The Risks and Rewards of Taking The Plunge – Part 2

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Taking the Plunge

Welcome to the second installment of my serial on Taking the Plunge into self- employment. Every journey has its beginning and last time, I shared mine. In Taking the Plunge Part 1, I described the agony of earning my MBA only to see it collect dust in a never-ending series of dead-end jobs. In a move that shocked my extended family about as much as jumping into a frigid lake would a shirtless Polar Bear Plunge participant, I traded in my guaranteed paycheck and micro-managing boss for unpredictable income and absolute autonomy. Today, I continue the story with what I have found to be the risks and rewards of self-employment.

Taking the Plunge Has its Rewards

When we decided to take the plunge, we were simply looking at the numbers. We saw that our income was unlimited. Add unlimited income to increased tax saving opportunities, and being able to put more towards retirement, and it was a no brainer for us. What became clear soon after was that we have the chance to do what we love, and be our own bosses. We can work when we want and work on things we want to. Working in the advertising industry can be rewarding as it’s constantly changing and we get to help clients from small non-profits to Fortune 500 companies shape their marketing voice and do it from the ground up. We write website content, direct mail letters, print, radio and TV ads, marketing materials and much more for small businesses, nonprofits and even a handful of national brands. We get to arrange our schedule as we see fit and work when we want to and not when we’re told we have to. At the end of the day I put in more hours to my “job” now than I used to, but I feel motivated, rewarded, and even invigorated because I can see the result of our hard work as opposed to just bringing in another buck or two to some massive corporation.

…And its Challenges

The slimy underbelly of taking the plunge and working for yourself is that it’s all and I mean ALL up to you. You can have a month where you’re killing it with business and bringing in all sorts of cash to be followed by a month where the only thing you hear is crickets. I’ll be honest, that can be tough both emotionally and financially. This is where budgeting becomes even more important and being committed to living frugally. I know some personal finance bloggers might get rankled at this part, but when we took the plunge we made sure that our financial house was in order and had a substantial sum set aside. Remember how I mentioned you don’t have a boss sitting around telling you what to do? Well that lack of framework can show up and can be nasty to deal with. We’re our own HR department and if we want to grow professionally it’s all up to us. Workflow can be unpredictable and always seems to get dumped right before a vacation or a holiday. So, self-employment it’s not all champagne and caviar. The best advice I have is this – if you decide that taking the plunge is for you, go into it with your eyes wide open.


I am not an expert by any means, but since taking the plunge I’ve learned many things which I’ll continue to share in upcoming posts. Have you taken the plunge into self-employment? If you’re a blogger, do you have dreams of growing your blog into a full-time business? If you’ve been thinking about taking the plunge but haven’t yet, what’s holding you back?

This is an installment in an ongoing series about the ins and outs of being self-employed. Keep your eyes open for future posts on this topic in the coming year.


Photo courtesy of: Tim Barrett

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John is the founder of Frugal Rules, a dad, husband and veteran of the financial services industry whose writing has been featured in Forbes, CNBC, Yahoo Finance and more.

Passionate about helping people learn from his mistakes, John shares financial tools and tips to help you enjoy the freedom that comes from living frugally. One of his favorite tools is Personal Capital , which he used to plan for retirement and keep track of his finances in less than 15 minutes each month.

Another one of John's passions is helping people save $80 per month by axing their expensive cable subscriptions and replacing them with more affordable ones, like Hulu with Live TV.


  • I think we will “take the plunge” as soon as our house is paid off in about 1.5 years. I very much dislike working for the man and I have so many side projects needing my full attention. Most of them would easily support my family and I should I be able to spend more time on them.

    • John says:

      I’m envious of you being able to pay off your house that soon. If you have projects in the works already that can definitely make the transition smoother.

