Money

Contracting as a life option

Someone asked me my thoughts recently on a graduate training scheme or contracting.

Firstly, grad training schemes can be gold. In the short term, you should seriously think about this. Bearing in mind, as a man, your 20s are pre gig. Your 30s are the start of the gig. Don’t be impatient, build your infrastructure in your 20s that you are going to live off for the rest of your life. So a good graduate training scheme could be a solid springboard into learning skills that you can charge good money for. So short term, in your 20s, this can be your meal ticket. But you might not be living the lifestyle you read about on these pickup blogs for a few years yet. Be smart. In your 20s build your brain up. Build your collateral as ME PLC, make yourself a marketable asset, pay off debt, save up at least £10k. Make that your focus. That would be my game plan, were I 20.

I wrote last year a post that touched upon this subject. I was working in East London and writing this blog, but under a pseudonym. I had about two readers at that point. The post is here.

As I was flicking through LinkedIn, I noticed old friends names popping up and impressive sounding job titles. Adam C, a friend from my youth who I lived with in London for a few years, he’s now in California, married and CEO of a mid-sized tech start-up. A few other friends are now departmental directors. The guys my age, pushing 40, are starting to reach the higher positions.

And there was I, project managing a data centre build. It’s serious work, but it’s just admin really. I am no career high flyer.

And for that brief moment I thought, had I fucked up? Was I falling behind?

I chose contracting as an option around 5 years ago now, maybe a touch more. It was during the RSG days when we all lived in the big house in Hampstead. In that 3 years we developed in many ways as we bounced off each other, game wise, but more importantly lifestyle wise. Core themes began to develop between the 12 of us. Political ideals, free spirited travel, music and literature, Hemingway Suites and conversations over whisky and cigars until 4 in the morning. None of us worked proper jobs and we weren’t making money at all from pickup. God knows how we did it. This went on for three years.

This idea began to foment between us. We called it ‘financial and geographical independence’ and it became our number one goal. We all pursued it individually as a primary focus, watching what the others did and copying as we saw fit, exactly as we had done with game. Now, all those guys from that house are living some form of independent life. Contracting, remote working, independent income stream, etc.

It started with the overseas boot we did in Lithuania around 5 years ago now. A guy emailed me one day asking if we would fly to Vilnius and do a boot-camp. I don’t think any of us had ever been to Eastern Europe and it was never anything we’d considered doing. We were too busy trawling the streets and bars of London searching for women above a 7 to lay.

I never made the trip. My flat got broken into and I had shit to deal with, but all the others went. They had a great time. They came back with unbelievable tales:

The food is great. The weather is good. The girls are all hot. They act like women. They wear dresses. They don’t hate men. They have fun on dates and giggle. Game was fun, not like mining gold in Alaska, as it felt in London.

So we went back under our own steam in different teams of two and three. Then to Latvia, then Poland, then Croatia.

Over time we realised that warm weather, good food, low rent and feminine women was what we liked. It was the life we want. Now how to live it? You can’t just rock up to Belgrade, get a £70k salary and start a new life. No, you could visit, but you had to return to London to work.

My path was to choose contracting, via one last shot at rock & roll. I was a full time employee at a small IT service provider in London, a job I loved but it was full time and slow progress. I left to pursue a chance at a record deal, which never happened. Once it fell through, I was out of work, but with money in the bank, some investments ticking over (stocks in an ISA, some family stuff) which eased the pressure of worrying about my pension. I had time to breathe and think. There was no big decision ‘should I give up this cushy number and risk the contracting route’. In that sense I had it easy.

I didn’t want and I don’t want to be a Director or CEO. There is no value in that for me, in the same way I don’t want to collect elastic bands. I can live without the six figure salary and the job title. I want a lifestyle I love. My friend was project managing, just like me, but on a contract basis. He was pulling in £500 a day, he used my CV to get the job.

So I chose that. The way I saw it:

I have no responsibilities, no mortgage or kids.

I have a low cost base, low rent, and plenty of savings. Not my stocks, just a float in my bank account that had built up over 10 years working. £10k. So my rent was covered for several years if I never got work.

