30-Day Economic Stability Challenge: Fear not the IRS

Ugh. Taxes. This year especially, when there's so much financial turmoil, the last thing many of us want to do is turn over any money to the IRS. But it's our civic duty, if we want potholes filled, teachers paid, or any other public service on which you may not realize you rely.

I'll be the first to admit it: I don't have the money to pay all my taxes on time this year. I earned quite a bit more last year and didn't save more to compensate. If you're in that boat with me, I want to encourage you to reach out to the IRS.

They aren't as scary as you think. Or at least they don't have to be.

I have friends who have made good on years of unpaid taxes, and they did it all by calling and going down to the local branch of the IRS and talking with the nice folks there.

Just like any other creditor, all they want is their money, and they will work with you to get it however they can. Here are your options:

File for an extension
I wouldn't be surprised if a record number of people do this this year. By filling out form 4648, you can automatically extend the date by which you must file your tax return.

The downside: You'll have to pay interest and penalties on the money you don't pay now, so be prepared to cough up more.

Pay what you can
If you owe $2,000 but won't have it for a few months, you can pay, say, $500 by the 15th. Then, in a few months, you'll get a big scary letter from the IRS informing you of how much you owe and pay the rest then. If you can't pay it all then? Pay what you can and wait for another bill. Or get a payment plan.

The downside: You'll get a penalty, but it won't be as hefty if you don't file at all.

Sign up for a payment plan
This is so easy it's silly. I did this two years ago. Online. In 10 minutes. And it was over with. You can name how much you pay, and have it automatically withdrawn from your account. And you may not know it, but you don't have to pay a lot monthly for them to accept it. I paid $30 a month till it was paid off, but it wasn't a burden on me and I always knew I could meet the bill.

The downside: Again, interest and penalties.

Put it on your credit card and file for bankruptcy
My accountant told me this option as a joke (I always emphasize with him that I want all my options, no matter how far fetched). But it it a legitimate option the IRS even acknowledges--the paying with credit part, not the bankruptcy part.

The downside: With the IRS, you'll pay interest and penalties, but they won't approach the 15-25 percent interest some pay on their credit cards. You're way, way better off signing up for a payment plan if you're strapped.

Have you found more creative ways to pay your taxes? Let me know and I'll feature you!

Photo by Mat Honan.

30-Day Economic Stability Challenge: Group healthcare love for the freelancer

As Randy mentioned in yesterday's post, a great way to get good coverage and avoid the perils of the individual market is to get insurance through professional organizations. I looked into this when I was searching for better insurance than the HSA and HDHP I had. Here's what I found.

The following writer's groups offer health insurance to members:

MediaBistro
For $55 a year, you can join AvantGuild, their membership arm that gives you access to articles, market guides and, oh yeah, health insurance. Rates are separated into In New York City and Outside New York City.

The good news: If you're in New York City, you get healthcare through Oxford Health Plans, IRBA plans Atlantic, HIP and GHI.

The bad news: Outside New York, you only have an option of--surprise--an HSA or a PPO Copay plan. And that insurance has a $25 million cap, which seems like a lot until you develop a costly illness such as multiple sclerosis or parkinsons disease.

ASJA (American Society of Journalists and Authors)
The yearly membership fees of this huge freelance writers' group are similarly large: $195 a year plus a $50 nonrefundable application fee and a one-time $75 initiation fee upon joining. But once you're in, you'll get discounted rates at their popular annual conference in New York, access to inside information about markets and pay rates, and other benefits. You'll also have the option of joining their health insurance pool.

The bad news: They only offer insurance in 30 states and companies still do underwriting, meaning they can charge you more if you have chronic medical conditions. Sometimes this makes the insurance so expensive, it's unaffordable.

The Author's Guild
For $90 a year, you get access to all kinds of benefits, including copyright and contract help. And if you live in New York City or Massachussets, you'll have access to health insurance starting at $334 a month.

The bad news: As the site says, "Although we offer plans for California, Connecticut, Florida, New Jersey and metropolitan Chicago, rate increases have rendered those plans unaffordable to most members. Understanding the importance of these benefits, our staff is continuously working to provide affordable group health plans for our members."

The National Writer's Union
This honest-to-god union for writers charges hefty membership fees based on income (up to $340 a year for people earning more than $45,000 annually) but it also fights for journalists' rights, offers contract assistance, negotiation assistance and other benefits. It's health benefits are specific by region (they have a California plan, and other regional plans) but it's impossible to tell from the Web site how much they cost).

Editorial Freelancers Association
For $125 for those in New York City and $105 elsewhere (and a $35 processing fee), you can join this group, which is aimed primarily at editors and copywriters. You'll get access to it's online membership directory, job list, email discussion list, and local events, as well as health insurance. They offer a variety of health plans, including the Health Insurance Plan of Greater New York (HIP, which Randy referred to yesterday), The Entertainment Industry Group Insurance Trust (TEGIT), and the discount (NOT health insurance) firm Careington International. It's unclear which areas are covered outside New York City, but it looks like some plans may cover Chicago, Connecticut, California, Florida, Texas, Arizona and Virginia. Some rates are available, in the $400 range for individuals and the $1,200-$1,400 range for families--but those rates for are New Yorkers.

The Writer's Guild of America
This group, which seems to be for television, movie and TV writers, offers members a credit union, health insurance and a pension plan (becoming a TV writer has never seemed more appealing). If you can afford the $2,700 initiation fee for a full-time member, you'll have access to all of this, but there's no detail on the Web site about how much their health plans costs, and they aren't relevant to most journalists anyway, it seems. (Randy, correct me if I'm wrong.)

The National Writer's Association
This group, which seems to be aimed at fiction writers, offers health insurance through Med Choice One, a company that seems to be a group of insurance consultants who help people find decent health insurance through the National Association of Independent Business. No information is available on their site about how much they charge or where their insurance is available.

Have you noticed a theme here? If you live outside New York City, you'll be hard pressed to find decent health insurance through any of these groups, it seems--though if you think you might qualify and want to join, do more research.

Tomorrow, I'll add a few more places to look for group health insurance, closer to home.

Photo by CarbonNYC.

30-Day Economic Stability Challenge: The case against high-deductible plans

Recently, I asked insurance broker C. Steven Tucker who should avoid health savings accounts and associated high-deductible plans. His answer?

It is my informed opinion that no one should avoid an HSA-qualified high-deductible health plan (HDHP). The longer you own one the more lucrative having one becomes. However, it should be noted that prior to age 30 the premium difference between an HSA-qualified HDHP and a more traditional health insurance plan (with all the "first dollar" bells and whistles) is almost non existent. This being the case, younger families can enjoy a more traditional health insurance plan with "first dollar" coverage for about the same premium. However, they will not have the unique tax advantages allotted to those who own an HSA qualified HDHP.

