Are freedom and security mutually exclusive?
July 17, 2010 11:52 AM Subscribe
How can I start saving and investing money under the unstable circumstances of my career path and the state of the economy?
My job history in brief: After I got my bachelor's (anthropology) I found myself in a poor economy with few opportunities, plus I had this idealistic attitude that I should ignore practicalities and follow my dream of being a fiction writer. For about six years I lived a pretty carefree life in which I focused on fiction and took meaningless day jobs (in my area of the country, which has been economically depressed for years, that meant telemarketing mainly). I ended up poor and bankrupt. Then I returned to school for a master's in creative writing and ended up moving to an economically thriving area. I got the degree and made connections in the writing field, and have since worked as a journalist at an alt-weekly and the arts editor of a slick local lifestyle mag. These were W-2 jobs with health insurance and everything. Then I was laid off from the second publishing job and I went freelance and pretty much wrote and edited anything anyone would pay me for. My fiction dream died on the vine. I ended up completely burned out on writing right when the economy crashed.
I then got lucky with a grant-driven nonprofit job, which was temporary, and then the 2010 census. There was a gap of about three months there where I lived off savings. It's been more than two years since I did anything writing-related, due to burnout from having to hustle as a freelancer, and the fact that the market for professional writers has pretty much collapsed.
Now the census is almost over and I will qualify for unemployment. The job market in my current area is no longer thriving -- just like back home, all there is is telemarketing. Also, I've really started to hate living in the city I live in. But that's another question's-worth of conflict.
I have the impression that the new normal in today's economy is to job-hop as I've been doing. I also enjoy the freedom that comes with self-employment and short-term employment. But I would like to build a nest egg for the future.
Is it possible to invest and save as self-employed, or should I buckle down and look for a long-term job? If I can save as a self-employed person, can you point me toward some resources for how, or suggest good strategies?
Is a long-term job at all possible to get these days? Or is the bumpy road of contracts, layoffs, and temp jobs indeed the new normal?
My job history in brief: After I got my bachelor's (anthropology) I found myself in a poor economy with few opportunities, plus I had this idealistic attitude that I should ignore practicalities and follow my dream of being a fiction writer. For about six years I lived a pretty carefree life in which I focused on fiction and took meaningless day jobs (in my area of the country, which has been economically depressed for years, that meant telemarketing mainly). I ended up poor and bankrupt. Then I returned to school for a master's in creative writing and ended up moving to an economically thriving area. I got the degree and made connections in the writing field, and have since worked as a journalist at an alt-weekly and the arts editor of a slick local lifestyle mag. These were W-2 jobs with health insurance and everything. Then I was laid off from the second publishing job and I went freelance and pretty much wrote and edited anything anyone would pay me for. My fiction dream died on the vine. I ended up completely burned out on writing right when the economy crashed.
I then got lucky with a grant-driven nonprofit job, which was temporary, and then the 2010 census. There was a gap of about three months there where I lived off savings. It's been more than two years since I did anything writing-related, due to burnout from having to hustle as a freelancer, and the fact that the market for professional writers has pretty much collapsed.
Now the census is almost over and I will qualify for unemployment. The job market in my current area is no longer thriving -- just like back home, all there is is telemarketing. Also, I've really started to hate living in the city I live in. But that's another question's-worth of conflict.
I have the impression that the new normal in today's economy is to job-hop as I've been doing. I also enjoy the freedom that comes with self-employment and short-term employment. But I would like to build a nest egg for the future.
Is it possible to invest and save as self-employed, or should I buckle down and look for a long-term job? If I can save as a self-employed person, can you point me toward some resources for how, or suggest good strategies?
Is a long-term job at all possible to get these days? Or is the bumpy road of contracts, layoffs, and temp jobs indeed the new normal?
There are plenty of private 401k and IRA accounts that you could set up for yourself. You could even move the money into a corporate account if you get a steady job and want to use the company retirement plan.
Nobody is happy with their prospects in the job market right now. We are all just going to have to deal with it for a while longer. If I were you, I would look for a long term job, but I would take whatever I could get until I find one.
posted by twblalock at 12:21 PM on July 17, 2010
Nobody is happy with their prospects in the job market right now. We are all just going to have to deal with it for a while longer. If I were you, I would look for a long term job, but I would take whatever I could get until I find one.
posted by twblalock at 12:21 PM on July 17, 2010
Welcome to today's economy, where a heckuva lot of us (me included) are in the same leaky boat. If it's any comfort to you, a lot of people are asking this question.
In regards to self-employed savings plans, among others there is the SEP-IRA - a self-funded, tax-deductible IRA. IANAFA (financial advisor) so you might want to consult with one about your options.
There are jobs with bennies out there but not as many as there were, and there is a lot of competition for them. I think self-employment, well done, is actually a great option, depending on your circumstances. What you need to do, though, is have a thorough business plan before you start your self-employment gig. Local Chambers of Commerce usually offer classes and business plan help for little cost. My own local CoC is awesome. Also there is Score.org for small business mentoring - equally awesome. Good luck!
posted by Rosie M. Banks at 12:42 PM on July 17, 2010
In regards to self-employed savings plans, among others there is the SEP-IRA - a self-funded, tax-deductible IRA. IANAFA (financial advisor) so you might want to consult with one about your options.
There are jobs with bennies out there but not as many as there were, and there is a lot of competition for them. I think self-employment, well done, is actually a great option, depending on your circumstances. What you need to do, though, is have a thorough business plan before you start your self-employment gig. Local Chambers of Commerce usually offer classes and business plan help for little cost. My own local CoC is awesome. Also there is Score.org for small business mentoring - equally awesome. Good luck!
posted by Rosie M. Banks at 12:42 PM on July 17, 2010
With the usual caveats—IANAFP, etc.—I'm a fan of Treasury Inflation Protected Securities. TIPS can be bought in multiples of of $100 up into the millions for terms of 5, 10, or 30 years and can be held to maturity or sold at any time on the secondary market.
