How to be profitable as a contractor

RobHT

Elliott.T123 said:

RobHT said:

But also 100k don't make sense for me, though this is me.

I see the real life cost here, in total opposite view of the people out there, which probably live in Disney Land or have the house paid from their parents .
So, 100k, outside London, is just the border line for an healthy life, or wealthy life, you name it, as soon as you have an important expense that everyone will face in life, you'll see thousands going away.

Inside London, I need 150k minimum to decently survive, 300k to live decently (most famous magazines report the same so DON'T say I'm crazy), with the only meaning to get out asap before going crazy, probably investing all I take or buy a nice house in a nice village or medium size city, but I'm pretty sure that I'd invest all I take , max I'd buy an house for holiday and rent it out for most of the year, or keep it as a secondary working location.

I think you need a little bit of a reality check here, the average UK Salary is £31,447
To be claiming £100k "doesn't make sense" comes across extremely entitled and very arrogant. I think this forum may be the wrong place for you to be if you don't feel like you can live on less than £150k. A lot of people on here are worried about if they can afford to heat their house or eat next week not can they afford to eat at top restaurants.

As a tech recruiter for over 10 years I have worked with a lot of IT Contractors. The general rule is that contractors get paid between 1.25 - 1.75 times what a permanent employee would depending on skill set but 1.5x is most common.

A lot of people would be very happy to earn £160k (in a more tax efficient way) as a contractor than £100k as an employee (but with benefits on top)
It is a personal choice and no one is forcing you to take a contract role but the fact companies are offering those rates clearly means other people do see the benefits.

Companies will pay what they need for roles, I once had 2 guy who had an incredibly niche skill set who were on £60k a year perm. I got them contract roles paying £1,500 per day, they were the only two in the country with that tech stack and the company poaching them would have lost a contract worth over £500m. Supply and demand, it works.

I'm not going to discuss how bad the situation is now, because before it was the same, in terms of what you can actually afford without touching your savings beyond safety limits.
If you live in London, you should understand my point, or maybe you're the one that if there are no savings at the end of the month, it's just normal...
Regarding the national average, shall I explain? It has been always low, don't take an excuse with this situation, it has never been enough.

Let me be clear, that's not how I live, and it's not about how much money I spend, it's about how much I have in my bank account (+ investments, but that's not important now).
You can't live having a few pennies in the end of the month, that's it, regardless if you rent, mortgage, contractor or homeless.
It's a safe way of living that as far as I see, people really struggle to understand, maybe because this country doesn't have a real saving reserve, people never had but it's wrong, don't try to make it normal.
Plus, if we talk about London, no one buys there, it's all rented or purchased by some large family, alone you'll never make it, have you ever been in London?
What about Wembley, Watford, Hammersmith? Have you ever seen the bad areas? Have you ever seen how the people really live? I know some wealthy people that without a partner or some larger contribution wouldn't be able to reach the 3rd week spending all the income.
Rents are 1600 for a decent house, 2000 for something in the center.
Add expenses, parking and council tax and you reach 2300 or 2700 (considering that recent increases, same story before though).
Don't get me wrong, I can make it, but for what? I'd have probably 500 pounds each month left, just coins for the London magnitude.


I don't care what EXTREME opportunities the supply and demand could generate, those cases are very rare and it's not under consideration, I don't play the lottery.

RobHT

ElefantEd said:

Elliott.T123 said:

I think you need a little bit of a reality check here, the average UK Salary is £31,447
To be claiming £100k "doesn't make sense" comes across extremely entitled and very arrogant. I think this forum may be the wrong place for you to be if you don't feel like you can live on less than £150k. A lot of people on here are worried about if they can afford to heat their house or eat next week not can they afford to eat at top restaurants.

Average full time salary is £31k. Many people are part time, and so the average salary is rather less at £24,600. And the median household income is about £31k (there seem to be slightly different figures being bandied about depending on where you look but they are all in this ballpark). So I quite agree that saying you need £100k is absurd. Only about 4% of people in the UK earn 100k+, clearly most people earnign less are not struggling in any meaningful sense!

