Clean Up Your Finances to Become a Writer

Being a successful writer is the dream of many aspiring novelists and feature writers. For many, the sign that you've made it is when you're able to quit your regular job and concentrate solely on the writing. However, a writing career is not for the weak of heart or pocketbook, because regular paychecks become a thing of the past. Before you take this step, learn how to clean up your finances to become a writer.

Steps

1. Take a second and third look at your expenses to see where your money is going so you know what you need to do to clean up finances.
   • Pull bank statements, canceled checks, check registers, and credit card bills to get a handle on your spending.
   • Think of how you would categorize various spending -- clothing, groceries, entertainment?
2. Pay off all small loans and credit card debt before you quit your regular job.
   • Clean up finances by pulling the plug on charging. Either pay cash or do without.
   • Concentrate on paying off the smallest debt first.
   • Once the first debt is paid off, apply that payment to your second smallest debt and so on. Debt payments and payoffs will snowball.
3. Create a budget on what you would be comfortable living on as a beginning full-time writer.
   • What has to go? Take-out twice a week? Renting DVDs? Book store splurges?
   • How much will it take to live on per month?
4. Multiply the proposed monthly income by at least 12 months; more is better. Save this amount before you quit your regular job.
   • This savings will be used as a safety net and/or supplement earnings as you become a full-time writer.
5. Discuss living on one income with your spouse if you and your spouse both work.
   • If your spouse is supportive about a plan for you to quit your regular job, this could be a substitute for saving up a year's income as long as you can make it on one salary.
   • If you go this route, you should still have emergency savings account equal to a couple of months of living expenses.
6. Decide how to manage health insurance. This is not a thing to do without, no matter how healthy you are.
   • You can continue health insurance from your previous employer under COBRA for up to 18 months but prepare for pricey premiums.
   • Some writers' organizations, such as the National Writer's Union, have a health insurance option available with membership.
   • Can you be covered by your spouse's health insurance plan?
7. Prepare for tax time because there will be some new expenses.
   • Before you quit your regular job, the employer deducts taxes, Social Security, and other extras. As a full-time writer, you will have to pay a self-employment tax at tax time.
   • Some writers choose to make quarterly tax payments to keep from being hit with a huge tax burden once a year.
8. Understand that making money as a full-time writer is complicated. It may be months, even a year, until you see a check for work you've done.
   • Increase your chances to become a writer by establishing yourself before you quit your regular job.
   • Line up writing assignments for 1-to-2 years before quitting.

Related Articles

• Become a Freelance Writer
• Become a Paid Writer
• Become an Author As a Teen

References

• http://www.writersdigest.com/article/10-questions-writers-must-ask-before-quitting-their-day-job/
• http://hollylisle.com/index.php/How-To-s/dealing-with-money.html

See also

• Be a Great Feature Writer
• Draft a Ghostwriting Agreement
• Argue Your Value As a Professional Writer
• Use Your Writing Skills to Earn a Living
• Save Money As a Full Time Writer
• Get a Job As an Advertising Copywriter
• Gain Credibility As a Writer
• Find the Courage to Become a Writer
• Become a Science Writer
• Be a Serious Writer

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