With the decision to give up summer sales, I became a full time freelancer. Rather, a part time freelancer because the goal is to limit how much time I spend working until I begin MBA school in the Fall.

Although I don’t have much time under my belt being completely self-employed, I have discovered a couple of financial challenges.

Health Insurance

One of the top concerns that I have is health insurance. We lost our health insurance when I quit full time employment in April. If any of you have ever looked at COBRA, it’s cost prohibitive for most people because your employer paid most of the cost for you.

I investigated health insurance alternatives through a broker as well as some price comparison I did myself online. I could easily find insurance that was half the price of COBRA but even then, it was too expensive for us.

We are fortunate in that we’ll have health insurance when I begin school in the Fall.

Expect your health insurance costs to at least double when you become self-employed – especially if your family has a history of medical issues.

Budgeting

I’m a lists guy. I like constancy. I like stability. I like predictability.

You lose all of that when you first become a freelancer. Before, my budget worked on a set, fixed amount coming in every month. So determining how much I could spend was very straightforward.

Now that my income is variable (and frankly less), I’m struggling with how to best budget. We have some expenses that are set and happen at the same time every month – cell phone bill, car payment, etc.

But our other budget accounts, such as food, are now also variable depending on how much money is in the bank.

Honestly, it’s a disconcerting feeling.

I’ve found that I have to budget for a minimum. What’s the minimum that I expect to earn each month? What’s the minimum that I can spend on pretty much everything?

Consequently, I’m learning that our budget has to be very fluid. I can’t always use in this month’s budget what worked in last month’s budget. I have to be flexible. I have to readily change our allocations based on my expectations for the next several weeks.

Credit Cards

I’ve made some strong arguments against credit cards and a few arguments for credit cards.

I’ve spent the last few years transitioning all recurring bills to auto-withdrawal from our checking account. But since I don’t know, like I did before, that I’ll always have the right amount of money in my checking account at the right times during the month, I find myself moving everything to a credit card so that I can make one convenient monthly payment.

Let me be clear. I’m not suggesting that you live off of credit cards. But they can be helpful if you pay them off every month and don’t incur interest charges.

Your Own Space

I half jokingly told my wife this morning, “You don’t seem to understand the working part of working from home.” To which she just grinned.

With three kids and a wife who want my attention, it’s very easy to be distracted.

There are several options on where to work:

• Working out of a coffee shop – There is just something romantic about this thought. Sitting at some cafe with a laptop in front of you where the people know your name (think Cheers but without Ted Danson’s hair or ego). Of course, drinking premium coffee, or hot chocolate in my case, can be an expensive habit.
• Coworking or renting space – I also love the idea of coworking. Basically, you pay daily, weekly or monthly for access to a shared work environment. The idea is that by working around others like yourself, you can bounce ideas off of each other. Cheaper than renting an office, but far from free and only in select cities.
• Home office – Probably the most economical, but you may face interruptions…lots of tiny little interruptions like, “Daddy, can I do your hair?” or “Here’s the baby.” Time away from work can be just as costly as either of the two options above because you aren’t bringing in money. Also, you may have some outlay if you need to setup an office in your home.

Marketing

This goes without saying but I’m going to say it anyways – you have to spend time every week or day acquiring new customers.

Depending on your craft, the best methods can vary.

For example, I have a friend who is breaking into the real estate market. More specifically, he has opened a Title business to close on homes. He spends a lot of time at networking events. Most of which have a cost to join.

I recommend looking at sites like Meetup.com and LinkedIn to see if there are groups in your area that you can attend for free.

Some other marketing costs you should consider:

• Business cards
• Website
• Flyers
• Referral incentives
• Branded give-aways
• Yellow pages
• Facebook ads
• Google PPC ads

What financial challenges have you found as a freelancer?

I wasn’t really sure what to call this post. I usually have a pretty clear idea from the get-go. But not this time.

My head is a jumble of thoughts and I hope to succinctly explain myself in this post.

One of the greatest challenges that we face as adults, and especially as parents, is learning to sacrifice our wants and desires for the sake of our family. I believe that the very act of having a child is one of the most selfless things that anyone can do.

However, it’s easy to make decisions subsequent to a child’s birth that are selfish in nature. Though, sometimes we don’t realize it because we tell ourselves that we are acting in our family’s best interest.

“If this works, we’ll make a ton of money and be able to get the kids anything.”

“But I enjoy it so much.”

The hardest decision I’ve ever made

As some of you know, I am going to MBA school this fall. I was very fortunate that two of the three schools I applied to accepted me. Both of them are excellent schools. Both of them offer a unique and valuable experience. But one of them would have satiated my pride. The other offered financial security.

I struggled day and night up until the deadline to make the decision. Ultimately, I had to realize that although both options were good options, the one offering security for my family was the better option.

