What Exactly Is $70,000 in Freelance Income?

What does $70,000 mean? (www.inkthinkerblog.com) —  A whole heck of a lot of work, that’s what! But seriously, Susan asked and I’m glad someone is interested because I’ve been thinking I should break this down for you folks who (a) don’t believe I did it, (b) don’t believe it’s possible, or (c) want to do it, too.

Susan said…

Since you’re so open with your financials, I’m curious where the bulk of that income comes from. If not from blogging, then from speaking? Or print work? Or consulting?

I think we all know that it’s tough to get rich relaying on blogging or consumer pubs, after all.

Here’s where that $70,000 came from:

• Blogging, ~$1.5K — Including base pay and traffic for paid blogging and ad revenues for my own blogging
• Editing, ~24K — Mostly oncology clinical research articles, but also books, websites, and miscellany
• Copywriting, ~$8K– Websites, brochures, etc
• Writing for publication, ~10K — Print and online mags, etc
• Resume writing, ~$24K — This was all since May, btw. If I did it independently rather than through a company and maintained the same workload, I would make literally twice this much (which, btw, is part of the plan for next year: more independent resumes!)
• Other, ~$3K– random other writing, consulting, etc.

For the sake of simplicity, projects that combined consulting with copywriting are under copywriting rather than breaking it out. Whatever the dominant task was determined where the money was categorized. So in other words, blogging and writing for publication make up a mere 16.4% of my freelance income.

Now, where does the money go? Well, at my old job, the salary was only about 75% of my total compensation package, so let’s use the same proportion. If you take out 25% of my freelance income to cover taxes (which in my case is 15% of 93% of my income, or 13.95% — I don’t know why they don’t just say that in the first place), vacation time, sick leave, and health insurance (which, btw, is costing me way more than it was at the old job — $574 a month!!!), you get only $52,500. Oh, and retirement matching. I don’t get any of that, and I haven’t been saving for my retirement since I became self-employed, which I really need to start doing.

Then, factor in overhead expenses: phone, Internet (absurdly pricey out here in the boonies, where satellite is the only option and high-speed costs several pints of blood and your first and second born, or $200 a month on top of the $700 dish), Efax, website hosting, postage, PO box, electricity and mortgage (based on percentage of the home used for office space), business cards, advertising, office supplies, and of course the not-so-cheap computer parts, etc… Not to mention travel, conferences, subscriptions, and training that would all be covered by an employer. Average it all together and we’re talking somewhere around $500/month x 12 months = $6,000.

So after that, I get a measly $46,500. Yeah, I’ll definitely be getting a refund on mileage, tuition, and my overhead and other expenses, but that’s a lot of money to shell out throughout the year! And there’s a lot I don’t get back. So the bottom line is, I got a raise in take-home pay from my “real job,” but I’m not exactly rolling in dough. Hence, my new goal.

To follow: what I’m going to do to reach that goal.

Tags: freelance writing, freelance income, self-employment, finances, goals for 2008, taxes, overhead expenses

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