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Archive 2009 · Am I crazy?

oobie
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p.1 #1 · Am I crazy?

A studio just offered me a job that pays 40k/year w' full health/optical/dental/401K/etc. etc. etc.

It would have been a great hedge considering the uncertain economy. However my wife and I ran the numbers, and were shocked to find that the actual amount I'd take-home was extremely low.

- Increased earnings would bump me into the next tax bracket so retained earnings would be lower
- healthcare would actually cost more (don't ask...just trust me - it would)
- less time to pursue freelance work shooting stuff I actually want to shoot.
- additional child care costs

On top of this - I called up one of my mentors to bounce it off of him. He said at one point he had a similar gig (shooting large high volume product stuff) for almost a year and hated it. He said it was one of the biggest reasons that he temporarily quit shooting and nearly gave up on it entirely. Everybody is different I guess, but he and I are pretty similar so it was just further confirmation that this wasn't the job for me.

After weighing the pro's and con's I decided to graciously decline.

Never thought I'd see the day that I'd turn down that kind of work/money. Particularly considering the current state of our economy.

Crazy times...

Jun 26, 2009 at 12:34 AM

Marty Bingham
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p.1 #2 · Am I crazy?

oobie wrote:
A studio just offered me a job that pays 40k/year w' full health/optical/dental/401K/etc. etc. etc.

However my wife and I ran the numbers, and were shocked to find that the actual amount I'd take-home was extremely low.

- Increased earnings would bump me into the next tax bracket so retained earnings would be lower

After weighing the pro's and con's I decided to graciously decline.

Crazy times...

It looks like you have already made your decision so I'm not sure what good any comments can do but here goes.

Evidently you are making less than 40k now. How big of a difference can there be between 40k and the next lower tax bracket? It can't be much........but never mind that for now.

Lot's, if not most, of us have two jobs. Photography and something else. You had a chance to have a primary job in photography and a secondary job in photography. Not to mention a pay increase, tax issues aside.

You should also look at a couple things that don't show up on your paycheck. Is there room for advancement? Maybe in a year or so you could be making another 10-15k per year. Do you think you might want your own studio someday? This would have been a good chance to learn the tricks of the trade on someone else's dime. But I guess it's too late now?

Just a few things to think about for next time if there is one.

Marty

Jun 26, 2009 at 01:25 AM

oobie
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p.1 #3 · Am I crazy?

Sorry Marty. I wasn't being clear in my previous message. My wife and I both work so the bump would have hurt us tax-wise.

I hear ya on the primary/secondary photography thing. The problem is - most of what I shoot is time-specific, so if I had taken the job, I would have wound up needing to take time off of work to shoot freelance jobs.

There may have been room for some advancement. It's hard to say. But it is a fair question and one I did think about. I have no qualms about paying my dues, and working hard. I still bust my ass doing freelance assisting so I know what you mean there.

Regarding learning tricks of the trade - I would have been shooting mostly high volume cut-out stuff. Not styled work where you're doing 3 or 4 shots a day. So I'm sure I would have learned some there - but probably not as much as I do while freelance assisting.

Thanks for the input though. I always appreciate hearing things from another perspective.

Jun 26, 2009 at 01:58 AM

Marty Bingham
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p.1 #4 · Am I crazy?

Yeah, right after I posted I thought I might have misinterpreted your situation. My bad......

I glanced at your website. You definitely don't need to learn the "tricks of the trade" photography wise. I was thinking more along the lines of the business end of running a studio.

But anyway.........when one door closes another one opens! So they say

Marty

Jun 26, 2009 at 02:09 AM

pipspeak
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p.1 #5 · Am I crazy?

if you work at home and are self employed it's very often the case that a "real" job will have to pay significantly more to be worthwhile. After deductions and write-offs, my effective tax rate each year is in the single digits. To make the same net income a salaried job would have to pay me about 50% more than I earn now (gross).

Jun 26, 2009 at 02:22 AM

pearlstreet
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p.1 #6 · Am I crazy?

I read this today. Number 2 might apply here -

http://www.miltonglaser.com/pages/milton/essays/es3.html

Jun 26, 2009 at 02:49 AM

oobie
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p.1 #7 · Am I crazy?

snaptie2002 wrote:
Yeah, right after I posted I thought I might have misinterpreted your situation. My bad......

