“Follow your heart” is such a great piece of advice…
We preach it, and we teach it, and we sing its praises, but dreams cost money, and so does survival. Out of the two the latter usually wins, which may seem unfair. At least I thought it was. Until I learned that you don’t have to choose. You can follow your heart and fund your dreams.
To make your dreams come to pass takes sacrifice. It takes time and effort and (usually) money, but it also might mean uprooting yourself, or taking a huge risk, or abandoning security for the sake of a chance and a shit-ton of “what ifs.” We dole out the notion of “do what you love” like it’s an option for everybody, and then when it isn’t, we shrug and say nothing.
What I Learned (the hard way)
I know this because I’ve done that. High on my own “quit my job, move and write” (only for it to end disastrously), I told everybody who’d listen to throw caution to the wind and to take a chance, be courageous, embrace gutsiness, and fight for what they wanted because someone else would if they did not.
I didn’t take into account what it’s like to be a parent, or to have responsibilities to family or friends, or a community, or to not live off a line of credit like I was about to do (see:? disaster). I didn’t think about past experiences or what my friends and family’s concerns were and why. And I certainly didn’t think of how I looked, standing there lecturing like a professor about as equipped as Kramer from Seinfeld, wielding a briefcase of crackers. I was all about following my heart, but didn’t consider how I would actually fund my dreams.
We dole out the notion of “do what you love” like it’s an option for everybody, and then when it isn’t, we shrug and say nothing.
To pay for college, I had worked two jobs and lived at home. I worked at a bank and a clothing store at the mall, and my days were long and I was tired always, but it was fine. After college, I spent the first year working only at the store before deciding to quit that job and “become a writer” (despite my writing income of only about $200/month.) In short, I was an idiot. When I moved out of my parents’ house the next year, I used my line of credit as a bank account, making about $400 for every $1,200/month I was spending. What happened? I eventually landed myself right back at my parent’s home and in a shit-ton of debt.
What I Could’ve Done Instead (but was too stubborn)
But it could’ve ended differently. As I struggled to make ends meet, my friends who were in the same financial boat worked part-time jobs as servers or baristas, viewing their regular jobs as a way of funding what they really wanted to do (writing, art, music) while ensuring they could eat and pay rent. One friend described her job to me as her “dream funder.” Today, I think she was brilliant.
I don’t know what my problem was. As in, I don’t think I can narrow it down to a single issue. I was stubborn, prideful, and convinced that doing the logical thing was the “weaker” thing. I couldn’t figure out how my friends could make life work and I couldn’t, all while getting increasingly frustrated. So, I learned the hard way — I moved back home, wrote full time (whether I wanted to write or not) until I could dig myself out of the ditch I’d taken a nap in.
If someone can’t afford to do what they love, we need to know that dreams can still be pursued – because they can be funded.
Today, when I talk to teens and twenty-somethings about what they want and who they want to be, I relay the advice that I used to neglect. I tell them to follow their hearts, but to make sure they’re filling the pool — whether financial, mental, or emotional. I tell them to make sure that they’re doing something to ensure that what they’re doing isn’t taking away from the big picture.
The Pros of Not Quitting Your Day Job
And I’ll admit, there’s a certain power and freedom in having a boring day job you don’t really care about, regardless of how much you may envy friends working full-time in the field you want to be in — especially if you can just leave work at work. 5 p.m. rolls around and you owe nothing to nobody. You can freelance at night, snag company benefits, and slowly work your way into the world you want to be in at your own pace. Because I’ll be honest:? once you start doing what you love full time, it can seriously take over a huge part of your life — especially if your job revolves around the internet. Add that to the big picture.
There is no Right Way to Chase your Dreams
The bigger problem is that we believe the big picture is finite. It isn’t. Dreams vary, but unless yours is to pick up and move to Los Angeles and win an Oscar (and honestly — good luck if so), there are ways to move towards your dreams while still keeping your head above water. Do you want to write? Start a newsletter and use it as a jumping off point to pitch publications. Do you want to act? Look into drop-in classes or see what your community theatre offers. (At least to start.) Make music? If you can’t afford an instrument, play around with GarageBand or read up on the tools used by artists like Grimes (who produces her own music and is self taught). Do you want to write a book? Take an hour or two a week and write. There is no wrong way to follow your dreams. Taking your time requires patience and tenacity, it also means you’ll get to do it without wanting to scream into the night.
The bigger problem is that we believe the big picture is finite. It isn’t.