I'm going to take the contrary view on this, not only as someone who started her freelance career with an HSA and as someone who's written about them. Your mileage may certainly vary, but when I was looking at them, I had a hard time finding any critical information on them. In an effort to provide you with more information, I've compiled the following.

About HSAs and HDHPs

Here's the deal with HDHPs and HSAs: HSAs are the Individual Retirement Account of the health insurance world. They're essentially a tax-protected savings account rom which you can draw funds to cover approved health expenses. These are pretty generous: They cover everything from chiropractic to emergency room visits. However, in order to use one, you must have a corresponding HDHP. Deductibles range from $1,000 to $4,000 and premiums can be anywhere from $150 to much much more. The idea is, the money you save will be invested in the stock market according to your wishes and, when you have money left over at retirement you can use it for anything you want, not just health costs.

Sounds like a good deal, right? But let's look at the potential problems:

Not enough money

The attraction of high-deductible plans is that they are inexpensive, catastrophic coverage that can at least get you in the door of a doctors' office or emergency room. But they aren't so cheap when you really look at them:

• The saving problem: In an ideal world, you'd take the difference between what you'd pay for a full-coverage plan (in some cases, up to $1,000 a month) and what you'd pay for a HDHP ($200 or so a month) and put it in the HSA. That way, when you need healthcare, you can draw down the account without having to pay a lot if you're relatively healthy. But as I've written elsewhere, most Americans are abyssmal at saving. Unless you can save the equivalent of your annual out-of-pocket expenses (in some cases $10,000), you may go into more debt with an HSA and HDHP than without it.
• The coverage problem: The reason you could incur serious debt is because you must pay out-of-pocket for all your health expenses until you hit your deductible. The plan I got had a $4,000 deductible. I didn't have $4,000, let alone the money to meet the deductible. What's more, my particular HSA and HDHP didn't cover prescriptions. So I ended up paying $150 for a bottle of allergy spray. No kidding.
• The fee problem: Tucker says the longer you own one, the more lucrative it becomes, but that wasn't my experience. I wasn't a good money manager--I'll be the first to admit it. What I didn't count on what that most HSAs charge you fees. When I finally closed the account because I signed on to a big HMO, I expected to get $20 back. I got $0.11. The bank took the rest in fees.

The reason so many people choose HSAs and HDHPs is because they don't have $1,000 or even $400 to spend on health insurance a month. And with budgets strapped, it can seem easy to slide off on saving money in your HSA. As writer Beth Goethe shared when I asked about health insurance on LinkedIn:

It tickles me that we talk about a health care crisis in this country. The health care is not the crisis. It's a health care INSURANCE crisis. There is plenty of care, but no way to pay for the insurance. Sorry to disappoint, but medical savings accounts are not as impressive as they sound.

Tax time

Tucker says HSAs and HDHPs offer "unique tax advantages." That they do, if you have cash you want to protect from the IRS. But as a self-employed person, you might get just as much of a tax savings, or even more, from getting a high-premium, full-coverage plan if you can afford one.

That's what freelance business writer Randy Hecht argues:

Interestingly, Heather, I've learned to take the opposite approach presented by the first two posters [who advocate HDHPs], something I was taught by Bob McGarvey. I buy relatively high-end health insurance with a low deductible because it's far more advantageous come tax time. Premiums are guaranteed to be expenses you can deduct off your 1040. But high insurance deductibles/co-pays may not be. Too many freelancers treat insurance as something less than a necessity when they ought to give it the same regard and priority they give to housing, utility and food expenses. It's a necessity, and my suggestion to anyone considering a switch to self-employment would be not to do it until they were confident of making enough money to pay for decent coverage.

I've been on a HIP plan for 7 years or so by way of Media Bistro, which itself actually piggybacks on the IRBA health plan. I'm probably going to make the switch to an Oxford plan offered through the Authors Guild, but not for reasons of economizing--simply because a doctor I like no longer takes HIP but does take Oxford. In either case, my monthly insurance expense is slightly higher than a third of my monthly housing expense (though I should qualify that by saying my monthly housing expense is low by NYC standards because I bought my apartment 20 years ago). My suggestion to anyone who's shopping for health insurance is to compare the plans available from any professional associations they're qualified to join--and to get quality rather than bargain-basement coverage, both for peace of mind and for the tax deduction.

Bottom line: The fact is that the U.S. Government Accountability Office found that the average income of someone with an HSA was $139,000 and that 41 percent of people with an HSA didn't draw money from it for health costs. It was a tax shelter. If you actually plan to use it, HSAs won't be the great investment you hope it will be.

Photo by K e v i n.

30-Day Economic Stability Challenge: The great health insurance debate

I watched Sicko the other weekend. Well, I watched part of it. Okay, 15 minutes. Then I had to turn it off.

Anxiety rose up in me because I knew what the people Michael Moore interviewed experienced could easily happen to me. I'm self-employed. I'm on individual health insurance. And I discovered by reading the fine print of my renewal notice at the end of last year two things:

My insurer will increase my premium twice this year.
Once for the annual increase and again when I turn 35 and jump to the next age bracket. I'm anxiously waiting for that letter informing me of how much I'll be paying.

My insurer will review my "membership" in their health plan monthly this year, instead of annually.
Meaning? I assume it means if I get some dread disease in June, I'll be out of health insurance in July. I'm grateful I'm healthy, but I shouldn't have to be lucky. I should have some kind of decent health insurance that does what it promises it will do--cover me for any expenses that develop from a new health condition. I don't trust them. Nor should I.

Still, I know I am lucky to have health insurance, which has covered my allergy spray and treated me for an abscess on my back last year that just finished healing. If I didn't have that, I don't know what shape I'd be in now, financially or physically.

Since this blog is about serenity, I will not subject you to the blood-pressure-raising statistics about healthcare and bankruptcy. But I will say that this is such a major component of economic stability in this country that it's getting a full week of posts on the subject.

I'll cover the options available and whether you should consider them, with the help of some experts.

But today, I want to ask you two things:

How does having health insurance contribute to your self-employed serenity, however you define that?

Where do you get your insurance and do you recommend it to others?

If I get some good tips, I'll incorporate them into future posts.

Photo by allaboutgeorge.

30-Day Economic Stability Challenge: Collecting what's yours

One of the things freelancers hate the most about the business side of the job is collecting money that's owed to them. In this economy, doing it is becoming even more important, and common. So I've asked a fellow freelancer Kristine Hansen, to explain how she tries to avoid having to do collections in the first place, and then how she approaches it when she has to do it. It turns out that it's much easier than you may think--and it requires more persistence than perhaps you'd like.

Hansen is a freelance writer in Milwaukee and covers travel, food/drink and eco-living topics for many national publications. She just entered into her 10th year of freelancing. Read more about her at KristineAHansen.com.

