Working lots of short-term contracts are fine when the economy is good. But when the economy goes bad, you'll see those contracts dry up very quickly. Then you're looking for a full time job along with everyone else who was doing short term contracts at a time when companies are scaling back hiring. Most of you are going to have a bad time.
A full-time job offers some protection from volatility. I'm not going to pretend that nobody has ever been laid off from a full-time job, but if you work contracts you have ZERO job security. And contractors are the first thing to go in cost cutting mode.
If you go the independent contractor route, make sure your emergency fund can cover 18-24 months of expenses. Also, recognize that while the pay may be higher, if you're in the US you also are on the hook for 8% payroll tax that your employer would normally pay on your behalf.
If you go this route, you need to adjust your definition of "well off". If you are looking to keep pace with your friends working at Google and making $150k, that's pretty unlikely. But you can probably pull $60k and still meet your savings goals, and $60k/yr is more than enough to live comfortably on. And that number won't be static; some years you might make $100k and some years you might make $20k. You need your savings to be able to survive the lean years.
All that said, based on your comment I assume you have no work experience. Why would you hire yourself for a short-term contract over someone else? Go work somewhere full-time for at least a few years until you have a good answer for that question. You almost certainly have a whole lot of tradecraft to learn as well. Once you've built up some experience (and some contacts) you can think about contracting.
> Also, recognize that while the pay may be higher, if you're in the US you also are on the hook for 8% payroll tax that your employer would normally pay on your behalf.
You are on the hook for more than just that. Federal, state and often county taxes (gross receipts, business licenses) will need to be paid. Plus you will need to acquire health insurance, fund your retirement, pay for needed business expenses, etc. Not to mention, most contracts you sign, will require that you also carry some form of business insurance (errors and omissions for example). All these things will slice and dice your hourly rate down severely.
I am not even sure now that this will work in good economic times, since there is saturation in contract-based assignments, with agencies hiring programmers on very low rate in developing countries.
All I can take away from this is that, one needs to have experience and a great network (potential clients) before thinking about contract work. Thank you for your input.
Yes, a great network is essential. But there is plenty of room for independent developers; just target some of the less prevalent tech like Ruby, Erlang, node.js, etc. Most of the big shops go after Java, Oracle, SAP, etc. and don't bother with some of the smaller technologies because there's not consistent enough demand to support their scale.
A full-time job offers some protection from volatility. I'm not going to pretend that nobody has ever been laid off from a full-time job, but if you work contracts you have ZERO job security. And contractors are the first thing to go in cost cutting mode.
If you go the independent contractor route, make sure your emergency fund can cover 18-24 months of expenses. Also, recognize that while the pay may be higher, if you're in the US you also are on the hook for 8% payroll tax that your employer would normally pay on your behalf.
If you go this route, you need to adjust your definition of "well off". If you are looking to keep pace with your friends working at Google and making $150k, that's pretty unlikely. But you can probably pull $60k and still meet your savings goals, and $60k/yr is more than enough to live comfortably on. And that number won't be static; some years you might make $100k and some years you might make $20k. You need your savings to be able to survive the lean years.
All that said, based on your comment I assume you have no work experience. Why would you hire yourself for a short-term contract over someone else? Go work somewhere full-time for at least a few years until you have a good answer for that question. You almost certainly have a whole lot of tradecraft to learn as well. Once you've built up some experience (and some contacts) you can think about contracting.