Still, maybe for you it isn’t about money. Maybe you don’t need to take small steps and can throw yourself into an industry because you’ve got the privilege of comfort. Then it’s up to you to fund your emotional and mental state. Stay sharp. Read: books, magazines, blogs. Watch the news. Listen when people who are smarter than you are talking. Soak up as much information as you can and then keep soaking it up because you have to replace what you’re expending. That’s how the best dreams are turned into reality.
Pride has no place in chasing dreams. If you love something and are sure you want to make it your life, there’s no timeframe or blueprint to follow — your dreams are on your own terms. Which means that if funding them takes a second, or sees you pause between opportunities, that’s fine. The only person who gets to dictate the terms of what you want is you. Don’t let friends stuck up on their high horses make you think otherwise.
Anne T. Donahue writes for MTV News, Refinery29, The Guardian and other publications. She is in a loving and committed relationship with Leonardo DiCaprio, even though he is not aware of that.
If you?re making money with a side gig, I have bad news and good news for you. The bad news: You have to pay taxes on that extra cash. The good news: With some creative (and legal) accounting, you might be able to turn that side gig income into a tax cut? or at least seriously reduce any tax you might owe on it.
Two tax options for side gig income
Whether you do odd jobs for TaskRabbit, clean up as an Airbnb host, drive for Lyft, or offer freelance services, any cash you pick up gets added to your taxable income. But where and how you report that side money can make a serious difference in the taxes you owe on it.
The IRS?s first choice: Just include it as another line item as ?other income.? That way, there?s nothing to think about, and you pay tax on the full amount.
A better choice for you: Treat your side gig like a business? because it is one. And that means you can deduct all of your ?ordinary and necessary? business expenses ? and put a serious dent in your tax bill.
Depending on the type of side gig(s) you have, you?ll work with either Schedule C (this cover most gigs) or Schedule E (for renting out space). Either way, it pays to keep track of any expenses you rack up in your pursuit of extra income.
Schedule C when you?re the business
Most side gigs fall into Schedule C territory, the form for reporting ?Profit or Loss from a Business.?
Any company you work for has to send you a Form 1099-MISC if you earn at least $600 during the year. If you earn less than that, or don?t get the form for some other reason, you still have to report the income? the IRS fines, penalties, and interest can be pretty steep if you don?t.
Side note: Having more income may not be great for your tax bill, but it is good when you?re trying to rent an apartment or apply for a loan.
Now come the deductible expenses ? pretty much anything you paid for to keep the gig going, attract more customers, or offer better service.? You?ll want to deduct every possible penny to shrink that income down for tax purposes. Your expenses have to make business sense for the type of gig you?re doing (like sheet music for a guitar instructor). Here are some examples of common expenses you might not realize you can take:
Home office deduction (the square-foot method is super easy)
Mileage (for driving to meet customers and other business outings)
Deprecation expense (for any equipment you use)
Education (like webinars and e-books)
If you?ve made at least $400 after deducting every expense you can think of, you?ll also complete IRS Schedule SE for self-employment tax (tax apps and programs usually do this automatically).
If you ended up shelling out more for expenses than you brought in, that business loss offsets the rest of your taxable income, lowering this year?s tax bite.
Special tips for Lyft and Uber Drivers
When you drive for a ride-sharing service, you may get two different types of 1099s (IRS forms that report payments) for your work.
A 1099-K covers any payments for driving you got directly from customers.
Form 1099-MISC reports any non-driving income, including things like referral bonuses.
Here?s the tricky part about your 1099-K: The main dollar amount on this form, found in Box 1a, is the total customer payment ? not just the payment you actually got. So you?ll need to include the ride-sharing service?s commissions and fees in with your deductible expenses.
You may also have expenses that other side gigs don?t, such as:
Bottled water and snacks (for customers)
Smartphone charges (unless you have a separate phone for this, you can only deduct the business portion)
When it comes to your driving expenses (like gas, repairs, and insurance), you?ll probably make out better using the standard mileage deduction, which is 53.5 cents a mile for 2017. Make sure to keep a mileage log that tracks all of your professional driving, including miles you drove for rides that were cancelled or trips to meet up with inspectors, just in case the IRS asks for proof.
The 14-day rule: If you live in the space you?re renting ? like many Airbnb hosts do ? you only have to report your rental income if you that space is rented for 15 days or more during the year. If you only rented it for 14 days, that?s totally tax-free money.
