Author Topic: contract fee dilemma  (Read 1435 times)

DoNorth

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contract fee dilemma
« on: February 18, 2015, 05:47:38 AM »
My wife was a military spouse until I retired from the military.  She had some good PR jobs with big companies, but obviously had to quit every time we moved.  To her credit, she translated each employer into a client for her free lance business.  She started out at $45/hour and gradually over the years has now made it to $55/hour.  She does a majority of her work for one client in particular and the work has been extremely sporadic, but generally increasing overall.  In the last year, her income has ranged from $500/month to $8500/month.  They have now offered her a formal contract arrangement for $3500/month ($42K/year) for 86 hours of work each month.  This translates to just over $40/hour which is a pay cut, but provides a much more predictable stream of income.    They made the offer yesterday and she asked how close they could get her to $4000/month citing she had to fund SET, retirement etc. herself.  Not sure if they are going to budge at all.

She hates doing timesheets, sends invoices in late and generally doesn't like the business/admin side of her work so it certainly makes things simpler if she receives a flat rate each month, but the cut in pay is fairly significant and we can't decide whether she should take it. We are going to FIRE this fall so between my pension, rental income, dividends and her free lance work, our FIRE income is still $110K/year  with me fully retired and she continuing to work some (about $30K of projected annual expenses) Any thoughts are appreciated.

Gray Matter

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Re: contract fee dilemma
« Reply #1 on: February 18, 2015, 06:01:45 AM »
The biggest question is:  Does she want to do this work?  It sounds like you'll have plenty of income in FIRE and don't really need this income.  So if she's less than excited, I'd say no.

I personally probably wouldn't come all the way down to $40 from $55, but I might come down to $45 for the stability and not having to do all the admin work of tracking hours and billing, etc.  But again, only if I wanted to do the work, if it had some intrinsic value, not just monetary reward.

mskyle

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Re: contract fee dilemma
« Reply #2 on: February 18, 2015, 06:41:57 AM »
How much time does she spend doing the invoicing, etc., that she hates? Is she including that in her hourly rate? If she's getting paid $55 an hour for the "work" but also has to spend a lot of time doing administrative stuff and hunting down work, her hourly rate might actually be a lot closer to $40 already. Also is this a W-2 or a 1099 position? Are there tax implications?