June and July Financial Update

I didn’t do an official financial update in June because I was on vacation, so here’s how my finances have changed since May:

My current net worth is $121,598.46, which is up $13,797.02 from the net worth of $107,801.44 recorded on May 1.

Between May 1 and today, I brought in $20,851.09 in freelancing and publishing income (only $14.51 of that came from publishing, if you’re curious).

I also spent $3,249.81 on my two-week “Disney followed by a family reunion” trip ($2,470.87 of which went towards Disney) and put $2,820 towards quarterly estimated taxes, so… yeah, the math on that net worth increase works out.

The FI calculators suggest I could reach financial independence in seven years at my current rate of earning/saving/spending, which would be… like, seriously, I’d be 44 years old. That feels both way too soon and very far away.

However, I’m also going to need to do some thinking about taxes, since my unexpected earnings increase (I thought I would earn $70K this year; now I suspect I’ll hit six figures) is going to need an associated tax optimization strategy.

This isn’t just about me underestimating my taxes, btw. If my adjusted gross income gets too high, for example, I’ll lose my health insurance subsidy and owe the government an additional $3,600.

I can combat some of the tax burden by maxing out all of my available retirement vehicles, including my SEP IRA which can absorb between 18 and 20% of my gross income (no, there isn’t a single fixed percentage i can use here; like most self-employed tax stuff, you have to do a bunch of Tax Math to get the actual number).

I can also start putting more money into tax-deductible business expenses, which is one of the reasons why I just signed up to attend FinCon this fall. (It’s also why I’d love to increase the number of guest posts I run on the site—so pitch me!)

Plus, I’ve started to put together some ad-hoc tax spreadsheets where I run the numbers on what it might be like to earn $100,000 in gross freelancing income and $5,000 in business expenses vs. $100,000 in gross freelance income and $10,000 in business expenses. If my goal is to save as much as possible while also growing my business, which combination of numbers is most likely to get me there?

This is, of course, a conversation I’ll need to have with my CPA this fall, since I’ve made assumptions about taxes before and they have been SUPER DUPER WRONG. (I wish freelance taxes were simple, or at least straightforward. Unfortunately, you get a lot of “you can’t know how much to deduct until you deduct it and then do the math and then adjust your deduction and then do the math again” scenarios, and no I am not kidding about this.)

Anyway. That’s my financial update for this month, and I’m going to get you an investing update later this week since I heard you might be interested in that kind of thing. ❤️