  • Jason says:

    Is caviar even that good? I’ve never had it before but something tells me it tastes like, well, fish eggs. lol

    It’s a lot of fun to be able to work from home, but self employment is only a good thing if you’re doing well. If you’re not then you don’t have health insurance, retirement plans, pensions, vision/dental, etc. There are a lot of downsides to being self employed, but if you succeed then the upside far outweighs the negative.

    • John says:

      You crack me up Jason! 🙂 I’ve never tried it myself and really have no plans too.

      I wouldn’t classify working from home as fun, but rewarding. Sure, there are many downsides but there’s also a lot of potential to be had. The point is to go into it with your eyes wide open to what you’re doing and having all the necessities in place.

  • When we decided to take the plunge, we were simply looking at the numbers. What were the numbers you were looking at income/expense wise?

    • John says:

      The numbers were the main driver for us Mrs. Pop. That and questioning if my wife and I could work together. We were looking at what we could charge per hour vs. what I made in my job. What my wife made in an hour it took me four hours to make in my job. That doesn’t even begin to touch the tax benefits. It was a no brainer for us.

  • Pauline says:

    Is it a challenge to work with your wife? Do you really work together or take turns with the business and the kids? My BF and I have VERY different ways of thinking and doing things, we work well if one does a task and the other something else, but common projects are very hard.

    • John says:

      It really is not much of a challenge as our skills complement each other fairly well. The big challenge is getting creative work done with three little hooligans running around. We basically split the work and the kids and just get it done.

  • Did you start your business while still working at your regular job or did you save up enough to live on while you got it started. I would think pulling the plug on the 9-5 world would be tough, but very rewarding as you’ve mentioned.

    • John says:

      My wife started it about two years ago and got it to the point where it would cover our bare minimum. The thing is though that she was having to turn down work. We had/still have a 3 month E-Fund along with 6 months of mortgage payments saved up. We’re planning on building up the E-Fund by at least another 3 months.

  • I have thought about taking the plunge numerous times, but I love my full time job along with the awesome benefits that I have. I don’t know if I will ever take blogging full time, but I will use it as a side business with passive income eventually.

    • John says:

      If you have a full time job you love, then I am sure it would be hard to go all in on starting your own business. That was not the case for me, so it made the decision that much easier.

  • I feel much more fulfilled when I complete spreadsheet work for my side biz than I do for my full-time job. Part of it is that it all comes down to me – I have to find the work, I have to communicate with the client, I have to create a product that fits their expectations, and I have to collect the bill myself. It really is a pretty fun/fulfilling process. I do love the company I work for and I am very blessed to have such a great job at a young age, but I could see myself working my own biz full-time down the road (could be 1, 5, or 10+ years away).

    I definitely would like my blog to grow into a full-time income. I am inspired by Peter at Bible Money Matters who turned his blog into a “second” full-time income, allowing his wife to stay at home with their son. I will have to see where the blog goes, and I am stretching myself very thin right now so it may hinder the growth, but overall I definitely would like to grow it into something that consistently brings in income.

    • John says:

      It can be very fulfilling to bring the business in on your own, especially when it’s doing something you enjoy. Having a job you enjoy though is nothing to sneeze at. Though, if you desire to run your own business then doing side gigs is a great way to see if it’s a fit for you. The client relations can be messy, but thankfully we’ve got pretty good clients that we enjoy working with.

  • I cannot possibly agree more with focusing on the budget. And even if you are bringing in decent income…pretend like you have half of that, just to be safe!

    • John says:

      Great point Tonya! I could not agree more. If we have “extra” income come in in a given month then we don’t go hog wild, but look for what needs to be saved and simply do it.

  • Mandy @MoneyMasterMom says:

    In the millionaire next door they invited a bunch of millionaires to a get together. The hosts thought they better have some decent snacks and got a bunch of caviar, fancy stinky cheese, and crackers. The millionaires only ate the crackers.

    Look like you’re on your way 🙂

  • Awesome, John! My husband and I work together as well and we love being a team in every way.

