Late last year, I got a great raise; so great, in fact, that I decided to buy a nice house. This involved some scrimping and saving, because although I had been saving over 10% of my income, my income indicated a larger house than my savings did.
This spring, I got laid off from my job at Clairvoyance Corporation. A company called Queria moved in with an attempt to license the technology and hire the key members of the staff. But since Queria was in a somewhat precarious financial position, they hired me as a contractor instead.
This means that I have to pay estimated quarterly income taxes and self-employment tax. (And health insurance, and so forth.)
Then in June, I got married, and I was worried about being able to afford that. So for a few months, I didn't save for quarterly income tax and self-employment tax, and saved for the wedding instead, figuring that I could make up for it with extra saving in the second half of the year.
So in July, I sat down with Quicken's tax planner, wrestled a bit, and came to the conclusion that in order to pay for all the income tax and self-employment tax I expected to owe, I would need to save about 55% of my income for the rest of the year. This is unfortunate, particularly so because I estimate our normal living expenses to be about 55% of my income. And there are house repairs and so forth that I'd like to spend money on.
Fortunately, there's a way out of this mess (at least for the short term). I only have to pay 100% of my 2000 tax liability by the end of December; I can make up the rest by April 15, 2002. And by April, I should be able to save up enough money to pay the rest.
Or rather, I should be able to save up enough money, if I'm employed by then. If I'm still a contractor, things will be very tight then. (Though somewhat less tight). In a sense, I'm only deferring the problem.
And in the meantime, I am still not able to restore the financial emergency fund that I depleted to buy the house, then to have the wedding, and now to pay taxes. I miss my emergency fund. (Though I have resources such as good credit with which I could cope if I exhaust my emergency reserves.)
Since October now, I've been feeling "If I can get by this financial crunch, then I'll be in the clear." (Where in the clear means, more or less, "able to save effectively and occasionally make significant purchases without crashing our overall savings rate.") First the house, then the wedding, and now the taxes.
It makes me sad to feel squeezed this way. And I get sad on a meta level, too--I've seen other well-to-do people (honestly, we are pretty darn well-to-do) getting into a money chase of always feeling "if we had just a bit more, everything would be all right", no matter how much they get. And I don't want to be like that. (My comfort there is that I remember feeling financially comfortable, and that gives me hope that I'll be able to feel that way again.)
Sigh. I'd like to be an employee again, with health insurance and the company paying half my self-employment tax. And a raise while I'm at it. And a pony.