113. Speed Up Financial Independence Through a Side-Hustle

October 10, 2019

“Achieving freedom opens up a lot of options to take risks with your career.”

Your side-hustle can help you achieve financial independence if you approach it with clear goals and take intentional steps.Kim, who writes at The Frugal Engineers, had a thriving corporate career and a side-hustle in a field of work that she loved.

Kim’s initial inclination for the moonlighting gig may have been to explore other things that she could do within the field. But with a clear financial goal driving their decisions, her side-hustle sped up her and her husband’s path to financial independence. Within a few short years, Kim and her husband managed to leave their corporate careers and transitioned into self-employment debt and mortgage-free.

Highlights of Episode 113

  • Key actions that Kim and her husband took to achieve financial independence
  • How they were able to pay their 15-year mortgage in 3 years
  • Why insurance coverage holds people back from self-employment and how Kim and her husband manage their family’s insurance
  • How Kim took advantage of inexpensive and free resources to help build her freelance career
  • How Kim mitigated the risks of leaving corporate employment to transition to a freelance career

Mentioned in this episode

A few highlights from this conversation:

I started my side-hustle on nights and weekends. My side gig was paid by contract or by the project. And it was the kind of work that the more you do it, the faster you become. So something that used to take me ten hours would now take me three hours after two years of doing it over and over. So it got to the point where with the rates they established, I was making more with my side job than my day job. So I eventually dropped the day job.

My advice for any freelancer is to have a really good picture of your living expenses every month. Because you won’t know how much you need to work if you don’t know how much it costs you to live your life. If your family is spending $4,000 a month, well, you know that you’ve got to make more than that because you have to cover taxes and business expenses on top of it.

We wanted to get our expenses down as low as we could. You hear stories about startups where they’re all eating Ramen and sleeping on air mattresses. We were not that intense. But the biggest thing was our mortgage. We had a 15-year loan in Florida. I think it was about sixteen hundred dollars a month. And I said I don’t want to feel like I have to work to cover this every month. So for those two years that I was working the day job and the side job, we took one hundred percent of my take-home pay from my day job and my side-job earnings and put those into the mortgage. We lived on my husband’s income.

When you look at your pay stub from your day job, you can see how much you’re paying for your employer’s coverage. Sometimes, for a family that can be as much as $700 a month. But you don’t see it because it doesn’t get deposited into your bank account. You are paying it out of your total compensation. When you become a small business owner, you’re looking at the total compensation. You’re looking at everything that you’re bringing in and what you’re taking out. If you’re a small business owner, you can deduct the cost of your health insurance so you don’t pay taxes on that just like your employer didn’t pay taxes on it when they gave it to you.

Earlier this spring I decided I wanted to write about our story. It was with the mindset of I’m talking to my two best friends who are still working full-time in engineering but they’ve got families now and their priorities are changing. And so I said, I just want to tell people how I followed the prescriptive path of my mentor. I want to tell people exactly what we did so that they can see that this is possible. And that you’re not stuck with the kind of job that society tells you you’re supposed to have. And how you can actually do that numbers-wise. So I started writing and it kind of made a splash pretty quickly, especially among women Engineers. That was a nice surprise.

There are different levels of financial independence. The first thing for us was paying off our regular debt, like our credit cards and student loans. And then after that was paying off the mortgage. That’s the big thing. I mean our parents still have mortgages and they’re technically retired. So having that kind of freedom is knowing that you’ve got a place to live forever and you don’t have to make payments to the bank anymore. That opens up a lot of options to take risks with your career.

Subscribe to Second Breaks

or search for “second breaks” wherever you listen to podcasts.

*This uses my Amazon affiliate link. Your purchase using this link earns me a small commission. Thank you so much for supporting the podcast!

Get smarter, wiser, and bolder about midlife.