Fulltime job or Contract work or it's the same...???

[Aiming_4_55]

Here's my story on the job, semi-FI, life front. Considering risk and options.... residence & car paid off, just monthly bills.

Currently, I've been at my job for less than a year, making reasonable to good salary. J*b is ok but very stressful and demanding on my personal time. Also, my rentals are covering my barebone budget, so almost FI, really working to fund 100% of kids' college education, more ER travel funds, and sh!t happens events.

I was approached by a contract company, recruiting for a 12 month assignment that can turn into 18-24 months and/or maybe contract for hire. The assignment would be w-2 with benefits/vacation time paying 33% more than my current salary. The kicker... overtime would be paid, they see 5 hours per week, +16% of current salary. I'm currently working 10 - 15 hours per week for no additional pay.

If this assignment ends, I see enough opportunity in the marketplace that I can land a new gig in 1 - 2 months. Since it is w-2, I can probably obtain unemployment.

I've never worked on contract before. While the $$ is better, I see an improvement of life here as I'l have more time to be with family, etc.

Anyone have good or bad experiences with shifting from fulltime to contracting? I was thinking about doing this at age 50 to semi-ER so I'm 7 years early to my plan, but opportunity is presenting itself.

Decisions... decisions... what does the collective wise wisdom of the forum suggest?

 

[Sarah in SC]

I wish my DH would look for a contract gig instead of his full time j o b. Like you, I see it as a chance for more flexibility, as well as getting to change his work environment. No experience with it ourselves...yet.

 

[CoolChange]

I cannot know enough details of your personal situation to give advice; but, I will share my experience in the hope that it is helpful/useful.

I was a bit tentative about jumping into contracting/consulting work...well over 15 years ago. It was likely the best professional/financial decision that I made. (Note: I do not claim it was the best decision that I could have made, just the best path I actually followed.)

Most of my time was spent W-2 with small firms, getting paid well with overtime. My first contract was only for six weeks but paid very well...3.5 years later, I went to my firm and told them that I really needed to move clients. (I just needed something new; I was still getting paid the same rate as for the initial six week contract; and, every time I moved clients, my rate increased.)

Assuming you are good at your skill, are fairly flexible with assignments and have a reasonable professional network, you should have little fear of bench/beach/non-billable time. I am better than the average IT consultant but definitely no expert on any specific technology, industry, vertical, etc. And, I do a very poor job of maintaining my professional network; yet, I have never had any down time between contracts.

I am making some assumptions from the post: You are good at your job/skill and have a work ethic; so, I do fear that your expectation of contracting giving you more free/family time is not likely to materialize. In my experience, a project with planned/projected 5 hours per week of overtime is likely to turn into 15-20 hours a week of overtime; and, that is hard to turn down when they are willing to pay. Likewise: I have found it very hard (actually, impossible) to take time off between assignments for the same reason.

Five years ago, I did jump into a venture capital (VC) backed start-up; but, once that finally ends (sale, shutdown, takeover, quit, get myself fired, etc.), I expect to go back to contracting/consulting again...hopefully part time or really short term gigs. But, I definitely suffer from the one more dollar syndrome.

 

[Aiming_4_55]

Thanks for the reply Sarah. I'm going to test the waters and see how it works out.

I wish my DH would look for a contract gig instead of his full time j o b. Like you, I see it as a chance for more flexibility, as well as getting to change his work environment. No experience with it ourselves...yet.

 

[Aiming_4_55]

CoolChange - Thanks for your reply.

I do feel I am flexible and do well in my j*b/career field. My concern is the steady paycheck, but I'll be on a 12 month assignment unless I screw it up or it loses funding which I doubt. While I hear you on the overtime, at least I'll get paid for it... it'll help fund extras in life. It's been 20 years since I got compensated for OT by the hour. With the extra increase in salary, I figured I can be on the bench 3 - 4 months a year which I view as SER without a pay decrease. If my plan works out, I can take the summer of 2013 off, but my area of work has constant need. If overtime is a constant, I'll have to think about it, so it's an experiment for now.

I cannot know enough details of your personal situation to give advice; but, I will share my experience in the hope that it is helpful/useful.

I was a bit tentative about jumping into contracting/consulting work...well over 15 years ago. It was likely the best professional/financial decision that I made. (Note: I do not claim it was the best decision that I could have made, just the best path I actually followed.)

Most of my time was spent W-2 with small firms, getting paid well with overtime. My first contract was only for six weeks but paid very well...3.5 years later, I went to my firm and told them that I really needed to move clients. (I just needed something new; I was still getting paid the same rate as for the initial six week contract; and, every time I moved clients, my rate increased.)

Assuming you are good at your skill, are fairly flexible with assignments and have a reasonable professional network, you should have little fear of bench/beach/non-billable time. I am better than the average IT consultant but definitely no expert on any specific technology, industry, vertical, etc. And, I do a very poor job of maintaining my professional network; yet, I have never had any down time between contracts.