Any expenses directly tied to your rental income are 100% deductible. Those include things like
Airbnb (or HomeAway or VRBO) fees
Decorating the rental area
Guest towels and linens
Indirect expenses like mortgage interest, property taxes, and utilities have to be allocated between the guest-time and you-time in the house (or by area if you rent out a room or section of your home).
If you made a lot of money on your side gig and you?re not sure what you can deduct from that income, consider talking to a CPA ? at least the first year that you?re in business.
Professionals know about deductions that you may not, and they?ll be right by your side if the IRS decides to call you in for an audit.
Plus, every penny you pay the tax pro is a fully deductible business expense. That, along with how much more she can lower your tax bill, makes it an expense that pays for itself.
Michele Cagan is a CPA, author, and financial mentor. With more than 20 years of experience, she offers unique insights into personal financial planning, from breaking out of debt and minimizing taxes to maximizing income and building wealth. Michele has written numerous articles and books about personal finance, investing, and accounting, including The Infographic Guide to Personal Finance,Investing 101, Stock Market 101, and Financial Words You Should Know. In addition to her financial know-how, Michele has a not-so-secret love of painting, Star Wars, and chocolate. She lives in Maryland with her son, dogs, cats, and koi. Get more financial guidance from Michele by visiting SingleMomCPA.com.
No one is going to give you the definition of a truly meaningful life. We are simply invited, driven or compelled to create our own.
What does this mean when it comes to our jobs? Presumably, our jobs are there to provide the means of satisfying the first rungs on Maslow’s hierarchy of needs: food, shelter and protection.
What about those higher rungs, the ones that show the mind we can step outside of simply the need to survive?
What about those moments of inspiration and connection with others that speak directly to our core as human beings? Is it even possible to integrate these things into our work life?
To live a meaningful life is to live free from mindless compliance.?51% of American workers do not feel engaged at work. How do we find a job, or convert an existing job, into one that suits our life purpose and brings us joy rather than the bare minimum? How do we stay inspired even while working a job that isn?t our true calling?
Part of the journey to a more prosperous life (and wallet) means reframing the many actions we take on a daily basis. This includes the hours we spend at work. The average person spends 90,000 hours at work over their lifetime. When time is allocated carefully, we can calibrate our lives into a joyful balance of work, play and fulfillment.
The way we feel affects our performance at work. One of the first things we can do to ensure a more pleasant workplace experience is to keep the components of internal wellness in check.
It doesn?t have to be complicated. Implement a moment of gratitude first thing in the AM. Take a small pause to listen to the birds sing. Fresh food, enough sleep and moderate exercise are incubators of happiness. When your body budget is in balance, your mind can become expansive.
An expansive mind cultivates resilience, optimism, achievement and pride in one’s work. We have more control over these states than we realize. Trick your brain into a state of optimism by smiling, even if you don’t feel like it. Because of emotion contagion, these ‘good vibes’ will spill onto everyone around you, elevating the work environment. It’s a win win.
Going to work should feel like an opportunity to make a meaningful contribution to your job and world alike. When we feel engaged with our job, we feel as though we are being useful, encouraged to challenge ourselves, and able to help others.
When an employee loves the work they do, the whole office feels it too. Autonomy, learning opportunities, performance feedback and use of strengths are all important parts to the happiness equation at work. Even if you are stuck in a cubicle all day bored out of your mind, figure out ways to engage authentically with your work by looking at each task with curiosity. You might be pleasantly surprised.
Pro-tip: Even if you feel ?stuck? in a job you dislike, take small actions steps daily to get you closer to your dream job. It could be something as simple as updating your resume or something more substanscial, like?taking night classes in a subject that fascinates your mind.
Your work culture plays a pivotal role in overall job performance and happiness levels. Social elements such as trust and support from supervisors, the competency of fellow co-workers, cultural values and teamwork are all predictors of feeling purposeful at work. Having a trusted circle of friends at work is an incredible source of energy and community.
Pro-tip: Always go with your gut and ask yourself ?how do I feel?? after each day of work. Are you around people that lift you up or tear you down with gossip, or distrust? Considering the lengthy hours we spend in a workplace, the people we surround ourselves with effect the very cells of our bodies. Be wary of bad company and stick close to those who promote a kinder environment.
Having a stable job and healthy working conditions is paramount to finding your purpose. This include the nitty-gritty like salary and benefits, job stability, ergonomics, respect, fairness, and work-life-harmony. Simply put, choose a job that you would enjoy. While the journey to a more desired place of work often requires stepping stones that are not your dream job, know that these building blocks are helping you reach your long-term goals.
