Okay, remember when we talked about Elastic Waistbands, Stretch Jeans, and the Lies We Tell Ourselves? Particularly this part:

Beware of budgeting tools that emphasize income over expenditure and pat us on the back for how much we make…when what we really need is a clear picture of how much we have left after the bills are paid and our debt is accounted for.

We can kiss the checks as they come in, but we really need to watch that bottom line. Every. Single. Day.

Well, a perfect real-world example found me on Twitter today, thanks to @blondechicken. Here we go—

In this genuinely “super interesting thread”, ShadeJewelry did not believe the lie his earnings were telling him. Yay, ShadeJ!

He totaled up $100,000 of income on Etsy in 12 months AND ALSO tallied his expenses for that period…all to find he spent over 3/4 of his earnings on (and in) his business. Good to know, yeh?

As a jeweler with online sales, his expenses included things like materials, shipping, and transaction fees from PayPal and Etsy, etc. …nothing surprising—

So in the end he walked away with $24,000 as an annual salary. From that he subtracts his rent, utilities, taxes and social security, etc.

Not. Pretty.

And it’s about to get uglier

He typically works 70-80 hours a week. Every week.

I’d bet dollars to doughnuts that you already know how this story ends, but I’m going to lay out the math anyhoo—

75 hours a week × 50 weeks a year = 3,750 hrs/yr

$24,000/yr ÷3,750 hrs/yr =
$6.40/hr

Yup. Here he is, very skilled labor working for less than minimum wage. And no overtime! In my area, kids working at McDonald’s make more than that. The young waitstaff at a local restaurant start at almost twice that (there’s no tipping).

That’s not a judgment on whose work is more valuable. I don’t nibble through my jewelry box when I’m hungry and I wouldn’t wear a french fry as a wedding ring. Each occupation has its place and value and I consider them at least equally valuable…and ShadeJ’s hourly rate doesn’t reflect that. At all.

He’s delighted with his work and working for himself, but he does wish he had more money at the end. Simply, he could choose to spend less, charge more, or both. But what’s simple to say ain’t so simple to do. Etsy is fiercely competitive and it seems he’s already living a little close to the bone.

I don’t know enough to offer a solution. And I struggle with my own finances such that I wouldn’t dare speak to anyone else’s.

What I Can Do, Though…

…is offer his story to you. Do you see yourself in this? Are you working hard, making lots, yet walking away with little?

This still applies if you’re a service professional, by the way—your mind is your material. It gets used up. When you’re running low, you need to restock with workshops and reading and coaching and such. Your mind is your equipment and things are ever-changing…you will need to retool, eventually.

If you tally your income and expenses and divide by your actual—not intended or scheduled—working hours, how much are you really putting in your pocket? And also, how much are you really making per hour?

And no, it’s not all about the hourly wage if you bill by project, earn commission, or whatever…not even hardly. But it’s a good basis for comparison and it’s probably worth 15-20 minutes of your attention.

Like, today. :)

p.s. I wouldn’t put you through it if I hadn’t done it myself. It came out okay, and I’ll be keeping an eye on it to make sure it stays that way…