How common has it been for you to have to go to bat to get your checks? Has it changed recently?
Having to chase down checks has, fortunately, not been something I've had to do often. I intentionally seek out magazines that seem to be viable and are committed to paying on time and in full. (Note: Having a solid network of writers who dish on their clients is key to finding them!) My first brush with a "deadbeat client" came in 2000, right after I began freelancing, and it was because the Web site I had been hired to write for filed for Chapter 11. There has only been one other instance (see below).

What happened in 2000?
I was doing a lot of writing for a Web site and it may have been because I was new to the business of freelancing, but I made maybe two calls to the subcontractor before giving up on collecting the $600 that was owed to me. Because the subcontractor pleaded ignorance but was extremely kind to me, I dropped my plea. I now realize that his demeanor was likely a ploy to put me off! If this were to happen today there is no way I would drop the matter so easily.

How much time do you spend a week on collections, would you say?
Honestly? Other than the time it takes to drop relevant info into an invoice and then e-mail it, zilch.

Would you describe how you go about doing collections: How do you track when payment is due, how soon after the due-by date do you contact the editor, and how high up the food chain have you gone?

What I would highly recommend is sending the invoice immediately after filing your story. Each publication plays by its own set of rules for how it cuts checks. The more days you wait to invoice, the more likely your check could end up in the next cycle (lots of times publications cut checks in batches). Being a day late in that cycle could mean you are waiting an additional 30 days for the money. You'll know based on the contract you sign what the terms are (ie, how many days after either acceptance or publication the check is processed) and that helps you guess when "pay day" really is. What can sometimes happen is that the editor does not receive your e-mailed invoice. So that can hold up the process.

Give your editor a few days after submitting yours before sending a follow-up message to confirm its receipt. I keep track of three kinds of dates in an Excel file:

• The date of the invoice;
• Any times I'm in touch with the editor or accounting about payment; and
• The date my check arrives.

For repeat clients, this makes it easy to determine a publication's pattern for cutting a check (in other words, how long it will take). One last thing to know is that its the accounting department that cuts the checks, and not your editor. So if your editor doesn't seem to be going to bat for you, politely ask for the name and contact info for someone who can.

What mistakes have you made with collections, and how would you advise other freelancers to avoid them?
The classic mistake I seem to make more times than I'd care to admit is to not follow up on sent invoices.

You mentioned elsewhere that you hate having to be the "squeaky wheel" to get paid. Can you elaborate on that?

Just last week, I realized that a magazine's promises to cut a check were not coming through. Every few weeks I would receive an e-mail that announced the check was en route -- but in actuality, it was not. It occurred to me that being a squeaky wheel in this magazine's "engine"
could result in a check being cut.

The good news is that it worked!

My editor had also become frustrated with the matter and while I knew she was doing her job to see that I got paid, I asked if there was someone in accounting that I could speak with. When I got this person on the phone, I calmly relayed the series of mishaps when she said that the check would go out in the next few days. I requested that the check arrive within the week and if not, I would be obligated to report this incident to the professional writers organizations I am a member of. But even as I was saying those words, realizing that they could be interpreted as a threat, I knew that I was doing what any other business owner would do.

Because freelancers are working project by project, there's a strong want to be pleasant, polite and flexible. That's hard to do in situations like this. But taking good notes on the correspondence you have had, and taking a lot of deep breaths helps. It's also helpful to view the discussions with a strong sense of
teamwork. It's not you vs. them. Getting paid is a natural step in the relationship a writer has with his or her editor.

30-Day Economic Stability Challenge: How I increased my income in nine months

It wasn't that long ago that I was working nights and weekends and still not earning enough to live on. But it doesn't have to be that way. Over a period of nine months, I went to work to change the kind of work I was doing to increase my pay, decrease my work hours and make freelancing sustainable for me.

Since we've been talking about the scary parts of finance so far--the savings, the mindset, and all the things you should have in place before you start freelancing, etc., I want to spend today talking about the good stuff: What happens when all your work pays off.

But it was work. To wit:

Meet with a consistent group.
I met monthly for a year with the same two self-employed people who constantly were urging me to move away from the movie reviews that paid me $50 a pop and the articles that paid 15 cents a word on publication. They did it gently, and kept at it until I was frustrated enough and bleary-eyed enough to listen. Then we talked about how to do it.

You don't have to have a group in place, but the key is to look for a mentor or two and set up regular meetings with the understanding that you're there to get help.

"Don't think about next month, think about November."
This was the best single piece of advice I got during that time, and it was my guiding mantra. Every time I worried about decreased income from not doing as many movie reviews, or spending time querying instead of time watching movies to review, I focused on bringing my income up in six or nine months instead of how I was going to get through next month's bills.


Focus your marketing.
I didn't have a specific income goal. The goal was simply "more than I'm earning now," which was what I needed. But I knew how I wanted to get there: I identified that I wanted to write for publications that paid $1/word on acceptance or more. Sure, it was easier to keep querying the low-paying markets that I knew were desperate for writers (guess why they were so desperate...). But I couldn't cling to them if I wanted to really make this my career. So I queried higher paying markets. I looked eagle-eyed for job ads and applied for every one I could find.

And when I got the assignment, I had to be willing to say no or negotiate if the pay was too low.

Take a class.
It was around this time that I took Erik Sherman's Planning Your Writing Business class. It taught me how to create an hourly rate. It taught me how many queries I should send a month, and how much I needed to make a day, a week and a month to support myself, including taxes. I also learned what my hourly rate needed to be.

Ask for help.
During those nine months, I often felt like I was coming out of my skin. I wasn't earning enough. I was selling old clothes and shoes and books online to make end's meet, and sometimes they still didn't. When an eroneous charge was made to my checking account, I'd call my friend in tears, because I didn't have those extra $10 to spare. But my friend always said the same thing: You will get through this. Focus on November. I know you feel like you're going to be homeless, but you won't. You will make it through.

And I did. It was amazing and a serious faith-building exercise.

Take good care of yourself.
Those serenity practices I told you about the other day? Yeah. I did those in spades. I took the advice of a dear friend who said, "You should meditate once a day, unless you're really stressed. Then, meditate twice a day." I poured my nervous self into downward dog and into my journal and into the ears of some very kind friends. And I didn't use a credit card to relieve the pressure. I just worked hard and kept forcused on November.

The outcome
I won't lie: That kind of hard work isn't for the faint of heart. I had to keep doing the low-paying work long enough to keep supporting myself--barely--but also do the additional work of seeking out and doing higher-paying assignments. I was stressed, I was scared and I wasn't convinced it would work. It might have been the hardest I'd ever worked in my life.

