My first cost-cutting measure is a big one, because I’m looking to free up a significant amount of cash in one fell swoop, and the timing is convenient. My lease is up in a few short weeks, and so I’m already on the lookout for cheaper accommodation. I live in downtown Toronto, and my place is bigger than one person needs because I wanted to have enough space for a home office. My rent is accordingly quite expensive.

Luckily, working from home doesn’t necessarily mean working from home all of the time, so this time around I’m willing to make concessions regarding space (and location) in the interest of saving significantly in terms of my monthly rent. Instead of a one-bedroom-plus-den, which I have now, I’ll be looking for a one-bedroom place, which in this market might amount to as much as $700 in savings, depending on where I end up relocating.

To make up for the lost space, I plan on spending much more time working away from home. I have a three-part approach to accomplishing this, which should ensure that my routine stays varied enough to remain interesting, and has some built-in redundancy to ensure I always have somewhere to go to work that isn’t my own apartment.

Coworking/External Office Space

The first and primary part of my plan is to use a largish portion of the money I save in rent to pay for a membership at a newly opened coworking venture here in the city. It’s called Camaraderie, and it’s conveniently located relatively close to the area I’m looking to move to. Membership fees are $300 per month, which guarantees you a spot during working hours, including free Wi-Fi and hot beverages.

It’s a deal that can’t be matched by renting office space alone in the downtown area, but if you live somewhere that isn’t a major metropolitan area and that doesn’t have a local coworking space, try looking around for office space rentals, and see if they might not be cheaper than maintaining the larger place you’re using now as your living/work space. You might be surprised at how much money you can save this way. Even the savings represented by being able to choose a lower-cost Internet plan for home and savings on tea and coffee spend are significant.

Museum/Gallery/Library Memberships

The second part of my office/house separation plan involves simply maintaining the library, museum and other public space memberships I already have. Library cards are free in most cases (or at least they are here in Canada) as long as you can prove residence, and museum and gallery annual memberships generally aren’t that expensive.

It’s like having coworking space, except you’ll often be the only one working and it’s an interesting environment. There might not be coffee immediately available, though, which is why step three is a great old stand-by.

Starbucks/Coffee Shop

Never underestimate this old time-tested web working buddy. The coffee shop will save your sanity time and time again. If you’re in a dense urban area or have access to a car, this one should be the easiest of the three steps to get a handle on. My advice is to find an independent place with low turnover, because you’ll get the familiarity benefits of an office setting without all the downside of an actual office.

All told, it looks like I might be able to shave between $300 and $400 a month off of my budget, all by accepting a move to a slightly smaller space and adding some coworking to my routine, something I’ve been hoping to do more of anyway; not a bad cost-cutting measure by any means.

Have to tried downsizing your home office to cut costs? How did it work out?

The cost savings can be significant over traditional landline phone services, depending on the needs of your business and whether you make a lot of long-distance or international calls. Here’s a look at the top four ways to cut your web worker budget by using a VoIP service.

Get a business phone number at a fraction of a landline’s cost. Using VoIP can save money on a business line in both service and installation costs. Service for a landline into my home office from our phone company would cost around $30 per month for local service, with long-distance calls additional.

In contrast, VoIP provider Skype offers numbers for pay-as-you-go customers for only $60 per year, plus per-minute usage fees. For infrequent phone users, this is a much cheaper option than a landline. For heavier users, Vonage offers 1,500 minutes of outbound calls to the U.S., Canada and Puerto Rico (and unlimited incoming calls), a free dedicated fax line, call waiting, voicemail and caller ID for $39.99 per month.

Installation with VoIP can also save money over a landline if your office is not pre-wired for a phone line. New phone wiring can get extremely expensive, depending on the office location. But VoIP installation can be much cheaper, or even free, depending on your choice of equipment, provider and office Internet connection.

As an added bonus, if you have a lot of business contacts in another area code, you can request a VoIP phone number that will be local for those clients.

Make long-distance calls for free or cheap. Even if you don’t want a VoIP phone number, it can still save you money on long-distance phone calls. Computer-to-computer calls are free using most VoIP services, so if your frequent contacts use a service like Skype or GTalk, you can talk or even video conference with them for free anytime you are both at your computers.

Calling from your computer to a non-international phone number is also extremely affordable with services like Skype, which charges only $0.021 per minute to numbers in the U.S. It’s only slightly higher for Europe or other countries. If you have an iPhone or Windows Mobile phone and a Wi-Fi connection, Skype will also let you place calls from your cell phone. Vonage is also working on an app for smartphones.

