Take a 45% cut post tax for a perm job to just about pay off the bills or wait?

[PCTNN]

I draw the line at instant coffee.

I know, THAT would be the challenge. What if there was no line at all?

I know you can eat cheap and healthy; what I'm curious about would be what is the cheapest diet someone could go for, regardless of nutritional values and health

[PCTNN]

To go back on topic, I recently applied for a permanent role at my current client, where I have a contract (inside ir35) until the rest of the year and I'm very likely to be extended again. Anyways, I like the organisation and the potential career progression and this combined with the poor state the contract market has been for the past 6-12 months convinced me to apply, knowing I would probably have to take a pay cut. Was ok with that.

Went through the first round of interviews, then surprisingly didn't get invited to the second stage...silver lining is I asked what the salary would have been. Surprise surprise, the total package of salary + pension + bonus still would have translated in a 52% pay cut.

Recently I've gone back and forth between permanent and contracting but these experiences just clear any doubts

Tough times!

[Old Greg]

I know, THAT would be the challenge. What if there was no line at all?

I know you can eat cheap and healthy; what I'm curious about would be what is the cheapest diet someone could go for, regardless of nutritional values and health

One of these will set you back 29p and give you pretty much the calories you need. Personally I would cook it first.

Online Food Shopping - ASDA Groceries

[radish2008]

Northernladuk has it bang on, 6 month warchest minimum, 12 ideally, even then I'd go further and have 24 months of warchest.

So you have 24 months of FULL rate sat in the bank do you ?

I'm all for having a war chest but it would take me, or anyone for that matter, years and years to have 200k put aside.

The money I have put aside is always subsistence level not full rate.

For the OP take the job. I'll be joining you soon I think as I agree that contracting as we know it will die next year.

[Paralytic]

So you have 24 months of FULL rate sat in the bank do you ?

No, the warchest is to cover your living costs for a period of time. It is up to each individual to determine what length of time that is, and whether that assumes their "normal" expenditure or whether they'd expect to tighten their belts during longer periods with no billing.

It all very well asking for opinions, but ti concerns me that people come on here expecting strangers to tell them how much warchest they should have.

[radish2008]

No, the warchest is to cover your living costs for a period of time. It is up to each individual to determine what length of time that is, and whether that assumes their "normal" expenditure or whether they'd expect to tighten their belts during longer periods with no billing.

I know - the point I was making is that NLUK suggested it should be 6 months at full rate and then this was upped to 24 months. After 12 years I've got probably 2 years at subsistence level but that is all the cash I have after taxes - it's not put aside just on the off chance I'm on the bench. I would be perm long before I got to the end of my war chest though.

[CosmicWave]

OP, please take it, with both hands. The contract market is dead ever since the past few months.
IMO this is not going to change going forward.
There are only fake job ads and it deceptively makes the market looks like its ok, but it is really not OK. Its dead.

If you ask me, I would say, take the job.

[rashm2k]

So you have 24 months of FULL rate sat in the bank do you ?

I'm all for having a war chest but it would take me, or anyone for that matter, years and years to have 200k put aside.

The money I have put aside is always subsistence level not full rate.

For the OP take the job. I'll be joining you soon I think as I agree that contracting as we know it will die next year.

Well yeah I actually do, but that's a long story, I basically want to diversify so looking at commercial properties and along comes the pandemic so plans on hold atm - BUT this is likely to be the best time in a long time to buy commercial property. And cash is king.

My extra income alone is enough for me to live on, and the cash in the business is enough to see me keeping the current level of salary/dividends for a good few years (I keep it to less than 40% personal tax hence why cash has built up and so dividends are low). Having said that I'm not scrimping like crazy, I had an africa holiday booked in March, went on 3 holidays last year, and been on two stay cations so far and possibly looking at 2 more before the end of this year.

I would agree with you subsistence level is good enough no arguments there, but my spending requirements are very low, so not the normal case, but I'd definitely say 12 months of spending income is enough.

For me it's all about building cash flow (as it should be for all businesses), my target is for my other ventures to take me up to the 40% tax bracket.

Back to the OPs predicament, take the cut, you got to do what you got to do, as long as you come out stronger at the other end its all a learning exercise.

[ChimpMaster]

Well yeah I actually do, but that's a long story, I basically want to diversify so looking at commercial properties and along comes the pandemic so plans on hold atm - BUT this is likely to be the best time in a long time to buy commercial property. And cash is king.

My extra income alone is enough for me to live on, and the cash in the business is enough to see me keeping the current level of salary/dividends for a good few years (I keep it to less than 40% personal tax hence why cash has built up and so dividends are low). Having said that I'm not scrimping like crazy, I had an africa holiday booked in March, went on 3 holidays last year, and been on two stay cations so far and possibly looking at 2 more before the end of this year.

I would agree with you subsistence level is good enough no arguments there, but my spending requirements are very low, so not the normal case, but I'd definitely say 12 months of spending income is enough.

For me it's all about building cash flow (as it should be for all businesses), my target is for my other ventures to take me up to the 40% tax bracket.

Back to the OPs predicament, take the cut, you got to do what you got to do, as long as you come out stronger at the other end its all a learning exercise.

The OP might not have been contracting for long or might not have been on a good rate, so it can be hard for some to save up enough in the warchest.

For those who have had years of contracts and/or a reasonable rate, then yes for sure they should be in a strong defensive position, financially.

Since the BoE interest rate cuts, £100k in your company will earn around £1 interest/month. £500k will earn £5 interest/month. If people have funds in the company then they must learn how to apply those funds to provide a much better rate of return than what the banks are giving them now.

I have never spent all of my contracting income over the years: most of it has accumulated and I have invested it in various ways to provide an income. Perhaps I won't live the life of a multi-millionaire and I might not ever get that Porsche 911, but the last thing I want is to worry about paying the bills or how my family will get by.

And getting back on topic: I will be out of the contracting world at the end of 2020. My tech is old and dead and the client has told me it's all over. I'm looking for a perm job now to keep me busy, to get me by and hopefully to learn new skills. Money will take a back seat for as long as need be.

[rashm2k]

The OP might not have been contracting for long or might not have been on a good rate, so it can be hard for some to save up enough in the warchest.

For those who have had years of contracts and/or a reasonable rate, then yes for sure they should be in a strong defensive position, financially.

Since the BoE interest rate cuts, £100k in your company will earn around £1 interest/month. £500k will earn £5 interest/month. If people have funds in the company then they must learn how to apply those funds to provide a much better rate of return than what the banks are giving them now.

I have never spent all of my contracting income over the years: most of it has accumulated and I have invested it in various ways to provide an income. Perhaps I won't live the life of a multi-millionaire and I might not ever get that Porsche 911, but the last thing I want is to worry about paying the bills or how my family will get by.

And getting back on topic: I will be out of the contracting world at the end of 2020. My tech is old and dead and the client has told me it's all over. I'm looking for a perm job now to keep me busy, to get me by and hopefully to learn new skills. Money will take a back seat for as long as need be.

Perhaps but the op has been on here a while so I guessed they'd been a contractor for a while too, in any case its a target to have a 12 month warchest. I'd clarify that saying 12 months of income from somewhere, company or rental income or other, not just company dividends

That bit in bold is really the goal, what's the point earning so much and still having to worry about money?