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Size of Warchest?

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    Size of Warchest?

    Hi all,
    I know this has been discussed quite a lot times, but I could not find a specific answer to the question. So here goes my situation.

    I was a permie till early this year, and was fed up with all the bad things that comes along the permie role. There were few good things, but they really were so meagre after 3 years in the same company, that I thought it was the time to call it a day. I was not sure of contracting as an option and was actively looking in the permie world.

    Then this particular agent comes into the scene, and somehow manages to convince me to get on this contract. The contract so far is good, and I am already enjoying the life in this new world. Now the invoices have started to come in, and I am seeing the increase in the money in my bank. This is where I think of this word "Warchest" coming up in the forum.

    My question is "Is there a level which most of the contractors think is bare minimum for warchest?" I know the terms here have been like 3-6 months, but I am in a phase of upgrading my lifestyle from that of a permie to that of a contractor, but really want to build up on the savings first, so I am not sure what is the sizeable amount.

    I was thinking of keeping the same lifestyle for first few gigs, and build up considerably, and then think of what money have I have got to spend on what?

    Any ideas please?

    #2
    I am down to my last million. Times are tough.

    Comment


      #3
      I see no reason not to carry on as you are until you at least have a 2nd contract.
      Originally posted by MaryPoppins
      I'd still not breastfeed a nazi
      Originally posted by vetran
      Urine is quite nourishing

      Comment


        #4
        I recommend taking out a couple of 25k loans and purchasing that new sports car you wanted and taking some expensive holidays. None of this squirrelling away lark. Make hay.

        Champers & coke all round. Wahoo!
        What happens in General, stays in General.
        You know what they say about assumptions!

        Comment


          #5
          When the government now pays your mortgage, gives a bundle of benefits, why do you need a warchest?

          Comment


            #6
            Rasesh, do you like films about Galdiators?

            Comment


              #7
              The sensible answer is that it depends on your approach to risk, your attitude towards contracting, what type of work you do (is it niche/is the demand high), what are your long term goals (e.g. do you want to retire early) and so on..

              No one can answer these questions but you.

              As a guideline, unless you're confident that you'll never be out of contract, and that you'll never need significant time off sick, I would suggest a minimum of 3-6 months warchest.

              Personally, I was up to 12 months with a view to increasing it to 18 as I felt that with that behind me I could be more selective in the contracts I actually took on. My circumstances changed, I needed to move to a larger house so now I'm back down to around 4 months with a bigger mortgage, and a less selective approach to which contracts I accept
              Proud owner of +5 Xeno Geek Points

              Comment


                #8
                Just go for it, you can always go back to permie if you fail.

                Comment


                  #9
                  Originally posted by rasesh409 View Post
                  Hi all,
                  I know this has been discussed quite a lot times, but I could not find a specific answer to the question. So here goes my situation.

                  I was a permie till early this year, and was fed up with all the bad things that comes along the permie role. There were few good things, but they really were so meagre after 3 years in the same company, that I thought it was the time to call it a day. I was not sure of contracting as an option and was actively looking in the permie world.

                  Then this particular agent comes into the scene, and somehow manages to convince me to get on this contract. The contract so far is good, and I am already enjoying the life in this new world. Now the invoices have started to come in, and I am seeing the increase in the money in my bank. This is where I think of this word "Warchest" coming up in the forum.

                  My question is "Is there a level which most of the contractors think is bare minimum for warchest?" I know the terms here have been like 3-6 months, but I am in a phase of upgrading my lifestyle from that of a permie to that of a contractor, but really want to build up on the savings first, so I am not sure what is the sizeable amount.

                  I was thinking of keeping the same lifestyle for first few gigs, and build up considerably, and then think of what money have I have got to spend on what?

                  Any ideas please?
                  It all depends on individual circumstances (kids/no kids, mortgage, partner etc), but if there's a downturn in your field you will need 6 months living in the warchest; that will quickly dissappear if you use the time for expensive training courses to upgrade your skills or retrain in something with higher demand.

                  When you say 'upgrade my lifestyle' let me give you a little advice; spend your new found welath on stuff you can miss, like going out for meals, going away for weekends etc; a lifestyle that doesn't commit you to keep up spending levels. Don't rush into buying a big house with a big mortgage or signing HP deals on flash cars; that all looks very nice, but can be a millstone around your neck when times are hard, as they almost inevitably will be sometime. If you're satisfied with your current home, stay there. As for cars; sure, reward yourself with a nice car, but pay for it from your savings and get something second hand. Likewise boats, motorbikes or whatever other material things take your fancy. The key to it is to enjoy your income without making big future spending commitments.
                  And what exactly is wrong with an "ad hominem" argument? Dodgy Agent, 16-5-2014

                  Comment


                    #10
                    Originally posted by rasesh409 View Post
                    I am in a phase of upgrading my lifestyle from that of a permie to that of a contractor
                    What do you mean by 'lifestyle of a contractor'?

                    Comment

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