But when November rolled around, my income for that month was double what it had been the February before. And it kept coming up. When I'd go to my business meeting with my mentors, I often had a look of incredulity on my face. I couldn't believe it. It worked. I could take a little pressure off. I could maybe go on a vacation and I could trust that my rent would clear and I could be the one to treat my sweetie to a meal for once.

I won't say that it's been an even course. It certainly hasn't. But that focus taught me both that I never want to go back to working the way I used to, and that I had the capacity to work hard and earn a decent income. There's a saying I've heard that goes, "You can act your way into right thinking but you can't think your way into right acting." This experience proved it. I was doing low-paying work because I didn't have the confidence to do more. But by doing the hard work, I earned that confidence.

What's the hard work you need to do today?

Photo by CamponeZ.

30-Day Economic Stability Challenge: Financial planning 101

Often, people go into self-employment because they love doing what they do, says Sherrill St. Germain, MBA, CFP®, is founder and principal of New Means Financial Planning, a Hollis, NH-based, fee-only financial planning firm. She provides financial advice on an hourly, consulting basis.

"The thing is, the skills required to be a good writer or a good financial planner are often different than the ones required to run a viable business. Plus, they compete for your time and mindshare."

So how do you put on your business cap if you've never had one? St. Germain, who especially enjoys working with career changers to develop financial plans that enable them to transition to their dream job and the life that goes with it, answers some of finance 101 questions below.

If you haven't done all of them, don't panic. The point of this challenge is to learn and start applying the principles now.

Heather: How is managing finances different for a newly self-employed person than it is for people with full-time jobs?

Sherrill: Ultimately, it’s about taking responsibility for managing things previously managed, if not actually paid for, by your employer:

• Changes in the business’ ability to make money;
• Income tax withholding;
• Retirement savings;
• Health insurance; and
• other insurances, etc.

Further increasing the challenge, this usually has to be done in an environment with fewer economies of scale. So if, by self-employed, we are mostly talking about solo or very small business, that self-employed person will not be as likely to get a good a price as is offered to those buying in quantity, whether the item being purchased is insurance, widgets to be used in a product, or marketing materials.

The plus side: The self-employed have increased control over their financial destinies. In particular, as a full-time employee, you can be laid off at any time, resulting in income going from nice predictable stream to $0 almost overnight. As a self-employed (if you’re doing it right and not relying too much on any one customer), the loss of a single account hurts but you don’t go immediately to $0. Also, working harder/smarter has the potential to have a direct, fairly immediate impact on income, whereas a full-time employee may have to wait until who-knows-when to get a much-deserved raise.

What are the biggest challenges people face, and what should people do to address them before they become a problem?

It all comes down to cash flow, and I think I may have addressed how those challenges arise (probably ad nauseum!) elsewhere.

As far as what to do about it, the answer is to do cash flow projections on a frequent enough basis to catch a shortfall before it starts to cause ripple effects, such as bounced checks that result in angry suppliers no longer willing to provide widgets required for you to deliver product which results in angry customers or maybe former customers. This might be monthly, weekly, or even daily, depending on the kind of business and the size of the cash cushion.

Don’t like keeping a constant eye on the financials? Better have a bigger cushion.

What are the most common financial mistakes made by newly self-employed people?

Not doing nearly enough math to determine whether their plan will generate enough money in the time frame they need it to, in order to support themselves without a lot of angst, financial and otherwise. In my experience, people often want to shift to self-employment so bad, they avoid running the numbers (or they are overly optimistic) so as not to find out things aren’t as rosy as expected and be faced with a difficult decision.

My take: However painful it might be to delay a shift to self-employment to allow for the numbers to work, it’s always less painful than making the leap and finding out later, once thousands of dollars poorer and much more discouraged, that it won’t work. Here are some common gotchas:

• Making the shift to self-employment without enough cash to get through the lean beginning period, which can last 3 years or more.
• Not knowing how much income from the business would be enough, because you don’t know what you spend now or how it will change after becoming self-employed.
• Not keeping business and personal finances separate.
• Not keeping enough of a cash cushion in your business account
• Confusing sales (money you are paid by a client) with net income (the amount that you actually make AFTER you pay all the costs of doing business). For example, if you have a $15,000 contract but it costs you $12,000 to deliver on that contract, you only end up with $3000 as income. From that, you’ll need to pay a portion in taxes. The rest is yours to do what you like with: take as salary, reinvest in the business, whatever. But don’t plan on $15,000!
• Forgetting to set aside money for income taxes that will be due on any money you get paid, and getting an unpleasant surprise the following April.
• Not planning for the employer’s portion of payroll tax, a.k.a. the self-employment tax.
• Forgetting to save for retirement – No matter how perfect a fit your work, you will someday want or need to retire.
• Not getting professional liability, disability, or life insurance (or – God forbid – health insurance) if your family situation calls for it.
  

What advice do you give to freelancers about managing cashflow? What kind of system do you recommend?

Try to mimic the model of people with full-time jobs. That is, treat the business as a completely separate financial entity. This includes setting up a separate business checking account with enough cushion to allow for expenses to get paid during down, as well as up, periods. This might be something like $3000 – 5000 or more (depending on how big your biggest expenses are and how reliably and frequently new cash flows in.)

I also like the idea of paying yourself a salary, e.g. setting up an auto-transfer of a certain amount of cash each month (or every 2 weeks) to your personal account for use in paying the mortgage, etc. It might not be possible to do this out of the gate, but it’s a great goal, as well as a strategy for insulating your personal finances from fluctuations in the business.

In this credit crunch, do you recommend people use credit cards? Why?
I’m a big proponent of “pay it off in full every month” credit card use for both business and personal, because I so rarely see an interest rate that’s reasonable and that sticks around for long enough. In a pinch, if someone can make a clear business case for using a credit card for an expense (i.e. “I’ve done the math, and it’s going to cost me more NOT to buy this big piece of equipment than it will to pay for it + interest on the credit card debt.”), then it might make sense.

How can self-employed people make reasonable budgets for themselves? What do they need to include?

There are two ways to consider this:

Personal
If you mean personal budgets, I’d recommend they start with an inventory of what they’re currently spending, either by reviewing Quicken data or using my Career Changer’s Cash Flow Worksheet (in Excel). The worksheet has columns for before, during, and after calculations across typical spending categories, including the ones that people often forget because they don’t happen on a predictable monthly schedule, e.g. real estate taxes, vacation, etc. I’d also recommend they include a figure, maybe 5 – 10%, for “unexpected” or “one-time” expenses. Turns out these are never really “one-time” – they’re just different from year to year.

Next, they need to ask the question: “Can I reasonable expect to cover these expenses after a shift to self-employment?” (Again, not forgetting taxes and saving.) If the answer is no, then they need to take a pass through the list of expenses and decide what things they can/want to cut out in favor of opting for self-employment. Best resource for this: Your Money or Your Life, a book that helps readers sort out what’s worth paying for and what isn’t, in alignment with their values and short- and long-term goals.

