Irregular Budgeting

Cheyenne: Thank you for joining us for this episode of What the Finance. There are a few things we like to mention at the top of each episode. Rachel: First, if you want to get in touch with us, you can email What_the_finance@protonmail.com or join the What the Finance Discord server. Cheyenne: Second, it would mean a lot to us if you could support our show through Patreon. Starting at $3 a month, you can get episode shoutouts, access to topic polls, and get to listen to some pretty hilarious outtakes. Rachel: Third, as we seek to be a more inclusive show, we want to acknowledge that colonialism is an ongoing process and capitalism, which we regularly decry, is part of this process. We are recording this episode on the ancestral land of the Dakota and people, and we recognize our sovereignty and express our gratitude of being here. Good morning, and welcome to this episode of what the Finance. Cheyenne and I are joined today by Andres Coca, and he is the sound designer who works primarily with podcast, but also with Film and TV. And he's joining us here today to talk a little bit about some strategies that he uses to budget when you don't get paid, uh, by a weekly or by monthly or whatever. So, I'll just welcome him to the show. Andres: Thank you. Hi. Cheyenne: Hi. Welcome. Rachel: So, I just think it's to kind of get us started as a contractor. How did you get your start doing the work that you do? Andres: I started as a musician years ago. I was playing gigs. I was playing jazz gigs and some flamenco gigs here and there. And, uh, it's always been like that. I've never really had a full-time job. I did have one for a few years because I kind of have to for visa reasons and this and that. I had a great time, but most of the time I've been a contractor. So, I started as a musician and then eventually I started working as a sound designer for advertising. And slowly I stopped doing playing gigs and doing more sound design. And I ended up studying more sound sign, which gets deeper and deeper. So, yeah, it's always been like that for me. I never got used to the full-time thing. Even though it was really nice to get a paycheck at the end of the month regularly. I didn't get used to that. So, I don't suffer too much. Rachel: I would venture to say, too, that a big difference between, um, the Netherlands, where you live in the United States, it's really just Europe at large is that your health care is not tied to your employment, mhm. So that would be a guess on my part that it perhaps on your side of things makes it a little bit. Andres: Yeah. The way that it works here, it's private and mandatory, so every month we have to pay the insurance. So, I think it's not that different from the state. I'm not sure how it works in the States though, but yeah, here we pay every month, like, uh, and something euros, depending on what you sign up for. Um, and that's it. And it is mandatory. You'll get fined if you don't have it, which is very weird to me because in Spain, where I'm from, um, it gets subtracted from your work. If you have a full-time job, it automatically gets subtracted from your work paycheck, so you don't have to worry about it. And it's taxes. It's just the taxes. So, it's not like, uh, you can also have a private one, of course, but that's your own decision. Rachel: Okay. Andres: So, you don't have to worry about. Rachel: Um, that's very much how it is in the United States as well. Andres: Right? Rachel: We did have a model for a while where you got fine, but Cheyenne, I believe that is not the case anymore. Am I recalling that correct correctly? Okay. Cheyenne: That has been removed. Rachel: I guess we just don't like people telling us what to do. Well, cool. At this point in your contracting journey, are there like, a set number of clients that you try to maintain all of the time just to help with cash flow or, um, is it a little more like laissez faire for you? Andres: I have a few clients that I almost continuously work with, but, uh, I always have new clients coming and going because a lot of what I do also is like a one-off type of thing. Like somebody does a short film and they need some help. Okay, I do that and then maybe in three years they do something else and then they come back. Rachel: Um. Andres: A bit of both, I would say. But, um, while I'm working on podcasts or while I'm doing, um, sound editing for film, I have a few clients that I'm kind of on their go to list. Does that make sense? Which is great because finding clients is not my strongest, uh, talent. Rachel: In Pod People, where you and I met. A lot of that conversation is around. Okay. I really like this work. So now how do I find clients? I think it's hard for all of us. Andres: Yeah. Cheyenne: A question that I had about that is how many hours a week would you say you work? Because for us, like a regular work week is like minimum hours. Would you say that's pretty close to what you do or more? Andres: More. I would say more. It depends on the week, but yeah, uh, more. I keep track of it for tax reasons, but I try to not look at it too much because I get depressed. I work more than hours per day. I, uh, don't know how much more in between eight and hours per day. I like it though, which is fortunate. There's nothing even when I'm sorry. Say that again. Rachel: I just said there's nothing worse than doing something that you hate. Andres: Oh, my God. I know. Of course, not every single aspect of the job that you love is wonderful, is it? But if at least most of it is something that you enjoy. I was going to say that even if I don't have a job at the moment, whenever that is, I'm also still working on passing projects or just learning stuff or coming up with things that I can do in the future. So that's why I never stop. But I think it's fairly normal in my industry. I don't think I'm special in any way for