Author Topic: Case Study: Film Freelance at the Bottom Rung (for now!)  (Read 1961 times)

cazio

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Case Study: Film Freelance at the Bottom Rung (for now!)
« on: October 30, 2016, 04:51:00 PM »
Hello! I知 a new Mustachian, but (luckily) I致e been keeping healthier habits than most when it comes to financial planning. My job in the film industry is at the bottom of the ladder and not a typical salary job (more on that later) but I知 so happy to have found this forum and blog. Since I got my job, I致e been feeling kind of unchallenged in terms of the future, but FI is my new life and career goal, and I知 confident I can make it happen!

However, I feel stuck right now. I know paying off my student loan debt is my first priority, but I'm trying to find a way to pay that off even faster than my current calculations of 12-13 months.

Disclaimer: I知 still new to all of this and quite frankly, adult life itself, so most of this is speculation in terms of what I think I need.

Current FI Goal: Retirement by age 32 (2027)
Estimated Retirement Spending: 20-30k per year

Current Employment Stats:

Expected Total Base Pay Income per year (with current job): $39,000
   Weekly Rate: $586 after taxes*
My job is not salary, it is based on the length of the movie I知 working on. I知 expected to be working until at least Dec. 2017, but we will have weeks off for hiatus/vacation that I will not be paid for. However, there will also be weeks where I work a 6th day, which will give me a lot of extra pay. For the yearly calculations, I知 estimating 50 weeks of pay.

Expected Base Pay Income After Tax: $29,295
Expected Reimbursements per year: $3,000-$5,000

Current Investment/Retirement Stats:

Pension Plan (from college part time job, including employer contribution): ~$1850 - currently in the process of rolling over to a Vanguard IRA
Roth IRA (Betterment): $350
Betterment Safety Net: $400
Betterment Investment Acct: $200

Debt:

Student Loans: (with interest rates between 3-5%) $17,443


Monthly Bills: (my half--split with a roommate)

Total Rent: $550ish (give or take utilities)
Including:
   Electric: $30-40/mo
   Water: $4-8/mo
   Internet: $25/mo

Gas: -$.47 cents per mile (roughly)*
This is because my employer pays me $0.54 per mile, and my car is running at about $0.6 per mile. This is a rough estimate because I知 only paid for miles I use for work, but the vast majority of my miles are spent for/at work.

Car Payment: $249/mo lease (yes, a lease, I know, I know. Right now I'm stuck in it at least until next November--my job puts tons of miles on my car, so i wanted to lease first and then buy a used car once I'm done on this show)

Riding Lessons: $240/mo **
** - I know this is going to be a big dock in points for my finances, but I have a fantastic facility with a great trainer worth far more than what I pay per lesson ($60). Since owning/riding horses is something I want to do once I知 FI, I view this cost as an educational expense.

Groceries/Food: $30-40 every two weeks, about to become drastically lower (potentially $0!)
This is because we have a fully stocked kitchen at work to eat from at our leisure, and soon lunch will be catered every day, all free for me! And I get to take home excess food at the end of every week that is close to expiring, almost empty containers, etc. Huge perk of the job.

Bearded Dragon Food: $50-60 a month, but will get lower, as I am going to be able to be self-sustaining for his food within the next few months if all goes to plan. And as he gets older, he'll be eating more veggies and less bugs, meaning less money spent  on his food (99 cent kale vs $25 for 500 roaches).

Other Spending:
Lately my spending has been much higher than normal because yay, new job, new city, new friends, more money! So the past few months I have spent (this includes shopping, groceries, gas, and any other spending):

August: ~$500
September: $397.78
October: $870 (yikes--a lot of this came from buying equipment to start riding lessons, purchasing a bike, and a trip to Disneyworld with friends (which was only $323 total including airfare and hotel because we had free tickets)

I have everything I've spent in a spreadsheet that I keep with all of my budgeting stuff, so I can break down my spending even more if needed. Basically I was using my new adulting freedom to go out to eat 2-3 times a week, which I have since completely cut out except when in dire straits (I still haven't master how to properly feed myself with groceries lol). I've also completely cut out Starbucks, where I thought I wasn't spending much but was getting it around 2-3 times a week.


