[Baypiggies] Thoughts on starting a career as a consultant?

[Paul McNett]

On 6/22/10 12:30 PM, Elizabeth Leddy wrote:
> +1000 on the health and taxes part. If you aren't into learning all
> about taxes, get an accountant. Whenever I get money in I immediately
> put 50% aside for taxes. You also should get your estimated tax payments
> set up if you have any kind of guessable income.

Excellent advice. Due to my entire situation, I either end up owing a lot of money to 
the IRS or getting a decent refund. Sock that money away so you don't have to borrow 
it from your savings.

I think the best thing I did when I became a consultant was to marry my long-time 
girlfriend, an educator in the local school district. She has killer health 
insurance, which extends to her spouse. In the ten years we've been married, I've 
undergone cancer chemotherapy, time in ICU, so many ct scans I've lost count, several 
operations, to the tune of something like $400K in hospital and doctor bills.

> Oh and be prepared for people to not pay on time. I've had clients that
> were on the mark and paid days later and others that dragged it out for
> 6+ months. Really business/money saavy clients know how to string you
> along. Keep a keen eye out for these types and make sure the payment
> terms are strict and clear, with penalties.

This has happened too often to me. I currently have one bill that's about 8 months 
old, and I'm still providing service because its a friend and I know he's having 
difficulties. I've had other clients where I've had to stop working to get them to 
pay. And I've had others that simply never paid me, even though I provided the service.

But mostly, I've worked with people that respect me and want to keep me happy, and so 
they tend to pay my bills almost as fast as I send them out. The mutual respect 
really feels good.

I've always been more of a conversation and handshake kind of guy, rather than 
drawing up and signing contracts. So far, all in all, it has worked out for me. I get 
to live a good life, work out of my home on my terms and when I feel like it, 
sometimes burning the midnight oil to get a project done, and feel good about what I do.

> I just started working with freshbooks.com <http://freshbooks.com> and I
> like it way better than stuff I've used in the past. I also use mint.com
> <http://mint.com> to manage which items are tax deductible - they make
> it really easy.

I use my home-brewed time and billing program (written in Python of course), Quicken 
and my long-time accountant. I'd probably use freshbooks if starting today, but can't 
really justify jumping over now, given that the status quo works.

> As for health insurance, things have dramatically changed and are still
> changing with the new legislation. I saved a lot of money (monthly) by
> switching to basically a catastrophe plan ($250/month down to $52) but I
> have a high deductible so if you can have that money in the bank shop
> around on plans. I really like this health insurance search engine and
> check often to see if I can get better rates:
> http://www.ehealthinsurance.com/
>
> I just switched over to full time contractor after doing it on the side
> for many years. I'm incredibly happy with the freedom that comes from it
> so keep that in mind when you read about all the work that comes too! :)

The life sure is great, but it takes discipline to stay on task sometimes. I find 
that when I'm overwhelmed with things to do, I'm happiest and am able to deliver most 
of what is required in the time available. But when I'm not swamped, I tend to do 
more social networking or trips to the fridge, and don't deliver simple things on time.

When you are a consultant working off site, there is nobody managing you, so you need 
to manage yourself. You may be saying "well, duh" but this has been my greatest 
struggle: staying on task, and staying billable.

Paul