Scarlett McCarthy on Facing Our Finances as Freelancers
The creator of Literally Broke shares her journey to financial freedom.
Hi writer friends,
Now that I’ve admitted to you all that I’ve spent many years with my head in the sand when it comes to my personal finances—and I’m finally pulling it out and blinking into the bright sun of many mistakes—I want to talk more about money and writing around here.
My first step has been a mindset shift. There are three ideas that I’ve spent years convincing myself are true:
Part of being a writer is being broke and I’m fine with that.
Saving for retirement is impossible because I’m barely making enough to save for next month.
My student loans will hold me back for the rest of my life so it’s better to just not think about it.
The cool thing I’ve realized recently, is that I’ve made these statements true by saying them to myself over and over again. But I can also make them untrue by telling myself new stories and working towards those.
I just need to figure out how…
In looking for new financial possibilities, I’ve been looking for people who are much better at money things than me. But so much personal finance advice is geared towards people with full-time jobs and 401(k)s and the likelihood of being promoted in a year—most of which does not apply to freelance writers.
So I was thrilled to discover Scarlett McCarthy and her blog Literally Broke, which is full of personal finance advice for creatives and freelancers. Scarlett is a writer herself, and she got started on her financial journey in the shadow of some serious credit card debt. (Who can relate? ✋) Now she has a very transparent approach to her money situation, and she candidly shares what she’s learned, like how to save for short-term goals and how to budget when you have a fluctuating income.
I’m excited for you all to meet Scarlett, and for us to all keep having new kinds of conversations about our finances as freelance writers.
Scarlett McCarthy on Facing Our Finances as Freelancers
So much personal finance advice is targeted at people looking to get promoted and work a thousand side hustles. But creatives are already working a thousand side hustles!
Tell me a little about what you do and how you got started on the path to personal finance expert/mentor/trusted blogger?
I’m a playwright and screenwriter who graduated from NYU in 2016 with 30k in student loans. I took a full-time job at a startup because I knew I had these loans to pay back. I quickly realized I was miserable. Every day I was having panic attacks and crying after work. I knew I needed to leave so I saved up some money (which looking back was not enough) to quit. I ended up working like 3 part-time jobs during 2017. I was suffering from a lot of anxiety and insecurity and ended up leaning heavily on my credit cards to keep me afloat.
By the time I realized something needed to change it was January 2019 and I had 10k in credit card debt and 25k in student loans. I made a Google sheet of everything I owed and began using the debt snowball method and cash budgeting to pay it off. By August of that year I had paid off all of my credit card debt, which is when I became obsessed with personal finance. By the end of 2019 I had increased my net worth by 15k on a 35k salary.
I knew there wasn’t any personal finance literature out there for people with nontraditional career paths. But I knew there were other artists and creatives who were in the same boat I’d been in (working 1,000 jobs and overspending on credit cards because they were convinced their big break was around the corner). So in January 2020 I finally mustered up the courage to share my story publicly and launch Literally Broke.
What is one big change you made when you decided to focus on paying down debt?
I adopted a cash-based budget, which I strongly recommend everyone try even if they’re not paying down debt. Studies have shown that when you spend with cash you end up buying less because it’s painful to see your money disappearing physically.
When I started my financial journey I was getting paid bi-weekly and I would write out all my expenses and categories and pull that exact amount out of the bank on payday. I had little clips dividing my money. I looked like a lunatic but it was SO helpful.
I think so many creatives avoid the topic of personal finance in favor of an "ignorance is bliss" mentality. I can remember a friend of mine asking me to check my credit score years ago when we were talking about partnering for a business idea and I told her, no way—it's bad and I don't wanna know. (I got over that and I now check it regularly.) So I'm curious how you first came to actually enjoy staying on top of your personal finances? Were you ever resistant and how did you get past those blockers?
I 100% used to be resistant. I mean, that’s how I got into debt. I remember being in line to buy a $5 iced oat latte from La Colombe and being like, “well I’ll deal with my credit card someday.”
The number one thing that kept me motivated was updating my net worth once a month. In my opinion your net worth is the most holistic measure of your financial health. It’s really easy to dismiss your progress when you’re not measuring it.
A lot of people obsess over their credit score. And it’s definitely important for things like buying a house, starting a business, etc but it’s not an accurate reflection of where you are financially. You can have a great credit score and still be a financial hot mess.
What worked for me was competing with myself and celebrating the small wins month-by-month.