If I score 3 months contract each year, at £300 a day, that’s about £10k. Rent and food for the year is about £10k (regardless of location). So 3 months work is break even. Every month over that is banked resources.

So if I do between 3 and 6 months work a year, I can have the balance of the year off – and live abroad – and still save money up. I can add a couple of grand a year to my pension pot.

It’s the deal I took, but it took me two years to get there. I had to change my CV from being a full time employee to being a contractor. That was insanely hard. The recruitment conversations went like this.

Recruiter: When did your last contract end?

Me: Three months ago. But it wasn’t a contract, it was full time. I left because I want to contract.

Recruiter: Oh. What have you been doing for three months?

Me: Looking for work. I want to work as a contractor from now on.

Recruiter: So you have been out of work for three months?

Me: Yes.

Recruiter: They won’t like that. I can’t pitch you to my client.

It took me a year of constant calling to get my break. £100 a day doing project co ordination for a company in Weybridge. I had to beg them for the job. I offered to work for free.

They were good to me. Very good. They upped me to £150 a day very quickly and they seemed to have a full time job in mind for me.

No chance. The climate at the company was poison. When they found out I had a younger girlfriend they freely made jokes about my ‘Russian Mail Order Bride’. That was fine. They constantly told me I was old and ugly and weird for having a younger girlfriend. When I told them that younger girls were more free spirited and fun to be with, that was sexist. Nothing wrong with calling young girls mail order brides. That’s not sexist. But say you don’t date older women, that’s sexist.

Your preferences don't match my political ideology. WRITTEN WARNING!

Your preferences don’t match my political ideology. WRITTEN WARNING!

I can honestly tell you this. For me to have worked there full time, they would have had to offer me, I’d say, £250k a year. After taxes I’d bank about £150k. 3 years and I’d be retired. Yes, honestly, that. If they offered me double my real salary, £150k, I’d have turned it down flat.

It was freedom I wanted. But not freedom to travel. It was freedom to distance myself from this poisonous social prison we live in the UK. You have to second guess every word you say in public. There’s an ideology at large which is slanted in favour of certain groups and your opinion voiced has to be pleasing to that group. If it’s not, you’re in hate crime territory. At work that means problems with HR.

Looking back, what I was supposed to say was this:

‘Yes, my girlfriend is young and beautiful. But you know what; she is nothing on a 36 year old girl. They’re still beautiful at 36 because they’re not fat, no, they are normal real women. They’re not angry, they’re confident. They have careers and that is what is sexy. Helen Mirren is sexy. Young girls are stupid air heads’.

Calling young girls would have pleased the fat old bags I was sitting with. So that wouldn’t have been a HR moment.

My first taste of contracting power  came when I had the HR moment. I had said my girlfriend liked the fact I was older because I had experience and leadership and girls liked that. That was reported as sexist.

HR: This is a warning. You’re a misogynist and you have to stop saying women are inferior.

Me: I never said women are inferior.

HR: Well whatever. Stop saying it or you’ll get a written warning.

Me: My contract expires next Friday and I don’t intend to extend. Shall I leave now or wait until then?

Pause

HR: It would be good if you could do a handover… while we find someone new.

Me: Well, look I am only going travelling, I don’t mind just extending a few weeks to support you while you find someone to replace me.

HR: That would be great.

Me: So… no written warning then really is there. You’re asking me to stay right?

That job got me the status contractor. It took me 6 months to get my next gig, then 2 months. Touch wood, I get them now after about 6 weeks looking. This is how the conversation goes.

Recruiter: When did your last contract end?

Me: Three months ago.

Recruiter: Cool.

It’s crazy. The last role was a contract, so it’s OK to be out of work for three months. It’s expected. But when it was a full time job, it was a big no- no. What’s the difference!?  It’s total insanity.

