Reply to: Would it be madness...

[handyandy]

Probably the best answer was form NLUK but also it depends on your current salary and what contract rate you'd be going to. If you told me you were on a £15k scary and being offered £400/day on a contract and you were a very very good PMO or a fairly good BA PM or even C++ dev - I'd say go for it as you'd currently be well under market rate and be going to something towards the top end. But if you're earning right at the top of the range for the skills/experience you have then stay with the permy job and start sorting your spending pattern out.

[Sub]

Would it be madness to make the jump from permanent employment to contracting without a 'war chest' / savings fund. In fact with the exact opposite... say Circa £10k+ in credit card debt etc?

Half of me thinks its madness, the other thinks that the debt could be cleared (or at least severely dented) in a matter of months instead of years if I did.

No savings I would say isn't an issue, but you may find that you actually don't like things contractors doing - taxes, administration, uncertainty, risks. There are loads of things coming with bags of cash (making the bags bigger is another skill you'll need). It is not madness, but there are certainly some risks you'll have to accept.

[gables]

So not that similar then

You got me

Ok the similarity was I had debt and no gig to go to, but then did it anyway

[northernladuk]

It can be done, the OPs situation looks similar to mine (my CC debt was about 4K) when I started except that was in 1993, so different times. I handed my notice then got a gig, was struggling to get interviews without an end date even though I had a very in demand skillset. Paid off the debt in a month Of course there were more roles and less supply or so it seemed.

The OP hasn't said what his current salary is, it be madness if he were earning say 60K given the changes. If he's on 20K (paying back 15K will take a while) then it'd be madness not to He's also not said his skills area.

So not that similar then

[gables]

It can be done, the OPs situation looks similar to mine (my CC debt was about 4K) when I started except that was in 1993, so different times. I handed my notice then got a gig, was struggling to get interviews without an end date even though I had a very in demand skillset. Paid off the debt in a month Of course there were more roles and less supply or so it seemed.

The OP hasn't said what his current salary is, it be madness if he were earning say 60K given the changes. If he's on 20K (paying back 15K will take a while) then it'd be madness not to He's also not said his skills area.

[MrMarkyMark]

Good point. A month work and 30 days payments meaning you don't see any money for 60 days isn't uncommon.

Had 90+ days to get the first one sorted, once when I went direct .

The whole office went silent on the final call with client co accounts, prior to payment, it was fairly direct

[northernladuk]

Even if all that happens, then bear in mind the time from your last paycheck, to your first invoice can be a while depending on how it lands and the payment terms. Personally I worked for a month, then billed, then waited 30 days for payment..

Good point. A month work and 30 days payments meaning you don't see any money for 60 days isn't uncommon.

[Danglekt]

best case scenario you get a gig and the timing is wonderful, you then give your notice (assuming you don't want to burn bridges and be a dick and the client is happy to wait for you) and you breeze into the gig and ace everything so they keep buying your services.

Even if all that happens, then bear in mind the time from your last paycheck, to your first invoice can be a while depending on how it lands and the payment terms. Personally I worked for a month, then billed, then waited 30 days for payment.

You need a little something even for that, and that is absolutely best case which you are no way guaranteed.

so my view - 100% yes have savings unless you don't mind going into arrears on all your bills.

[northernladuk]

What are you on about?

Come back Bee... All is forgiven.

[MrMarkyMark]

Work both

Don't opt out

What are you on about?

[5000]

Work both

Don't opt out

[psychocandy]

OP - you talking about handing in your notice and then trying to get a contract? Or getting contract and hope they wait?

Obviously, first one is more dodgy.

Ideal one is to see if there any redundancies on the go. I did this last time. Was peed off working there anyway so took voluntary - not a huge amount £20K but better than a poke in the eye. And I got a gig in two weeks so quids in. Best decision I ever made to take voluntary.

As others have said, a lot depends on your personal situation. If you've got kids etc. Bottom line - if it all went tits up, how much a month would you need to pay the basic bills?

I'll get flamed for this but in your situation, you could claim JSA (but not if you quit current job before you get a gig). Only £75 a week but better than nothing. They wont shell for your mortgage though.

Credit card debt - is this on 0%? If not, try to get it on that. I had debts of about £25K a few years ago - still got about £12-£14K but its all on 0% so I'm not in a rush to pay it off. I overpay the minimum but dont stress about it.

[northernladuk]

War chests are things you get from contracting. I can't imagine how people would build them up beforehand.

I think when we talk about war chests before hand we mean any kind of savings or method of survivng a dry spell. That could be a partners wage, short term loans, family. Anything to get you three months on the bench. It doesn't have to be a pot of spare money.

If you've got £15k of debts then contracting is a god send - twice as much money suddenly gushes in and you don't have to pay out stuff for ages and ages so you've now got readies to juggle your payments.

I think this is completely wrong. It's not a God send at all. It's a potential risk that means you could lose a hell of a lot more and people that spend beyond their means will do it whatever their income. All contracting will do at best is allow a greater amount of debt to build and be in bigger trouble for these people.

I've seen plenty of contractors that withdraw everything the are allowed to and then tulip themselves when they are being told they are not being renewed. All the nice shiny expensive stuff they bought goes up for sale after a month on the bench.

Seen too many that withdraw more than they are supposed to as well.

[VectraMan]

But they only give you credit of 2.5k or thereabouts and that's on a decent crack with no existing debts. It also adds another hit to your credit score. I don't think looking to borrow more money just in case is really a good thing (if it's even possible) for the OP.

Possibly not a good thing in the short term but if you earn more and pay off the previous debt then it probably is.

No guarantees either way. You might lose your "permanent" job tomorrow.

[MrMarkyMark]

War chests are things you get from contracting. I can't imagine how people would build them up beforehand.

If you've got £15k of debts then contracting is a god send - twice as much money suddenly gushes in and you don't have to pay out stuff for ages and ages so you've now got readies to juggle your payments.

By the way: credit card debt? - you need a brain transplant

People do build up warchests from perm, I started with 3 months worth.
Obviously debts are easier to pay off when up and running. However, I would have to have known in demand skills to go 1st time contracting with 15K of debt in this climate.