These people spend all their money every month, making it to the end of the month doesn't mean they are safe, they probably spend the same amount of money I spend.

They are extremely vulnerable, plus, considering that people are so willing to buy a mortgage rather than the house, I want to understand how they are gonna save money for a deposit. Oh don't tell me, they are gonna wait for the parent's gift.
Look at my previous message.

In any case, the conversation about contractor vs employee can be considered closed.

lincroft1710

RobHT said:

Elliott.T123 said:

RobHT said:

But also 100k don't make sense for me, though this is me.

I see the real life cost here, in total opposite view of the people out there, which probably live in Disney Land or have the house paid from their parents .
So, 100k, outside London, is just the border line for an healthy life, or wealthy life, you name it, as soon as you have an important expense that everyone will face in life, you'll see thousands going away.

Inside London, I need 150k minimum to decently survive, 300k to live decently (most famous magazines report the same so DON'T say I'm crazy), with the only meaning to get out asap before going crazy, probably investing all I take or buy a nice house in a nice village or medium size city, but I'm pretty sure that I'd invest all I take , max I'd buy an house for holiday and rent it out for most of the year, or keep it as a secondary working location.

I think you need a little bit of a reality check here, the average UK Salary is £31,447
To be claiming £100k "doesn't make sense" comes across extremely entitled and very arrogant. I think this forum may be the wrong place for you to be if you don't feel like you can live on less than £150k. A lot of people on here are worried about if they can afford to heat their house or eat next week not can they afford to eat at top restaurants.

As a tech recruiter for over 10 years I have worked with a lot of IT Contractors. The general rule is that contractors get paid between 1.25 - 1.75 times what a permanent employee would depending on skill set but 1.5x is most common.

A lot of people would be very happy to earn £160k (in a more tax efficient way) as a contractor than £100k as an employee (but with benefits on top)
It is a personal choice and no one is forcing you to take a contract role but the fact companies are offering those rates clearly means other people do see the benefits.

Companies will pay what they need for roles, I once had 2 guy who had an incredibly niche skill set who were on £60k a year perm. I got them contract roles paying £1,500 per day, they were the only two in the country with that tech stack and the company poaching them would have lost a contract worth over £500m. Supply and demand, it works.

You can't live having a few pennies in the end of the month, that's it, regardless if you rent, mortgage, contractor or homeless.
.
Plus, if we talk about London, no one buys there, it's all rented or purchased by some large family, alone you'll never make it, have you ever been in London?

A lot of people do live and have lived "having a few pennies in (at?) the end of the month". myself included some years ago. Can't talk about currently, but someone I know (single) bought in a fairly good area of London some years ago and still lives there.

Grumpy_chap

RobHT said:

Regarding the national average, shall I explain? It has been always low, don't take an excuse with this situation, it has never been enough.

Plus, if we talk about London, no one buys there, it's all rented or purchased by some large family, alone you'll never make it, have you ever been in London?

You seem to want everyone to simply earn more.  That just results in everything costing more.

As for London, it seems to be about half-and-half property ownership versus rental.  See page 27:
https://www.london.gov.uk/sites/default/files/housing_in_london_2020.pdf
"In 2019, 51% of households in London owned their homes"

DE_612183

I contracted outside IR35 for 10+ years, only recently have gone inside - tbh - the take home isn't much different as the inside rates are much higher, plus with lockdown travel expenses have disappeared 

And I get an umbrella to take away all the accountancy pain and threat of investigation.

macman

Could it possibly be that your standard of written English is unappealing to recruiters maybe? I'm assuming that you are not English, and that English is your second language?
For example, someone mentioned wages in 'the North', and you replied 'North where'? Anyone who's grown up in the South would know that as a generic term, 'the North' starts just after Watford Gap services...
And most families in London would be delighted to have £500 left from their monthly salary after expenses. To call that 'just coins' is simply arrogant.
 

