Author Topic: Should I Pay $18,000 to Take a Vacation?  (Read 5081 times)

Fuzzy Buttons

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Should I Pay $18,000 to Take a Vacation?
« on: August 14, 2015, 03:07:03 PM »
I've been thinking about ER a lot lately, and about how far away it is.  My company offers a reduced schedule arrangement, and I'm considering approaching them with an idea about taking next summer off.  Essentially, I would take a 3 month sabbatical, where I would be doing a trial run of what life in ER would be like.  As a bonus, my girlfriend is a teacher and has the same time period off. 

Where would I go?  Probably nowhere. 

What would I do?  Probably nothing in particular. 

Basically I'd just be looking to use time to "recharge".  A few years ago I went through a couple of 3 month periods out of work, and I found myself much more excited to do my job when I returned.  I'd also probably spend more time with my niece and nephew, and with my mother.  I'm ten years away from FIRE, so if I wait until then both of the kids will be out of college, and my mother will be 84, so there's no way to tell if I'll even have the opportunity then.  It seems like a good idea to take more time now.

My hesitancy comes from the cost.  Three months loss of salary will be about $18,000.  When I'm constantly looking to save money each month to add to the stash, that's just a huge amount of cash.  That's even assuming I can keep the health insurance at my current rate - not sure how that would work if I had to get my own.  Right now I'm saving about $30,000 a year.  So, I'd still be living below my means, but not nearly as much.  I figure if I made that a habit every year I'd be working 15 more years instead of just 10.  That seems like a big sacrifice when I'll mostly just be at home, only five minutes drive from the office. 

If I was already FI, no question I would do this.  Or just quit entirely.  And if I was barely scraping by, I'd never have an opportunity to do this.  It's a lot of money - but what is money for, anyway? 

So, what do you think?  Would you take that trade off?  How do you value your time away from work now vs the time that you will have after FIRE?  I'm interested in hearing people's opinions and stories of what choices you have made along these lines.  Thanks in advance.  :)

totoro

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Re: Should I Pay $18,000 to Take a Vacation?
« Reply #1 on: August 14, 2015, 03:39:30 PM »
Well, that is in interesting question.  Do you feel burned out?  If so, yes.  If not, maybe still yes. 

Taking a sabbatical that recharges you and allows you to work on happiness might be well worth it.  There are lots of people doing this rather than retiring earlier.   Can you cut back on your current spending more or even get a side job and actively save for this goal?  Might make the mental balance tip to taking the time off more easily.

teadirt

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Re: Should I Pay $18,000 to Take a Vacation?
« Reply #2 on: August 14, 2015, 03:42:19 PM »
How far away from RE are you? You're going to have to make the $18,000 at some point to retire, right?

If it's 1 year away, then you would be missing out on (rough calculation) $18,000 * 0.04 = $720 in interest. In this case, it'd be like paying $720 for a test drive of retirement and putting off the RE date by a summer.

If you're 10 years away, you'd be missing out on 10 years that your $18,000 would be working for you. (my calculations: $18,000 * (1.04)^10 = $26644, or $8,644 in lost interest).

On the other hand, if you want to take a break from work, and have the means to do it, I say go for it! Isn't MMM about being happy, healthy, and badass BEFORE AND AFTER retirement? You'll still get there eventually, and when you get there, you might be healthier, happier, and you will have the memory of a work-free summer with your girlfriend.

I'm facing similar thoughts myself. I'm still in the "pay off student loans" part of building my net worth... whenever I think about opportunity costs it makes it really hard to justify buying anything above the bare necessities or taking any time off work. But personally, I think there should be limits to the delayed gratification offered by saving everything for retirement. You have to find a balance that works for you, lest you show up at the gates of RE only to find yourself overworked and burnt out.
« Last Edit: August 14, 2015, 03:44:31 PM by teadirt »

Mother Fussbudget

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Re: Should I Pay $18,000 to Take a Vacation?
« Reply #3 on: August 14, 2015, 03:49:01 PM »
Follow your Happiness / Joy.

Have you done any research on Sabbatical's?  I took one several years ago, and will say it was a great time to re-focus on the things that are important in my life.  See if your local library has the book:
"Six Months Off: How To Plan, Negotiate, & Take The Break You Need Without Burning Bridges Or Going Broke", by Hope Dlugozima. 

I haven't read it in years, so don't know whether the material is dated, but from my perspective it covered just what I needed.

SweetLife

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Re: Should I Pay $18,000 to Take a Vacation?
« Reply #4 on: August 14, 2015, 03:49:43 PM »
I just came back from 6 months in Portugal to see family.  It was worth going there rather than staying home and saving $$ ... worth it for our son, my husband and for myself.  Sometimes you just need to decide to do what you want to do and enjoy every minute.

Emg03063

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Re: Should I Pay $18,000 to Take a Vacation?
« Reply #5 on: August 14, 2015, 06:11:09 PM »
Maybe.  Leisure time is worth more when it's rare than when it's abundant.  It has a diminishing marginal utility just like any other commodity.  Is it $18,000 gross you're out or $18,000 net?  Bear in mind, your average tax rate will be down for the year, so you should effectively be getting an hourly raise, all things being equal.  Factor in your saved commuting cost, etc, etc, if you're looking for a justification.  Also, if you're company is open to negotiation, offer to give up 2 month's salary in exchange for 3 months off and see what they say.

