I’m 27, single, Contractor(incorporporate), and working as a service guy for telephone company. making 80~100K/year.

I don’t have any RRSP/TFSA/RESP contribution, I never thought about it.
after I switched from FT employee to contractor I realize that I need to save
a lot of money instead of buying a clothes and meals.

I’ve read lots of articles here and lots of young people like me saved a lot of money and investing on funds and RRSP/TFSA/RESP and embarrassed my self with my spending habit.

I only have bank account with TD (Chequing $2,000, Saving $1,000, Business Chequing account $5,000 and VISA $1,000).
I know its not very good looking….
I’m getting paid weekly from company minimum of $1,500/week(can go upto $2,500 depends on how many work I’ve done).

I want to invest money rather than stacking in saving account for nothing.
My goal is to buy a condo as a first home and rent it out until rent fee pays off the first mortgage and then buy a house as a final goal…

Could you give me an advice what to do to increase my money for my goal?

I’ve already heard about transfer 20K RRSP to HBP for mortgage…

there is 1 more huge disadvantage of being a full-timer. they tend to make you sign intellectual property agreement..so i you write a nice piece of code in your spare time (being in IT) it belongs to the company.

I’ve worked in IT for 10+ years and would not consider full-time employment any more secure than contract work.

My company made $211,000.00 last year, so even if I only worked one year and could not find a contract – I made more than double what I last earned as an employee ($79,000.00).

I could lay on the beach for a year, then just go get a job.

I think those wary of contracting never think about that option – if you can’t find a contract – get a job! the thing is – contractors rarely “go back”..

I’m certainly doing everything I can to prevent being an employee again. Although I did pay myself like one last year – just enough to write off daycare.

Oh and the tax advantages of being a small cdn corp are wonderful.

I should mention – where I live/work – there is quite a spread between employee wages and contractor rates.

At $79,000 I was nearing the top of the scale for someone with my experience – on contract I can make a minimum of $85/hr.

We also have a benefit loophole – too long to explain, but our medical benefits are very reasonable for our family of 4.

Your math is similar to Liz, but you flipped one variable around.

38 miles = 45 one way = 1.5 hours day = 375 hours / year

You will get to write off much of the travel cost as a business expense, but you typically don’t get to bill for travel time. Of course, the salary position typically involves some unpaid overtime (unless you’re in government), so how many of those extra 375 hours are you going to lose each year?

Plus there’s the value of benefits. You’ll have to put a dollar value on those benefits to really make any kind of fair comparison. Do some research and compare those benefits (especially those you would use) with the cost of paying for them from you $50/hour.

Also worth noting is company status. Are they both profitable? Are they both growing? What’s the relative value of the work you’ll be doing? If your work is going to generate (or save) a lot of money, then your value to the company will be higher. This is an important form of job security.

Of course, you’ll also get some financial leeway in terms of taxes when you bill on contract. The final value of these two setups is likely to be very close. So from a pure numbers perspective this could tip your final salary one way or the other.

Your goal is to maximize your hourly earnings. Spending 300+ hours in the car isn’t a lot of fun, but nor is unpaid overtime. Being able to write off the expense of the car on a pre-tax basis makes a significant difference in your ending salary, but you also have to account for other overhead costs (accounting for example).

End of the day, you’ll likely take home more money on the contract gig, but the number will be close. However, you are accepting a higher risk for this decision.

$45 / hour ~ 90k / year

All other things equal, this is about the same as having a 75k salary with vacation and decent benefits. (note this is for Canadians, In the US, the value of the healthcare plan is pretty heavy).

Of course, not all other things are equal.

27 miles = 1 hour / day = 250 hours / year of extra commute. That’s 10.5 days or about 5 extra weekends that you’re going to spend in the car for the salary job.

2 miles = bikeable & lowered costs
27 miles = dependent on your car & significantly increased vehicle costs

So that 90k / year job is definitely starting to be look more valuable. You save 250 hours and 12,500 miles of travel. According to AAA the cost to operate a car in 2006 was 50-70 cents / miles. Gas makes up 8-10 cents of that and that cost has nearly doubled. So now it’s about 60-80 cents / mile. So again, that’s 250 hours and $8750 on the average car.