If you’re a young, single man with no responsibilities, then I can understand why contracting is an attractive option. You’re sacrificing being a CEO for freedom. Bearing in mind my average salary is £300 a day, so if I got a 12 month contract that would be £80k a year? It’s not a bad amount. One day I’ll hit a big pay day and get a £500 a day job and I’ll milk it as long as I can. I only need to do that once or twice in the next ten years to retire. Let’s say I do a cumulative 24 months at £500 a day over the next few years – That’s £252,000. After costs I’d bank about £100k. £100k in the bank is a lot of breathing space.

That’s for me, a life of freedom, distance from the muggles and a modest amount of money that’s my own, I’ll take that over a directorship. I just have to be thrifty at times, I have to keep a large float in the bank for when I have my down time and I have to make sure I swell my funds year on year enough to fund me a pension. All these things are very easy to do. 3 months work is break even, just about. 6 months work a year is gold to me. If I do 6 months I bank £5k after taxes and live off the rest.

All I am doing is waiting for the £500 a day pay off. I will get it one day and in the meantime, I can be patient. Teaching pickup is a nice little side project. As I always say, I just love to teach and hang out with you guys. This is my lifestyle. It’s what I want.

Money For Nothing

It has taken me fucking three hours to write this post, so difficult is it to explain without sending you to sleep. I finally worked out a simple way to get the information to you that I should have spotted at the start. Here goes:

Here is a little bit of practical advice which may help you, financially, in a small way. Read carefully, it is very cumbersome to explain but it might make you a couple of £100.

At some point at the start of the tax year (April) the tax office looks at your salary and gives you a tax code. You then pay tax on the assumption that you will earn that salary for the whole 12 months. So let’s say your salary is £20k a year. That will be your tax rate.

However, if you quit your job at some point and have a few months not working… then you may not earn your assumed £20k in total – so you could have paid tax and continue to pay tax on earnings you never got.

So with this in mind, maybe you should check if you’re owed anything? If you have had any time off work in the last 12 months (and not been paid) then you may well be owed some cash. It’s worth a look.

The simplest thing is to look at your P60 then go here and type your details in.

The important thing to know is. where it says ‘salary’, you don’t put in your annual salary from your current or last job, you put the figure on your P45 of what you actually earned – total pay to date or total pay in tax year, or however your payroll system words it.

Sorry for a boring post, but joking aside, people do read this blog so we may have just saved a few friends a couple of hundred quid. It’s worth it. Remember that any money the Government doesn’t have is better for society, it fights poverty and need on a global basis in a very significant way.

Just to be clear, I am NOT advising that you don’t pay taxes – that’s illegal and very stupid. I am saying pay what you owe, but not more than you owe.

Tax evasion – Illegally not paying taxes.

Tax avoidance – Not paying extra tax that you don’t have to pay.

If you do get some money back because of this advice, then consider some more advice that might be good – consider saving it, or investing it. Have you got an ISA yet? Consider buying some stocks or firstly and foremostly, paying off debts. Or buying some gold. Anything other than spending it on trainers.

£100 on Vodafone shares might sound like it isn’t worth it. But maybe the learning experience is. When you look 12 months later and realise your £100 is now £110 and the dividends were £9. You realise… if it were £1000… £10000…

No, no, this is not a compromise!

No, no, this is not a compromise!

I write as though speaking to the 20 year old me, trying to tell my 20 year old self what he needs to know to set himself up in life. Have you ever heard anyone say ‘if I knew then what I know now, I’d be set’?

They’re not talking about the winning lottery numbers or the horse races. It’s the little things. What they are really saying is ‘I wish I’d listened to older peoples’ advice when I was younger…  and taken it’.  The problem is of course, when you’re young, you’re bombarded with people advising you. Most of the advice is awful. So you go your own way, you hit 40 and then realise what you should have done.

Take saving, for example. I got lucky. I learnt about savings, the power of compound interest, how to work the stock market, at just the last minute. I saved myself with a year or two to spare. If I’d sussed it out at 20… man I’d be set now. I’d be SET.

Now my life path will be very different to yours, so a lot of what I do may not suit you. It’s your job to try and discern the gold from the crap.

Playing us out of this blog post will be, of course, Dire Straits.