Professional
The goal for a self-employed person, once the business is established, is to have a budget that is a solid, say, 10% below the average monthly income (after taxes and savings) that can reliably predicted on an ongoing basis. So for example, say you are confident the business will do well enough for you to pay yourself $4000, $1000, $3000, $7000, $1000, $2000 in the first 6 months of the year, for an average monthly income of $3000. A wise self-employed would plan to spend no more that $2700 per month. Then if things go better than expected and there’s a surplus, great problem to have: Buy those things on your “maybe” list, or further beef up your cash reserve. If they don’t go as well, you’re better positioned to survive.

Prior to getting established, you will have to cover expenses with money from other sources besides your self-employed income, whether that’s a spouse’s paycheck, savings, part-time work, or some combination. It’s important to do the math to determine how much will be needed to fill the gap and identifying where it will come from (savings, loan, etc.) before making the leap to self-employment, while you still have a chance to save more to cover shortfalls.

Anything I didn't ask that you want to add?

The number one biggest stumbling block I see with self-employeds is accepting the fact that you’re not just a writer, financial planner, marketing consultant, social worker, whatever, but that you’re running a business and need to put on your business owner hat on a regular basis. Even when you have plenty of business. This means planning time to think about things like:

• Business planning – How will I structure my business to make money? How will I monitor and, if necessary, adjust that plan on an ongoing basis before things go awry financially?
• Marketing – How will I attract enough clients to make that plan work?
• Sales – What process will I follow to ensure that those who are interested and a good fit end up deciding to go with me?
• Operations – How will I deliver on commitments made, and do it efficiently and accurately enough even when things get crazy busy?
• Finance – How do I make sure I have enough breathing room so that, if cash comes in more slowly or goes out more quickly than anticipate, I won’t suddenly be out of business?
  

…and all the rest of those things that larger businesses know they have to consider to be sustainable.

Yes, they can be done on a much smaller and more informal scale, but ignoring any of them is likely to result in financial trouble eventually.

Photo by borman818.

Next Challenge: Financial Stability

It looks like it's unanimous: We'll have a financial stability challenge, starting March 1.

Before we start, I want your quandries:

What stymies you most about finances? What stresses you out the most about the financial side of the freelance life? If you could have a personal sit-down with a financial planner, what three questions would you ask? What bigger topics do you want to see covered? Cash, credit, taxes, cashflow, savings, etc? What are your top areas?

Please respond here, or if you'd rather not have your questions logged publicly, please email me at heather at heatherboerner dot com.

Looking forward to getting it started!
Photo by luismi1985.

30-Day Marketing Challenge: Saturday Bonus Bloglink Edition

This week brought us some great marketing and query posts from around the web. Here are a few of my favorites:

Kristine Hansen at the fabulous Renegade Writer Blog shared Seven Tips for Standout Queries.

My favorite, besides going for the quirky, is to slow down:

"Take a deep breath (yoga breaths if that’s your thing) and let it sit for a day, maybe even overnight. What you might discover during your time away is an added source, or a fresh idea for a sidebar. Not only will this make for a stronger pitch but you’ll feel more confident about its idea too."

Jenny Cromie, whose blog, The Golden Pencil, I raved about yesterday, did a great post this week on whether it ever makes sense to work for free. I'd argue no, but she does a great job of breaking down the options strategically.

Then, Erik Sherman, whose pearls of wisdom I've shared several times, wrote on his blog this week about what to do when your marketing efforts fall short of expectations. In Erik's typically thorough and thoughtful manner, he gives very concrete suggestions for appraising your efforts.

I also love that he says that a 10 percent success rate on your marketing is "very healthy." I knew I wasn't the only one who thought so!

And finally, though this isn't directly about the world of freelance marketing, it is a concept that I strive to take into my marketing efforts: Taking a vow of stability. What Gretchen Rubin, in her Happiness Project blog, is talking about is monks who take a vow of stability to stay at whatever monastery they are directed towards.

She applies this to marriage (which is apt), but I'd also argue that it applies to marketing. After all, setting a bottom line for how much and what kind of marketing you'll do and then sticking to it whether it's boring or not, whether you're busy or not, is another form of stability.

And I would also argue that so doing creates a lot more financial stability in your life as well. Try it out and tell me what you think.

30-Day Marketing Challenge: Contract bottom lines

Yesterday I shared my bottom line for the number of queries I send a week. Today, I'll talk about why I have bottom lines for how much I earn and contract terms.

In my first year freelancing, I regularly took assignments that paid 10 cents a word, on publication--and I was happy to get it. I was thrilled to see my name in a magazine I'd read for years, even though I often found myself in the odd position of occasionally receiving a check for $50 and wondering what it was for. It might even buy a dinner out--but it didn't pay my bills and it left me having to churn out tons of work--and tons of queries to make ends meet.

So it shouldn't be surprised that my other marketing bottom line goes like this: Those three queries go to markets paying $1/word or more on acceptance. Period.

If I'm only going to send three queries a week, I need to make them count. Spending them on a publication that isn't going to meet my financial needs is a waste of time. I'm pretty adamant about this because I remember clearly what it was like to work nights and weekends and still barely be able to afford my rent. I don't want to go back there--and I don't want you to suffer the same fate.

Does that mean I never query lower-paying markets? Of course not. But I don't count those queries toward my weekly total. The practical reality of it, then, becomes that I accept assignments that pay less than $1/word, but I don't spend my precious marketing minutes trying to get that work. And I don't accept pay on publication work. Ever.

Limiting my querying to what I consider higher-paying markets makes my marketing life so much more serene. Suddenly, my marketing decisions aren't personal. They're professional. Just like me.

And limiting my querying to pay-on-acceptance brings me one step closer to having a guaranteed income--as guaranteed as it can be in this economy. Pay on publication is essentially an interest-free loan to your client, with no guarantee of payment. Especially in this economic climate, publications can go out of business between the time your work is accepted and the time your story is slated to run. If that happens, you're out money and a clip. I don't know about you but I'm not rich enough to provide a mini-bailout to my clients in the form of contract terms.

The payoff of this system is I don't feel like the victim of my marketing anymore. I mean, really: If you have to query, do you want to make it any harder on yourself than you have to? I don't. Bottom lines make sure it isn't.

Bottom lines eliminate from my work life the kind of unnecessary drama that comes with financial panic. I have more energy and attention to spend on my work, I'm more able to show up for my clients and have time to do the last-minute edits that are an inevitable part of this business.

I can spend my days full of gratitude for my work instead of resentment.

Just like in yesterday's post, your terms may vary. You might not get out of bed for less than $2 a word (and if that's the case, I want to buy you coffee and pick your brain). Or, you might feel that 50 cents a word is a fine fee. Whatever it is, the key is to know it and live by it.

