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Personal finance steps every freelancer must take to avoid ruin

(FINANCE) The government shutdown showcased financial instability, but what do people that have no paycheck guarantee need to do to be secure?

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In light of the recent government shutdown, there has been a lot of attention in regards to how missing paychecks impacts the average American. Most Americans don’t have a regular savings account and could not handle a $1,000 emergency, let alone miss practically a month of pay.

While things look positive for the backpay of those government workers, we all could benefit from some careful reflection about the precarious nature of our personal finances.

Particularly those of us who don’t receive a regular paycheck.

Entrepreneurs and those invested in the gig economy have volatile incomes, and literally no promise of a paycheck ever – that can impact your personal finances in a number of ways.

Variable incomes are normal for this group and can impact entrepreneurs in ways as simple as handling debt.

If this is you – here a few things to keep in mind that can help you deal with the volatility of living on a variable income and handling your personal finances.  

  • Set up an emergency fund. Start with 500 if you have too, and remember this an emergency fund for your personal expenses, not your business. If you have an emergency fund, make sure you identify what an emergency is and also be prepared to put money back when it comes out. If you have a hard time not spending money in front of you, put your money in a local bank or CU that you don’t have immediate access too.
  • Stick to a budget. when you can’t forecast your income appropriately, controlling expenses is so critical it’s the few things that are in your control.
  • Don’t mix business with personal. While you may be pouring your personal energy and time into your start up or gig, be careful about mixing expenses for two reasons: First, it messes up your budget. You need to have separate budgets for personal and business. Second, there could be tax challenges – consult a tax professional for more information. Here’s a little primer to get you started.
  • Save for retirement. There are tax benefits and come on, don’t wait till you can’t work anymore. Also, an IRA IS NOT AN EMERGENCY FUND.
  • Practice good financial behaviors. Automate bill pay. Online statements. Digital receipt tracking. The more you can automate your life, the better you are. You already have so many demands on your time, reduce that so you can spend more time doing what you love and what matters.
  • Consider diversifying your income. Either ensure you have multiple strings or a backup gig (even if it’s just uber driving); or be prepared to do temporary or contract labor during your slow seasons.

The path to entrepreneurship is rough. What we can learn from the very struggles of the federal employees and the government shutdown is that if the government can be unstable, those of you who work in the world of startups, gigs, and entrepreneurship, need to be even more on our toes. The “normal recommendation” for saving is 10% of your income, but normal may not be enough for you. Be prepared and save (more).

Disclaimer: I am neither a tax or investment professional. This is personal financial advice and I encourage you to visit a professional if you need more specific plans of action.

Kam has a Master's degree in Industrial/Organizational Psychology, and is an HR professional. Obsessed with food, but writing about virtually anything, he has a passion for LGBT issues, business, technology, and cats.

Business Finance

COVID-19: Governors fail renters, a 90-day rent freeze is the only option now

Independent contractors whose only sin is renting instead of owning, are facing evictions even as Governors put tiny bandaids on the situation. A 90-day freeze is the nation’s only option to avoid mass migrations or spikes in homelessness.

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2020, it seems, is the year of rebranding—even when it comes to our impromptu recession brought on by a variety of factors (but largely thanks to COVID-19). Despite the negative connotations of widespread economic disaster, some people, such as St. Louis Federal Reserve President James Bullard, are regarding this instance as “an investment in U.S. public health.”

Should we all be so optimistic? Bullard seems to think so.

To be fair, James Bullard’s “optimism” also accounts for taking a “$2.5 trillion hit” to the economy, so it’s not all sunshine and dancing unicorns (this time). However, the long-term outcome of handling this crisis correctly—a process which involves bailing out small businesses, matching wages, and contributing to rebuilding and supporting our healthcare infrastructure—will be, according to Bullard, positive.

Bullard’s optimism does come with an important message: As with pretty much anything, the simpler we can keep solutions to this problem, the better the outcome will be. We’re not off to a great start; between states’ varying responses to COVID-19 procedures and mixed congressional support for a stimulus package, the process of dealing with economic fallout has become more complicated than some—Bullard included—would consider “ideal”.

Unfortunately, there isn’t really an “ideal” outcome here that is also practical without requiring a heretofore unseen level of cooperation and cohesion between political parties and state-based cultures. In the event that we can actually pull together and actively invest, as Bullard suggests, in our infrastructure, the implications for our economy will ultimately be positive—even if only in a pyrrhic victory kind of way.

