Increased Costs Since Switching To Self-Employment

Increased Costs Since Switching To Self-EmploymentSelf-employment has been pretty great these past 9 months.

I’m having fun, I love my flexible schedule, being location independent is absolutely amazing, I love the work I’m doing, and everything overall is good right now.

One thing many people don’t think about is that even though you work from home, your expenses might actually increase. Working from home and self-employment does not automatically mean that you will be saving hoards of money.

Before I get to the part about how certain things have become more expensive I do want to say that for the most part my expenses have decreased in many areas:

  • Clothing. I’m not sure if this is good or bad (does this mean I’ve let myself go? haha), but I definitely spend a lot less money on clothing than I used to. I think it helps a lot that I don’t need much when it comes to professional clothing anymore and that’s where a lot of my clothing spending used to go.
  • Transportation. I spend a lot less in transportation than I used to. I don’t have to drive to work 5 days a week anymore.
  • Food. I don’t spend anywhere near the amount I used to spend on food. Now, we mainly eat at home and it’s cheaper and much tastier.

 

Below are different areas in which my expenses have increased:

Electricity, Gas, and water.

During this past winter, our gas bill was a little bit higher. The same goes for during the summer months so far.

This is because I am home all the time now and I want my home to stay at a comfortable temperature all day long pretty much, and also because I am using more electricity (charging electronics, lights, etc.) than we were when no one was home during the day.

We are also using more water as well. But that could also be attributed to the fact that my sister lives with us and has been at home more.

The electric, gas, and water bills haven’t significantly increased, but I believe I am spending around $30 to $50 more each month in these areas altogether.

Taxes.

I am paying much more in taxes now, and I think it hurts a little more because they aren’t automatically taken out of my paychecks before I can actually see it in an account.

I also have to pay self-employment tax now.

Health Insurance.

Wes and I each used to have health insurance through our employers.

Now, we pay $200 a month for super horrible health insurance. I believe our deductible is somewhere around $12,000, so I know that before our health insurance will even kick in, one of us will have to be seriously ill.

We plan on looking for better health insurance when we plan on having children though. However, I have heard of other self-employed people paying over $1,000 a month for their family’s health insurance, which is a scary number!

Home office.

I’m not completely done with my home office, but I do have almost everything gathered. I have been scouring Pinterest to get an idea of what I want.

A home office costs money. Yes, you can make a home office for cheap, but I am wanting it to be a place where I can get inspired and actually get work done. Luckily, I did get a lot of great gifts at our wedding specifically for my home office, so that will make it cheaper as well.

What other costs do you think would increase if you were to switch to self-employment?

Anything above surprise you?

 


Comments

Increased Costs Since Switching To Self-Employment — 18 Comments

    • Yes, I agree. Sadly, I know too many people with this same exact plan. The people who are paying $1,000 a month even have the same scary $12K deductible.

  1. Taxes is the biggest worry for me. I’m already home with the kids all day, so those expenses wouldn’t change. But I need to go talk to a professional about taxes before I dive in too much more.

  2. In my case, the electricity and water bills have gone way up too from the same reasons: I’m always at home now and especially during the winter, the costs increase a lot. My friends simply can’t believe that I pay as much as I do on electricity alone. But it’s something that I love doing, so it’s totally worth it!

  3. Your health insurance costs are scary. I thought we had it tough by paying a 1.5% levy on our income for public health and then $240 a month for the family for private health insurance with only a $500 excess. I don’t think I will be complaining again.

    I think phone and internet charges could increase working from home. As it’s an isolated environment it could be tempting to call people just to communicate with someone.

    The good thing with home business is that many costs end up being tax deductible, would this also be the case in America?

  4. Health insurance is probably the worst and there is so much uncertainty in the market now. I’ve heard that some people are predicting over 20% increases next year. I think my phone/internet will increase. I need to get a faster connection.

    • Oh my 20% increases would make me cry! 🙁 It’s not much of a difference now, but when we change our plan in about a year, that would be very costly.

  5. Very sad to report that our health insurance premium is our second biggest expense after rent and we live in NYC. Being that both the DH and I are self-employed we had little choice but to pay the steep premiums that we were offered. We chose a plan with a lower deductible than yours but it’s not by much. I still wouldn’t trade my self-employment status and at least it’s considered a business expense. Gotta find the positive in everything I say 🙂

  6. The most expensive time of the year, electricity-wise, is the summer for us, and that happens to be when my (teacher) BF is home. So… if I worked from home, our expenses in regards to electricity probably won’t increase at all, haha, since they’re already so high!

    I think technology, for me, would get more expensive if I worked from home. I LOVE technology and want to always buy the newest, coolest, most updated stuff. I could easily see myself falling into a rabbit hole 🙂

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