Here are the rules of thumb for extended stay hotels:
1 The lower the chain’s price, the higher the odds an off-shore company is stacking L-1 and H-1B workers eight to a room trashing the place.
2 The lower the chain’s price, the smaller a room’s square footage. Most will be like having a bedroom in the kitchen.
3 The lower the chain’s price, the higher the odds of them having traveling construction workers rotating through Monday through Friday. If the crew has at least ten people, at least one of them will not read the sign over the cooking range about turning the fan on high BEFORE attempting to cook bacon at 4AM. If you are the kind of person who panics when fire alarms go off, you aren’t going to do well. (I got to the point I looked at the clock whenever the fire alarm went off during one of my projects. Didn’t step out in the hallway to see what was up unless it was daylight outside.)
4 Unless you are working 60-90 hours per week on your project you are not going to survive more than six months in a “standard studio” no matter how nice the chain.
When you have to go on-site for one to two months you tough it out in the extended stay places. Don’t even think about “the cheapest place you can find on-line.” That is going to be a one star hotel (or a one star hotel masquerading as a two star hotel) and you will put up with a lot of police in the middle of the night responding to domestic disturbance calls. Most municipalities don’t provide enough low income/welfare housing, they rely on cheap hotels accepting welfare payments. Some hotel managers have found a way to “make it pay” and that is their market. A lot of hookers tend to band together and rent rooms by the week as well.
You need to travel for at least six months because you want to find a place you can be comfortable in, but you don’t want to commit to a multi-month lease right out of the box. The first two weeks to two months you tough out in a hotel room or extended stay place. During your free time you surf the Web and the local paper for Corporate Housing by Owner and Corporate Housing companies. These are fully furnished apartments/condos/town homes/houses which charge by the month and bill credit cards. You will end up with a washer/dryer “in unit” and a place which has enough space to actually feel like home.
Let’s continue with our example and assume the consultant found a hotel for $45/night on Hotwire…don’t simply add 31*45 to the total. You have to get the per room cost after taxes and Hotwire fees. If you budget an extra seven dollars per night you will usually be fine. 31*52 = 1612
(1810 + 1612 + 460 + 700)/40 = 114.55
That’s a pretty good sized billing rate. There are some skill sets paying above that right now, but if you are just a straight Java or COBOL programmer you can forget about seeing those rates again any time soon. You either need a significant niche to improve your market worth, or you need to slash and burn your costs. The easiest thing to do is to reduce your car expenses. This is why you will see many successful consultants driving four year old cars. They wait for a nice two to three year old ride they can pay cash for comes off lease and they buy it. This wipes out the payment portion and usually reduces the insurance cost. The sad thing is that you don’t get much depreciation for tax purposes. When you see a old consultant with a brand new Mercedes, Volvo, or other $40-46K car it is usually because they are on a contract billing 90 hours per week and could put over $30K down. When it is a young consultant, they are simply waiting for it to be repo’ed at the end of their current contract.
One cheat, which leads to a lot of divorces, is to “apportion” some of the housing expenses to a significant other. The first time you are on the bench and they have to shoulder the entire burden, expect to be “rationed”. When you get back to work and the billing rate doesn’t allow you to shoulder the entire burden for at least the same length of time, expect to be “shut off” for quite a while.
While it might be nearly impossible now, the real solution is to live cheap and always work “out of town”. Most have family ties which don’t let them do that, but there are places in this country where you can buy a brick ranch home with a massive yard and some out buildings for $45K and it isn’t a dump, it simply isn’t close to anything a metropolitan person would call a city. You have to use either satellite or Verizon wireless broad band for your Internet access, and you do have to drive places, but, a lot of people could have probably paid cash for the place before the housing market collapsed.
In fairness, most people won’t have both taxes and association fees. Many people will have taxes rolled into their mortgage because the lender wanted to be certain they were paid. While it helps, it still doesn’t drop the minimum billing rate a lot.
(1580 + 460 + 700)/40 = 68.50
At least now you can make money billing at $70 per hour.
Please remember, I never included clothing, health insurance, medical insurance, income taxes, or any of those other major life expenses. The reason you set your billing rate based upon your first week is so those expenses can be taken care of by the following weeks.
Do not skip your Keogh deduction while working! I have seen this, and even done this myself. If you’ve been on the bench for a while there is always pressure to cover the quarterly estimated taxes (which are calculated based upon LAST YEAR’S INCOME) and the credit card debt you ran up. You are always going to find something else to put on your credit card and that is an issue you need to deal with. The Keogh deposit must be done first. If you wait until the end of the year, you won’t have the necessary cash lying around and you will be raped by even more taxes because you didn’t take 25% off the top and put it in the Keogh each month.
(70 * 40 * 4) * .25 = $2800
