As a contractor do you sometimes lose perspective when it comes to money?!

[Old Hack]

This thread has made me have a look at my finances - something I don't do very often.

Total outgoings per month on bills are £700 - not including food or beer spending money, etc. Mortgage paid off, so bills are just for car/house insurance, car tax, phone, council tax, water, electric and gas. So adding on food and beer money looking at about £1500 a month outgoings - luckily this is just about covered by my wifes salary.

So basically, my contracting income is "spare" and has been for about the last 5 years. This has resulted in a fairly large war chest and lots of retained profits in the company account. I've been contracting just over 10 years, never been out of contract and averaging £400+ per day.

My main concern is that we don't spend enough! My wife is frugal beyond belief and so am I to a certain extent. I need to put together a spreadsheet detailing our finances - show her our outgoings/incomings, show her the value of our accummalated savings and tell her to start spending and actually enjoying the financial postition we are in! Our lifestyle is no different to our family and friends - no really expensive holidays, no flash cars, no flash clothes, etc - if they knew how much I earned they would be in total shock.

Amen. Life is too short to be worried about money all day.

[d000hg]

If you are in the lucky position to be content with your moderate lifestyle, knowing you have the resources to weather any storms, spending money just because you can doesn't sound a great idea to me. Spend it on things that need it without thinking twice rather than finding things to spend it on.

[norrahe]

I like to enjoy life but I don't spend money just for the sake of it.

I like the feeling of having the available cash to splurge if I so wish, but nice to have the security of a 3 year warchest ( minimum, savings) and at least a year in the company.

[ChimpMaster]

This thread has made me have a look at my finances - something I don't do very often.

Total outgoings per month on bills are £700 - not including food or beer spending money, etc. Mortgage paid off, so bills are just for car/house insurance, car tax, phone, council tax, water, electric and gas. So adding on food and beer money looking at about £1500 a month outgoings - luckily this is just about covered by my wifes salary.

So basically, my contracting income is "spare" and has been for about the last 5 years. This has resulted in a fairly large war chest and lots of retained profits in the company account. I've been contracting just over 10 years, never been out of contract and averaging £400+ per day.

My main concern is that we don't spend enough! My wife is frugal beyond belief and so am I to a certain extent. I need to put together a spreadsheet detailing our finances - show her our outgoings/incomings, show her the value of our accummalated savings and tell her to start spending and actually enjoying the financial postition we are in! Our lifestyle is no different to our family and friends - no really expensive holidays, no flash cars, no flash clothes, etc - if they knew how much I earned they would be in total shock.

Great that you've paid the mortgage off, that's a major achievement.

I must admit that I was very tight the first few years that I contracted and lived well below my means. The wife was understanding and we planned to build a substantial warchest before letting the pursestrings loose. This was a very defensive stance to take but it paid off in many ways because 8 years' contracting has given us a solid financial foundation. I think it took 4 years of almost continual contracting before I felt comfortable enough to spend more and take a little more time off.

Kids have certainly added in a challenge to the finances and any thoughts of early (part) retirement have been dashed, but I love them to bits so I don't mind.

Certainly you (should) know your finances and future plans (kids etc) better than anyone, so let that determine your financial plans too.

[MyUserName]

I genuinely don't think about the roof caving in, nor a bizarre illness, as insurance covers both.

Ah, then they were poor examples, the someone suing you was not because I expect it to happen - I was merely trying to think of examples of sudden, unexpected cash demands.

I also have utterly no idea of what I spend a month. Genuinely. When we were both contractors, or just me as one.

If you have really never spared a thought to balance income and outgoings and have still found yourself this well off then you have been very lucky. If I simply spent on the assumption that the money was there I am pretty sure I would crash fairly soon and that is without an expected emergency!

[Old Hack]

Ah, then they were poor examples, the someone suing you was not because I expect it to happen - I was merely trying to think of examples of sudden, unexpected cash demands.

If you have really never spared a thought to balance income and outgoings and have still found yourself this well off then you have been very lucky. If I simply spent on the assumption that the money was there I am pretty sure I would crash fairly soon and that is without an expected emergency!

Probably disingenious, for I have, but that was pre IT to be honest. I have been lucky in that I left Uni, where I met the wife and we both picked up cracking jobs, pre kids, then both went contracting for about 8 years before we had kids. After a while she wanted to give up work, but we'd already put lots by, just by dint of not having spent it. She's an Oracle Financials bod and earned serious wodge in the city.

But even when we were students, we didn't really budget per se.

[MarillionFan]

Amen. Life is too short to be worried about money all day.

You assumed in your post that I was worried about money. I'm not. Far from it. I can choose to buy anything anytime I want. I'm a numbers person and so subsequently I enjoy data modeling and that is all this is.

Plus I don't like surprises.

[psychocandy]

Ok, I hardly ever pay cash for anything, so I probably could, too. But I don't want to know in that much detail. I'm happy if it all adds up overall.

I dont mind spending money as long as I know where its gone. I hate just thinking where did that £500 go?

[psychocandy]

When I started out my tactic was to, as quick as I could:

1. Be debt free
2. Save 12 months warchest
3. Upgrade my banger is it is at the embarrassing stage
4. Keep bills below £1.5k a month

19 months in - all done

No matter what the rate no.4 is really important for me. My aim is to have financial freedom, not increase my financial commitments. Years of student debt and worrying, its so nice to not be in that position anymore.

Of course. Less bills = less warchest needed to last same amount of months.