"Treasury Inflation-Protected Securities, or TIPS, provide protection against inflation. The principal of a TIPS increases with inflation and decreases with deflation, as measured by the Consumer Price Index. When a TIPS matures, you are paid the adjusted principal or original principal, whichever is greater.posted by ob1quixote at 12:45 PM on July 17, 2010 [1 favorite]
TIPS pay interest twice a year, at a fixed rate. The rate is applied to the adjusted principal; so, like the principal, interest payments rise with inflation and fall with deflation." —treasurydirect.gov
My view of the world is that things may go deflationary for a while, driven by massive unemployment and the resulting shrinking supply of cash... your best investment in that type of environment is literally to have cash in a safe location... (a safe deposit box).
Eventually though... we'll pull out of that because there will be a massive stimulus to try to reverse the effects.... and that point you take your cash (assuming you haven't needed to spend it all) and buy bonds, etc.
Timing is everything. Think about preservation of your wealth first. Make sure you are comfortable with the amount of risk you have to take in order to earn a profit should you decide to invest.
Alternatively, I'm likely wrong... you've got everyone's opinion to read if that's true.
posted by MikeWarot at 2:35 PM on July 17, 2010
Eventually though... we'll pull out of that because there will be a massive stimulus to try to reverse the effects.... and that point you take your cash (assuming you haven't needed to spend it all) and buy bonds, etc.
Timing is everything. Think about preservation of your wealth first. Make sure you are comfortable with the amount of risk you have to take in order to earn a profit should you decide to invest.
Alternatively, I'm likely wrong... you've got everyone's opinion to read if that's true.
posted by MikeWarot at 2:35 PM on July 17, 2010
Okay, so I'm going to suggest a somewhat weird idea -- this is probably not the time for it, but I think having it as an option might just give you some hope if/when you feel like you have no options.
If you're up for it, make a list of a bunch of foreign countries. The cheapest ones that you're actually interested in or curious about and might actually like to live in. Save some money, get a visa (and a debit card) and hop a plane. Find a living situation in a lovely place -- whether that means a city to you or the mountains or the beach -- and work remotely. As an American, you will be in demand, and you'll be competing with foreign workers on a more level scale. I don't know how absurd this sounds, but really - there is a lot of freelance work (especially if you're not picky about what you write for money) and you will most probably be able to save without even having to work full time. Which is my whole point: it will allow you to get back to the writing.
I honestly would not say this if you were not a writer or had very marketable skills besides writing (which is in any case done remotely), or even if you just liked the city you're in. You don't have to keep fighting the wrong battle, is all. Once you have more savings, a better resume, or a novel you're proud of - you can come right back... although who knows how the experience might change you / your plans.
Your degree in anthropology also makes me feel like you'd be up for something like this without being unrealistic about it. I mean cheap living has its own price... but if it feels like a fair deal you should look into it.
posted by mondaygreens at 4:01 PM on July 17, 2010
If you're up for it, make a list of a bunch of foreign countries. The cheapest ones that you're actually interested in or curious about and might actually like to live in. Save some money, get a visa (and a debit card) and hop a plane. Find a living situation in a lovely place -- whether that means a city to you or the mountains or the beach -- and work remotely. As an American, you will be in demand, and you'll be competing with foreign workers on a more level scale. I don't know how absurd this sounds, but really - there is a lot of freelance work (especially if you're not picky about what you write for money) and you will most probably be able to save without even having to work full time. Which is my whole point: it will allow you to get back to the writing.
I honestly would not say this if you were not a writer or had very marketable skills besides writing (which is in any case done remotely), or even if you just liked the city you're in. You don't have to keep fighting the wrong battle, is all. Once you have more savings, a better resume, or a novel you're proud of - you can come right back... although who knows how the experience might change you / your plans.
Your degree in anthropology also makes me feel like you'd be up for something like this without being unrealistic about it. I mean cheap living has its own price... but if it feels like a fair deal you should look into it.
posted by mondaygreens at 4:01 PM on July 17, 2010
Given your goals and limitations, Ramit Sethi of iwillteachyoutoberich.com may be exactly the guy you're looking for.
His money advice and strategies are different from anything you've heard or read, and they work. He can occasionally be snarky and irritable, but don't let that put you off. He gives you concrete, step-by-step ways to invest, save money, and earn more.
None of this will take over your life. The explicit aim of all his advice is to get your money working hard with the least effort on your part, so that you can live your best life.
I'm not a paid spokesperson. At my advanced age (53), I've learned dozens of ways from iwillteachyoutoberich.com to use my money better, and I'm looking at retirement in a few years with confidence.
posted by Srudolph at 4:52 AM on July 18, 2010 [1 favorite]
His money advice and strategies are different from anything you've heard or read, and they work. He can occasionally be snarky and irritable, but don't let that put you off. He gives you concrete, step-by-step ways to invest, save money, and earn more.
None of this will take over your life. The explicit aim of all his advice is to get your money working hard with the least effort on your part, so that you can live your best life.
I'm not a paid spokesperson. At my advanced age (53), I've learned dozens of ways from iwillteachyoutoberich.com to use my money better, and I'm looking at retirement in a few years with confidence.
posted by Srudolph at 4:52 AM on July 18, 2010 [1 favorite]
This thread is closed to new comments.
Are you asking about options for saving extra money you have or asking about how to get extra money to save? If it's the former and you can scrape together $1000 for the minimum investment you can open a Roth IRA with the Vanguard STAR fund.
posted by ghharr at 12:15 PM on July 17, 2010