Other Financial Advantages:

My parents still pay for my phone bill AND my car/health insurance, and will for the whole of 2016 and 2017

When I return to college (see Disadvantages), I will be living at home with no housing expense, 吐ree public transportation (as part of tuition), and have everything else in very bikeable distance

When my lease is up, I have the option to sell my car and break even or potentially make a profit when/if I can sell it to someone else instead of giving it back to the dealer (Lame argument, but hey)

Disadvantages:

I have a semester left in college (I took the next 1 ス-2 years off for this movie job) that I will need to pay for (~$4000)

I will not be able to work full time while in college (but I will be working part time)

Film industry work can have months of unemployment between shows, but I知 hoping to get a job as a personal assistant that will be salary within the next year or two.

Weekly pay. Vacation weeks are basically mandatory and  will take a big bite from my budget for that month in terms of saving.

No 401k 


In closing...


My current goal is to attack my student loan debt. I致e been paying off my interest thus far, but I realize now that yes, I do need to treat it like an emergency. I currently plan to pay off $1,300+ per month (the rest of my money goes toward monthly costs).

I get 途eimbursed (though I make a profit耀ee above) for my mileage, which ends up coming in at around $70-110 per week, but this will probably skyrocket once we get busier. I plan to use 50% of my mileage towards paying off loans, the other 50% goes towards food, paying for gas, pet food, and spending.


I guess my question is...am I on the right track? I'm a little nervous about not having much of a safety net, but I'm lucky enough that if something were to happen that was unexpected, my parents would totally cover for me until I get on my feet again. I'm wondering if I should be putting any money into that (right now I have like $200 on reserve) or if putting every cent toward my debt is the best thing in my situation. And of course, getting spending down is also a priority.

mozar

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Re: Case Study: Film Freelance at the Bottom Rung (for now!)
« Reply #1 on: October 30, 2016, 09:25:02 PM »
My question is when/if are your parents going to cut you off?

ShoulderThingThatGoesUp

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Re: Case Study: Film Freelance at the Bottom Rung (for now!)
« Reply #2 on: October 31, 2016, 04:54:54 AM »
Do you earn 1099 income, or W2 income?

expatartist

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Re: Case Study: Film Freelance at the Bottom Rung (for now!)
« Reply #3 on: October 31, 2016, 05:45:16 AM »
Hi, welcome to the forums!
You have a lot going on,  congrats on the film job and on managing your $ before graduation.

Are your loans on deferment or repayment mode?

Freelancers should have a larger emergency fund than salaried folks. My suggestion: while paying down your highest interest loans, make building that efund a priority.

cazio

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Re: Case Study: Film Freelance at the Bottom Rung (for now!)
« Reply #4 on: October 31, 2016, 07:40:24 AM »
My question is when/if are your parents going to cut you off?

Insurance-wise? I'm not exactly sure. Health insurance - Probably at 26 (I'm 21 now) or when/if I start to get benefits at a future job. Right now their benefits are better than anything I could get, so I guess I'm with them for the foreseeable future.

As for car insurance, probably once this lease is up, so in 2019.

Do you earn 1099 income, or W2 income?

I will earn W2 income for this job. Other jobs I've had have been for much shorter periods (ex. 1 month or less) and have been paid mostly under the table (can't work on many movies with a class schedule haha). For the jobs I hope to work in the future, I imagine 99% of them will be W2.

Hi, welcome to the forums!
You have a lot going on,  congrats on the film job and on managing your $ before graduation.

Are your loans on deferment or repayment mode?

Freelancers should have a larger emergency fund than salaried folks. My suggestion: while paying down your highest interest loans, make building that efund a priority.


Thank you! I'm excited!

I'm still in the grace period until Jan 2017, but I believe 3 of my loans are already accruing interest. I've been paying off my interest since I started accruing, but I wasn't paying down the principal.