I am making some assumptions from the post: You are good at your job/skill and have a work ethic; so, I do fear that your expectation of contracting giving you more free/family time is not likely to materialize. In my experience, a project with planned/projected 5 hours per week of overtime is likely to turn into 15-20 hours a week of overtime; and, that is hard to turn down when they are willing to pay. Likewise: I have found it very hard (actually, impossible) to take time off between assignments for the same reason.

Five years ago, I did jump into a venture capital (VC) backed start-up; but, once that finally ends (sale, shutdown, takeover, quit, get myself fired, etc.), I expect to go back to contracting/consulting again...hopefully part time or really short term gigs. But, I definitely suffer from the one more dollar syndrome.

 

[eridanus]

1) Save your money when the market is hot. When it isn't, you want to be able to afford the forced unemployment.

2) Not many contractors takes substantial time off, surprisingly. Stand your ground or you'll find yourself working throughout the year. Actually, it's tough to time the natural end of a contract with your desired vacation month or two.


Oh, you should look into forming an Inc. or LLC. Some companies/agencies like paying corp-to-corp. Your own W2 also allows you to get a solo 401k.

 

[omni550]

Oh, you should look into forming an Inc. or LLC. Some companies/agencies like paying corp-to-corp. Your own W2 also allows you to get a solo 401k.

+1

My ex-SO had a lawyer draw up LLC documents for him when he went to work as an agency CAD designer. The lawyer included a statement that the company had to give 60 days notice before termination of employment.

A few years later, when the economy was experiencing a slowdown, my ex-SO got another 60 days of employment while his agency co-workers were let go immediately. This put him in a much better position as far as knowing that his contract was ending and searching for his next gig.

omni

 

[TromboneAl]

I did that (consulting) from 1982 to 1988 and it was good. It helped to have a spouse with a steady income.

 

[meekie]

Lack of health insurance coverage can be the big minus for some people.

DH did some contract work over the last year after he was laid off. His biggest problems with it were the lack of security, and knowing he'd have to find a new job/go for interviews after every contract. He prefers having more stability to having more money.

I think this sounds like a good move for you. I'd use some of that extra money to beef up your emergency fund during this first year, since you're much more likely to have weeks/months without pay going forward.

 

[DangerMouse]

My husband was a consultant for 11 years, it was only when the economy started turning 3 years ago that he committed to a full time gig.

Based on his experience I would have to say he much preferred being contract. No need to participate in the regular company games such as performance reviews, bonus pools, begging for permission to take annual leave. When he was a consultant he took much more time off, if he wanted to go away for 3 weeks he would simply tell them the dates and off he would go (of course he would consider workloads before doing so).

The key to success as a consultant it to live as if every paycheck is your last. In the glory days all our friends/acquaintances were consultants but when the music stopped there were quite a few who had blown everything they had made on the good life.

If he could get another consulting gig DH would probably walk away from his current employer tomorrow, even though most people think his current employer is the place to be.

 

[sunsnow]

I worked as a contractor from '97 til this year. It was great for me. Many more opportunities to deduct expenses, and to save for retirement (SEP plan was very helpful). It is a bit of 'feast or famine', so I agree that you need to have a big cushion of liquid assets to cover quiet times. But I always made a lot more money that my employee colleagues, attended far fewer meetings, and avoided most of the office politics. I was able to purchase individual health insurance during that time, but if that had not been possible, I would have wanted to be an employee instead.

 

[Ed_The_Gypsy]

There are three problems with being a contractor.
1) Lack of security.
2) Lack of health insurance.
3) You may have to work out of town.

I have been a contractor for maybe 13 years now. I am an engineer with a wide variety of experience and I network very well. I can get work when no-one else can, but some days you cannot buy a job.

1) I have been out of work from time to time. Once I was home for 5 months. I have found that I am less stressed by unemployment than by a toxic work environment. I do not have to work for jerks. I don't care what promises the employer makes or what the contract says, you can be gone in a minute. Get used to it.
2) For a while we bought expensive health insurance through the agency I was working for. Then my wife got a nice job and we bought health insurance through her employer. Long ago I had private health insurance and foolishly got rid of it.
3) Do not expect to work close to home. I get very good jobs by being ready to go far away for long periods of time. This could be a problem for you with rentals and a family. Do not discount the damage to family life. Can you do this?

The money is very good (for me). Today I am making 3 or 4 times what I could in a staff job back home. (You cannot keep it all. You will have extra costs. I am basically supporting two households--home and me in the field. Then you might want to go home once in a while.) For the first year, I was just breaking even.

