Build a Freelance Business and Pay Off Your Debt

Melanie Lockert is the founder of nationally recognized lifestyle & finance blog, Dear Debt.  Melanie quit her job two years ago to start a freelance writing business.

I was exhausted and knew I had to pick one — my day job, or my freelance career…I took a risk and chose my freelance career…It’s been the best decision of my life.

She has since doubled her income and paid off more then $61,000 in debt.  We know so many of you dream of quitting your full-time job for a creative business, so we interviewed Melanie about her journey.

Here is what she had to say:

1. What kind of work were you doing before you started your freelance business?

Before I became a freelance writer, I worked at education-based nonprofits in various roles — program director, events and communications coordinator, and teacher.

2. When did you decide that you were going to quit your job?  Why did you make that decision?

I decided I was going to quit my job in July 2014, only one year after I started my last full-time job.  For six months prior to that decision, I was working the equivalent of two full-time jobs.  I was exhausted and knew I had to pick one — my day job, or my freelance career.

I took a risk and chose my freelance career.  I could see that I had replaced my income in a short time and was convinced I could make even more money than my $31,000 salary.  At the time, I was also deep in debt and wanted to earn more so I could get out of debt faster.  It’s been the best decision of my life.

3. What steps did you take before you finally made the jump? (set up a savings account, started a side business, etc).

I made sure I was making close to what my day job brought in before I quit.  I also went on a bare bones budget and increased my emergency savings.  In addition, I let everyone I know that I was available for work.

4. How long did it take you to replace your full-time income?

I would say that it took me about six months to replace my full-time income.  What I brought home was actually more, but it took six months to make what I was making before, after taxes.

5. How did you find your first customers?

My whole career was started by a friend.  She got a full-time job and could no longer serve her clients.  I was just starting out and she knew I was looking for work.  She recommended me and I got all three of the jobs she referred me for.  I went from having no clients to three clients in a short time.

I’ve found other clients through social media, my blog, pitching startups, and from conferences.

It made me realize how important your network is and being at the right place at the right time.  I’ve found other clients through social media, my blog, pitching startups, and from conferences.  I truly believe you never know where a connection will lead and I’ve gotten some gigs in unlikely places.

6. What are the various revenue streams that make up your freelance business?

For now, I’m focusing on writing, producing events with financial brands and side hustle coaching.  In the past I’ve also worked as an editor, social media manager and brand ambassador.

7. How did you manage your income so that you could pay more on your debt?

I cut back where I could, but I really focused on earning more.  In personal finance, so often the conversation turns to cutting out lattes or cable, and while that helps, there is only so much you can cut back.

I’ve been in the position before where you can’t cut back any more and you’re left wondering, “what’s next?.”  Focusing on earning more through my freelance career and side hustling gave me the ability to pay off debt early and put the equivalent of my old salary to debt.

I more than doubled my income through freelancing, which allowed me to put massive payments to debt ($3k-4k per month).

In personal finance, so often the conversation turns to cutting out lattes or cable, and while that helps, there is only so much you can cut back.

8. How long did it take you to pay off your debt?

The long version: 9 years to pay off $81,000.

The short version: 4.5 years to pay off $68,000. Essentially, I took out $23k for my undergrad degree and only paid the minimum on it for five years.  I then borrowed an additional $58k to go to NYU.  When I graduated with my M.A. in May 2011, after taking on a lot more debt, I had $68k left (after making those minimum payments for 5 years) and was determined to pay it off as quickly as possibly.

Once I set my mind to it, I was shocked that I paid off $68k in 4.5 years — $30k of that was in 2015, my first full year as a solopreneur.

9. How did having a freelance business help you become debt free faster?

Having my own business was a complete game changer for me.  I thought I was going to be stuck in the low-pay, nonprofit trap forever, but freelancing gave me a shot at a higher income, and having a career on my own terms.

I more than doubled my income, which helped me pay off debt faster and reach my goal of being debt free a year early.

10. What advice would you give someone who wants to follow your path, but wasnt quite ready to give up their full-time job?

My advice would be to really build your relationships and focus on the work.  It can be easy to focus on the wrong things in the beginning and waste time.  Start by building a brand, being consistent, reaching out and building a community.  Find out what makes you happy and what works.

At the same time, start building a cash reserve for when you do quit.  Preparation is key.  I don’t think anyone should take quitting your job lightly.  It can completely change your life, but you have to prepare mentally, emotionally and financially.

Start by building a brand, being consistent, reaching out and building a community.

It’s hard to go from the employee mentality to the boss mentality.  It can be stressful and trying.  That’s why it’s so important to find a community and also have a mentor that can really show you what you need to do.  I had a mentor that really pushed me and helped me along.  I’d be nowhere without her.


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