Checking In With My Savings Plan: February Edition

In February, I received $3,330.38 in freelance payments. Here’s what I put into my sub-savings accounts:

Taxes got 20 percent, or $666.08.

Debt also got 20 percent, or $666.08.

Savings got 10 percent, or $333.04.

This left $1,665.19 for my checking account.

That’s not enough to cover my $1,800 overhead expenses, and I ended up taking $1,000 out of savings to make sure rent/bills/debt payments were covered.

What happened here? A few things:

In January, one of my bigger clients closed up shop (this is also why January’s earnings were slightly lower than usual).

I spent a big part of February hustling for work and (successfully) landing a new client, but I also ended up with a lot of outstanding paychecks; I have $1,218 in checks that haven’t arrived yet, and $2,200 in work that is close to being completed but isn’t yet finalized and invoiced, and I expect to bill about $6,400 in new work this month.

So the situation is not dire, even though it’s another reminder that freelancing is unpredictable and the hustle has to be constant.

But yeah, I had to take $1,000 out of my savings account this month (current savings balance: $3,430.28) and I feel kind of disappointed and ashamed, as if this “shouldn’t” have happened. Even though this is exactly what a savings account is for, especially when you are a freelancer.

I am also a little nervous about paying my savings account back, because—well, let’s look at it this way. If I get $5,500 in freelance payments this month, which is a reasonable expectation, it’ll split itself up as follows:

• $1,100 to taxes
• $1,100 to debt
• $550 to savings
• $2,750 to checking

If you take that $2,750 and subtract the $1,800 monthly overhead cost and the $1,000 I owe my savings account, you get negative $50.

So I can’t pay myself back all at once, unless I get more checks than I’m anticipating. That’s the problem with debt, even if it is just a debt to yourself: you have to pay back the costs of your past while you are simultaneously paying off the costs of your present.

You might remember that Friday Chat where I told Ester that I had a plan to pay that $1,000 back into my savings account, a little bit at a time. The current plan is to put 15 percent of my freelance payments into savings, which would adjust the estimated $5,500 figure as follows:

• $1,100 to taxes
• $1,100 to debt
• $825 to savings
• $2,475 to checking

It’ll take a while to pay off that $1,000 debt to myself (four months, at this rate), but it’ll also give me enough of a checking account buffer that I won’t have to spend the next few months in Buy Nothing Mode.

It did occur to me, by the way, that I could just not pay the $1,000 back. I’ll still be putting 10 percent in savings, which means I’m still saving, right? This is very, very tempting—but I really want that three-month emergency fund, and I need to get myself to $5,400 in savings to make it happen.

So that’s the plan, for now. Fifteen percent to savings until I pay off the $1,000 debt or hit $5,400, whichever comes first.

We’ll see how this month plays out.

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