And the amazing thing is that I haven’t really sacrificed. I’m going to an amazing school and will have my family by my side. Is there really anything else that matters?

So when is risk-taking the right decision?

I wish I knew the answer to this question. What I can tell you is when it’s not worth it.

• If someone’s life is put in jeopardy
  I had the awesome opportunity to go skydiving before I was married. I loved it! As newlyweds, my wife and I discussed our position on skydiving and other such high adventure sports. For us, we felt that the risk of death was too high. Once the kids are out of the house, then we can take more risks. So no skydiving for 20 years. I’m not saying that you shouldn’t skydive or do extreme sports. You just need to find a line or balance.
• If someone’s health is put in jeopardy
  I don’t think you can understand the value of health insurance until you have children. Dumb, unexpected things happen. Sometimes, a not so enjoyable job with good health insurance is worth the price.
• If your family’s finances are in jeopardy
  I’m a risk taker. My wife and I have started several companies (and spent a lot of money doing it). But we always maintained a source of income. We never became a burden for someone else to carry because we wanted to try an idea out. Let me be very clear. I’m not saying to never step out on a ledge and start something great. You just need to find that line between risk taking and stupid.

Is your spouse onboard with it?

If you haven’t guessed already, this post is really for husbands. Many of us have the good fortune of having a wonderful wife that supports us. What that unfortunately means is that, at times, women go along because they are so willing to sacrifice security for us men chasing our dreams.

If you decide to put some aspect of your family at risk, make sure that you truly have her support. Just because she says, “Go for it,” doesn’t mean that she isn’t screaming inside, “What the hell are you thinking?!”

I’ll be honest, I get pretty angry when I see people making selfish decisions that put wives and children at risk. I’m tempted to start screaming. But I’ll refrain and just blog about it. Hopefully, I’ll change some attitudes.

My second daughter was born this past Tuesday. The nurses were a little concerned about her breathing and took her down pretty quick for a check-up. Like her older sister, my new little girl spent three days in the NICU. Fortunately, she is home now and doing just fine. We found it interesting that both our girls spent the same amount of time in the NICU though for slightly different reasons. Also, we had different health insurance for each pregnancy and birth.

Health Insurance #1

With our first daughter, we had health insurance that pretty much covered everything. We didn’t even have co-pays. Our total out-of-pocket was just a couple hundred dollars. Ignoring the financial benefits, what we really received was peace of mind. For example, when my wife needed the epidural, the answer without hesitation was yes. When our little girl was admitted to the NICO and they needed to run more tests, the answer was please. We certainly were mindful of not being frivolous, but we received the needed health care without sitting in the waiting room wondering how we would ever pay for it.

Health Insurance #2

My company announced last December that starting January 1st, our health benefits would be drastically reduced though the premium stay the same. The HR representative who had to tell 300+ employees about the “good changes” in our health insurance missed her true calling as a car salesman. Within two weeks of the “good news,” we received additional good news – we were pregnant. We had been wanting to conceive, so the pregnancy didn’t come as a complete surprise. This time though, we had a $4000 deductible to meet! We started saving money each month. However, there were complications early on that required 3-4 ultrasounds, medication, and extra visits to the doctor. My wife again wanted an epidural (which didn’t work). Our little girl was admitted to the NICU and given antibiotics. With each eventuality, the thought crossed my mind, “Do we really need this? How much will this cost?”

Are we just being conscientious consumers?

On several occasions during the pregnancy, we opted to forgo a doctor’s visit or prescription medication in lieu of over-the-counter options simply because we could not afford it. Fortunately, we ended up being okay without the extra doctor’s visits and medication. So, did we make the right decision? Were we just being good consumers and questioning each expenditure? Or did we risk my wife’s and baby’s health?

Are we entitled to better health insurance?

There is a health care debate raging in this nation right now. One side says, “Health care for all.” The other side says, “We agree. Just pay for it yourself.” So are we entitled to better health insurance? Absolutely. The question is, who should pay for it? One of the biggest reasons we took my job was the fantastic health insurance. We didn’t know that the company would cut back during a down economy and drastically reduce our benefits. If Obama’s plan passes, my family stands to greatly benefit from government subsidized health insurance. But in an effort to reduce my expenses and provide superior health insurance, I don’t think I have the right to expect another person’s hard work to foot the bill. I believe appropriate planning and work is the answer.

I’m not trying to be political

Though this discussion obviously has political elements. I have simply now experienced both the high and low of health insurance (discounting not having health insurance). My experiences have left me desiring better health insurance so I don’t have the financial anxiety on top of the anxiety of just being in the hospital. And that’s one reason why I’m headed back to graduate school next year to put my family in a better situation with better health insurance.

What are your thoughts and experiences with health insurance?