anxiety
I really like the money I’m making now. There’s so much of it, and it comes every week! A year or two ago now, a $500 tax bill would have really been hard to deal with. But now, with a little extra knowledge, and all this money, reducing and then simply paying my tax bill is no sweat.
Where am I going to work after this, and will I be able to get this much money? Every job I’ve ever taken has paid me more than the previous job. What if the job market is so tight that I won’t be able to get the same amount of money or more when this project is over?
And if I AM able to put away enough money to start shopping for a house, how am I going to get approved for a mortgage without having a permanent job? And how will I build my savings back up quickly enough to have an adequate savings cushion to feel comfortable taking on a mortgage obligation?
And with all of this focus on the house, how in the world are we going to have enough money to have even the simple wedding that I want?
I’ve been doing great so far, despite a weird economy and having been laid off a few months ago. But just because I’ve gotten rid of all my revolving debt, doesn’t mean that I don’t have financial concerns. My net worth is still tens of thousands below zero. I still have student loans and a car payment. A mortgage will still add to my liabilities, even though it will be secured debt. And I still don’t have enough money in my retirement savings. My financial journey is far from being over. I thought I wouldn’t have much to talk about once I became revolving-debt-free, but I was wrong - there is so much more on my horizon.
I was in your position back in 2002 - 2004 when I was saving for my home, working as a self employeed contractor.
Here is my advice:
1) Continue to work on eliminating debt while at the same time increasing your down payment fund. Basically banks like to see a healthy cash reserve and low to no debt payments.
2) Read up on SEP-IRAs, a great way to both save for retirement and shelter some of that self-employeed income from taxes.
3) Just because you are self employeed does not mean you can’t get a mortgage. However, given current credit markets you are likely to be looking for a doc loan which will mean having two years of self employeed tax returns for the bank to review. So if you started working solo later in 2007, you really start your first full solo year in 2008. So you likely will not be able to apply for a doc loan with self employeed income until after you file your 2009 taxes in 2010.
However, you can always go for a W-2 job before applying for a home mortgage and you can do that one month before applying if you are otherwise ready for the big purchase.
Wow - thanks, Boston Gal! Hopefully I’ll get a permanent job by the time my down payment savings is high enough to start shopping. But I’m going to look into your suggestions.
Comment by Boston Gal — March 12, 2008 @ 8:24 pm
From reading your blog for a while, it’s clear your smart, a hard worker, and scrappy. I’m sure you will be fine!
Thanks!
Comment by ms. m&p — March 12, 2008 @ 10:08 pm
Curious…you’re doing contract work right? What would you say is your annualized salary? Did you get the professional liability insurance?
Yup - contracting. If I did this job and these hours all year, I’d be over $90K. And I don’t have the insurance… yet.
Comment by chitown — March 13, 2008 @ 4:45 pm
Thanks for sharing.
Comment by chitown — March 17, 2008 @ 11:43 am
Hmm. Sounds like you are in a good position, contract or not.
Comment by The Frugalista Files — March 17, 2008 @ 11:14 pm