450/day Contracing Offer - What would you do?

[HannsG]

My situation -

Just moved family home - Taken on a much larger mortgage
Have a seven week old baby boy
Financially we rely entirely on ourselves - If st really hit the fan its really down to us. Cant turn to family etc..

So I received a call about a 6 month rolling contracting job with a bank based in the East Midlands. Never ever considered contracting before. Always though what about security and so on. Working in Banking I know some people have been contracting on silly money for years in the same kinda role. Others have bitten the dust...anyway

But they offered me the contract. I have the weekend to decide if I want to do it.

If i was to take into account the wedge. It would literally triple my income after tax...

I am just scared of the following:

1. The unknown - it aint perm is it...
2. The contract being terminated - where to go from there?

What would you do? Its a no brainier right?

[LHRFlightman]

Roll back to 1998 I was in the same position. New mortgage, wife pregnant. Contract offer was for 3 months rolling and would double my salary.

I took it. Best thing I ever did.

PLEASE READ THIS NEXT BIT.

SAVE EVERY SPARE PENNY YOU CAN. LIVE ON WHAT YOU ARE NOW, BANK THE REST.

I know so many who lived like kings for a year or two, and are now back to scrimping and saving for every penny.

Good luck.

[bigunit00]

I would make sure you have some money aside just in case you are in between contracts (say 6-9 mths of mthly outgoings). Apart from that you need to work out whether you can handle not having all the nice perks that come with perm given your family situation. Sounds like your partner works so if it was me I would do it. I have been contracting for a while in banking and really can't see the reason to go perm again.

[HannsG]

LHRFlightman said:

Roll back to 1998 I was in the same position. New mortgage, wife pregnant. Contract offer was for 3 months rolling and would double my salary.

I took it. Best thing I ever did.

PLEASE READ THIS NEXT BIT.

SAVE EVERY SPARE PENNY YOU CAN. LIVE ON WHAT YOU ARE NOW, BANK THE REST.

I know so many who lived like kings for a year or two, and are now back to scrimping and saving for every penny.

Good luck.

Cheers for the advice. I thought as much to...banking the money would be the most wise thing to do given my personal situation.

Give it a few years I might decide to treat the family or myself etc.

[HannsG]

bigunit00 said:

I would make sure you have some money aside just in case you are in between contracts (say 6-9 mths of mthly outgoings). Apart from that you need to work out whether you can handle not having all the nice perks that come with perm given your family situation. Sounds like your partner works so if it was me I would do it. I have been contracting for a while in banking and really can't see the reason to go perm again.

Yup. We already have that in the bank. Wife does work, obviously she is on maternity - Earns around £25k.

Are you in the IT field (Global Tech in banking)? I'm a Finance/CIMA guy so Lean towards the Business Management side of things.

[stevenjhepburn]

LHRFlightman said:

SAVE EVERY SPARE PENNY YOU CAN. LIVE ON WHAT YOU ARE NOW, BANK THE REST.

Exactly this. Within the first 6 months you could have enough banked to see you through the following 12. Do you think you could find another contract or another job within 12 months? If so, then it is a no brainer.

[Jasandjules]

HannsG said:

If i was to take into account the wedge. It would literally triple my income after tax...

So, in six months you could live off your previous income, bank six months in case the contract isn't extended AND have a float of six months income.

So you go for it.

If the contract isn't extended you have six months to find another job and still have six months left in the bank. If it IS extended, you now save six months money, put three months into the float and then have three months income to spend on a holiday or doing something nice. The 9 month float could pay a chunk off the mortgage....... And you STILL have 12 months money in the bank.....

[omniflow]

Keep in mind that the vast majority of Banks have a 2 year rule when it comes to contractors. So even a 6 month rolling contract will only have a max 2 year life.

Rate cuts - might be a thing of the past, might happen to you next month - 10% cut in day rate, so your £450 becomes £405, and then £365.
Furlough - generally once or twice / year - 2 weeks enforced non-billable time off. Generally timed to precisely when you're NOT planning to take time off.

On balance, it's still probably worth it.

[Kudos]

Without seeing your skills/CV, I'd say £450 seems light. My BA's are £600+ a day

[HannsG]

Kudos said:

Without seeing your skills/CV, I'd say £450 seems light. My BA's are £600+ a day

This is East Midlands and not London though. First contract so thought £450 was reasonable.

[Kudos]

HannsG said:

This is East Midlands and not London though. First contract so thought £450 was reasonable.

First contract or not is irrelevant.

Are you not in London? I still see £500+ Outside London. Still, do what's right for you, I'm just saying don't undersell yourself

[New POD]

Jasandjules said:

So, in six months you could live off your previous income, bank six months in case the contract isn't extended AND have a float of six months income.

Most of the contractors I've met in Aerospace engineering, started contracting due to redundancy (although not all), and then there is no risk. You are already bricking it ref paying the mortgage.

