What do you tell financial companies your status is?

[contractor79]

Hi there

So if you're renewing insurance on your car, applying for a credit card... what do you call yourself? I'm referring to when you are out of contract and not paying yourself but still have a company? Do you call yourself a 'director' instead of 'employed'? Upon a claim would that be dodgy do you think? And what salary/earnings would you declare? As our earnings are unstable especially if you are out of contract for a while. Do you give last 3 year's average? Or whatever suits ? ;-)

If you have a mortgage and you're not currently on a contract so not paying yourself a salary do you just keep hush about it and keep on paying the mortgage anyway until you get the next job?

I guess the insurances and the loans are being paid so who would bother to look into your affairs until you default, right?

[Wanderer]

Motor insurance I put down my occupation from the drop down. I also put that I'm self employed. To me it's important because I use the car for business and it's covered for business use (at no extra cost so shop around). If you get some insurance company that wants to charge extra then go elsewhere.

If they are asking for how much I earn then I put down an estimate (including dividends). If they want the exact amount then they can look at my accounts.

To be honest, if you are working as a contractor then getting credit isn't normally something that you would be doing.

If you have a mortgage and you're not currently on a contract so not paying yourself a salary do you just keep hush about it and keep on paying the mortgage anyway until you get the next job?

I got a flexible mortgage over 10 years ago and I've never looked back. No more messing about with credit cards (with extortionate interest rates), overdrafts (with crazy fees) or crap like that.

I've put some seriously large transactions through the account and spent a year not paying money off the mortgage and they never batted an eyelid.

[TykeMerc]

Well if you're a contractor and you don't put enough aside to pay your financial commitments for a minimum of 6 months (I work on 24 months min) then frankly you need to think really hard about your financial management.

As a contractor I'm careful to live off cash and not credit as there's always the risk of protracted bench time.

I do have a mortgage, but it would take some pretty extreme circumstances for me to even consider defaulting, if nothing else that closes off a whole set of potential clients in the financial sector and arguably many others.

[contractor79]

Well if you're a contractor and you don't put enough aside to pay your financial commitments for a minimum of 6 months (I work on 24 months min) then frankly you need to think really hard about your financial management.

As a contractor I'm careful to live off cash and not credit as there's always the risk of protracted bench time.

I do have a mortgage, but it would take some pretty extreme circumstances for me to even consider defaulting, if nothing else that closes off a whole set of potential clients in the financial sector and arguably many others.

Cheap credit means you don't need to dip into your more illiquid assets, comprendez? Optimising the use of one's capital.

So spend on a credit card, shift the balance to a 0% for 16 months for just a 2.90% fee. Then pay back min amount and do the same in 16 months time. Small charge, better liquidity.

So no one puts down "unemployed" when you're on the bench? Just checking. Seems safer to say "company director".

[TykeMerc]

No I don't put unemployed as I'm not, I draw a salary.

I don't believe in living off credit, one of the benefits of contracting rates is the ability to minimise commitments so that in the event of a protracted bench period commitments are small, plus of course should I need credit in an emergency then my commitment profile isn't alarming to a potential lender.

I'm not a big fan of churning credit cards as the banks are wise to it and I don't see a reason to chuck them 3%, plus if they decide to do away with the 0% deals then I won't be stuck for an alternative.

In my case I keep my commitments small, maintain several fair limit credit cards by paying them off every month and have an offset mortgage with a positive balance so I have liquid funds available. Conservative yes, but I'm quite risk averse when it comes to financial commitments these days.

[contractor79]

No I don't put unemployed as I'm not, I draw a salary.

I don't believe in living off credit, one of the benefits of contracting rates is the ability to minimise commitments so that in the event of a protracted bench period commitments are small, plus of course should I need credit in an emergency then my commitment profile isn't alarming to a potential lender.

not really true, you will have no credit history to speak of so will be viewed as higher risk than someone who has made many on time credit payments, so you won't get the best offer even if you have 100k in your bank account

I'm not a big fan of churning credit cards as the banks are wise to it and I don't see a reason to chuck them 3%, plus if they decide to do away with the 0% deals then I won't be stuck for an alternative.

no sign of them getting rid of 0% deals, they're always there

In my case I keep my commitments small, maintain several fair limit credit cards by paying them off every month and have an offset mortgage with a positive balance so I have liquid funds available. Conservative yes, but I'm quite risk averse when it comes to financial commitments these days.

I used to be like that. Not anymore. Capital is valuable why waste that on your immediate living needs when on the bench - just put it on cards, do min repayment, shift balances around to minimise interest you're paying, in the meantime let your gold and equities grow in the background... much better liquidity...

Remember also, and this is a VERY IMPORTANT thing to realise folks:- the time to borrow is when you don't need to borrow. When you NEED to borrow, no one will want to lend to you. It's a paradox of life and trust me my advice on this one is good.

[TykeMerc]

Based on you past posts about financial difficulties and the original post where you implied defaulting or reaching an arrangement to delay mortgage payments I think I'll ignore your advice thanks.

I've a better than fair idea of what my credit profile looks like and I suspect after what you've said in this thread and on previous ones I'd prefer to have mine than yours.

Cheap credit won't last forever and I'm much more comfortable having modest commitments and a cash stockpile than a massive debt overhead.

[contractor79]

Based on you past posts about financial difficulties and the original post where you implied defaulting or reaching an arrangement to delay mortgage payments I think I'll ignore your advice thanks.

no that's not what I'm saying at all

I've a better than fair idea of what my credit profile looks like and I suspect after what you've said in this thread and on previous ones I'd prefer to have mine than yours.

Cheap credit won't last forever and I'm much more comfortable having modest commitments and a cash stockpile than a massive debt overhead.

I have very positive net assets and (much more importantly) very good liquidity. Your cash stockpile may give you mental comfort but it loses value each year it's a bad place to put your hard earned earnings. I say load up cheap credit when the going's good when everyone wants to lend to you, build up a great credit profile, so you can borrow more and more on better credit terms, whilst simulatenously invest in n metals and equities in the background. The metals and equities generate good returns well in excess of your cheap credit and inflation. This year my equities and metals have earned 20-30% whilst I pay back only about 3% on my borrowings. Taking your approach, which I used to do, would mean I have a large cash stockpile earning 3%, which is more than wiped out by inflation so you lose value whilst I gain 15-20%. Worst that can happen is that you run out of cash to pay your credit min repayment? No problem, sell some equities and metals.

[contractor79]

TykeMerc - ok so you have 24 months living expenses sitting in cash. That's comforting. Two problems with this:-

1. Inflation. You think you have 24 months living expenses but it may well turn out to be only sufficient for 16-20 months because of unforseen plus the fact it's in cash and inflation eats into its value plus the cost of things incrase over the 24 months. Ouch. What if you're on the bench for 20 months? You default after 20 months? Not good. No need for this situation to occur which leads me onto the next point

2. The time to prepare your finances and credit profile is ideally in your good time, before you hit the bench i.e. now. By not doing this you are missing out on investment gains and building up good credit profile to secure better and longer 0% credit deals.

[javadude]

I've never had unplanned time off as I'm a Christian and God has provided contracts when I need them but when I take planned time off I squirrel enough away in advance to continue paying salary, pension etc. While not working I consider myself to have the same job title and employment status. When it comes to financial applications, like the recent re-mortgage I took out, I put down Computer Programmer or something similar for a "job title" type question. For "employment status" type question I usually put down "self-employed" unless they have a "director" option requiring further information. For the mortgage they wanted copies of the last 3 years accounts for proof of income so along side that I gave them a figure of salary + average dividends.