I glanced at your website. You definitely don't need to learn the "tricks of the trade" photography wise. I was thinking more along the lines of the business end of running a studio.

But anyway.........when one door closes another one opens! So they say

Marty

Hey no worries.

There are always more "tricks of the trade" to be learned. But yeah - I'm always happy to learn more about the busness end too.

Jun 26, 2009 at 03:36 AM

oobie
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p.1 #8 · Am I crazy?

pipspeak wrote:
if you work at home and are self employed it's very often the case that a "real" job will have to pay significantly more to be worthwhile. After deductions and write-offs, my effective tax rate each year is in the single digits. To make the same net income a salaried job would have to pay me about 50% more than I earn now (gross).

This is exactly what I realized in the lats 24 hours. It's nuts!

Jun 26, 2009 at 03:38 AM

oobie
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p.1 #9 · Am I crazy?

pearlstreet wrote:
I read this today. Number 2 might apply here -

http://www.miltonglaser.com/pages/milton/essays/es3.html

Aaah yes. Mr. Cage. I was a music student in College. We studied integral serialism and chance music (among other things). Odd how they both often sound quite similar... But I digress.

He has an interesting take. Don't know that I necessarily agree with it. I have no aversion to work. I just don't like the idea of giving away a huge portion of what I earn.

Jun 26, 2009 at 03:46 AM

dcaswell
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p.1 #10 · Am I crazy?

pipspeak wrote:
if you work at home and are self employed it's very often the case that a "real" job will have to pay significantly more to be worthwhile. After deductions and write-offs, my effective tax rate each year is in the single digits. To make the same net income a salaried job would have to pay me about 50% more than I earn now (gross).

But do you get matching FICA contributions, unemployment insurance, paid time off, disability insurance, workmen's comp, etc.?

Jun 26, 2009 at 03:50 AM

nathanlake
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p.1 #11 · Am I crazy?

One option might be to accept the job, but actively plan to be out of it in a set period of time. I don't just mean lip-service, but have a plan for leaving.

The question is, would having this job contribute anything to your future if you kept it for 6 months to a year. That would be the only reason for doing this.

Jun 26, 2009 at 02:20 PM

mdude85
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p.1 #12 · Am I crazy?

I'm interested in your rationalization of how your healthcare costs more now that you would be insured thru your company.

Also when you calculated your income, did you factor in your benefits in addition to your income? Health insurance coverage, 401k matching, etc etc are included as 'benefits'. In my job, the benefits bumped up my effective compensation by about 20%.

Also I guess the others have a point about using this job as leverage for another job/career down the line.

Taxes kind of suck, but they are a part of life !

Jun 26, 2009 at 02:36 PM

pipspeak
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p.1 #13 · Am I crazy?

dcaswell wrote:
pipspeak wrote:
if you work at home and are self employed it's very often the case that a "real" job will have to pay significantly more to be worthwhile. After deductions and write-offs, my effective tax rate each year is in the single digits. To make the same net income a salaried job would have to pay me about 50% more than I earn now (gross).

But do you get matching FICA contributions, unemployment insurance, paid time off, disability insurance, workmen's comp, etc.?

All true and all should indeed be considered. The benefits of those will depend on one's situation, however.

In my case, the money I save on taxes each year more than offsets any benefits I would get from unemployment insurance (I claimed it once after getting laid off from a well-paid job and was underwhelmed). Not all employers make worthwhile matching contributions these days and, again, IMO I benefit more from tax savings and investing some money in Roth IRAs, for example. Health insurance etc. is through my partner's firm, so I'm lucky there. And as for paid time off... my job flexibility more than offsets any minimal paid vacation time a US employer might offer me. My main profession (which is is not photography) enables me to work more or less at any time of the day and from anywhere in the world (assuming I have an internet connection). I'm also fortunate because the bulk of my income is from fixed contracts, so I'm also not having to worry about constantly drumming up business.

Now, if US employers suddenly started dishing out European-style paid vacation time (4-5 weeks) then that might persuade me to jump back into gainful employment

Jun 26, 2009 at 04:09 PM

Josh Evilsizor
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p.1 #14 · Am I crazy?

pipspeak wrote:

Now, if US employers suddenly started dishing out European-style paid vacation time (4-5 weeks) then that might persuade me to jump back into gainful employment

When I started my job I got 4wks paid vacation. I just hit my 10yr mark so I'm up to 6wks paid

Jun 26, 2009 at 06:05 PM

pipspeak
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p.1 #15 · Am I crazy?