This was how In 2009 I ended up setting up my ltd company. The 1st and only offer of work, effectively doubled my income, and every month I would calculate how much of a buffer I had created. Basically for every month it's a week of buffer, so in 4 years I've managed to save a years buffer in the business.

Unfortunately rates are not as high as IT, and the cross over of my skills into more lucrative industries, has so far not come to anything.

[98elise]

Kudos said:

Without seeing your skills/CV, I'd say £450 seems light. My BA's are £600+ a day

That seems about right for a BA. Contractor UK says average rates are £450 for a BA, and I generally get thats sort of rate in London (BA with about 15 years experience, Prince2/ITIL/ISEB).

To the OP, as above. Save like mad for the first few years. You need to make sure you have a solid financial buffer for times without work.

[h0b0]

450 does seem a bit entry level for London but outside its good. I an confirm that the maximum stay at most banks is 2 years. Not a huge issue in London but where you live there may be less options. I know banks are outsourcing their maintenance support to India and their developers to Europe. The people left behind are all becoming contractors or are managers of of shore teams.

[MagicalTrevor]

HannsG said:

LHRFlightman said:

Roll back to 1998 I was in the same position. New mortgage, wife pregnant. Contract offer was for 3 months rolling and would double my salary.

I took it. Best thing I ever did.

PLEASE READ THIS NEXT BIT.

SAVE EVERY SPARE PENNY YOU CAN. LIVE ON WHAT YOU ARE NOW, BANK THE REST.

I know so many who lived like kings for a year or two, and are now back to scrimping and saving for every penny.

Good luck.

Cheers for the advice. I thought as much to...banking the money would be the most wise thing to do given my personal situation.

Give it a few years I might decide to treat the family or myself etc.

Exactly this advice, I started contracting 3 months ago and I pay myself the same as what I was earning in a Permanent role, this now means that I've got >3 months wages in the bank and no sign of the contract ending in the next 12 months.

Contracting is the best thing I ever did, I'm now wondering why I didn't do it sooner!

Good luck... I'm sure you'll choose contracting

[Staplebug]

Based on an 8 hour day; £450 per day
Let's assume you work 10 months a year = 200 days
200 x 450 = 90,000
Via Ltd company - take home 75%
Take home: £67,500

You also need to consider any benefits you are currently receiving from your employer

- non contribute final pension salary
- ? x salary death in service life cover
- critical illness / life insurance
- paid holiday
- performance bonus of up to X% of annual salary
- Sick pay
- Etc Etc

[Carl_Docklands]

LHRFlightman said:

SAVE EVERY SPARE PENNY YOU CAN. LIVE ON WHAT YOU ARE NOW, BANK THE REST.

I know so many who lived like kings for a year or two, and are now back to scrimping and saving for every penny.

Good luck.

Don't buy the 2 years maximum stay thing. As long as you are doing project based work you will be fine as you can bounce from project to project. If you are not doing project based work be very careful and I would consider paying full PAYE and NI rather than limited.

Edited by Carl_Docklands on Monday 23 September 21:02

[MoelyCrio]

Carl_Docklands said:

Don't buy the 2 years maximum stay thing. As long as you are doing project based work you will be fine as you can bounce from project to project. If you are not doing project based work be very careful and I would consider paying full PAYE and NI rather than limited.

Edited by Carl_Docklands on Monday 23 September 21:02

Just have an extended break at Christmas. Some companies enforce it anyway as they need the headcount reduction at year end.

To the OP, I took a pay cut from contract to perm so I could be closer to home and my 1 year old boy. The cut wasn't as severe as your increase though.

And £450 is good for a BA out of London.

[omniflow]

Carl_Docklands said:

Don't buy the 2 years maximum stay thing. As long as you are doing project based work you will be fine as you can bounce from project to project. If you are not doing project based work be very careful and I would consider paying full PAYE and NI rather than limited.

The 2 year rule that many / most banks have is not related to the type of work you do - it's a simple rule that the hiring company has in the (probably) mistaken belief that this protects them from some employment legislation. At least one bank has recently abandoned this stance, and others are considering it, but many still have it as a fairly strict rule. It is possible to get exceptions, but your hiring manager is going to have to go out on a limb for this, and most won't bother. The hiring organisation isn't particularly worried about your IR35 status, it's all about protecting themselves.

[ArsE92]

I know a couple of the banks (one I work for now, one I worked for previously) have most of their large programmes resourced through a Managed Service provider (IBM, for example) rather than directly via an agency. Not sure of the intricacies but it allows contractors to stay > 2 years.

Go for it OP.

I made the leap 7 years ago. Best thing I ever did.

Bear in mind that if you're good at what you do and have the right attitude then you'll end up getting looked after and potentially recommended for something else towards the end of your contract, if you don't get a renewal.