Often the employer does not want to pay overtime so you have a normal life, but you may be working far away from home so how much good is that? (It is good. You will be stressed anyway.) I get straight time for OT. My overtime is never 1.5 or 2.0 times my hourly rates. I generally work on projects. They start out with no overtime but at some point the project managers discover that their aggressively optimistic plans were BS and then the OT starts. Or they cancel the project.

Depending on the business you are in, you may find it impossible to go back to a staff job someday. They won't hire a former contractor. They are afraid of you. They know you won't sit still for crap. How can they put pressure on a free man? They want someone who is afraid to leave and will tolerate now-lower pay and corporate nonsense.

Oh yes. You better be good.

 

[FreeAtLast]

My best years were when I was a consultant billing by the hour.

 

[Aiming_4_55]

Thanks for the suggestion on LLC. That is one of the advantages that I saw if I could get paid C to C or 1099, stock away more tax advantage $$.

Oh, you should look into forming an Inc. or LLC. Some companies/agencies like paying corp-to-corp. Your own W2 also allows you to get a solo 401k.

 

[Aiming_4_55]

Or any source of steady income

I feel I can take a bit of risk with my rental income covering my barebone expenses.

It helped to have a spouse with a steady income.

 

[Aiming_4_55]

Thanks for the feedback. The interesting part is the contract company offers health insurance as a w2 employee. It's currently cheaper than buying an individual policy on my own. Given I run the risk of losing coverage once the assignment is over or when they run out of assignments for me.

My emergency stash is sitting at about 18 months without factoring in rental income and unemployment.

Lack of health insurance coverage can be the big minus for some people.
... I'd use some of that extra money to beef up your emergency fund during this first year, since you're much more likely to have weeks/months without pay going forward.

 

[Aiming_4_55]

This is one of a few reasons why I want to give it a try. Personally, I think this would reduce alot of stress, way too many games going on in my environment.

Based on his experience I would have to say he much preferred being contract. No need to participate in the regular company games such as performance reviews, bonus pools, begging for permission to take annual leave.

 

[Aiming_4_55]

...

3) You may have to work out of town. Is that the reason for your screen name here?

.... Oh yes. You better be good.

Very good point, we'll see... in my 20+ years, I've never been terminated for performance, so I hope to continue bringing value to my clients.

 

[Aiming_4_55]

Thanks for responding and sharing your experiences. I'm looking forward to a change, so that might be the trend.... a new assignment from time to time without the stress of quitting.

During downtime, in between assignments, I'll get to work on my rentals and/or practice an ER lifestyle. Hope my spouse is ready for that.

 

[myself]

I did contracting for about 12-13 years. It was VERY enjoyable, since I got to network with a lot of people, and also got to expand my skillset dramatically.

I currently am W-2, and don't care for it all too much, but have a house to support along with wife and 4 kids. It can be scary at times, but it's definitely worth it if you have the funding saved up for the down times.

 

[Ed_The_Gypsy]

Yup.

If you check my name tag, you will notice that I am working about ten time zones ahead of you at the moment.

I am not kidding about travel.

...

3) You may have to work out of town. Is that the reason for your screen name here?

.... Oh yes. You better be good.

Very good point, we'll see... in my 20+ years, I've never been terminated for performance, so I hope to continue bringing value to my clients.

 

[eridanus]

Travel depends on where you live, of course. If you're in software and live in Silly Valley, then you can get local contracts easy. If you're in Topeka, you'll have to travel sooner rather than later.

I use airbnb or priceline and, for extended periods, find a room on craigslist.

 

[Aiming_4_55]

I would not do your type of traveling for contract employment. I would/have traveled for several weeks at a time for previous employers. I would enjoy the bench time until I was broke. Thanks for your feedback.

Yup.

If you check my name tag, you will notice that I am working about ten time zones ahead of you at the moment.

I am not kidding about travel.

 

[Aiming_4_55]

Unemployment rate in the MN is fairly low, about 5.8%. There has always been a shortage of workforce in my area of work, so I can see opportunities frequently. I'm hoping to stay in the area with limited travel. Thanks for the suggestions on the websites.

Travel depends on where you live, of course. If you're in software and live in Silly Valley, then you can get local contracts easy. If you're in Topeka, you'll have to travel sooner rather than later.

I use airbnb or priceline and, for extended periods, find a room on craigslist.

 

[CoolChange]

Regarding the travel, I definitely understand personal reasons you may want to avoid it; but, just something I have found that you may want to consider which I have never understood: It seem to be true whether you are an independent contractor or member of a global consulting firm: You worth (pay, respect,etc.) on any given project seem to directly proportional to the distance you have traveled to do your work.

Even though I used to have many more opportunities presented locally, the [relatively] few that came my way which involved significant travel also paid significantly better. For many of those gigs, I have to imagine a local candidate could have been found. (I have also worked on many local projects where expert talent was being flown in from across the country that I could have easily replaced locally at much lower cost.)