What would you suggest for my safety net? Right now my total fixed costs per month are $1006 not including groceries etc, but I have a guaranteed job until at least December of next year, so I'm wondering if I need to start putting stuff into that safety net just yet or wait until it's closer to when I might need it. My thought process is that if I can pay off my loans in less than 12 months, I can then use the loan repayment money to put in a safety net, as I could save over 100% of a month's costs in a single month (ie. $1300)

mskyle

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Re: Case Study: Film Freelance at the Bottom Rung (for now!)
« Reply #5 on: October 31, 2016, 08:43:33 AM »
You know that your cost per mile is not six cents, right? You're driving around 150-200 miles a week for work (estimating based on your reimbursement numbers) and spending $249 a month for your car payment (plus gas, which I'm guessing is what costs six cents a mile). So in a month figure 600-800 miles, with $40-50 worth of gas and your $249 a month car payment, that's more like 40 or 50 cents a mile, not taking into account things like oil changes and mileage overage fees for your lease. (Also, when you're not driving for work, you will still have that car payment, right?)

You also don't seem to be accounting for any non-regular expenses in your budget. What will you do for transportation when your lease is up? If you want to keep working your way up in the movie business you're still going to need a reliable car. If you save that mileage reimbursement money now you could be able to buy an inexpensive used car outright when your lease is up. Likewise, you need to be saving a lot more for the slow periods between jobs, unless you are planning on moving back in with your parents every time you're out of work.

And let's talk about your "other expenses" category - you're kind of hand-wavy about this but this needs to be a real part of your budget. What you spend on socializing and entertainment and whatever the heck else is in this category is going to keep happening even if you feel like it shouldn't. How long have you been tracking your spending (so that you know what is an "unusual" spending month and what is a "usual" spending month)? You really need to keep an eye on that and be realistic about what you need to spend and/or what aspects of your lifestyle you want/need to cut back on.

Honestly, I'm not sure working your way up in the movie business and retiring at 32 are mutually achievable goals, unless you get very, very lucky (and the riding lessons and the pet expenses don't help). If working in film is your dream and your joy, I don't want to discourage you from it! But from what I understand you are likely to spend years in subsistence-wages "paying your dues" kinds of jobs. Working long hours for low income without access to tax-advantaged accounts (e.g. 401k) will make it very hard to retire at 32. Which is fine! There's nothing special about retiring at 32! I'm 38 and I'm not retired (partly because I spent my 20s working low-paid dues-paying kinds of jobs). But you will probably need to decide which one of these is more of a priority for you.

This is all sounding kind of harsh as I read it back but seriously: your budget as it is has a lot of hope and vagueness in it and I have doubts about how it will hold up to Real Life.
« Last Edit: October 31, 2016, 08:46:22 AM by mskyle »

cazio

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Re: Case Study: Film Freelance at the Bottom Rung (for now!)
« Reply #6 on: October 31, 2016, 01:25:39 PM »
No worries, you bring up totally valid points. There are a lot of kinks I still need to work out and things to think about for the future.

Quote
You also don't seem to be accounting for any non-regular expenses in your budget. What will you do for transportation when your lease is up? If you want to keep working your way up in the movie business you're still going to need a reliable car. If you save that mileage reimbursement money now you could be able to buy an inexpensive used car outright when your lease is up. Likewise, you need to be saving a lot more for the slow periods between jobs, unless you are planning on moving back in with your parents every time you're out of work.

Basically, I had to revamp my budget this month because I discovered Mustachianism and realized how much I was dumping into spending for stupid reasons. I'm completely confident that my spending will never exceed the payments I get for milage. However, I see your point, and yeah, it's something I'm still grappling with to figure out how much is stuff I need (gas, groceries etc) vs straight up spending. Networking is a HUGE part of this industry, so there will be times where I go out to eat or pay for tickets to things because staying up in the industry almost completely depends on who you know.

My plan is to buy a used car once my lease is up, using money saved as well as money I'm (hopefully) going to make in profit upon selling the car. Basically, if the car is worth $10k when the lease is up but I sell it for 12k, I get to pocket the extra 2k.

