My husband and I just came back from a year-long around the world trip and we feel like it was worth every penny (our travel blog is http://purplmarsh.wordpress.com if you're interested). We're in our early thirties and we also wanted to do something like this before kids and other obligations (although my husband is already talking about going on another trip like this...I guess that's the danger with these!).
Please expand on this - because you are not FIRE yet this plan kind of says that we looked at what is needed to get to FIRE and then said screw it we will focus on the experience first - basically not only are you not increasing your stash, you are also spending a portion of it and to some extent risking your primary income producing asset (you and your job) to do it. Being out of work for a year plus in your 30's typically (not always) has a negative impact on your income.
Don't mean for it to sound negative, again just curious and would like more info on your position and thought process to do this.
Hi Tooqk, no worries, I'm always surprised by how polite people are on this forum.
Short answer: We had already started our trip before I found MMM so we didn't think about how it might affect early retirement beforehand. :)
Long answer: However, I think it still did make sense for us even in retrospect. I'm a physician who finished residency and started the trip before joining a practice. My husband got a Ph.D. in the behavioral sciences, then worked in a top consulting firm, then did some freelance writing for the last couple years (some of which he continued on the trip). We also got married at the end of my residency and are planning on kids in a few years.
So from just a life situation perspective, the timing made a lot of sense to us since we were transitioning careers and didn't have kids yet.
From a financial perspective, we had no debt and plenty of savings for this. I feel like I have decent job prospects as a primary care physician, especially since I’m flexible on location. My husband was trying out writing for a while, so he would have had a break from full-time employment on his resume anyway. He’s looking for something full-time now and he’s a smart, resourceful guy so I feel like he shouldn’t have too much trouble finding something (perhaps this is terribly naïve). We still have plenty of savings after the trip, and if need be, we could do just fine on my salary alone as a physician.
The total cost of the trip for the two of us was $36,000. If we had stayed in the U.S., I’d guess we would have spent something like $30,000 instead so not a huge difference in expense. And even if we had decided to retire first, we still would have wanted to take a trip like this afterwards, so assuming roughly the same total amount of time worked in either scenario, the biggest difference would be the investment income from starting to save a year earlier. However, we also used the income-limited Saver’s Credit in 2011 (since I only worked half the year in residency) to get an extra $2000 tax credit and be able to convert $6500 of a 401K into a Roth without any extra federal tax liability. We converted the rest of a 401K to a Roth in 2012, hopefully without any tax liability at all thanks to the Saver’s Credit again, and we don’t plan on touching the Roths for a long, long time.
If we do decide to retire pretty early, I think that my income and savings rate will be high enough that the trip wouldn’t have delayed FIRE that much in terms of total working time, maybe just by a matter of months. And if we decide that we love our jobs and that we won’t retire until much later even if we could retire sooner, the cost of the trip causing a delay in FIRE is a moot point anyway.
I don’t know if that novel makes any sense. To be honest, we weren’t even thinking of FIRE beforehand. But we did feel financially comfortable taking the trip and I don’t think it should affect possible FIRE plans too negatively. Oh, and you might be surprised just how common a trip like this is outside of the U.S. - "gap years" are very common among young Europeans and Australians. But it certainly isn't for everyone, and I'm looking forward to settling down for a while in a home.