Save cell phone minutes on the road. If you keep a minimal minute plan on your cell phone, the usage spike of occasional travel can consume your minutes fast. Using a VoIP service to make calls from the road can keep you under your plan’s limit and avoid cell overage fees being added to your travel budget. I use Skype for lengthy calls home from my hotel in the evenings.

An added bonus is that my autistic 6 year old won’t talk on a regular phone but will when she can see me via a video call.

Video conferencing can reduce the need to travel. Sometimes it is helpful to do business face-to-face, or you need to share visuals during what could otherwise be a phone conference. VoIP services (like GTalk or Skype) can create a face-to-face meeting for free, and allow for the use of visual aids or even screen sharing. And since computer-to-computer calls are usually free, it definitely saves over the price of travel.

Do you use VoIP for business?

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Closet Excavation

It may not be quite as satisfying as unboxing something brand-new, or buying a big ticket item at retail, but digging around in your closet for old, nearly forgotten hardware and gadgets can actually be pretty satisfying. Especially if you haven’t looked at them in many years, since you’ll often be surprised with what recent software updates or new peripherals can help you do with older devices.

For instance, I recently reclaimed an old Palm T|X that was languishing unused in my brother’s bedside drawer. I’d passed the device onto him when I picked up the first iPod Touch, but he’d stopped using it long ago when he got his first iPhone.

Paired with a Bluetooth keyboard, it’s still a great solution for quick document writing and editing on the road, and it actually has the added benefit of preventing distraction. I’d almost compare the experience to working with a typewriter, whereas any computer is more like working with a typewriter in a movie theater while a movie’s playing with a jukebox going in the background. Not to mention the fact that the device is still a great universal remote.

Trade for Tech

People who work from home tend to accumulate a lot of stuff. It piles up, falls in and out of service, and eventually just takes up space. You could sell it, but often the depreciation on electronics makes that an unappealing prospect to me. A nice alternative that usually leaves me (and the people I’m dealing with) much more satisfied is to try to work out barter deals to trade things you’re not using for things you’d like to try out.

I’ve done trade deals a few times, and nabbed an eMac and a nice starter film SLR out of the deal. Most recently, I traded an acoustic guitar I had (no, I don’t play guitar, and yes, I did buy it new for some stupid reason) for a 1.33GHz 12-inch PowerBook G4. It’s seen better days, but everything still works well, including the optical drive, which is a rare find for this particular vintage of Mac. A trip to the Apple Store and my local independent computer supply store later, and I’ve maxed out the RAM (to 1.25GB) and have a brand-new battery that will get me four hours and change with smart battery management practices.

Having the Powerbook means that I don’t need my Eee PC anymore. Don’t get me wrong, the battery is great on that thing, and it handles video streaming somewhat better than the PowerBook, but I just cannot get back to using Windows as my primary OS for any length of time. The upshot is that I now have a relatively new Eee PC 1000HE to use for further bartering. I’m hoping to pick up a newer-model Time Capsule, with dual-band networking.

Start a Gadget Exchange Program

Chances are, if you have a lot of gadgets, someone in your circle of friends also has a lot of electronic toys lying around which aren’t strictly useful all of the time. What better way for both (or all, if there’s more than two) of you to get a chance to try out new tools without the high cost than by organizing a gadget exchange?

Of course, there are numerous problems with such an arrangement, which is why you should make sure ahead of time that you trust the people you’re trading with implicitly, and that everyone will treat each other’s gear with respect and compensate one another for any damages that may result. It’ll still work out to be a lot cheaper than all of you impulse buying every new thing that comes out, and is a lot less wasteful, too.

Save Money

The bottom line is, the less you spend on gear, the more money you save. Believe me, if I could, I would just grab everything electronics manufacturers slap a “new” sticker on. Sadly, that’s not a realistic possibility. It’s far better to concentrate on finding “new to me” things to experiment with, and occasionally making a choice investment when one of those things actually does enhance my productivity.

Have you tried a gadget exchange program with your friends? Did is satisfy your urges to acquire shiny, new gadgets?

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Though I know no one’s immune from a recession, this conversation made me think about my own approach to the financial side of what I do. I started to think about what, if anything, I could do to try to cushion myself from the current (and future) economic turmoil. Here’s what I came up with.

1. I need a savings buffer.

Much of my work is short contract jobs, so I need to make sure I have enough money in the bank. I’ve seen a lot of talk about having a buffer that would last three months if you were out of work. That will be difficult to achieve, but it’s worth aiming for.

2. I need to pay my debts down, if not off.

Sometimes my credit card can get a hammering, so I’ve decided to pay it off every couple of weeks at the moment. This helps me avoid the “how-on-earth-did-I-spend-that-much” moments of truth that can occur if I leave it longer, and makes it easier to track my spending.

