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Negotiating A Consulting Contract: Did I Blow It?

In life, there are countless negotiations. Especially if you’re like me and have a three year old at home. We all win some and lose some. I had a chance to negotiate a consulting contract. Did I blow it?

Time is Money

Opportunity cost is a funny thing. When you spend your time doing one thing, you can’t use it to do something else. The last time I posted a “winning move” was back in November. I’ve been slacking!
 
This is because I’ve focused my free time and attention towards writing and promoting this blog . Which has not been a “winning move” just yet.
 
I haven’t been as focused on finding new opportunities to earn or save money. That’s a little backwards for somebody writing about personal finance…but it’s the truth.
 
I’m hoping the investment in this site pays off in the long run. The goal is to make it the platform for me to launch a financial coaching business. I’m betting my most valuable resource (time), that the investment is worth it. 

Better to Be Lucky Than Good

Thankfully, I’m a lucky guy. No, I’m not talking about my wife or kids again but yes, they are the primary reason I’m lucky.
 
Instead of going out and looking for a winning opportunity, one fell onto my lap. A former executive from my company reached out. He asked if I’d be interested in doing some consulting work for a new project of his. I’d basically be doing more of my day job…at night. Yay more work! The hours were pretty flexible too. 

The Negotiation:

I said I was interested and we started to talk about compensation. I don’t think I’m a great negotiator. One thing I knew was that I did not want to throw out the first number. Here’s how the conversation went down:
 
Him: Have you thought about how you want to structure this?
Me: It would have to be hourly 
(I did not want to agree to a flat fee and then have the workload change or have to make countless revisions. If I’m going to be selling my time, I want to get paid for…..my…..time)
Him: No problem. What rate were you thinking?
Me: I’m not sure. I don’t do much consulting work. What do you have budgeted?
Him: I’m obviously trying to keep costs down as I’m cashflowing this out of pocket right now. I’m not going to negotiate with you. Why don’t you think about it and come back to me with a rate you think is fair.
Me: OK. Sounds good. 

 Now What?

So I did a little research and the internet told me to take my hourly rate at work and multiply it somewhere between 1.3 and 3 times. My initial gut was to go 2 times. I calculated my rate by taking my annual salary and dividing it by 2,000 working hours. After thinking about it a bit, I realized that I really wanted the work extra money. I was willing to take less to make sure I got the job. So I talked myself down a bit. Ugh.

Next Time

Him: Have you come up with a rate?
Me: Yes. Let’s go with $XYZ per hour (which worked out to be 1.6X my hourly rate)
Him: Sounds good, when can you start. 
Long story short. I did the work. Some of it was interesting and fun but it also became tiring. When I work on my blog at night, I’m using a different part of my brain than my day job. It actually feels like a break from work. This project did not, as it was so similar to my 9-5. 

Consulting Wrap Up

 
He was pleased with the results of my work and paid me. In total, the project earned me $1,070 (before taxes). The door was also left open by both of us for another round down the road. The money was not bad at all for a couple of nights of effort.
 
Still, I’m questioning if I should have asked for a higher hourly rate. 

What to Do With the “Extra Money”

 At this point the story should be over. But it’s not.
 
One of my biggest pet peeves is seeing how unexpected or “found money” tends to get spent and disappear. Have you seen the “spend your tax return here” ads yet? I saw one at a used car dealership the other day. Many tax preparation companies make money by getting consumers to turn their interest free loan to the government (aka tax refunds) into gift cards. Remember, spending money is okay but it should be done with intention.
 
In fact, when the check came in, my own wife asked if I was going use the money to buy new skis. I know, I married a good one!!! My skis still turn fine and getting new ones is not necessary. Nor will a new pair help achieve my current goals. After seeing the ages of the top athletes in the Olympics, I’m past my dream at being a gold medal downhiller or professional free skier anyway.
 

Thought Process

Let me walk you through my thought process on what I’m going to do with this found money.
 
Fantastic, I have an extra $1,070. I need to set some aside for taxes. Then what?
I could go get a new TV! Never mind, I only have one cable box and have never needed a second TV. In fact, my budget is set up to allow me to spend on everything that’s important to me. There’s nothing I can buy that’s more important than achieving my goals for the year.
 
What are my goals this year?
 
Sweet! I’m already on track with my savings goals. Investing more in taxable accounts could never hurt. Still, I’d like to consider alternative uses for the money. Next.
 
Ut Oh. That blogging goal’s going to be a challenge. I’m operating Winning Personal Finance on a shoestring budget right now (read I’ve spent $0 so far in 2018). I’ve seen some great traffic growth but am still a long way from reaching my targets. Investing a little into this site may help this one. I know many other bloggers have been using tools to automate Pinterest posts. Doing so could passively drive crazy traffic. That’s my next move. Anything I can do for big gains and little effort is huge right now. There are not enough hours in the day.
 
I could also invest in a theme to make the site look nicer. The free default theme is fine but it’s not exactly the most professional looking. Do any of my blogger friends reading this have a theme they prefer? Was it worth the investment?
 
Thankfully, the above blogging investments should not take up my whole earnings. I’m going to save the rest for a different goal, my CFP (Certified Financial Planner) courses. And poof. The money is spent.

Conclusions

Sometimes the best way to make some extra money is to do your day job as a consultant at night.
 
When you have some extra money don’t just spend it because it’s there. Invest it. One way to do so is to invest in traditional investments like stocks or bonds. But that’s not the only way to invest. Investing in your own business or your own education can also pay huge dividends down the line.

Questions:

How do you think I fared in the consulting rate negotiation?
What could I have done better?
What’s the best way to invest the profits?
Do you have a favorite Pinterest scheduling tool?
Anybody out there have a theme that they love?

Winning Move Series

 This article is part of a series of posts about the actions I have taken to save or earn more money. After adding in these moves, the annual wins total $3,514. Not bad considering I did not make any sacrifices for these savings.
 
Previous Winning Moves:

 


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