nearest $5, our example results in $115 per hour rate.
4. Charging what everyone else charges for consulting
This last tip may seem silly, but sometimes it really does make sense to charge what everyone else charges for consulting. It comes down to what the market will bear and what your competitors are doing. If you fall in line by charging the same as everyone else, you're signalling that you're a worthy (qualified) consultant who plays fairly. You're also making sure you get the base line rate for consulting in your market.

Title: Re: What do I need to know about moving from W-2 to contractor?
Post by: Mississippi Mudstache on March 17, 2019, 07:25:48 PM


Ha, thank you for tempering my excitement. I want to go into this with open eyes about what is in store. I'd love to see the spreadsheet if you're able to dig it up.

See if this works for you

Thank you for taking the time to share such a thoughtful response. The spreadsheet is working fine. My boss is supposed to present an offer on Monday or Tuesday this week, so I'll be digging in to the numbers to see if this is something that's going to make sense. I'm really hoping to make it work, because it could be a huge boost to my quality of life, but I definitely don't want to make any rash decisions either.
Title: Re: What do I need to know about moving from W-2 to contractor?
Post by: ender on March 18, 2019, 08:08:54 AM
A decent rule of thumb is to take your yearly salary and divide by 1000 to get an hourly rate. It probably will be low if you have remotely good benefits though.

Realistically though the hourly rate you charge should feel really high if you've always been a W-2 employee, pretty much regardless of what parts of the great post by @BlueHouse you are responsible for yourself.
Title: Re: What do I need to know about moving from W-2 to contractor?
Post by: Mississippi Mudstache on March 18, 2019, 10:34:53 AM
A decent rule of thumb is to take your yearly salary and divide by 1000 to get an hourly rate. It probably will be low if you have remotely good benefits though.

Realistically though the hourly rate you charge should feel really high if you've always been a W-2 employee, pretty much regardless of what parts of the great post by @BlueHouse you are responsible for yourself.

Your rule-of-thumb is pretty close to what I'm calculating. The benefits through my job are nothing terribly exciting. 3 weeks vacation, 10 days of holidays, and an 8% match on the 401(k) with no vesting period. I mean, the 401(k) match is pretty sweet, but the nice thing about that is that it's incredibly easy to value. Health insurance is offered, but it's a rotten deal for our family, so we get that through my wife's employer.
Title: Re: What do I need to know about moving from W-2 to contractor?
Post by: Mississippi Mudstache on March 21, 2019, 07:47:25 AM
Got the offer in hand on Tuesday. The hourly rate is fine, but the guarantee of hours per month was lower than what I wanted. On Wednesday, I went back with a counter-offer, asking for 20% guaranteed time per month. Eagerly waiting to hear back from my boss, but he's out of town at a conference until Monday. I'm ready to get the ball rolling if they approve it. This would change what my life looks like to a considerable degree - positively, in almost all respects.
Title: Re: What do I need to know about moving from W-2 to contractor?
Post by: BlueHouse on March 21, 2019, 01:28:50 PM
Congratulations! 

One other thing that I learned along the way:  I require a minimum of a half-day when onsite work is required. 

I took a side-gig that required an occasional onsite meeting.  Those meetings started turning into weekly, for an hour at a time.  I had to leave my full-time gig, drive across town, attend a 1 hour meeting, then return to the full-time gig.  It turned out that I was losing money on the side-gig.  After I instituted the new rule, all of a sudden I was able to call in to meetings instead of attending in person.  Win!
Title: Re: What do I need to know about moving from W-2 to contractor?
Post by: Mississippi Mudstache on March 26, 2019, 01:38:38 PM
Congratulations! 

One other thing that I learned along the way:  I require a minimum of a half-day when onsite work is required. 

I took a side-gig that required an occasional onsite meeting.  Those meetings started turning into weekly, for an hour at a time.  I had to leave my full-time gig, drive across town, attend a 1 hour meeting, then return to the full-time gig.  It turned out that I was losing money on the side-gig.  After I instituted the new rule, all of a sudden I was able to call in to meetings instead of attending in person.  Win!

That's a good policy. It looks like I'll have an arrangement of one day per week in the office. I'll work there the whole day, during which we'll take care of any face-to-face business, so no commute for a one-hour meeting (and as a bonus, the commute will now be tax-deductible!). The rest of my time is mine to schedule as I please.

I was able to negotiate 10% more guaranteed hours, not the 20% I was hoping for. But on the plus side, I'm now looking at a 3-day workweek. What in the hell is Mustachianism, if not wresting back control over my life? I'm excited :)
Title: Re: What do I need to know about moving from W-2 to contractor?
Post by: Mississippi Mudstache on July 23, 2019, 10:43:34 AM
Thought I'd report back on the new self-employment gig. It's been fantastic. I only work about 2 days a week on my contract, but I've easily met all of the terms of the contract. It helps that I'm now completely motivated to get my work done efficiently, rather than finishing up early and then being expected to do more office drudgery for no additional pay. I'm working on my own the other ~3 days a week - I run a mobile sawmill, sell lumber, build furniture, etc. It's very physical labor, and I'm outside all the time. I've very happy when I'm doing that kind of work, but it's not the sort of work that pays as well as analytical shit. I've ended up making pretty much exactly the same take-home pay as before, but the balance between work that I enjoy (woodworking) and work that pays the bills (analytical office work) is a complete breath of fresh air. I was even able to take a two-week vacation to the Great Lakes with my family earlier this month. I haven't taken off two weeks in ten years. My absence on this forum over the past three months is a healthy sign. It was just a way for me to waste my time while bored in the office. I'm not bored anymore. It's lovely. Cheers and thanks to those of you who offered advice.
Title: Re: What do I need to know about moving from W-2 to contractor?
Post by: MaaS on July 23, 2019, 11:23:00 AM
Look into setting up an S-Corp. It depends on your salary and what "reasonable" salary for your profession is, but it can potentially help you negate the additional SE tax obligation.
Title: Re: What do I need to know about moving from W-2 to contractor?
Post by: BlueHouse on July 23, 2019, 11:31:00 AM
This is great news! 

By the way, now that you're doing what you want and only have to work 2 days per week, the next time someone offers you a job, come back with a ridiculously high rate to try to dissuade them from hiring you.  That's what I did, and that's how I got my current rate.  After I knew no one batted an eye at it, I realized I should always charge this much.  Unfortunately, I also allowed lifestyle creep to happen, and now I pretty much need that rate to meet my goals.