RobHT

macman said:

Could it possibly be that your standard of written English is unappealing to recruiters maybe? I'm assuming that you are not English, and that English is your second language?
For example, someone mentioned wages in 'the North', and you replied 'North where'? Anyone who's grown up in the South would know that as a generic term, 'the North' starts just after Watford Gap services...
And most families in London would be delighted to have £500 left from their monthly salary after expenses. To call that 'just coins' is simply arrogant.
 

I'm not gonna comment on the English level, because I don't care.

So someone can't even ask what north is for them? That sentence was ridicolous.

500 monthly as savings in London are a joke, when you spend more than 7x in your life if you rent alone, or 5x if you rent with another person. Plus, what the people perceive as savings is wrong, their real life cost is much higher, reason why the bank accounts of Londoners are all empty, plus heavy debts on shoulders.

I can see that you don't understand my point, it's a nosense to continue this conversation with you.

Grumpy_chap said:

RobHT said:

Regarding the national average, shall I explain? It has been always low, don't take an excuse with this situation, it has never been enough.

Plus, if we talk about London, no one buys there, it's all rented or purchased by some large family, alone you'll never make it, have you ever been in London?

You seem to want everyone to simply earn more.  That just results in everything costing more.

As for London, it seems to be about half-and-half property ownership versus rental.  See page 27:
https://www.london.gov.uk/sites/default/files/housing_in_london_2020.pdf
"In 2019, 51% of households in London owned their homes"

No, WRONG, look at Germany! I know it makes British angry, but just look at their economy.

It doesn't matter who rents and buys in London when I talk about life cost, and if you take in consideration the amount of ownership, that's even worst.
The ownership is in somehow high for the standards of an underdeveloped country because the supply is less, so people own the small amount of buildings and others rent as tenants, lodgers are not considered...
Plus social schemes, which count as ownership but officially they don't own it, it's the redistribution of social wealth that allow them to "own".

Then again, don't confuse owning a debt that you can barely pay in 2 people with owning a building!

Sorry guys, I understand why we can't talk AT ALL, have a nice day.

DE_612183

@RobHT - Rob what were you hoping for or expecting from your initial post?

You seemed to be saying that being a contractor was not cost effective in London as the daily rates made it impossible for you to earn a living.

Were you expecting people to agree?
Were you expecting someone to feel sorry for you and offer you a £1,000 a day role?

RobHT

DE_612183 said:

@RobHT - Rob what were you hoping for or expecting from your initial post?

You seemed to be saying that being a contractor was not cost effective in London as the daily rates made it impossible for you to earn a living.

Were you expecting people to agree?
Were you expecting someone to feel sorry for you and offer you a £1,000 a day role?

I was just replying to the last messages, which were out of topic, the thread can be considered closed for me and it was a good one.

I never abandon a conversation if someone wants to talk, especially about wealth, but just prove me wrong instead of saying that all is fine as long as you breath. The point of this life is surviving, right, but we live a slightly different life compared to the wild... People need to live to develop wealth, not surviving, this is not a survival game.

Elliott.T123

RobHT said:

500 monthly as savings in London are a joke, when you spend more than 7x in your life if you rent alone, or 5x if you rent with another person. Plus, what the people perceive as savings is wrong, their real life cost is much higher, reason why the bank accounts of Londoners are all empty, plus heavy debts on shoulders.

I can see that you don't understand my point, it's a nosense to continue this conversation with you.

Rob, I think the issue some commenters have is that you come across as quite entitled and very out of touch with the average person.

While on a totally philosophical level I agree with you that everyone should have more than £500 a month left to save, but that just isn't realistic and is never going to happen. 

You need to decide what is important to you in life and focus on that, some people are happy not earning £150k a year because they get to spend more time with family, they may not ever own a house but they still make the most and enjoy the life they live.

Other people would rather work 14 hour days 6 days a week and earn a huge wage but not have free time.

If money is important to you then that's fine, but you need to figure out a way to maximise your earnings while minimising your outgoings.

You need to accept that this is how the world is and you have no control over it. asking a forum of people who probably earn 20-60k on average how to live on over £100k is not going to get you positive answers!