Josh Evilsizor wrote:
pipspeak wrote:

Now, if US employers suddenly started dishing out European-style paid vacation time (4-5 weeks) then that might persuade me to jump back into gainful employment

When I started my job I got 4wks paid vacation. I just hit my 10yr mark so I'm up to 6wks paid

Bah. Every job I ever had in the US started at two weeks and crept after many years up to four. Moreover, you had to accrue those two weeks over the course of the first year. Every job I had in the UK started at 4 or 5 weeks vacation and went up from there.

Jun 26, 2009 at 06:08 PM

WmPat
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p.1 #16 · Am I crazy?

Some people are well suited to being an employee, others do better as self-employed entrepreneurs, and others like the freedom of working part-time or freelance. All are legit but sometimes it takes a person a couple of tries to find their own niche.

I would be very supportive of the decision the OP has made, he has obviously given the offer serious consideration. One note of caution, especially for those near the beginning of their careers, would be to avoid letting movement into a higher tax bracket become too big of an obstacle. If your income is going to grow, sooner or later, you are going to have overcome that barrier, perhaps more than once. If you refuse to make the jump you may be sentencing yourself to low earnings for the rest of your life. And it's normal to pass through the lower rungs of any bracket on your way up the ladder.

Jun 26, 2009 at 08:54 PM

ange
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p.1 #17 · Am I crazy?

Since you used the word a couple of times, I will too. That sounds crazy! It IS crazy! This COUNTRY is crazy! You're right though. What have we come to, when the penalties for working hard, trying to get ahead and earn more, can outweigh the benefits?

It's just plain wrong. People mention taking the benefits offered by an employer into account...well wait until they start taxing some of those benefits too. Then it will be even worse.

I remember reading a study which found that many times, when a spouse gets a job for the extra income, with the increased taxes, some added travel expenses, maybe some child care costs and a little fast eating out thrown in, etc., the couple actually ends up 'losing' money. In this case, it paid not to work. It's really sad that that would ever be the case.

Sorry for my rant. It just makes me...well, can I say CRAZY again?

Andy

Jun 27, 2009 at 03:39 PM

oobie
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p.1 #18 · Am I crazy?

ange wrote:
Sorry for my rant. It just makes me...well, can I say CRAZY again?

Andy

Don't apologize Andy. You've hit the nail on the head. There is something seriously wrong when people are punished for working hard and trying to get ahead.

My freelance business continues to grow though, so I may be back in this same situation in a year or two. Perhaps it will be a different story then. We'll see...

Jun 27, 2009 at 05:44 PM

justruss
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p.1 #19 · Am I crazy?

I'm wondering about your tax calculations...

The U.S. has a progressive tax, meaning you are only taxed at higher rates (higher brackets) for income made OVER that bracket. In other words, based on tax bracket alone, you can't ever take home less total by making more.

So let's say, hypothetically, the tax bracket jumps at $40K from 30% to 85% (to take this to the extreme), and last year you made $39,999.00 and next year you would make $40,001.00 (again, to make a point), bumping you into the higher bracket.

Last year you would take home: $27,999.30 (70% of $39,999.00)
Next year you would take home: $28,000.00 (70% of $40,000.00) + $0.15 (15% of $1.00)

You are only taxed at higher rates on the amount of income you make over that "tax bracket." Not only that, but certain taxes are only applicable to certain amounts of income (such as social security), meaning once you make OVER that limit, no additional income has that tax levied against it (which is why Warren Buffet says he pays a lower effective tax rate than his secretary). Also, self-employed people have to pay both parts of social security-- a big portion of which your employer is required to pay.

Jun 29, 2009 at 09:39 PM

justruss
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p.1 #20 · Am I crazy?

That last part about social security:

If you are self-employed, you pay 15.3% of your income to social security and medicare.

If you are employed, you pay 7.65% because your employer is legally required to pay the other 7.65%.

Better yet, if you make over $100K, each additional dollar is only taxed at something like 2.56% for social security/medicare (the Warren Buffet statement).

Jun 29, 2009 at 09:48 PM

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