3. I need to track my spending.

I find it hard to save money if I don’t know where it’s all going, but I also find it nearly impossible to stick to a budget. I’ve taken to using my budget as a rough template for my spending, and simply tracking my spending against it. This approach allows for the variability of expenses from week to week and month to month, but also lets me work out where my money’s going, and find areas where I could be more frugal.

The budget’s invaluable on a day-to-day basis, but it’ll also help me make decisions if I’m asked to discount my rates or change my pricing structure.

4. I need strategies for finding new work.

I’ve been thinking that perhaps my wait-for-it-to-come-to-me approach to work won’t cut it if I’m out of work this time around. I’ve brainstormed a few ideas for finding work in markets that seem to be doing OK despite the downturn, and started networking with providers of complementary services that seem to be winning work right now.

Since I’ve done this, I’m also finding I’m more alert to potential opportunities and ideas that crop up as I go about my days, and I’ve started to keep a list of these so I don’t lose track of them.

5. I need to stay motivated.

With the constant news of unemployment statistics, redundancies and so on, it’s all too easy to get caught up in the doom and gloom. So rather than worrying, I’m trying to stay focused on the jobs I have coming up, and to feel reassured by my budgeting and any inroads I can make on my savings plan. When all else fails, I tell myself it won’t last forever — and I’m doing everything I can to stay in the game.

What are your tactics for keeping the wolf from the door?

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Kickstarter might be the answer to your prayers if you’re running a not-for-profit or if you’re looking to self-fund an arts project. Just browsing through the active funding efforts shows just how many different types of projects people are using the new service for to try to raise some cash. A summary glance found New York Times crossword creator Eric Berlin (not be confused with WWD writer Eric Berlin) funding a crossword “suite,” essentially a multi-part linked crossword puzzle, which would then be made available to all who contributed towards his funding goal. Another ongoing project has New Yorkers working together to create a crowd-funded and crowd-sourced book, with each donation of $30 or more earning the giver a page in the book.

Speaking from the perspective of someone who’s written grant proposals before, Kickstarter comes as a very welcome alternative for funding low-budget projects. I say low-budget because I think that the model wouldn’t really work with larger sums, unless there was also a significant marketing effort behind the attempt. It could also be very useful for funding projects — like Berlin’s crossword suite — that are only produced if enough people buy it beforehand, through “pledges,” which are actually more like conditional pre-orders.

Signing up for Kickstarter is easy; you can even use Facebook Connect to further simplify the process if you like. The best part is that Kickstarter doesn’t skim any money off of incoming pledges, so you receive 100 percent of the funds raised, minus credit card processing fees from Amazon. Even those are waived until July 15, as a special promotion to celebrate the venture’s launch.

There is a catch, which is that projects have to reach their target within the time frame allotted in order to receive any funding at all. Which means, if you have a funding goal of $1,500, and you set a deadline of four weeks within which to reach that milestone, you either reach it, and get the total amount pledged, or you don’t, and no one pays anything. I actually like that, because it provides some sort of accountability in that people have to work out a reasonable budget, and it means that the project doesn’t have to go ahead underfunded if it doesn’t reach that budget.

If you’re looking for a source for that little bit of extra cash you need to get your project up and running, Kickstarter might be the answer. Check it out, and be sure to let us know how it goes if you do end up using it.

Have you found any innovative sources of funding? Share your tips in the commments.

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Plan Your Role

Imagine you’re treating yourself as a new hire. It’s time to plot out your career path, which means answering the tough questions about what your role is and what you want to accomplish in your new position. It’s all well and good to say you want to be a web worker, but what does that really mean? It only describes the method, not the nature or content of your work.

The web working sphere is filled with people who seem not to have taken the time to answer the very basic question of what it is they do. Not that you can’t wear multiple hats, but you should definitely wear at least one.

I find it handy to give myself a job title, and even go so far as to write out the description for that title. When I’m feeling especially ambitious, I work on my career path, which has different titles arranged in a hierarchy, each with their own corresponding description. You may have ventured in to web working to escape structure, but it can go a long way in helping you (and your client) know what it is you’re hoping to achieve.

Word to the wise: avoid the “Social Media Consultant” title until you’ve actually done professional consulting work devoted to social media, and can point prospective clients to solid examples of what that work entailed. Otherwise, you’re setting yourself up to become known as something far less flattering.

Your Finances

Budgeting is a trying exercise in the best of circumstances. If you’re just starting out as a freelancer, and are used to the people in Accounting handling that side of things, it can be downright terrifying. Even if you’ve worked as a freelancer before, working online introduces new challenges into the equation which could result in a very different experience.