How good are you at sticking to your marketing bottom lines? What stands in your way?

30-Day Organizing Challenge: Buddy Up

Day 17's goal: Get Help and Have Fun

Ever feel like you're on the losing end when you try to face down a pile of clutter? Maybe it's because you're doing it alone. Today, the fantastic organizer June Bell is back with another entry in her ongoing guest-blogging series on the fundamentals of organizing. This time, it's about safety--and effectiveness--in numbers. If you have questions directly for June, feel free to email her at junebell at aol dot com. Otherwise, leave a comment below.

You’ve got a friend …


A big part of my job as a professional organizer is to be an empathetic listener, a fresh pair of eyes and a low-key encourager. You probably take on those roles from time to time for a friend, colleague or partner. So if either of you needs help getting organized, you can tap one another for support.

Here are some ideas:

 Smashin’ fashion show:

Hang the contents of your closet on a clothes rack and ask a trusted friend – the one who’s French, always well dressed, or works in a boutique (or all three!) – to suggest some new outfits using the separates you own. Also ask her to flag any garments, shoes and accessories that look dated, shabby or worn. Don’t argue with her. Just discard or donate them.

 Two’s company:

If you dread tackling stacks of paper in your home office or fear getting your tax papers ready for April 15, find a friend in the same boat. Work together at your home to halve the burden of filing and sorting. Then commit to meet at his house to do the same for him.

 I’ve got your back:

There’s no one like a good friend to help you become a better version of yourself. That might mean getting you back on track when you’re slipping or helping you acquire a new, positive habit. When you’re out shopping and begin eyeing yet another black sweater, this friend will kindly remind you that you already have at least six similar items in your closet. This very same friend will, for your birthday, upload your favorite ‘80s songs onto your iPod so you can discard those dusty cassette tapes under your bed.

 Set a goal together:

If you’re both committed to reducing clutter or using a new calendar to better manage time, work together to achieve your aim. Break down the steps you’ll each need to follow to meet the goal, set a timetable for action and then check in with each other daily, every few days or weekly to chart progress. Make sure to set an appealing reward that you’ll both enjoy upon achieving your mission. Having a “goal buddy” lets you draw energy from your pal’s motivation even when you don’t feel so enthusiastic.

Next week: So much for a paperless society. Despite our reliance on (and addiction to) e-mail, we’re still deluged with paper. I’ll have some tips on how to manage it, organize it and control it.

I can vouch for the goal buddy idea. I have one of those, and have used her to help me make scary phone calls to my student loans, to help me face my taxes and other scary tasks. And I've sat there and helped another goal buddy face down the clutter on his desk. It really works.

Have you ever had a friend help you with your organizing? How'd it go? Would you do it again?

What keeps you from inviting a friend or partner into your disorganized space?

30-Day Self-Care Challenge: Day 28

Today's challenge: Say Yes to Money

Doesn't seem like much of a challenge, does it? I mean, especially right now, it seems a given to say yes to money. But maybe you're not like me.

I don't want to get into all the hippie-woo-woo things I believe about money and my own personal growth. It's not that interesting and it's not that important for this discussion. What is important is that at the end of the day, I say no to money by not working during work hours, by not doing my marketing and by not returning calls or doing my invoicing.

We all know the stress marketing causes. I know so many writers who go into this business because we want to write, not because we want to invoice... Well you know the old saw. I'm no different. I was paralyzed by the thought of calling someone and offering my services. I thought of it as begging for money instead of offering a service that might be really helpful to the client.

But it turns out I like the marketing and business side of the job. Here's why:

* I like to be organized. That's the one part of my German heritage that stuck. Alles ist ordentlich, indeed.
* I like people. Funny as it may seem, the thing I like about marketing is getting to know editors. People are just interesting. It's just a fact for me. It's why I'm a reporter. And believe it or not, editors qualify as people. I like to know what they're looking for and I find that editors like people who want to understand what they're looking for.
* I'm competitive. I want to win, even if winning means breaking into a new market.
* I'm creative. I like coming up with story ideas and trying to figure out the puzzle of the right market and the right editor and the right publication at the right time of year. It's like the ultimate brain teaser.

That doesn't mean I don't spend time on Facebook, YouTube and other sites instead of working. In fact, lately, I've been dealing with a terrible case of procrastination. It makes me feel miserable. I beat myself up for working, and when I'm sitting at my desk, I lament about what else I could be doing. Sound familiar? That's the sound of saying no to money, my friends.

So here's what I'm doing to make it work today:

* I joined an informal one-week marketing group. Through one of my favorite writers' communities, I said yes when someone asked if anyone wanted to do a friendly challenge. I've got three stories due this week and another story due next week, but if I wait for the perfect setting to query, I'll never do it. I have to jam it in here and there. I have to slip a query in between interviews, after lunch or at the end of the day. The added benefit to this is that I can't get too attached to any query because I'm busy doing other things. Less attachment means less of a sense of disappointment or rejection if the editor passes. Try it.

* I'm drafting a getting-back-in-touch email for some of my favorite editors.

* I'm looking for a marketing class to take.

* I'm following up on old queries and invoices.

What's your plan for saying yes to money this week?

30-Day Self-Care Challenge: Day 25

Wow. How quickly a month goes.

Today's Self-Care Action: Say No

My mother is a kind, artistic woman who always made the holidays warm. And she still has a bit of her mother and grandmother's pioneer spirit. Instead of buying fancy and overpriced tree ornaments, we'd visit the local craft store and buy plaster ornaments. We'd sit for hours on the dark brown living room rug as she'd train our little fingers and hands in the fine art of painting the fur on a teddy bear skying down a mountain. One year, my mother sewed stuffed dolls-from-around-the-world ornaments. We'd go, usually the day before Christmas, and buy a Christmas tree and spend the evening decorating it with lights and our homemade ornaments while my dad DJed the Christmas carols on the stereo. It was always clear to me that the holiday was about the people and not the stuff. I was very lucky.

So why am I saying no to my parents' very generous request to have me home of the holidays?

The answer is simple, but not easy: Taking care of myself this year means not overextending myself financially or socially. It's a rough decision, and one I may yet reverse should more assignments come pouring in. But as of now, I've decided the sane and serene course is to keep it simple.

This year, that means:

* Sticking to my spending plan: Part of my business plan and my monthly spending plan is a list of prioritized expenditures. I have them for my business (join professional groups, save for a conference next year, buy a more ergonomic office chair, get disability insurance), but I also have a list for my personal life. That list includes everything from a recent trip to Disneyland to saving to replace the caps on my teeth next year, to a long-planned trip to Palm Springs for my loved one's birthday in January.

But here's the thing: I love my family and I want to see them. So when they asked in August that I come to visit, I looked at my numbers, made some calculations, moved a few things around and thought I could afford it.