So here’s what it comes down to: level of risk and what do you want to do?

I’m 27 and married with no dependents. I have confidence in my skills and I enjoy a flexible schedule. If I didn’t become indispensable in 6 months, I’m confident that I would be able to find a new job quickly and inexpensively. I also place a high value on my personal time.

To me, this is a no-brainer, take the close job with higher gross pay and the lowered time requirement. Your goal is to maximize your hourly earnings and one of these options clearly pays more. Imagine what you could do with an extra 250 hours every year!

Of course, you’re allowed to make your own decision here, but things are definitely weighted against the lower paid full-time job. (see my comment above)

I am a sql developer for a healthcare, i got two job offers, one fulltime with 75k a year , benefits, 27 miles from home. The other contract 6 mos 45 per hour. 2 miles from home.

[...] KMull.com has hosted this weeks Carnival of Personal Finance! I submitted my article Full Time vs. Contract Work. [...]

For business for self products, the Loan to Value is more likely to be lower (more money down) as most people that are self employed write their incomes down to much lower than actual levels in order to save on income taxes. The mortgage insurance premuims are higher in this case as well.

[...] Million Dollar Journey compares Full time vs. contract work. [...]

1. You are generating lots of income
2. You are generating “just enough” or “not quite enough” income.

If you are in group #1, you could likely be billing more alone, b/c right now you’re supporting the company’s profitabilities, the shareholders, and everyone in group #2.

If you’re in group #2, you don’t actually have job security b/c you’re not actually generating income. Smart companies don’t downsize their #1s, they don’t let go of their top generators. No car dealership is going to willingly part with their #1 salesman, b/c he’s typically selling more cars than the bottom 3 combined. If anything, they’ll pay the #1 salesman twice as much as the chumps and let the chumps go.

So, end of the day, you’re either fit for the chopping block or likely underpaid, b/c you’re hoisting up everyone else :)

But even then, I wouldn’t imagine the smart ones feeling their job is “secure”. You may be slighted by a poor manager or suffer when “the Board” arbitrarily decides to cut staff from top-down (b/c the company is bleeding).

The simple truth is, we’re all contractors.

Some of us just make less b/c we’re not freelance. We’re all on your blog, b/c we want to get rich (or we’re already there), but we all know that the best way to do that is to become a “contractor” and to leverage the time of others in a constructive way.

Working “for the man”, is a generally inefficient, but relatively “secure” way of building wealth. But in the modern economy let’s not imagine any real form of security. If you are a “wage-slave”, the #1 mindset change is to instead believe that you are a contractor, even if you’re on salary.

“Contractors” become wealth b/c they strive to generate wealth. “Employees” remain poor, b/c they strive to survive. They somehow believe that without “the company” they will not have useful work to perform tomorrow.

These are vague and highly general, but you get my point: contracting is more than just a decision, it’s a mentality :)

Now, I make around 225k/yr, I set my own hours, and I’m in full control of my career. I usually work 40 hours a week or more because I simply love what I do, but if I want to work a short week or or I need some time to run errands or do things around the house, I take the time when I need it. Even if I don’t find work for 3 months, it doesn’t matter. I have a large emergency fund for those situations, and even then the longest I’ve ever gone between projects was 2 weeks.

When you’re good at what you do you can always find people eager to employ your services. The key for me was just getting past the job security myth and putting my future in my own hands. All it took was turning a bad situation like being laid off into the opportunity of a lifetime.

As the person working, and filing for the tax deductions; they need to ensure that they follow the 4 criteria in determining whether they are eligible as a contractor in the eyes of the CRA. It’s not always that clear.

http://www.taxtips.ca/personaltax/employees/employeevscontractor.htm

control – more control is generally exercised by an employer over an employee than by a client over a self-employed person
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chance of profit/risk of loss – self-employed persons usually have some degree of financial risk, and more opportunity for profit than employees
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integration – an employee’s job will be an integral part of an employer’s business, where the tasks performed by a self-employed person will likely be less integrated with the client’s business
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tools and equipment – self-employed persons are more likely to be supplying their own tools and equipment, as well as being responsible for their maintenance