Thanks for reading!

>I wouldn't really consider this hidden expense. It's just expense.

Maybe I should have worded it differently. I meant "hidden" in the sense that the chart I showed didn't reflect it because that only showed my business expenses.

I definitely did take into account my living expenses when I decided to quit my job.

>Maybe I should have worded it differently. I meant "hidden" in the sense that the chart I showed didn't reflect it because that only showed my business expenses.

Salaries are a business expense. If you hired a second programmer would you not expect to pay them? So why wouldn't you expect to pay yourself?

They are, but all my other expenses are objective and quantifiable. I could make up a salary for myself, but it would kind of be pulled out of thin air.

I've thought a lot about what the dollar value is of my time and I haven't come up with any way of reaching a number that I find practical. It can't be my earnings, because that's negative. It's not 0 because I do value my time. It's not my opportunity cost from not doing consulting work because that would just tell me that I should outsource everything. I could just make up a number like $50/hr, but I don't know that it would help me make decisions that I couldn't other make.

I think you should figure out what salary you want to make and charge yourself that. It might be that you are happy with $2k/month as long as you get to do your own projects. It might be that you want $80/hr (~13k/month); maybe you want $20k/month. If you have a number that you are aiming for, you will have a better idea of whether you are succeeding. For instance, if you want $10k/month, and after N months/years you find you are getting $2k/month, you would then have solid information that you are not achieving your goals with the given strategy. In which case maybe you get a job, maybe you do contracting/consulting, maybe you switch to project with better prospects, etc. Or maybe you find that your trend will achieve your goal in M years, so you know to stay on track even though things aren't looking that good right now.

Your salary doesn't have to be unquantified. Your own salary is an implicit cost that needs to be accounted for if you are viewing your efforts as an investment.

As an example, PayScale says average software developer salary is $67k in Springfield, MA. I would recommend you put this down as an expense and a liability or equity in the business within the context of the "accounting equation"; see https://www.investopedia.com/terms/a/accounting-equation.asp

The key here is to make explicit your opportunity cost. You can then put that in context of how much you are willing to invest in this business. For example, if you wanted to give yourself a seed investment of $300,000, this could mean $50,000 cash and 3.5 years of labour.

If you counted that as a liability you could say the business has to pay you back once it reaches profitability. Or if you view it as equity you would build that cost into when you sell your business. This would also allow you to better calculate ROI.

If you account for your time this way, you can cleanly separate business and personal expenses. In terms of the "4 hour workweek" way of thinking, it also means you know when you can stop implicitly throwing money at your business and hire someone to fill the "dev" role and have the business run itself.

If you will indulge my 2c, I would also recommend you cut any projects that are not performing to your expectations. When you have multiple projects you are acting as portfolio manager. This means that you are modelling your business like a much larger corporation with different business units, which require far greater management overhead.

From reading your post, I believe the role you envision for yourself right now is that of product owner/manager. If that's the case you should limit the scope and complexity of all other responsibilities so you can do that role well.

I'm coming back to this late, but I think you've missed the point.

>I could make up a salary for myself, but it would kind of be pulled out of thin air.

The exact value of your salary doesn't matter, it matters that you've factored something in so you can keep a roof over your head and feed yourself. By not factoring in your salary, you're painting yourself a rosey-er picture of your financial state than it actually is. By your current measure, your venture could be "in the black" yet you'd still be struggling to make ends meet. You need to see the picture as clear as possible.

>all my other expenses are objective and quantifiable

If you expect this of every expense, then you'll be in for a shock. Many business costs are not objective in the sense that you can rationally determine why exactly it costs X. Heck, pricing software is mainly an exercise in "what's it worth to you", rather than what it costs to actually develop it. If you need absolutely need a service and only one consultant can offer it, then chances are you'll have to pay what they ask, even if there's no objective rationale behind the costs other then that's what they charge.

My point is that the business side requires a different mindset and perspective than the technology side. You've got to improve your business skills in the same way you'd improve your tech skills. It's not easy, but at a certain point your success will depend far more on your business acumen than it will your technological prowess.

Are you incorporated? I think you're required to pay yourself if you are, even if minimum wage. That would put it back on your balance sheet, and make the IRS happy.

(If its a sole proprietorship, I'm not sure shat the rules are)

That's completely untrue. In fact, it's the opposite -- the IRS objects if you pay yourself more than a reasonable salary.

Why would they? If you pay yourself through income, they will get the most taxes through income tax.

If you're the sole owner of a corporation and also an employee, you can move money from the corporation to your own pocket by either paying yourself a salary or paying a dividend out of corporate profits.

At least prior to the recent corporate tax rate cut, the tax you'd pay on the salary would typically be less than the sum of corporate income tax and tax on the dividend, so people would pay themselves unreasonably large salaries to save on taxes, and the IRS would object to this.

Here's an article that goes into more detail:

https://www.forbes.com/sites/anthonynitti/2016/05/13/reasona...

Correct. You should always include your salary as a business expense. Being your own boss, you can set that salary based on your personal expenses.

We'll there's your problem. If it were me, I'd look to cut expenses before doing something like this, but they're already as low as $1500. If I cut further I could be ramen profitable on his blog income.

Edit: don't mind me...

The author already did so: So in August, I bought a modest two-bedroom home in South Hadley, Massachusetts. Population: 17,500. If you're worried about money, just buy a house. My living expenses here are ~$2k per month, which is close enough to the rate of return on my personal investments that I’m kind of at equilibrium.

Missed that part, my bad!

This sentence threw me off too. I would have expected the author to have budgeted these living expenses prior to doing this... maybe "hidden" is just a bad word choice.

Well though there are difficulties, I do think my be moving to a place like India, or Malaysia etc, may be an economical viable option. The difference in living costs can be phenomenal: Reasonable appartments in many big Indian cities can be had for less than 300$ per month.

You don't have to move out of the US. I see 2 bedroom apartments in smaller US cities (but still decent sized cities, 60k+ pop, within a couple of hours from major metros, has all the same franchised restaurants/shops every other city in the US has) for ~$350/month. Like, lots of them.

If you're willing to live in a mobile home, rent can be as little as $250 a month, it looks like.

That is a very key point. Everyone focuses on digital nomads and living in Thailand. For the cost of the plane ticket there you could probably pay several months’ rent in Kansas.

Is that ideal? Maybe, maybe not. Will it make a blog post that gets you on HN? Of course not.

Still, if you need to be near a US time zone it’s a fantastic alternative to South America that doesn’t involve visas, dealing with a foreign language, etc.

Rent aside, the other big factors would be health insurance, car related costs, and food.

Going to a large city overseas, you won’t even need a car. Food will be a lot cheaper, and going to the doctor will be affordable.