I accepted. And then I had to make the agonizing decision to back out. Why? Because those earlier calculations were more about my desire to see my family than my practical ability to afford the trip.

We all do it. We all want to please those we love and spend time with them. But we all know what it feels like when we go to far: We feel crazy, we feel stressed, and suddenly we're picking fights with those very loved ones and preoccupied with how we're going to replace the money we spent for a trip or a present we couldn't afford.

So this year, I'm trying something different. I'm just going to stick to my plan. Save money. Fulfill preexisting commitments. Keep it simple.

How are you making your holidays more manageable?

30-Day Self-Care Challenge: Day 6

Today's plan for self-care:

Limit my exposure to the financial crisis.

I have personal experience with financial crises. Yes, I spent years hiding in denial and having trouble paying my bills, even when I was earning more than I am now. That was less a crisis than a chronic period of mismanaged priorities.

No, what I think about as I listen, watch and read about the economy reorganizing itself is 8th grade. While I was concerned with whether to wear the acid washed shorts or the acid washed skirt to class that day, the country experienced Black Monday. I was young, and it was exciting. We had just been reading about the Great Depression and the day in 1929 when bankers were flinging themselves out windows because they had lost everything. It was morbid, but alluring to me as a young writer. What an evocative image. It told us everything we needed to know abut what was happening then.

I felt like something significant was happening, that history was being made, that what was happening mattered. I had a lot of teen angst. I felt like everything was meaningless. This reoriented me.

Not long after that, my father, an entrepreneur himself, had to close his business. There was always low-level tension in my home as my parents struggled to balance their very different approaches to money, but when his business failed, the tension broke and crisis ensued. My dad, a proud, brilliant man, took a job at a retail store to keep bringing in money. My mom, a hardworking and diligent person, buckled down and worked summers and nights. As long as I can remember, my parents have always had more than one job.

My contribution to the family financial crisis was to worry. I had insomnia. I tried to help my parents by cleaning the house and listening to their worries. I wondered if we'd keep our house and what would happen to me.

The fact was that our family was fine, but the feeling was quite different. Just like in a lot of homes today, the feeling was of imminent doom, and that heroic efforts were required to avert disaster.

I share this story not to be self-indulgent but to illustrate a point: In times of crisis, we all revert back to our earlier selves. We revert to our primal instincts, and mine is to worry. So I don't see the news today and say, "Huh. Well, I'm doing fine. Just keep swimming."

I panic. I start feeling the need to rush about and fix things. Or, failing the ability to fix the national financial markets (of which I understand little), I feel the need to exert a lot of attention and energy on worrying and thinking of the worst thing that can happen.

FOR TODAY my plan is to:

* Switch off the news, delete news emails sight-unseen and avoid the great financial blogs I read daily.
* Focus on the truth for me: I have great work, great clients, and plenty of income.
* Focus on what I can control:
-- Building my savings in case of a downturn.
-- Increasing my marketing by a manageable amount.
-- Expressing gratitude to my regular clients.
-- Diversifying clients so if one goes under, I have others to pick up the slack.

What are you doing to take care of yourself around the economic crisis?

Serenity Tip: PITA tax

I recently finished writing up a story for Yahoo! Hot Jobs on bullying bosses. For it, I had the pleasure of talking to Bob Sutton, author of The No Asshole Rule. Let me assure you that he is not an asshole. In fact, he's a peach--a peach with a foul mouth, but a peach nonetheless.

Here's what I'd like to share with you:

Ditch toxic clients

It's not a revolutionary piece of advice, but it can be a revolutionary activity, especially when we fear for our economic security in the market's downturns. But what Sutton explained to me was that there's never a good time to work for a "certified flaming asshole"--the kind of boss who doesn't respect your time, your talent or your humanity.

If you suspect your client may be a pain in the ass (PITA), consider these three steps:

1) Become AWARE of their asshole status.
Take Sutton's Client from Hell quiz.

2) ACCEPT that they are the asshole, not you.
Chances are that you've been pulling every professional tool in your toolkit out to win this client over and get them to treat you with respect. But what you're really doing is sapping your serenity by trying to control something that's way out of your control. If someone is just a jerk, that's not something that any amount of professional courtesy or spectacular work can cure.

Once you can really accept that, it's easier to do the final step:

3) Take ACTION.
Action doesn't have to mean firing the client--but I could and maybe it should. If that feels too extreme to you, do some thinking: How much would your client have to pay you to compensate for the abuse you're taking?

Need helpl figuring it out? Look at your client mix and crunch some numbers:

* How much time does this client take, both in terms of hours worked and minutes spent answering follow-ups, traveling to your client's office, number of phone calls, etc.

* How much time does this client take in terms of the amount of time you spend debriefing with your support network and thinking about this client? Those are hours you could be spending marketing yourself and working on other paying assignments.

* How much time do you spend on personal time thinking about this client, resenting this client and being mad at yourself for not being able to convince him or her that you are a trustworthy, professional worker?

Now, add up those hours and multiply it by your hourly rate.

That's your client's PITA tax. You can up it by general emotional pain and suffering if you want.

But you can also contact your client and tell them that you've revised your business plan and that your new rate for them will be $XXX.

Of course, the best option is probably to dump the client--and seeing how much time that client takes up in your work and personal time may give you the willingness to let go of them forever.

I've had clients like this, of course. My main approach with them was to market like crazy to find other clients that could replace them. I also did a lot of writing, talking and praying to be relieved of the obsession with this client and the feeling that I needed them. I also had to remember that I need to put my faith not in that client but in my Higher Power to give me the career and fulfillment I was looking for.

Recently, I watched as a freelance friend went through this process. Today, I was gratified to get an email from her saying that she has finally cut the client loose. I said to her, and I'll say to you, that it's been my experience that letting go of those clients will give her so much extra energy that her career will grow because of it.

*

Spring Cleaning Update: Reduce, Reuse, Recycle

I try never to suggest things to you that I wouldn't do myself. So when I suggested last week that you start your spring cleaning in your office, I intended to follow through myself. And I have. Today's progress:

Recycle Old Computer: check

Can I just tell you how lucky I am to have Green Citizen in my neighborhood? I drove up, the staff took the computer out of the back of the car, I paid to have the hard drive erased, and sped off. It couldn't have taken more than 10 minutes.

And now I know where I can recycle all those old ink cartridges.

Scan and Shred Old Docs: in progress

Tonight, I got motivated. Heaven knows why, but I pulled out all the files of clients I haven't written for in the past year or whom I'm fairly certain I won't be working in the future. Then I put my all-in-one's scanner to the test.

Two hours later and I have scanned in all those files and I have to say--I'm addicted. I started looking at all the other files I've kept around for years--old medical files, tax files from 2002, files for credit cards I haven't used in years--and imagined the space I could have. I wouldn't need all three of these file cabinets I have now. I could be better organized.

