A few months ago, I made the leap from full-time employee to self-employed business owner. This change involved a considerable cut in pay but a major increase in quality of life. The quality of life improvements are everything I hoped they would be, if not more. The surprise is that many of my expected expenses have gone down, making my financial situation a lot more comfortable than I thought it would be. Let me tell you about some of the differences between my expectations and reality with regard to my new cost of living as a self-employed person.
-I only spend about $30 a month on gas. This is half what I expected to spend even though gas is about $1 per gallon more than it was when I stopped commuting. I used to commute 32 miles a day; now I avoid getting into my car at all costs. With the skyrocketing price of gas, I have actually started riding the bike that had been sitting in my living room unused since last September. The bike was a free hand-me-down from a relative and it was already in ridable condition, so my only expenses were $5 for a small, underseat bag (to hold essentials like cash, ID, and a high-energy snack) and $40 for a high-quality bike lock. For things that aren't easy to bike to, like trips to the grocery store, I go as infrequently as possible (usually every 2-3 weeks). Aside from occasional classes or get-togethers with friends, the grocery store is the only place I drive to. I walk or bike everywhere else (library, bank, post office), and I do all of my non-grocery shopping online. These days, shipping costs are often lower than the cost of driving to the mall.
-I buy almost nothing. I guess some of the things I used to treat myself to were consolation prizes for the misery I felt from being exhausted constantly from an overly-long work week. It seems that the things I enjoy most are money-making, free, or low-cost: reading library books (both for fun and for article ideas), being amused by my cats, working (because I love what I do), cooking, riding my bike, listening to music, and sleeping. My most expensive activity is traveling, which I do every few months. My second most expensive activity is probably cable TV, which I watch plenty of when I need a break from working. Most of the unnecessary things I do buy are pretty inexpensive (clothes from Old Navy, for example).
-Some of my hobbies are becoming self-supporting. I recently sold some photos that I took while on vacation. The proceeds are enough to pay for another trip! Also, the monthly advertising revenue from another site I have been building for years is finally enough to fund another of my passions.
-I was able to lower my monthly health insurance premiums. I thought I already had the best combination of plan and rate, but some significant research and soul-searching revealed that I could change plans, save $100 a month, and not experience a significant decrease in coverage. This was very important as health insurance became a major expense for me when I became self-employed.
-People have given me things because they want to support my new endeavor. I am fortunate to have people in my life who think I can succeed as an entrepreneur and who are willing to show their support by helping out. I'm not talking about major gifts--I'm talking about things like someone picking up finds at garage sales for me to keep or sell on eBay, having extra grocery coupons given to me, and being loaned a parking garage pass so I can avoid the parking fees when I have to visit a crowded and expensive part of town.
Why am I telling you these things? Because maybe you'd like to be self-employed, too, but you're afraid you can't afford it. Believe that the leap to self-employment was no whimsical decision on my part--it was one I planned for and was financially prepared for, even if part of that financial planning included an acknowledgment that I might be living off my savings for a while. But you might find that in addition to the obvious costs you'll give up by working from home, like work clothes and restaurant lunches, you can save money in other, unexpected areas. And maybe those extra savings will be enough to make your dream feasible.
Photo by library_mistress
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