Fuzzy Buttons

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Re: Should I Pay $18,000 to Take a Vacation?
« Reply #6 on: August 14, 2015, 07:10:34 PM »
Lots of good thoughts here - thanks everyone for chiming in.  I'm very burned out right now, which is what is prompting this.  Plenty of time to decide, though.

Maybe.  Leisure time is worth more when it's rare than when it's abundant.  It has a diminishing marginal utility just like any other commodity.  Is it $18,000 gross you're out or $18,000 net?  Bear in mind, your average tax rate will be down for the year, so you should effectively be getting an hourly raise, all things being equal.  Factor in your saved commuting cost, etc, etc, if you're looking for a justification.  Also, if you're company is open to negotiation, offer to give up 2 month's salary in exchange for 3 months off and see what they say.

That $18,000 is gross - but it's all money that would normally go in the 401(k) and IRA and such.  So I won't save any in income tax - but you are right, I'll save some in payroll taxes.  Travel costs may go up - work is 10 minutes away and family is an hour.  :)

madgeylou

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Re: Should I Pay $18,000 to Take a Vacation?
« Reply #7 on: August 14, 2015, 07:54:13 PM »
You could also consider making the sabbatical a little shorter ... maybe $9,000 for 6 weeks is easier to stomach than $18,000 for 3 months?

Dee

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Re: Should I Pay $18,000 to Take a Vacation?
« Reply #8 on: August 14, 2015, 10:04:42 PM »
I started a similar thread last year:
http://forum.mrmoneymustache.com/ask-a-mustachian/should-i-give-myself-a-gift-with-a-$10-000-value-for-my-40th-birthday/msg428799/#msg428799

I haven't take any sabbatical or otherwise lengthy time off... yet.

But maybe I will later.

bacchi

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Re: Should I Pay $18,000 to Take a Vacation?
« Reply #9 on: August 14, 2015, 10:17:34 PM »
Take it. You're just front-loading your retirement and the ability to recharge is well worth it.

JJNL

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Re: Should I Pay $18,000 to Take a Vacation?
« Reply #10 on: August 14, 2015, 10:30:41 PM »
if you're as burnt out as you say you are, take it! Avoiding an actual burn-out and the accompanying medical expenses / coaching sessions etc. olus the protracted feeling that you're in a black hole of your own making is totally worth it. Believe me, I'm talking from experience here. You do NOT want to push yourself too far over the limit.

FreeAsADragon

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Re: Should I Pay $18,000 to Take a Vacation?
« Reply #11 on: August 15, 2015, 04:22:52 AM »

Kaminoge

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Re: Should I Pay $18,000 to Take a Vacation?
« Reply #12 on: August 15, 2015, 11:02:30 AM »
Take it!

Time is the one thing you can't ever get back. Of course you can get retirement time later but as you note it won't have the same possibilities in terms of spending time with family. If you're in the position to be able to take the time now I'd do it for sure.

I've written about this before on here but it's the reason I don't regret at all taking off big chunks of time to travel in my 20s. Sure it's pushed my savings back significantly but those experiences and travels are something I could only have had at that time of my life. Of course I can still travel later (and in face I spend about 3 months each year traveling) but it's definitely not the same now I'm in my 40s as it was in my 20s. The opportunity for you to have time off to spend with your niece/nephew/mother isn't likely to be something you find yourself regretting down the track.

Able was I ERE

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Re: Should I Pay $18,000 to Take a Vacation?
« Reply #13 on: August 17, 2015, 02:53:58 AM »
I'd vote for yes!   (As long as you're conscious and aware that you're pushing out your FIRE date--trading time now for time later.)  Think of it as a reduced salary for a massive increase in vacation time.

It might be interesting to figure out how much taking the extra time off now will delay your FIRE date.  Perhaps this thread: Anyone calculate portfolio growth without additional contributions? could be of help?

I've done this in two ways.  One: I work 4 days a week, giving me an extra day for family each week.  Two: I've taken months off at a time.  Last summer I took two months off to take a cross-country road trip with my family.  Saw tons beautiful scenery at national, state and local parks while spending a lot of time with my wife and kids.  This summer I'm spending time with family in Europe.

Good luck in whatever you choose!
« Last Edit: August 17, 2015, 03:01:26 AM by Able was I ERE »

mandy_2002

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Re: Should I Pay $18,000 to Take a Vacation?
« Reply #14 on: August 17, 2015, 08:32:46 AM »
That's even assuming I can keep the health insurance at my current rate - not sure how that would work if I had to get my own. 

If your company has a description of this benefit, the insurance considerations should be clearly spelled out.  For my company, we can take up to a one year sabbatical, with 6 months at active employee rate and the remainder at COBRA rates.  It may be a good time to switch to a high deductible plan (assuming it's not already used) if you're in good health, can cover the deductible, and can invest in the HSA before your break.