    • John says:

      It’s an awesome thing to have Holly. Many don’t and I feel pretty blessed to have someone in my life that has the same passions as me and wants to accomplish the same things.

  • Veronica @ Pelican on Money says:

    The biggest challenge for me was the lack of a structured day. At first it was awesome! You get to make your own schedule and do things on your own time – who wouldn’t want that?! I guess after some time it became difficult to function without having some sort of a plan for the day. That’s where I got worn out really fast. Some days I’d have things to do and be busy sunrise to sunset, others I would just sit there and stare at the wall, thinking what the heck I should I be doing now?

    The ups and downs of cash flow are terrible too. Some days I would do so well that I wanted to dance on top of the pyramids (even though nobody cared and was busy with their lives). Others, weeks would go by with little to show for any hard work. It was a huge emotional roller-coaster most people don’t realize they’ll ride at one point or another. Sometimes just having a scheduled paycheck is a blessing. When you’re self employed and meet people who end their day upon the end of a late hour, then go home and have absolutely nothing to do until the next day – you start envying them. There’s no such thing as your day coming to an end when you’re self-employed. Just keep on working and working and working.

    Do your weekends blend in with the weekdays? I’m curious how you 2 feel about the weekend. When I was on my own it felt like the excitement of weekends wore off completely. I no longer looked forward to the weekend which was a huge bummer because people around me were so excited for Friday night.

    • John says:

      That can be a tough challenge Veronica, I won’t deny that. It definitely was a challenge the first few months, but we’re starting to get a solid base routine down.

      The cash flow can be difficult to deal with. The first six weeks we started we were hearing crickets and really started to question ourselves and wondered if we were just foolish. Then, it turns out we were experiencing some of the advertising cycle of a down time. Now that we know that we can budget accordingly.

      In regards to the weekends, we do have some spillover. If you ask my wife she’d say it was too much. We try (ok, it’s my wife asking me to do it) to not work on the computer several nights a week so we can be unplugged and have a day where we don’t talk about business. It’s not always nice and tidy, but we give it our best shot. It’s important to strive for as you do need a separation between work and home life, which is difficult as we work out of the home.

  • Mackenzie says:

    I’m curious how long you guys saved up before you took the plunge? Did you have times where you had to dip into your EF?

    I would love to grow my blog, but I’m doing the best I can with a 2yr old underfoot 🙂 But it is something I really, really want to do.

    • John says:

      We had a 3 month E-Fund going into it along with 6 months of mortgage savings going into it. We only had to pull out of it slightly and have been able to replenish it.

  • I tried self-employment back in college, and have had a variety of side gigs since.. But I’ve never been able to make anything sustainable. That said, if I could figure out that magic formula, my family probably wouldn’t blink an eye. Several people in my family have been self-employed from my god father, the professional clown, to my mom’s cousin who owns a paving company and my wife’s cousin who is a photographer and her boyfriend, the clothing designer.

    • John says:

      Wow, it sounds like you have some talent in your family! It sounds as if your family has the entrepreneurial spirit down, which can be hard to get. Having that sustainability is key.

  • You definitely wear a lot of hats when you are self employed, and I agree, a quiet month can be scary. But then you get months where when it rains it pours. Fun to juggle it all, isn’t it?

    • John says:

      Yes you do Sicorra, and you have to be comfortable with that as well. Our first month we heard nothing but crickets and it was quite scary, but we’ve learned over time that there are some ebbs and flows to the business cycle.

  • I ‘retired’ after 20 years and although we are covered income and savings wise, I still feel guilty if I am not plugging away, writing content, doing marketing or working on my web property somehow!

