Why you need a go to hell fund

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A few years back, I wrote a Father’s Day musing — “Is entrepreneurship genetic?” — in an effort to assimilate some of the business lessons my dad taught me. In advance of the upcoming Father’s Day, I want to address one of his principles in more detail: specifically, the idea of having a go to hell fund.

Personal finance gurus will tell you that building up an emergency fund of 3 to 6 months should be a priority, and I agree. You never know what’s going to happen to you, and you need to be able to pay the bills.

But your go to hell fund addresses financial security from a different perspective: It’s about having control and taking action. When I started my first job, my dad advised me to have enough money stashed away to escape a bad, negative, or unproductive situation. Which is precisely what I did, quitting an aggravating job in order to ride my bike across the country. (Didn’t make it, alas…got run over by a guy who fell asleep at the wheel of a pickup truck in Montana.)

At the time my dad said it, I understood the concept purely in terms of being an employee, and being able to tell a boss “I’m out.” What I’ve found is that, for freelancers, it’s even more important. The key is this: Your go to hell fund not only allows you to manage and/or extricate yourself from bad clients and situations, it enables you to avoid them in the first place. It’s not something to be used on a whim; it’s a business tool with strategic purpose:

  • You can say “no” to freelance work without worrying about paying the bills.
  • You don’t need to take jobs out of desperation, and therefore can negotiate from a position of strength. (That’s also a morale boost.)
  • You can dump bad clients without hesitation, which frees you up to attract more of your favorite freelance projects and work harder for your good clients.

It’s a tough economy out there for a lot of freelancers, and saving money can seem like a tall order. But it comes down to choices: Either you build wealth to control your own destiny, or other people and projects will control it for you.

What’s the most important business lesson your dad taught you? Do you have a go to hell fund?

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  1. says

    I want a Go to Hell fund! Actually, I had a stash in the bank thanks to a terrific year in 2012. It came in handy when the hospital stay came unexpectedly.

    Great way to link that to writing, Jake. Too many times I’ve said “No thanks” to a client (yesterday, in fact) because the price was outpaced by the work required. Easy to leave the low-paying stuff behind when you have a healthy bank account.

  2. Shay Moser says

    I don’t have a “go to hell fund,” but I’m working on it. But the best business advice I got from dear old dad was, “Even the good companies will take advantage of you if you let them.”

  3. says

    Exactly, Lori. For me, the nice thing about the GTH fund concept is that it’s a lot more positively oriented than the emergency fund, which you hope never to have to use…but needs to be there for out-of-the-blue situations like yours.

    That’s a great one, Shay! Thanks for commenting.

  4. says

    My dad taught me not to under estimate my worth–“Don’t sell yourself short.” Value the work you do and others will, too. This translates into not undercharging for my services.

  5. says

    Shay, your dad’s advice was brilliant. I wish more people understood that.

    I think a Go To Hell fund can also help you set boundaries with existing clients. It’s so easy to let them demand more and more of your time until you don’t have the time for other clients. Having some extra scratch in the bank makes me more confident about setting limits because I’m not (as) afraid of getting bounced.