We’ve been talking about the book, Happy Money: The Science of Happier Spending by Elizabeth Dunn and Michael Norton, and how these insights on money and happiness can help freelancers. Start with our Happy Freelancer overview to get the basics, but the short version is that if money can’t buy you happiness, you’re spending it wrong.
One of the foundational concepts in Happy Money is ‘pay now, consume later.’ Paying now gets the pain out of the way and allows us to focus on anticipation. The drool factor makes us happier.
But the opposite is also true: Paying later makes us unhappy.
Happiness and debt don’t go together. They’re pretty much opposites.Credit cards, student loans and home mortgages have been helping us enjoy now and pay later for generations. While some of that debt may be helpful (and tax deductible)—making the American dream of home ownership possible and putting a generation through college—debt in general is bad for happiness.
We worry about our coming bills and dread having to juggle all our payments. And we can’t even think rationally about those payments—research shows that everybody consistently underestimates the size of their credit card bills by 30%.
All that debt makes us very unhappy. Married couples with more debt even argue more.
“What we owe is a bigger predictor of our happiness than what we make” (95).
Freelancers & Debt
So the lesson for freelancers: If you want to be happy in your business, avoid debt at all costs.
This is probably the most consistent advice we’ve heard in our interviews with freelancers: pay down your debt. Practically speaking, simply having fewer debts makes it easier to get by as a freelancer. Fewer debts means fewer expenses, and that means you can get by on less and weather bigger storms. But emotionally speaking, it’s even more important for your well-being to not have to worry about that debt.
- If you’ve got personal debt (credit cards, car loans, school loans, etc.), make paying it off a priority.
- If you’re getting started and thinking about taking on a startup loan, think again. You’ll be happier and more agile if you can bootstrap your launch. Find ways to cut corners. Hang on to your day job a little longer if you have to.
- If you’re considering a line of credit for a business purchase, don’t. You’ll be much happier stretching that aging computer a little longer than you will going into debt for a new one.
Those debt payments will drag you down, in every possible sense. Cut yourself free from debt and watch your business (and your happiness) soar.
I have been a freelance graphic designer on and off for many years. Enjoying the flexibility and spending valuable time with the family. However, more and more clients were requesting websites. I had little experience in the field so I would sub let the contracts out to another freelancer. I was losing a lot of revenue through this, so I decided to go back to university and study web technologies. Finally, graduated in 2014 with a debt of £9000. I am now able to take on all types of print and web design work, plus retain all the revenue for myself. The debt, I’m sure will take a while to pay off. Now, I take on a variety of work from all industries. Whether they are artists in Cornwall or builders in Southsea. I am able to do the work I love and feel that it was worth the financial outlay.