In unprecedented times of crisis—you know, like right now—a little bit of optimism doesn’t hurt. Over the course of the next few months, you’ll hear all sorts of different takes on the situation; some people—those who identify as “realists” but really just enjoy bumming people out—will actively speak out against positive attitudes, while others will avoid “getting their hopes up” because they don’t want to be disappointed.

But, if Bullard’s optimism is to be believed—and we’re choosing to think it is—you have full permission to let yourself hope, at least for now.

Remember, there are a couple of things you can do to bolster your immune system without medicine during this time. One of them involves keeping a positive outlook, and the other one is eating plenty of garlic; we’ve found that one accompanies the other.

This story was first published in our Real Estate section.

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Business Finance

Gov. Cuomo first to issue 90-day moratorium on commercial, residential evictions

(NEWS) NY Governor, Andrew Cuomo is the first state leader to put a halt to all commercial and residential payments in an effort to stem the COVID-19 crisis.

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New York Governor, Andrew Cuomo is the first state governor to put a moratorium on residential and commercial evictions in response to the COVID-19 outbreak, specifically hitting pause for 90 days in his state. This is part of a $10B relief package that includes utility payments missed during this outbreak as the state (and all states) are strained by the global pandemic.

This will not only help renters to find stable footing as so many have lost their jobs overnight, but commercial renters (like restaurants) that are worried about being evicted during a time that they were shut down by the government.

Reactions have mostly been positive, but many are still pushing for a freeze on rent, essentially rent forgiveness during this period since mortgage holders can roll their 90 days on to the end of their loan term, but renters cannot.

For many landlords, rent is their exclusive income and they have very few units, but they too will be under a mortgage freeze on their buildings under this Order, providing some relief. Not to mention Tax Day just moved from April 15 to July 15.

Meanwhile, a state group, Housing Justice for All, is calling for the rehousing of every homeless individual using emergency rent assistance and in vacant homes. They cite the risk of viral spread through the homeless shelter system, as well as viral possibilities among homeless people living on the streets.

There is no known answer in this time of being tested, but a freeze on rents and mortgages in New York will likely lead to other governors taking the same route, and renters might be able to breathe a little better soon, especially those who have lost their jobs and independent contractors whose business immediately died on the vine.

We’ll be watching for other states’ reactions to rents and mortgage payments.

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Business Finance

COVID-19: Self employed Texans get some relief benefits

(BUSINESS FINANCE) Self employed? Worried about the corona virus hurting your business? Texas says you’re STILL eligible for cash-related COVID-19 coverage!

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When I heard ‘It’s hard being your own boss’, I thought people meant employee reviews were harder to do since you have to carry both parts of a tough conversation in your home office.

Now, watching as self-employed artists, caterers, events specialists and more are struggling in the wake of the COVID-19 pandemic, the image is less ‘Ha!’ and more ‘AH!’.

It’s bad out there, y’all. And my heart goes out virtually, as per CDC guidelines. But in every viral cloud, there’s a colloidal silver lining. In the great state of Texas, that lining is: You’re probably eligible for disaster-based unemployment.

Yes, really!

Straight from the Texas Workforce Commission’s mouth: If your employment has been affected by the coronavirus (COVID-19), apply for benefits either online at any time using Unemployment Benefits Services or by calling TWC’s Tele-Center at 800-939-6631 from 8 a.m.-6 p.m. Central Time Monday through Friday.

Now how does that cover the self-employed? Simple…kinda.

You’ll need to apply through the Disaster Unemployment Assistance and then take the extra steps of providing different proof than your 9-5 friends.

Firstly, you have to prove you’re self employed. If you’ve been paying you under the table, this is where the poop hits the fan, I’m afraid. The government will need things like (any given one of these): Insurance bills, business license, a recent ad, an invoice, or sales records.

Were you just about to start your own business when all this went down? Fortunately you’re covered too, so long as you have proof of prospective self-employment, say: The deed to a building you just bought, loan documents, ‘Grand Opening’ announcements, and so forth.

For the full list of documents that suffice, visit the TWC site directly and check what proof your pudding needs.

This situation is a Corona-cluster-cussword, but there’s help out there.

Reach out. Grab it. And then wash your hands.

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