Pro-tip: While you are on the road to realizing your dream job, consider taking on side jobs (aka side hustles) to make some extra money and explore other outlets that could help you hone in on our long term purpose. This could entail selling items on Ebay or even renting your spare room on Airbnb. Who knows what could happen!
Companies such as Costco Wholesale Corporation are focused on employee care. ?In fact, this warehouse retailer has become well-known for its above average pay ($13.50 per hour.) Better yet, their CEO James Senegal believes that ?paying your employees well is not only the right thing to do, but it makes for good business.? He’s not the only CEO who thinks investing in people is a smart money move.
Nike created a new approach to move past old supply chain transgressions with their ?responsible competitiveness? model. They now aim to focus on the root causes of labor exploitation. They also desire to bring about systemic change to further prevent such abuses. With Nike?s new philosophy, they have become an advocate for improving labor conditions and have also moved to healthier, long-term supplier relationships as well.
Patagonia?is an outdoor clothing company, a?BCorp and a trailblazer when it comes to using business as a force for good in the world. They donated their entire $10 million Black Friday revenue towards saving the planet and have one the highest employee satisfaction ratings around.
Whole Foods is an excellent example of a company that maintains meaningful relationships with the community in which it operates. They hold ?5% days? where the store will donate 5% of net sales to a local charity, offer loans to local suppliers, and promote high environmental standards across its many stores.
Feedwas founded by Lauren Bush 9 years ago after her travels across the word. She found a huge connection between nutrition levels and academic and economic performance in communities. For every product sold from Feed, there is a number stamp on it that represents the amount of meals or micronutrient packets provided to children in need around the world.
TerraCyle takes recycling to the next level. They create national “upcycling” programs that help companies re-purpose materials that would normally not be recycled. Their goal:?prevent waste from ending up in landfills, incinerators, and our oceans.
Purpose follows passion, passion follows purpose
Achieving fulfillment in your career is no overnight endeavor. As with any worthwhile feat, a meaningful job experience requires research, discipline and dedication.
Just as eating well, sleeping well, and exercising are important, so is the duty to investigate a work experience that is a living reflection of your long-term goals.
It?s not an easy road, but don?t be discouraged?there are thousands of other people who have blazed trails for us to follow. The most important part is to just begin.
Thinking about money gives me heart palpitations. As a small business owner in a creative field, my focus has always been squarely on my work and my clients. I send invoices off at lightening speed so I can get back to the real work.
Small business owners, freelancers, gig economy worker bees: we have all purchased tickets to ride a financial roller coaster. Money comes and goes in unpredictable waves. It?s easy to think things will always be sunny when you?re riding high on cash flow. But I?ve had enough down cycles over the past 15 years to know I can?t get comfortable.
The elephant in the room for me is retirement. For years I reinvested profits into the business, figuring I could save for retirement at some future date. When my industry, along with every other, took a nosedive in 2008, I was forced to dip into my savings. Fast forward 9 years and I?ve managed to make the business profitable again, purchase a nice apartment and maintain a comfortable standard of living.
But I have saved little for retirement.
Looking back, I wish I’d set up an automatic withdrawal and investment account, even if the contributions would’ve been small. Compound interest would have been nice.
“Compound interest is the eight wonder of the world. He who understands it, earns it…..he who doesn’t….pays it. Compound interest is the most powerful force in the universe.” -Albert Einstein
… Means Playing Catch-up For Retirement
I am now having to play catch up and it doesn’t look pretty. A peek at a retirement calculator confirmed my fears.??The good news is, I’m putting my retirement decisions on a fast track.?A few years ago I opened an IRA account and because I cannot contribute more than $5,500 per year, I decided to invest aggressively by purchasing mostly technology stocks. So far that account is up a whopping 30%. It isn’t a lot of money and that’s the only reason I feel safe taking such a risk.
Next, I opened a SEP account through my business (something I should have done ages ago) and opted for a more balanced portfolio made up of low cost?ETFs. I am contributing the maximum allowable each year, which in my case is about $20,000. These are pre-tax dollars and I am counting on that compounding interest to help reach my retirement goals.?This plan has certainly curtailed my bottom line, which means I’ve had to cut back on my expensive sushi and sake habit. But I feel safer knowing the money is working for me.
When You’re Building A Business, It’s Hard To Save
When you’re busy building a business from the grown up retirement is the last thing on your mind. As free agents it is hard enough to keep track of all the tax liabilities, let alone a retirement account. It seems almost trivial. But time flies when you’re having fun and before you know it, your friend who’s been doing the corporate grind for 15 years suddenly has a nice nest egg and you have…..nothing.? I’ve had to re-calibrate the way I think about spending.