that. Rachel: You're right. Getting to the meat of the episode. If you're thinking about your cash flow with your clients, um, how are you allocating those funds to make sure that at the end of the day that your bills are still getting paid. Andres: So I have like, a very simple system in my mind. I have my expenses, which is mostly rent, and then a few hundred euros for food and whatever. And as soon as I meet that, uh, threshold, then I can relax. It's not every month that doesn't happen every month, but ideally you are saving, uh, from previous month. So I never go out and decide, okay, I'm going to spend on the money that I made these months that I don't after, uh, paying for rent. I don't do that. I think most adults don't do that. Right. Um, so you kind of like, uh, a little B or an. You keep funds for the months that you're not going to get paid enough to cover for rent and whatnot. And slowly you start building that. And then it's not so stressful. But at first it can be a bit stressful. That's why some friends that decide to leave their full-time job and jump on a freelance career or changing careers or whatever. My advice is always to build a bit of a cushion before you make the jump, because it's going to be hard. And it still is. Hopefully eventually you get to a point where it's not hard anymore, but you still never know. Rachel: Right. Andres: It's going to happen next month. Rachel: Right. And I imagine also that it depends so much on your family make up as well. Andres: Right. Rachel: Like if it's just you, right, then that cushion should increase. But if you have a spouse or a partner who is also breaking in income, that has that level of like, helping you to relax financially because you're not the only one. Andres: Right. Rachel: That is relying on yourself for sure. Andres: On the other hand, if you have kids, which I don't, uh, that's another level of complexity that you need to keep in mind. But just crunch your numbers and see what it's not rocket science. You just need to figure out, okay, how much do I need and when can I leave my full-time job if that's the situation that we're talking about? Did you answer your question? Rachel: I think that you did. Okay. Andres: Great. Rachel: And, um, you also answered the next question in the list. So we had talked a little earlier about paying taxes for health care, but are there other taxes that you have to pay? Um, as a contractor and then other ones where you're setting things aside as well? Andres: Yeah. So, you have VAT and you have income tax. So, VAT is every three months. I think this is general for the whole planet. I don't know. Um, and then you have income tax, which happens once per year, which is. I should be doing that today or tomorrow. By the way, the VA depends on the kind of work that you do, but I think for most and there's your teaching kids or something like that here in the Netherlands. And as you're teaching kids, I think you're probably going to pay %. That's the VAT. You, uh, always charge that to your client? Well, I do, but everybody that I know does that if you're not doing that right. Um, so just keep it aside, or at least keep an Excel sheet so that then you don't run out of money. And the income tax, um, is my first year doing it in the Netherlands. So, I can't really say much other than I'm scared, but it's basically the same thing you keep in mind when you charge, when you decide how much to charge for your services, you have that as a variable. Okay. Probably the bracket that I'm going to hit is I'm, uh, going to have to pay around whatever, % in taxes, and then you charge accordingly, and hopefully your clients don't run away. Uh, Excel, keep an Excel sheet with all your deets. That's what I do. That's what I try to do. Rachel: It's has been done, that's for sure. Andres: Yes. Rachel: Mhm so then were you doing income tax in Spain? Did you move from Spain to the Netherlands? Andres: Um, not really. So, I never actually worked in Spain like that. Um, I have lived all over the planet, um, for good and for bad. I was in China for a bunch of years. During a few years there, um, I had a full-time job for a couple of years. That was the easiest time ever in that sense. Other than that, because you don't want to mess with anything in China. I just had somebody that did that for me, so I have no idea how it works. So, in a way, in the Netherlands is the first time that I really have to do it as a proper entrepreneur, which is fun. Rachel: That's really the only questions that I have for you about getting paid as a contractor. Do you have anything you'd like to add? Andres: Yeah, um, I would like to recommend. Well, uh, for everybody interested in this stuff, being a contractor and a freelancer and whatnot. I'm not entirely sure what the differences are between a contractor and a freelancer, by the way, but check out a podcast called Biz Buds Mike Jenda let me look up its Tom, but I don't remember what his second name is. Anyway. Check out the podcast called Biz Buds it's very helpful. Mike Janda is in it. He also has written a couple of books. One called Burn your Portfolio that was a very, very useful book, uh, for me talks a lot about, well, this stuff that we were talking about but also other very good practices for freelancers. How to approach clients, how to deal with clients. Um, basic stuff like emails, very good practices. Then he also has another book called the Psychology of Graphic Design Pricing which is also very helpful. It looks like what he does applies mostly to graphic design but applies to everything at least creative services. So, check it out. It's very useful. Um, both he spoke on the, um, podcast. I think it can help um a lot of people certainly didn't help me. Rachel: Thank you so much for joining us, um it was a delight to have you here on the show. Cheyenne: Thank you, um yes, thank you.