First, there’s some good news. Computer equipment, internet service, cellular and phone bills, and even a portion of your rent may all qualify as deductible expenses. I have an accountant, since my brain isn’t wired for numbers, but if you want to go it alone, the Anti 9-to-5 Guide has a handy Freelancer Tax FAQ that should start you off on the right track.

You need to budget for your web work-related overhead. Think about and budget for things like web hosting and domain registration, web service subscriptions, software purchases (some of which you may be able to be bill to clients, depending on the nature of the contract), and consumables like pre-paid long distance cards, and, believe it or not, easy-to-forget things like batteries for your hardware peripherals.

Budget for the short-term until you get a good feel for what sort of costs will be likely to recur.

Your Goals

This is related to your role, in that setting a career path comes in to play when you’re setting goals for yourself. But since you’re not just an employee any longer, it goes far beyond that. You also want to think about output goals, spending goals, and even establish a desired future state for your web working business for the purposes of developing a clear strategic vision.

You can measure your output goals in terms of deliverables, projects, contracts, blog posts, etc. depending on the nature of your business. Establish clear targets attached to timelines, but don’t be afraid to alter these as you learn more about web work and what you can realistically expect.

Spending goals are easy to measure, so long as you accurately track your spending history. Make sure to record even the little things, and then aim to reduce costs wherever possible, just like any corporation would.

Establish a desired future state once you’ve been working long enough to know what you can reasonably expect out of your web working career in the future. Paint a picture of what your practice will look like at one year, and then at five, and so on, for as long as you’d like. Having a future state in mind will help keep you motivated, and help make sure you don’t become stagnant. Revisit and revise your targets regularly to make sure you aren’t working towards something that isn’t possible or desirable any longer.

Hopefully these tips help you work out a clear vision of what you’d like to put into and get out of web working, long before you wade into the tools, services and best practices we examine here at WebWorkerDaily.

Existing web workers: what tips and tricks do you have for planning, budgeting and goal-setting? Share them in the comments.

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Yesterday saw the launch of $2000 Website, an intriguing design shop in the Bay Area that describes itself as a “self-service” design agency, offering to design, code and publish a custom website within a two-week period.

Users begin by completing a short online questionnaire to help tease out their requirements. The dialog is largely focused on the strategy and goals of the client, rather than technical requirements: questions range from site’s goals, to the company’s “personality”, required calls-to-action, and some simple audience demographics, along with your aesthetic influences.

I’ve seen similar services in the past – including PSD2HTML, XHTMLized and PSD2WordPress – but these have focused on the technical production of an existing creative treatment.

The service is aiming at small businesses with limited budgets, but it’s not hard to envisage it as a labor-saving utility for web workers who need to quickly punch out a microsite for a new product, store, event, community campaign, or even a client of their own.

The company promises to prepare initial design treatments within five days and complete production within another five days. It limits the output to a five-page site, with the option to upsell additional creative services, such as creation of a brand, for another $500.

The creative quality of the modest client portfolio actually looks pretty good given the short time available to the producers, though it’s unclear what the division of work was between the company and the client. There’s nothing here that couldn’t be created with a working knowledge of WordPress, CSS and XHTML, but many web workers aren’t fluent in all those areas, nor have the time to undertake small projects economically.

So, perhaps the notion of web site micro-factories may prove to be a useful toolkit for web workers – what do you all think?

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There are basically three variables to juggle: your total income for the year, the number of hours you’re going to work, and your hourly rate. If you know what any two of them are, you can figure out the third. So, if the goal is to come up with an hourly rate, you need to determine your target total income and work hours.

Start with your target income. A good starting point (if you’re considering leaving full-time work) is your current annual salary – but that’s not the end of the story. If you want to stay on an economic even keel, you need to add in all of the expenses that your employer currently covers. This might include:

Basically, if you become your own employer, you’re responsible for paying for “fringe benefits” (or doing without). You might find that you need to bring in $90,000 per year to have the equivalent of a $60,000 salary.

Now think about how many hours per year you’re going to work. 52 x 40 – That’s 2080 hours, right? Not by a long stretch. Consider:

A more realistic estimate is probably 40 working weeks per year (if you’re lucky finding work your first year!) and 6 hours per day. If you’re taking weekends off, that means 6 x 5 x 40 = 1200 working hours per year. Do the math, and in this simple example you’d need to set your freelance rate at $75 per hour to match your current salary.

That’s not the end of the story, of course – you need to think about what terms you’re going to bill people on and what the market will bear, among other factors – but it’s a good way to sanity check any plans you have to go freelance.

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