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The Psychological Trap of Freelancing

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Re: The Psychological Trap of Freelancing

#161

Post by mtberatwork »

gk1 wrote: post #148
OJFord wrote: post #70

Earlier quoted context omitted.

> My total pay in the first year was about 30% higher than when salaried With or without benefits/bonuses/... factored in?

Not the person you asked, but... Yes. If you do things right and get a little lucky, you can make much more as a freelancer or consultant.

> If you do things right and get a little lucky, you can make much more as a freelancer or consultant.

In the short term, but is it reproducible for the long term? How does the 10, 20, 30 year outlook look like? From my vantage point, it seems that most freelancers have pretty short shelf life.

Re: The Psychological Trap of Freelancing

#162

Post by nightski »

icedchai wrote: post #152
nightski wrote: post #147

Earlier quoted context omitted.

I wasn't trying to overthink. But the market is volatile at the moment and the next decade is rather uncertain. Thinking you can just throw your money in and get 7% over the next decade and get to $1M may not be the best strategy. We aren't talking about losing sleep over volatility here. We are talking about a situation where someone specifically wants to hit $1M in a decade.

The past decade was also quite volatile. So was the previous. Volatility is normal and timing the market doesn't work, so DCA in and forget about it.

I'm not suggesting one time the market. We've been in a huge bull run in the last decade volatile or not. But if you are shooting for $1M in a decade you might want to think about asset allocation more carefully than 100% in the market. That's all I am suggesting. I agree for the portion you are allocating to stocks, DCA in and don't try to time the market.

For example, I put several thousand in a Vanguard TR Fund in January of last year. It's still down 2% overall. Now on a 30 year horizon, no big deal. But for a decade that will significantly impact the compounding returns. Stocks are very volatile and may not be real desirable for a 10 year time frame.

Re: The Psychological Trap of Freelancing

#163

Post by icoder »

Spooky23 wrote: post #117
pointillistic wrote: post #115

I am a "freelancer". I have discovered that billing by the hour is the worst idea. It creates the inherent conflict. Clients start resenting how much time it took you, etc. Instead always bill per job, unless impossible to estimate. Determine value acceptable to you and the client. Agree on lump sum and let chip fall where they may. Sometimes client wins, sometimes you win, in the end it all events out. More importan…

Fixed fee is great as long as the scope is limited. Whenever I've hired companies to do stuff on a fixed fee basis, they typically lose due to unforseen circumstances.

One of my clients said the other day: "When working with a fixed fee there's always 1 party that 'loses'". I tend to agree, either it ends up more work than expected (freelancer loses), or (although in your experience that's less common) the freelancer learned from previous mistakes and overcharges.

In addition, the upfront cost of specifying the job is also lost. This is not always trivial to 0do upfront, as both the world, insights, etc change over time (hence many have moved away from the waterfall approach).

Re: The Psychological Trap of Freelancing

#164

Post by mtberatwork »

pault wrote: post #29
demircancelebi wrote: post #20

After freelancing for a few years, I decided that it was not making me happier, since: - It is not possible to create significant wealth by freelancing - I work on things I do not care. I want to think/spend time on important things - Chasing down payments is stressful - Finding new clients requires some effort Therefore, I decided that it would be much healthier for me to get a job that pays well and not work as a f…

Have you considered going hourly with a staffing agency? A senior developer can charge a three figure hourly rate and if you aren't known in the industry an agency can place you at companies that can afford to keep you working full time. I've always gone above and beyond at my salaried jobs because I find the work gratifying, and I've been thrilled being able to charge for those extra hours. I doubled my yearly incom…

> medical insurance is a relatively minor expense

Many more "expenses" than just health insurance. Retirement, health insurance, business insurance (e.g. E&O), federal/state/county taxes, accountants (you need one), lawyers (perhaps), etc...that $200K/year salary dwindles fast (assuming you can maintain that year after year).

Re: The Psychological Trap of Freelancing

#165

Post by brudgers »

nightski wrote: post #136
newroman wrote: post #128

Earlier quoted context omitted.

you done goofed if you're saving at 2.2%, he means investing in the S&P500 or the likes

While it's true the market has given guaranteed returns well north of 2.2% average for 30 years or more (the single worst 30 year period would of been higher than 2.2% average). However, when you cut that down to a decade it changes the picture significantly. There are decades where you could of actually seen a loss. So without giving financial advice, I'd say it's more complicated than throwing it in an index fund i…

With ongoing contribution plans like retirement accounts, the thirty year average returns are relevant to a sixty year contribution cycle: Assuming no back loading (later contributions larger than early contributions). With a back loaded cycle, dollar by dollar thirty year averages require a greater than sixty year investment cycle.

Even a ten year average returns is typically going to require more -- a cycle longer than twenty years. Financial services are sold: caveat emptor.