Quote
How long have you been tracking your spending (so that you know what is an "unusual" spending month and what is a "usual" spending month)? You really need to keep an eye on that and be realistic about what you need to spend and/or what aspects of your lifestyle you want/need to cut back on.

I've been keeping track of spending since 2014--I keep an Excel spreadsheet that lists our my expenses, how close I am to reaching paying those expenses, tracking my paychecks, and a section for allocating how much spending I have, and what I've spent on. For 2014-May 2016 I was going by semester, since I didn't have monthly costs as I lived in the residence halls, and my costs came up at the end of each semester.

Granted, my spending sheets probably have some holes. But I'd say I only ever miss one or two transactions. I do include summer expenses with my Spring worksheet because I needed to have money to pay for fall semester. Anything in my spending column is entertainment, going out to eat, non-school purchases, gifts, etc.

Spending:
AU 14 (August-December): $832.49
SP 15 (Jan-July): $712.86
AU 15 (August-December): $854.89
SP 16 (Jan-July): $906.71
July '16 (after getting the job--this month was only for half the month because I was moving): ~$400
Sep '16: $756.57
Oct 16': $719.76 (previous number above included gas and groceries)

In addition to that, this year I had moving expenses (about $2,500 total), but I had savings in preparation, so I could cover it all with what I had built up. I can do further breakdowns if necessary, but yeah, I've been spending a lot more since the move and new job.

Quote
Honestly, I'm not sure working your way up in the movie business and retiring at 32 are mutually achievable goals, unless you get very, very lucky (and the riding lessons and the pet expenses don't help). If working in film is your dream and your joy, I don't want to discourage you from it! But from what I understand you are likely to spend years in subsistence-wages "paying your dues" kinds of jobs. Working long hours for low income without access to tax-advantaged accounts (e.g. 401k) will make it very hard to retire at 32. Which is fine! There's nothing special about retiring at 32! I'm 38 and I'm not retired (partly because I spent my 20s working low-paid dues-paying kinds of jobs). But you will probably need to decide which one of these is more of a priority for you.

Fortunately, I've been very lucky in the industry. Whereas most people are working as Production Assistants for years before they land a movie, my first job was on a big movie, and my connections I gained there have gotten me on big movies since. My current pay rate is high for the industry, and the studio I work for really only hires from within, so unless I royally screw up, I probably at least have a PA position for awhile. Of course, I want to plan for the worst, but I have stellar connections so I'm in a much better position than most people starting out.

However, it's just a super volatile time in terms of my career. I could walk out of this job making the same, or get a personal assistant job and make double what I make now. Both are equally possible. And if I do get a personal assistant job, then I get traveled, so I'll get $65/day per diem for food, free rental car, gas reimbursed, and $85/day for housing. Pretty much beyond December 2017 I have no idea what my life is going to look like. :/

As for retirement by 32, I guess I should have reworded it to FI by 32. I love my job, but ten years from now I just want to be in a place where I don't need it. Retiring would be awesome, but I have no idea what my life will look like then. I have 7/8th of a business degree, and corporate life isn't entirely unappealing, so it really could go anywhere. And if it's not possible. That's fine too--I prefer to set the bar high and undershoot a bit than set the bar too low and barely achieve it, if that makes sense.

Thanks for all of your input--I hope this helps!

expatartist

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Re: Case Study: Film Freelance at the Bottom Rung (for now!)
« Reply #7 on: October 31, 2016, 06:25:57 PM »
Hi a quick reply re. e-funds. A good rule of thumb for single freelancers with few liabilities is to have minimum 3 months expenses, plus available credit of at least one month that can be used for car or unexpected health expenses.

NB: in many years of freelancing I rarely had that much available, but never owned a car and usually lived in places where healthcare was much more affordable than the US.

The FI by 32 goal may change over time as you track long term expenses in the new city and job, but numbers are good targets to have and FU $ - which you're well on your way to having - is a great start.