Author Topic: Self-Employed Mustaches  (Read 3413 times)

catmustache

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Self-Employed Mustaches
« on: June 01, 2015, 09:21:52 AM »
I've been thinking seriously about going from employee to self-employed/business owner.

Are there any mustachians who have made the transition prior to being retirement-ready? How did you deal with the uncertainty of not really being able to budget for the future and still save for retirement? Any tips for making the transition as cost-effective as possible? Thanks!

Rustyfishook

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Re: Self-Employed Mustaches
« Reply #1 on: June 01, 2015, 01:09:47 PM »
That would be me.

Don't jump ship without a plan. Have a transition plan lined out where you gradually incorporate your "self employed business" income to overtake your current JOB income. Many "experts" say that when you hit 50% of your necessary income with your self employed work, that is a good time to go full time as your focused efforts will then make up the difference.

I say, maybe. It depends what you are going into and what your goals are. Gimme some specifics to chew on.

Also, go read the Lean Start Up. Good info there. Work your ASS off. Set good goals, and don't waste your time staying busy with stupid bullshit.

There, that is a good start..

Axecleaver

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Re: Self-Employed Mustaches
« Reply #2 on: June 01, 2015, 02:14:57 PM »
I've done it twice, once in my 20's and recently, two years ago. My latest attempt has been wildly successful, I'm planning on a June, 2020 FIRE date.

Regarding budgeting for the future, you can still do this as a self employed person, because your expenses don't really change. If anything, it helps you tighten up your expenses. Your income may be more variable, but your costs aren't. I saved up six months living expenses before making the jump. That was six months I would have been able to go without billing a single hour. That helped a lot.

I also recommend having a contingency plan for when you will give up and call it quits. For me, this would have happened when our living expenses dwindled down to 2 months. I got to within a few weeks of that happening. One of my customers ran into budget problems and took 8 months to pay (it was my choice to work at risk, and it paid off in the end). I lost a client I expected to keep and spent a month selling my butt off. Nothing motivates you like the looming death of your dreams.

One nice benefit of being self employed is that you can use SEP IRA or Solo 401k retirement plans, which permit you to contribute $53k a year in 2015, or $106k for a married couple who pays both people (downside, you pay double the payroll taxes). You are effectively contributing to both the employer (up to 25% of salary) and $18k employee side. There are a few threads here about that. I'd like to contribute that amount on January 2 every year, we should be able to start doing that next January. This year I did a lot of speculative sales and started a major contract which required some startup capital to get rolling.

catmustache

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Re: Self-Employed Mustaches
« Reply #3 on: June 02, 2015, 12:45:12 PM »
Thanks for the advice. I've got about 3 months of expenses in liquid money right now and my husband would keep working his job. His job is sufficient to pay for all our expenses, with the exception of my student loan debts. I'll look into that book and the SEP IRA.


As far as more specifics, I'm a lawyer who is currently employed as an administrator and make about $35 - 38k a year. I recently got an offer from a partner at a law firm that I worked at to jump on board at his office as a kind of junior partner (i.e. kill what you eat, pay a portion of the expenses, answer the phones when he's out of the office, maybe do a little contract work for him when he's too busy). I know his billing rates and the number of cases he does a month, but there's no guarantee the same will be true of me, but if it is, I could match my current income easily. Side note, my current job prohibits all law-related side employment, so I can't really start it part-time.

He wants an answer soon-ish, so I don't really have the time to save up more money. I do have another part-time job I do on nights and weekends that could potentially keep us afloat, but I'm worried about it killing my ability to retire early and pay my debts off quickly. Right now, I'm on track to investing in some rental houses and paying off debts, but not loving (or even liking) my job most days.

Cassie

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Re: Self-Employed Mustaches
« Reply #4 on: June 02, 2015, 01:39:48 PM »
It sounds like you are in a secure enough position to make the leap.

androo63

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Re: Self-Employed Mustaches
« Reply #5 on: June 02, 2015, 06:48:41 PM »
I'm in New Zealand, so there may be some differences.

I lost my job 2 years ago and despite 150 applications couldn't get another (I admit an embarrassingly conviction affected this). I was on the sickness, then unemployment benefit for all of that time.

Eventually I got angry enough with my situation, to decide that if nobody else will employ me, I'd better employ myself. The fact that I used to teach Business also had an impact ... If it was ok for all those kids to set up a business I should have the guts to do so too.

I was broke, but at least I still had a good computer... So I set up a contract writing business.

In some ways it can be scary not having the certainty of a normal job (I have ended up with one major client, which helps for now but could be a problem further down the line).

One hint - write up a business plan. The discipline of thinking it through helps immensely

Retire-Canada

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Re: Self-Employed Mustaches
« Reply #6 on: June 03, 2015, 09:02:06 AM »
I've been thinking seriously about going from employee to self-employed/business owner.

Are there any mustachians who have made the transition prior to being retirement-ready? How did you deal with the uncertainty of not really being able to budget for the future and still save for retirement? Any tips for making the transition as cost-effective as possible? Thanks!

I've been self-employed since I was 27 so about 20yrs.

I set my business up to be fairly stable because that was important to me.

Ultimately I would only take on a self-employed/business opportunity if it was clearly better in key ways than a job as an employee. So I'd use that as your test for a go-no go decision.

Rustyfishook

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Re: Self-Employed Mustaches
« Reply #7 on: June 04, 2015, 10:21:33 AM »
Sounds like you are in the perfect spot to make this transition. One more book that has really helped me focus on what is important is this

http://www.amazon.com/The-ONE-Thing-Surprisingly-Extraordinary/dp/1885167776

Let us know how it goes! Very exciting for you!

catmustache

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Re: Self-Employed Mustaches
« Reply #8 on: June 04, 2015, 10:31:41 AM »
Thanks for the advice, everyone. I'm working on a business plan right now to really look at the numbers concretely instead of going off my gut. I suppose the worst that will happen is that I'll have to get another job.