Re: The Psychological Trap of Freelancing

#166

Post by andyidsinga »

porker wrote: post #107
photoguy112 wrote: post #28

I went from hourly, to per project, to weekly billings. When I charged hourly I ended up working A LOT more than 9-5. Per project work was good but I ended up losing a lot of prospects in the quote. Since many of my projects ran into the 20-40k range, my closing rate was 1/10 (already pre-screened, what I deemed as high quality prospects). This made me feel like crap. Instead of per project, I decided to increase the…

> I went from hourly, to per project, to weekly billings I have tried all three, read all the HN favourites on why value pricing is the way; tried charging for roadmapping; and yet I come back to the most stressful of day-rate (hourly by any other name), unable to break this in 15 years of technical consulting. Why? Because with per project billing I was losing 30-50% as client expectations were different to mine. Wh…

> It feels like I am missing something obvious

I'm not sure if you're missing something obvious ..this is HARD, I totally know what you're feeling like.

I was talking with a buddy other day ago (also a consultant); I was grumbling about how clients have "urgent" projects and then proceed to sit on the project proposal for a few weeks...

His response went something like this: "look, there are reason's why consultants are called in to work projects - and those reasons are not that they are well organized, well equipped, well funded ..etc etc". Oddly, that made me feel a bit better.

Re: The Psychological Trap of Freelancing

#167

Post by brudgers »

porker wrote: post #107
photoguy112 wrote: post #28

I went from hourly, to per project, to weekly billings. When I charged hourly I ended up working A LOT more than 9-5. Per project work was good but I ended up losing a lot of prospects in the quote. Since many of my projects ran into the 20-40k range, my closing rate was 1/10 (already pre-screened, what I deemed as high quality prospects). This made me feel like crap. Instead of per project, I decided to increase the…

> I went from hourly, to per project, to weekly billings I have tried all three, read all the HN favourites on why value pricing is the way; tried charging for roadmapping; and yet I come back to the most stressful of day-rate (hourly by any other name), unable to break this in 15 years of technical consulting. Why? Because with per project billing I was losing 30-50% as client expectations were different to mine. Wh…

When I added 30-50% to the prices, I didn't win the jobs.

That smells like a market segmentation effect where you're working in a market segment where normal is "part of how consultants make us money is by reducing their consulting fees." That's common, but not universal. The solution usually better clients. Some you will have to find (and finding good clients is harder than finding bad clients). But some existing "bad clients" will upgrade because of the relationship with you...good clients value the relationship more than price. Clients who prioritize price assume that consultants are fungible to a large degree.

Re: The Psychological Trap of Freelancing

#168

Post by rurp »

ahartmetz wrote: post #36
blazespin wrote: post #22

Earlier quoted context omitted.

Yeah, exactly. Maybe we could all just stop spending less money, then we'd have more time. There's a well known correlation between people who make more money, tend to feel the need to spend it[1]. 1. https://www.quora.com/Do-most-people-spend-more-when-they-ma...

"The wealthy tend to spend less of their increase in income than do poorer people" I rather think that the causality is the other way... if you don't spend money just because you have it, you're going to be wealthier.

I think it's mostly as simple as money having marginal utility. The first $30k a person make per year goes to absolute essential (ie. food, housing). The next $30k goes to really nice the have things like better transportation, medicine, etc. As a person makes more money, each additional dollar has less of an impact on their life.

Re: The Psychological Trap of Freelancing

#169

Post by nickdandakis »

newroman wrote: post #128
nickdandakis wrote: post #116

Earlier quoted context omitted.

I think the vast majority of people would find it incredibly difficult to save ~7.5k per month for 10 years (assuming an annually compound savings interest of 2.2%), to hit 1M. That type of savings goes beyond "no Ferraris/Great-Gatsby-parties".

you done goofed if you're saving at 2.2%, he means investing in the S&P500 or the likes

You right.

Let's say a 7% annual compound interest over 10 years (which I think, is debatable). That puts you at $5,800/mo. I think my argument still stands?

Re: The Psychological Trap of Freelancing

#170

Post by balabaster »

mistersquid wrote: post #156
balabaster wrote: post #109

Earlier quoted context omitted.

It's easy to make a judgment on one scenario, but being unable to get out of that mindset doesn't make her a shitty spouse, it's a fear that's been brainwashed into her by her upbringing. She is more than her fears. Thankfully though, I'm no longer in this position. I was rather more pointing out a toxic mindset that you need to overcome not just in yourself but potentially in your spouse and the rest of your familie…

> being unable to get out of that mindset doesn't make her a shitty spouse This is an incredibly helpful reminder that people should not be reduced to their flaws and relationships are not the mere sum of their drawbacks. Because people are risk-averse, it's easy to focus on what's bad and take for granted what's good. So when a relationship becomes challenging, people can reflexively give up (or throw away) rather t…

Indeed they are... though in this particular case there were a bunch of other factors that caused this particular relationship to fail, but even with those considered, they don't make her a shitty person, she is more than the sum of her parts. Just because the relationship was unworkable, doesn't make her a bad person or even a bad spouse, they just make us bad partners to one another.
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