  • I guess like anything there are pros and cons that can either make or break something. In this case you said you were looking at the numbers and that was a no-brainer. I’m sure now that you are into it a bit you can rewind and look at some of the cons you have learned. Do you think if you knew all the cons that you know now back before you gave up your job that you still would have took the plunge? Mr.CBB

    • John says:

      Great question Mr. CBB! Knowing what I know now I still would totally do it. In fact, I wonder why we waited so long. The biggest thing that we did not count on as much was the seasonability of our business. We expected it to a certain extent, but there are certain ups and downs during the year in terms of advertising. Thankfully we budgeted towards that and have been able to weather the storm and more importantly plan for the future.

  • Savvy Scot says:

    Definitely something that I will consider in later life! Good series 🙂

  • Another fantastic post John!

    The best tip I’ve had regarding self employment is to view your work life as if you were still employed. Yes you do have a extra degree of flexibility, but if you truly want to make self employment a success you’ll need to have as much, if not more discipline than any employee.

    Really enjoying this mini series!

    • John says:

      Thanks so much! Great point on the self-discipline. It can be tempting to goof off and do something that’s not productive, but at the end of the day you have to put food on the table and make a living. It won’t happen if you’re just wishing it to drop in your lap.

  • I’ve always wanted to work for myself as the effort I put in would directly relate to my output. I have a decent job though so it’d be hard to walk away from that. I’d have to be making more than at my job and have great potential to make more if I had more time to work to leave.

    • John says:

      That’s the great thing about it Lance, you can directly see the result of your hard work. in a big corporation that can be harder to find. It is hard to walk away from a good job, I’ll be the first to admit that. Starting out on your own is definitely not a decision to be made lightly.

  • Justin@TheFrugalPath says:

    Becoming self employed is something I’ve been dreaming of for a year or so. You were smart to wait until you had some money set aside before diving head first. My wife’s uncle owns a welding business and does his books. Some months she has hardly any invoices. Other months there’s stacks that take hours to get through. it can be tricky to find a financial balance.

    • John says:

      Yea, I had been thinking of it for quite some time but needed to see some potential growth in order to take that leap. I can relate to your relative. We’ve had months where we’re barely bringing in enough to stay afloat to months where all we do is sleep, eat and work. Finding that balance is key and not always the easiest thing to do.

  • “…when we took the plunge we made sure that our financial house was in order and had a substantial sum set aside.” I think this is an important point that is probably contributing to your success. It allows you to sleep easier at night knowing you have some financial security backing your new life venture. My wife and I wanted to purchase rental properties for years but never felt comfortable with it until we had reached certain financial milestones. Having met those milestones, our minds are more at ease instead of frustrated when we might have a property vacant for a couple of months.

    Besides money, I believe fear is the #1 thing that holds people back from pursuing their dreams. Fear of failure, fear of what others think, fear of whatever…It is such a powerful emotion, it can completely cripple us from moving forward.

    • John says:

      I could not agree more in regards to fear Brian. I know that was playing a huge role hen we were in our decision making on this. In the end we came down to the fact that we had to live our lives for ourselves and our children and no one else. We feel that this decision was in the best interest of our family.

  • eemusings says:

    The toughest part for me I think would be marketing – sounds like most of your business is coming to you though which is awesome!

    • John says:

      It definitely can be, especially as marketing and networking is a non-stop thing. Thankfully we have a good base, so we don’t have to put too much focus on it.

  • Thanks for being so transparent John. Reading about your journey helps me plan out mine a little better. Please continue with these posts I thoroughly enjoy reading them. I’m over here rooting for you and your family. Have a Merry Christmas!

    • John says:

      Thanks so much Marvin! That’s my desire, to help those with what I’ve learned so far. It’s definitely been a learning experience and one that I would do again if given the opportunity. The big key is going into it with eyes wide open to the risks & realities. I am planning on doing much in this series, like insurance coverage, retirement options, legal issues and more about what we do and why we did it.

  • Julie says:

    The idea of self-employment is appealing but the reality is that I am not ready for the ups and downs. Need to get my “financial house” in order before taking this plunge. But this is the ultimate goal.

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