Avoid the Financial Trouble I got into when I started IT Contracting.
I was as pleased as punch when I got my first contract. I was 25 when I started contracting and I‘d worked out that I‘d be out of it by the time I was 30.
Then, I would be able to have as much fun as I liked, with a fancy car, a nice house, and I wasn‘t sure if I would have a yacht or a motor launch. The French Riviera might be the place to hang out after I‘d hung up my program listings.
I was, after all, earning twice as much money as I was as a permie. I was just hoping that the 4/5 years that I calculated would make me rich wouldn‘t be wasted years. So, I was hoping that 30 wasn‘t too late to still have fun.
There wouldn‘t be much point in having all that money if I was too old to enjoy myself. That was the only worry though.
I suppose that I was on about the equivalent of £1,700 a week at today‘s prices. So, I couldn‘t wait to get my first monthly pay cheque. I couldn’t see the financial trouble ahead.
I wasn‘t going to go crazy in terms of spending, although I had allowed myself to spend a little more a week than I used to. That wouldn‘t make much difference as I was now earning twice as much.
I had been told that cars were tax-deductible and that the petrol could be claimed as expenses too. So, I should get a car then.
I could get it out of the first month‘s pay. I knew that I should really put some aside each month for tax, but as I was earning so much I could just save a little bit extra in each of the other 11 months of the year.
The crazy thing was that I couldn‘t even drive. However, I felt that the important thing was to get the tax-deductible item first and THEN learn to drive.
It was a convertible car and I often got my friends to drive it around. A lot of the time it just sat outside my flat in Maida Vale though.
The car cost me the equivalent of £5,000 at today‘s prices.
I hadn‘t realised that the insurance would be so much though and that you had to pay just to park it outside your own flat.
It wasn‘t a great problem though and the second month‘s pay arrived without me spending it on any big item.
Make Your Money Work for You
The third month‘s pay arrived.
I thought that it seemed a shame that the money should just sit in the bank account waiting for the end of the year. It could be earning money for me.
If I made my money work for me then I could be out of the business before I was 30. When I was calculating when I could be out by, 4/5 years didn‘t seem that long. After 3 months in my new contract it started to seem an eternity away.
Therefore I stuck the equivalent of £7,000 (in today‘s money) in one share in the Stock Market. I based my selection on the basis that it was the cheapest share in the sector at only 8p. It therefore had further to go up I thought.
It was a recovery share. I was willing to take a bit of a gamble. I didn‘t do any analysis on it. That’s because I had a system. I didn’t expect Financial Trouble.
It didn‘t seem to move much, which was slightly annoying – perhaps half a pence up or down. I would have liked more action than that
Financial Trouble – Shock News
I still remember entering St. Paul‘s tube station having bought an Evening Standard at the entrance. I opened the paper at the financial section. It said in the headlines that my share had been suspended.
I was stunned!
I almost forgot to get off the escalator at the bottom. How could I have had such bad luck with my very first share? This wasn‘t the way it was supposed to be. I didn’t expect ths financial trouble.
All my money had gone on this damned share and a car that I couldn‘t even drive that was sucking money out of me. I couldn‘t even afford any lessons.
Between them they had even taken all of my savings from before I went contract as well.
I had spent everything and had saved nothing for tax. This was just the start of my financial trouble.
I‘ll let you know what happened next in a coming article.
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