Depreciating Dollar Hurting Freelancers: How to Cope
As of this writing Inquirer’s Forex section shows that the exchange rate for every dollar is Php44.915. If I’m not mistaken it (dollar) is in it’s all-time low this year.
This maybe great for the Philippine economy but not much for Filipinos who are earning in dollars which include OFW’s and us home-based freelance workers working with US clients. So how do we deal?
Here’s some sound advice from an Inquirer feature on How to cope with strong peso, weak dollar:
But if the cash flows come from investments, then the OFW can do something to achieve higher returns on dollar investments — he can move his placement to another kind of investment that may give higher interest income. Gone will be the days that a five percent per annum return on US treasury bonds will suffice. For 2007, the peso has already appreciated by about six percent absolute. One’s USD investment should thus be earning about 14 percent to 15 percent per annum to offset the effect of the depreciating dollar and still make money in peso terms.
Other options are dollar global equity funds, global balanced funds, global high yield bond funds, and alternative asset classes such as commodity funds and real estate investment trusts (REITs). These investments may potentially yield a high interest income per annum. But since these investments come with risks, the OFW should determine first if he can handle the risks. Check too, if these investments are easily available and accessible to the OFW and/or his family.
But what if you’re not yet in the position to invest on anything as the case of a new freelancer? Here are what I think are some viable ways to cope with the depreciation of Uncle Sam’s currency:
Request for rate increase – explain the depreciation of dollars. If your client appreciates the value of your service, granting this request will be somewhat a no-brainer for him or her.
Balance your gig sources. Don’t always use your skills for the benefit of foreign clients. Find Filipino clients, too. 75% of my income come from Filipino clients, which helps a great deal during dollar depreciation since it’s impact is not on me.
Find more clients to compensate for the low exchange rate. If one dollar is equal to Php40 pesos, stop sulking and do something to earn two or more dollars in stead. Easier said than done, I know. But it’s not out of the question.
Include in your contract that rates are subject to change according exchange rates peso-dollar. I haven’t yet walked this talk. But is this policy a really novel one? I’d really appreciate if someone shares his or her thoughts on this one.
Tags: dollar rate, dollar exchange rates, OFW, freelancers, forex
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Jeremias said,
October 18, 2007 @ 9:33 pm
look, im an accountant, and i can fairly say that the economy is going to better places. This is the first year since CORY Aquino that the government had no deficit and and economy is really fighting with grit. I think its about time that freelancers started to settle down a little bit more and do “bundy clock” jobs. I know the pay isnt that good, but the bnefits will be rewarding. There’s medical, social security, and retirement benefits, which cannot be counted on a monetary basis. I really think that advocating freelanceship is not that good, if it extends beyond the mere “additional income”. believe me nothing replaces an 8-5 work shift. Also, i simply abhor the fact the many freelancers get to avoid TAX payments. believe me if the country’s economy was back the way it was in 1990 (25Php:1$) then freelancers dont need to raise their rates, because the commodities would be cheaper.
—but of course, this is just my opinion. i just hope you’ll have the same opinion before you are 60 and doesnt have a reliable retirement pay.
Jeremias said,
October 18, 2007 @ 9:38 pm
by the way, i find you attractive… r u stil single?
Alfa said,
October 19, 2007 @ 5:07 am
@ Jeremias
The thing is I’m not advocating only freelancing but turning freelancing into a home based business. But still, a serious freelancer can definitely provide for himself those benefits you mentioned. And I wish I can say that what I’m earning from my home based job is just mere additional income. But it’s not just additional income.
Oh and I used to think that I’d like to retire when I hit 30. But I just love my work so much it doesn’t feel like work much of the time.
And regarding the reliable retirement pay I’m sure this job will help me save more than a 9-to-5 ever will.
I’ll definitely blog about it when I change my mind about this matter – hating the bundy clocks.
Thanks for the compliment!.
online entrepreneur said,
October 21, 2007 @ 2:03 am
Yes. It does really hurt specially to those who depend solely in affiliate programs because earnings are in dollars. Hope the prices of commodities too will go down when the peso appreciates but that will never happen.
Don said,
October 24, 2007 @ 7:20 am
I bumped into this interesting blog article and would like to comment.
Currency changes hurts us all, but you should attract other potential customers too from the U.K. to Australia to Canada, whose own currencies have gone up against the dollar.
I visit the Philippines often and I have seen a remarkable improvement under Arroyo’s leadership (that’s what happens when you choose an economy professor versus an actor as a president). Say what you will to her other political problems, her economic successes are historical. It is selfishly sad though, because my buying power is lowered. I’m used to having a $1 to P55 exchange rate.
At any rate, just a tip to you and your readers. A lot of U.S. firms hire off http://www.guru.com – my publishing firm hires editors there all the time.
Minnie said,
December 27, 2007 @ 12:56 pm
I have chanced upon this interesting post about the dollar depreciation and i find this interesting. i have been freelancing for more than a year now and sure, the depreciation hurts a bit but (sorry to disagree with jeremias) nothing beats being your own boss. i tried working a “regular” 8-5 job and i hated it (not to mention the dismal pay). being a freelancer doesnt keep you from getting medical, social security and retirement benefits, in fact if youre smart enough (money-smart, that is) it can give you more financial freedom and early retirement option. I can go on self-imposed holiday, wear whatever i want to wear while working, say no to jobs that i dont feel like doing… the list goes on… and i earn much much more than 8-5 workers.