I love that you're so transparent about your net worth, even though it's negative (like A LOT OF US, myself included). Have you ever experienced shame related to your personal finances and how did you get over that?
My debt was a secret for a really long time. I borrowed $5,000 from my boyfriend to pay off some of my credit card debt at one point (I’ve since paid him back, even though he told me I didn’t have to) and having to ask for help like that was the worst I’ve ever felt. When I first calculated my net worth I was so scared to tell him what it was, because I had this fear he wouldn’t want to marry someone in so much debt.
The reason I’m so comfortable with transparency today is because when I was paying off my credit cards I watched a ton of personal finance YouTube. People in the debt free community really value transparency, and seeing other people in the same situation talk about their net worth makes you feel less alone.
Maybe it’s my anxiety, but I suspect there are people out there I know through writing or college or whatever who think what I’m doing is dumb. I also suspect that people who think that operate from a place of privilege where their parents probably either a) paid for college or b) taught them financial literacy.
My philosophy is that people who don’t support this project and my financial health aren’t my people.
There is so much advice out there on personal finance. But most advice is geared towards people with full-time jobs. Are there risks or misinformation for creatives to be aware of when it comes to traditional finance advice? Where are the gaps between the traditional finance advice and what we need to know as freelancers/creatives, and how can we fill it?
This is a great question. I would say that it’s really easy to see what’s out there and go “Oh this isn’t for me” and give up.
So much personal finance advice is targeted at people looking to get promoted and work a thousand side hustles. But creatives are already working a thousand side hustles! We don’t get promoted in traditional ways. AND our full-time job may not correspond at all with our actual career goals.
Budgeting when you have a fluctuating income is something I talk about a lot on my blog, because I think it’s easy to feel defeated when you’re not working with a set budget every month.
I think something like “You only need a 1k emergency fund while paying off debt” is some morally dubious shit, especially for creatives. If you’re a freelancer, the ultimate goal should be to have a year's worth of expenses saved. We don’t have the same flexibility and security so we need to look out for ourselves.
What does it mean to make personal finance more intersectional and feminist?
A lot of financial advice that claims to be feminist is basically just white feminism.
Like, having more women in business doesn’t actually serve all women as long as the systems that perpetuate inequality are left in place.
We need to understand that for most of its history, personal finance literature was all about “pulling yourself up by your bootstraps.” But if you’re getting paid minimum wage, have pre-existing medical conditions, or are differently abled, you’re often facing a set of financial barriers so restrictive, they make improving your economic standing, let alone acquiring wealth, virtually impossible. No amount of budgeting can help someone who’s not making enough money. And these issues really compound when you account for race, socio-economic class, citizenship status, etc.
Personal finance is personal and we need to approach it as an intersectional space. I’m a white, college-educated woman trying to get out of debt, but that shouldn’t be taken as representative of all women. Of course I hope it inspires people to take control of their financial life. But what’s worked for me may not work for someone else because my personal and economic circumstances are not the same as everyone who reads my blog.
What is something you continue to struggle with when it comes to finances?
My goal has always been to become net worth positive by the end of this year. Because I’ve been laid off, that may no longer be possible. And even if it were, I’m weighing the cost/benefit analysis of maybe investing instead of paying off debt because over time I believe that return will be greater.
Learning how to adjust my goals and be flexible is probably what I struggle with the most.
Do you believe we can achieve both creative and financial freedom? Or do we have to make sacrifices in our creative pursuits if we want to find financial success?
That’s such a complicated question because obviously everyone’s creative and artistic goals are different.
If you consider any time spent away from creating to be a sacrifice then I guess the answer would be yes, it absolutely requires sacrifice. For me, I don’t feel like I’m sacrificing right now (though I have felt that way in the past).
My goal is to make enough money working that I can save, invest, and work on the projects I care about. But I’m also not someone who likes to write plays all day long.
So many people are facing financial hardships right now due to the pandemic. And things have been looking especially bleak for writers. As a writer yourself, what gives you hope that we can all keep doing the thing we love and make money doing it?
I think we’re unique and fortunate in the fact that we can always do the things we love. Connection is a really fundamental human need and if we can share our work with people (and share it well) then we do have something that’s always in demand.
I also think that for the most part artists are creative and likely didn’t get into it for the money in the first place. I’m confident I can pivot and figure something out because it’s what I’ve always had to do. I’ve made $50 writing plays, so I never counted on that in the first place.
That’s all for today, friends. If you’re a paid subscriber, I’ll be back in your inbox on Tuesday with pitch calls and writing opportunities. See you then!