I have to admit, I've been reading UnClutterer's posts on the paperless office with a great deal of skepticism. I think it goes back to my newspaper background. I like to hold and touch my papers. It is comforting and more real somehow.

But c'mon. There's a limit.

And that limit is three filing cabinets in a small office at 33 years old. I can't imagine what it will look like in a year, let alone 10 or 15 years.

And now that I have my handy-dandy backup drive I don't have to.

What does this mean for my serenity? It's a little early to tell. Right now it means that there's physical room in my filing cabinet for new client folders. I know it's New Agey, but there's something important to me about making room for more work, even in my filing cabinet.

And I'm looking forward to making more.

How's your spring cleaning coming?

Serenity Tip: Spring cleaning

First, an apology. What can I say? I got bogged down with work. And if I've learned anything from tracking my time, it's that prioritizing is important. So I prioritized other things. But I've been thinking about this blog this whole time.

So! Now for the fun part:

Do you need to do some spring cleaning?

You may be asking, How is this fun?

Well, I've written here before about how clutter can steal your serenity before. Here are the two main ways:

* By clouding your clarity about your work (Where's that article I printed out again? Where are my notes? I know I wrote that person's phone number down somewhere...)
* By potentially helping you lose bills and get behind in payments. As we all know, money stress will beat the serenity out of us every time.

It's all about focusing on what you can't control instead of what you can.

So try these steps for your business spring cleaning:

* Scan in old contracts and important documents from previous clients.
* SHRED those papers and recycle the file folders for future use.
* Go through old files and make a list of potential story ideas (if you're a freelance writer, like me) or potential new markets for your business.
* Save what you need from those old papers (anything that will be useful in future marketing) and recycle or shred the rest.
* Move tax documents from 2004 and before into files marked "Destroy on XXXX." Those XXXs represent five years after the tax year. That's, I believe, the statute of limitations on audits.
* OR, scan all your tax docs into your computer and shred the papers.

And finally:

* BACK UP all those newly scanned files. Once they're on your external drive, you can delete them from your computer's hard drive to save space.

You can also use this time to go through all old material:

* Do you really need all those books you bought over the past five years? Some are probably for issues or technology that's obsolete.
* Do you have office furniture that's broken and stashed in the corner? Look up your local hauling company or list the stuff on FreeCycle.
* Sell the stuff that's good enough to sell.
* If you've replaced computer equipment in the past year, chances are you have an old CRT monitor laying around. In many areas you can recycle those, too.

Have I inspired you? What's one thing you can do to toss out the old this spring?

More on Managing Serenity During Recession

If you haven't seen it already, Erik Sherman has a very smart post about how to adjust your work worldview during a recession.

What I think is most helpful about his suggestions, which include marketing more, being less picky about projects and looking for clients that are financially stable, is that the focus is on what you can control--not what is happening out there in the world that you can't control.

We can't control our clients' work flow (when they can assign a project, for example.)

We can't control our clients' cashflow--but we can do our best to seek out clients that seem stable.

We can't control--or even really know--what pressure our clients are getting from higher-ups.

That's not our job. Our job is to make their jobs easier by being professional, upfront and enthusiastic about what we can control: the work in front of us.

It's that old 1 percent rule again.

What can you focus on today that's in your control and possible today?

Serenity Tip: Diversify

How many clients do you have? Does any one of them account for more than a quarter of your income?

If you're like most people, your answer is yes. As we head into a shrinking economy (or maybe we're already there--who knows) diversifying your clients is more important than ever. And it doesn't just make business sense. It makes sense for your serenity, too.

I'll give you an example: One of my favorite clients is also my longest-running clients. The money isn't phenomenal, but it's a steady stream of work on things I love to do. Then cut to yesterday, when I got that email. You know the one: The dear-john email:

Thank you for your years of service. We love working with you but we're taking this work in another direction and we won't be needing your content anymore.

Obviously, you could have knocked me over with a feather.

When I came-to this morning, I looked around me, at all the other amazing clients I also have. Of course it's upsetting to lose this client. I love them. They've been a true joy to work for. But this loss is not going to keep me up at nights. It's not going to leave me panicking and looking through my spreadsheets for how I'm going to make ends meet. It's not going to leave me worrying about things I can't control, like what I did wrong and how many other clients are going to go the same way. It's simply a very sad change in my workflow.

That, my friends, is serenity.

It's not getting and keeping your clients forever, because you can't do that. It's simply impossible. It's getting clients you love, doing your work with love and then looking for other clients.

This just happens to be the first client I've ever had drop me. But I guarantee you it won't be the last. It's part of the business. What was this week's mantra again? Just because things aren't going as planned doesn't mean they're going haywire.

So where are you looking for new clients? Are you prepared for your clients to leave?

Serenity Enemy: Recession Fears

If you read any portion of the news these days, you're hearing all about the iminent or current recession. It's enough to make anyone panic in their half-off shoes. And if you're self-employed, perhaps even moreso.

Yesterday, I posted to a freelance writers Web site seeking advice on how to cope with the recession, and here are the suggestions I got:

* Be choosy about which clients you take on: Stick with stable companies. Start-ups may not be the best option right now.
* Market yourself like crazy: Sales is always a numbers game, and even moreso now. Get those queries and marketing proposals out the door, and increase the number you do.
* Build relationships: You're more likely to get the jobs if you have a connection with the editor. Set aside time every week to meet with editors or other writers. Not only is this great support, but these are the folks who are going to offer you assignments.
* Don't be precious about assignments: Take what's offered. You can't always do your dream assignments.
* Build up your reserves: Now more than ever, it's important to have money saved to support yourself during down times that may be even more inevitable now. Some self-employed friends put 10 percent of every check into a prudent reserve. Can you afford that? I can't, not right now. But I am putting a smaller percentage aside.

And I would add to all of this:

* Be mindful of how *your* business is doing, not what the news says.

The last four months have been the most abundant of my short career as a freelancer. It's not hitting me yet. What is hitting me is the fear of recession and what it can do to me. There are lots of reasons for this but one of them is experiential.

My first memory of a recession affecting me was in 1987. Black Monday didn't just conjure images of the Depression, which I was studying in school, but brought real worries to bear: My dad owned his own business and it didn't take long for all his clients to dry up and for the business, funded by his retirement savings, to go under. It was a bleak moment in our family, but we recovered from it.

The important thing for me is to let go of that body memory and focus on my 1 percent: What can I control in this situation? How many queries I send, how much contact I make and how much money I save. The rest, unfortunately, isn't up to me. And the more I focus on what I can't control--the U.S. economy, my clients' freelance budngets, etc.--the less serenity I have and the less energy I have for doing my part.

What's your worry about the recession, and what's the one thing you can do today to help yourself?