I am a Web Developer by trade and after coming across MMM about a year ago I decided to start side hustling for extra cash. This side hustling has now created new opportunities should I choose to take them.
About a month ago one of the clients I side hustle for offered me a full time job whenever they were ready to bring me on. Last week he gave me a hard offer and wants me to start ASAP. He doesn't care if I work for him full time as a salaried employee or if I work as an independent contractor, as long as I can guarantee 30 hours of work a week for 6 months. It's a small company with a lot of potential growth with an owner that really care about his employees.
Now I'm in a pickle. I'm not very happy at my current job. The work isn't interesting and morale there isn't very good. I put my 2 weeks notice in last Thursday, and they have since offered me an extra week of vacation, a substantial salary hike, and are going to work with me on the issues I have with a current project (one of the main reasons I decided to leave).
I have to let both employers know my decision come this Monday. I spent a couple hours this morning crunching numbers and here's what it looks like for each option.
Option 1 - Stay at current job w/ new salary and continue side hustling
Vacation: 4 weeks plus 7 holidays.
Take home income after taxes and health insurance: $40,775
Money that will be invested: $40,125
Total income: $80,900
Savings rate: 49.6%
Option 2 - Take salaried job at new employer and continue side hustling
Vacation: Unregulated. Take it as you need it, don't abuse it.
Take home income after taxes and health insurance: $40,480
Money that will be invested: $29,875
Total income: $70,355
Savings rate: 42.5%
Option 3 - Become an Independent Contractor
Vacation: As much as I want, but unpaid. Budgeting for 3 weeks.
Take home income after taxes and health insurance: $35,510
Money I that will be invested: $38,971 (gotta love solo 401Ks)
Total income: $74,481
Savings rate: 52.3%
Side note: I currently have 3 clients that I would be able to get a combined 40 hours billable work from each for the next 6+ months.
A quick snapshot of our finances:
Ages: 28 and 32
Minimum income required per year after taxes: $30,000
Minimum income required per year for current standard of living: $36,000 (vacations, eating out, technology, etc)
Checking: $5,000 (stashing cash until I figure out my employment situation)
Savings: $6,000
Taxable investments (back up ER fund): $16,700
Tax deferred investments: $63,300 (will lose 5,000 if I leave my current employer before March 2015)
Mortgage: $111,500 @ 3.125% with 60K equity.
Car loan: $5,800 @ 2.5% (will be paid off in full next month if I switch jobs)
Student loan: $1,200 @ 2%. No reason to pay this off early.
Wife brings in about $15,000 per year after benefits and 401k contribution. I am not accounting for her income since we are trying to have a kid and she will likely stop working when we have one.
Given all of that, here's where I stand.
Option 1 Pros/Cons
Pros: Stability, will pay the most short term, will not lose $5,000 in 401k matching, higher ups now willing to work with me on work environment issues.
Cons: 20 minute commute, the work isn't interesting, not much fun.
Option 2 Pros/Cons
Pros: Can bike/walk to work, laid back atmosphere, flexible work schedule, bonus structure, profit sharing, a lot of potential upside.
Cons: Risk -it's a small business and could tank in a couple years, lowest income of the 3.
Option 3 Pros/Cons
Pros: I'm my own master - get to choose what jobs I want to do, more opportunity to learn different technologies, get to learn more about running your own business, something I've wanted to do for a couple years now, almost no commute, huge potential upside.
Cons: Risk - jobs will come and go, revenue will be inconsistent, might flop after a year.
So that's where I'm at. I'm on leaning taking the risk and becoming an independent contractor, but the stability at my current job is very enticing.
I'm having a hard time making a decision and would love to hear input from my fellow mustachians. What would you do in my situation?