I used to pay my business expenses, taxes and living expenses, in that order. Whatever was left over was reinvested into the business. Now, after paying business expenses and taxes, I pay my retirement accounts. There is less money to reinvest in the business and less money for living expenses.
Predictably, this has made me a more careful and mindful consumer. If there is a piece of equipment that needs upgrading, I will purchase used instead of new. I have lowered my overhead by consolidating staff while taking on more work myself. I cook more meals at home and Trader Joe’s is my new Whole Foods. Living a bit more frugally has proven to be less stressful than I anticipated.
What Finally Helped
The anxiety of planning for retirement largely came from the worry that I might not be able to keep up with monthly or yearly contributions in a consistent manner. So I simply didn’t deal with it. What finally worked for me was?automating my retirement contributions. I made them realistic. I made them a fixed line item, like my monthly mortgage. Once I did that, I had no choice but to pay into the accounts.
Practically everyone is familiar with Warren Buffet’s ‘pay yourself first’ principle. When you are running a business, simply keeping it afloat seems like a tremendous accomplishment. Moreover, many of us believe our small businesses will in fact be part of our retirement plan. Unfortunately there seem to be fewer guarantees about the long term viability of any given small business these days. Industries, especially creative ones, are changing so rapidly, it is impossible to predict the value of an asset 20 years from now.
Although I’m more than a little late to the party, saving for retirement using traditional investment vehicles has paradoxically forced me to streamline my business and perhaps better prepare it for that uncertain future.
Darla Roost is a pen name for a gig economy creative professional thriving in New York City. Her dream is to share her stories and create a place where people can share theirs, too.?Photo by?Bonnie Kittle
To succeed in today’s marketplace, you have to make every dollar count. One of the best ways to do that is to look at your daily business expenses. Ask yourself if you?ve done everything possible to keep those expenses as low as possible, while not sacrificing quality, employee retention, and your sanity. Consider these five cost-saving tips when you evaluate how well you are spending your dollars.
Building and Maintenance
In most companies, the top operating expenses are payroll and facilities. How well are you using the space you have? Would it be more cost effective to move or is it cheaper to stay where you are? If you own the building and aren?t using or need all the space, you could rent out part of the space to offset the cost of the mortgage and utilities.
Take a look at how energy-efficient your building and space is and how much maintenance is necessary. You can reduce the cost of space by either finding a cheaper, more energy-efficient space, or spreading out the maintenance among some of your staffed employees who handle cleaning or maintenance.
Payroll is a tough expense to address. You want to keep your employees happy and pay them what they are worth, but high payroll costs can eat into the budget quickly and deeply. The first area to look at is overtime. If employees are consistently working overtime hours, it may be time to either add staff permanently or temporarily. Do the analysis to determine whether it is more efficient to add staff or pay the overtime.
As seasoned employees leave, try to replace them with less experienced but highly trainable replacements at a lower salary. You may be able to reduce salary increases in lieu of stock options, paid time off, or other benefits that may not affect the bottom line. For example, employees may be just as happy with less pay if they?re allowed to work from home two days a week or trade in their suits for t-shirts and jeans.
Gone are the days when everyone needed an onsite server and to pay for expensive software packages. Now, the cloud has proven more reliable and easier to manage, and cloud space is dirt cheap compared to maintaining and upgrading services. Many software companies have moved away from selling software packages that have to be manually upgraded periodically. A lot of software released now is cloud-based, so that the experts can assure their customers have the most current version.
Best of all, you may be able to use this software from anywhere, which means you can work as easily from home as at the office, or if something happens to your office building, your business isn?t compromised. You can just shift locations elsewhere.
Keep accounting costs at bay. This will ensure you meet deadlines and can avoid paying penalties and interest and take advantage of vendor discounts. Additionally, look at what it costs you to have an accountant do your bookkeeping. You may find it less costly to treat one of your reliable employees to an online accounting degree, and then move the accounting back in-house.
Never assume the rates you were quoted last year for things like cellphones, insurance, trash service, or landscaping are still the best rates today. Make it a practice to at least once a year shop around for a better price. Remember to compare similar services in your analysis or you may end up paying more.
Keeping your day-to-day operating costs low means analyzing each income statement line item and asking if that is the best you can do and still maintain a healthy work environment that promotes growth. Start with these five tips, but do not stop there. See what suggestions your employees have as well. They may surprise you.