Author Topic: Taking a Year Off  (Read 5789 times)

gianleer

  • 5 O'Clock Shadow
  • *
  • Posts: 3
Taking a Year Off
« on: August 13, 2014, 05:21:28 PM »
Hi all,

First post on here! Been an MMM reader for a year or two (can't remember exactly) but a long-time reader of financial blogs/books/etc.

Here is our situation... I am 27, and my wife is 29. I have always been very frugal, and have slowly convinced my way to have a similar financial outlook to me (for the most part, at least). I am an accountant by trade and handle most to all of the family finances.

Quick backstory - I graduated from college and got a job right away, and worked there for about 6 months. After that, my wife was moving back to Colorado (where she is from) so I decided to quit my job and follow her, with a few thousand dollars in the bank. I was fortunate to land a great job at a great company, and have been working there ever since. This was in November 2010, and I have been fortunate that my salary + bonuses is about 3x what I made when I started!

We have saved a lot of money both in savings and retirement, and I am guessing if I stayed at my current job, the company stayed stable, and I kept getting my raises/bonuses similar to what I've been getting, we could probably retire in 5-7 years (or at least semi-retire, with help from the market). However, we've decided to try a different route! We know we will want kids, but we also love to travel... so the plan we hatched was to quit work and take a year off to travel before we try to have kids, but still put ourselves in good financial position when we return. Here are our goals, planning to be quit around the end of October 2015:

- We would like to save for a down payment on a house, obviously shooting for at least 20%. I'm guessing we would look at houses in the $200K-$250K range (highly dependent, of course, on where we live and want to settle down... we aren't really too sure yet), and we are probably about 75% of the way to this goal.
- We have enough saved up for a good used car, though hopefully we won't need to use. We have one car - a 2003 Chevy Cavalier with 175K miles. However, we do like to take long road trips, and I am not the most mechanically inclined, so a replacement car may be needed at some point relatively soon (next year or so).
- We are shooting for $40K saved for a year of travel... I'm sure we could go for a lot less but we also want to be very much on the conservative side.
- Would also like some additional money saved for any emergencies or when we return (if we can't find a job right away, etc) and are shooting for $10K there. We are probably 25% of the way to this goal.
- As mentioned, we know we also want to have kids. My wife will be a high-risk pregnancy due to a medical condition, so we are aiming high and hoping to have $10K-$15K for child expenses.
- I also max out Roth IRA and contribute a significant amount to a 401K, and our total retirement savings are nearing the six figures.
- Debt free as well as I paid off my student loans last year.

I have run the numbers many times, and at current savings rates we would fall a little bit short of the goals, but I hope to make up the difference with side income/expense cutting/possibly a job for my wife (she works PT here and there but she is looking for something more FT). Also, I hope that by aiming high on some of the savings goals, such a trip will still be possible even if we don't quite make those benchmarks.

We are pretty excited at the prospect of a trip, and that is a good motivator for savings. However, it's always tough to sacrifice even with a big goal like this, so I figured I would start this thread as further motivation for myself!!

Any tips/comments/similar experiences are of course welcome!

jennifers

  • 5 O'Clock Shadow
  • *
  • Posts: 86
  • Location: Madison, wi
Re: Taking a Year Off
« Reply #1 on: August 14, 2014, 12:25:18 PM »
I don't have much advice, but I wanted to reply and say that this seems like a really cool idea. 

One question I have is where are you planning on traveling (all over the world, just a few countries etc)?

gianleer

  • 5 O'Clock Shadow
  • *
  • Posts: 3
Re: Taking a Year Off
« Reply #2 on: August 15, 2014, 04:13:43 PM »
We are hoping to go a bit all over the world, within reason.

For example, we'd like to spend maybe a month in Thailand, a couple months in Central America or South America, and a few months in Europe (and then a few months staying around the USA as well).

So basically we want to try and balance seeing a lot of the world and experiencing different cultures, but without spreading ourselves too thin and spending all of our time in transit, rather than really soaking it all in.

limeandpepper

  • Magnum Stache
  • ******
  • Posts: 4500
  • Location: Australasia
Re: Taking a Year Off
« Reply #3 on: August 16, 2014, 07:33:10 AM »
Sounds like fun! I think $20k per person sounds reasonable for a whole year off. That's including everything, right? (I.e. not just day-to-day costs but also flights, vaccinations, travel insurance, etc.)

I'm currently at the beginning of several months off in Asia with my boyfriend, and we may extend our time away further. I have quit my job, while he continues to work as a freelancer. So you have my support on such an adventure. Good luck with everything!

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 28062
  • Age: -999
  • Location: Seattle, WA
Re: Taking a Year Off
« Reply #4 on: August 31, 2014, 03:31:04 PM »
Awesome.

It's always a balance.

The wife and I decided to just power through, hit FI, then start full time, round the world travel.  But taking a year off is tempting.

I would love to hear more about the plan for that year, once you've got it figured out.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with two kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Thegoblinchief

  • Guest
Re: Taking a Year Off
« Reply #5 on: August 31, 2014, 05:04:16 PM »
Consider how much airfare will eat up your budget if you hope around the world, even slowly. Consider doing more of a "slow travel" or overland type of tourism.

Good resources: Go Curry Cracker. They've been world travelers for several years, and are one of the few that into the finance side of it. They average $30K.

I also really like Drive Nacho Drive and Bumfuzzle.

Neat goal. Definitely do it before kids! Then again, my kids will be 15-18 when we FIRE, so we might try to do a long tour when they are teenagers and can get a lot out of it. And I'll only be 43 by the time my youngest is 18.

water1974

  • 5 O'Clock Shadow
  • *
  • Posts: 14
  • Location: Shanghai
Re: Taking a Year Off
« Reply #6 on: August 31, 2014, 10:19:38 PM »
Tangentially related to this topic:

http://www.today.com/parents/parents-escape-everyday-life-grow-closer-kids-family-adventure-1D79823494

Taking a year off after you have children can also have benefits. In any case, taking a year to travel around the world sounds great!

plantingourpennies

  • Bristles
  • ***
  • Posts: 441
  • None.
    • Money, Kittens, Happiness
Re: Taking a Year Off
« Reply #7 on: September 01, 2014, 03:43:59 PM »
Yeah, this is tempting for us as well.

I think with all the market growth we've seen over the past two years there are a bunch of frugal people that are considering a "gap-year" type of experience on the way to FI.

If you do it-keep track of the numbers for us!

best,
Mr. PoP

Less

  • Stubble
  • **
  • Posts: 178
  • Age: 33
  • Location: New Zealand
    • Journal
Re: Taking a Year Off
« Reply #8 on: September 03, 2014, 04:32:49 PM »
This is something my SO and I talk about a lot. Before we started talking a bit more about saving and where that might lead us, we both kind of had the plan of go overseas and spend what we had before coming home again and really starting to try build a life. Now that we actually have some savings though, we are both more resistant to dipping into it. For us immediate freedom is not the end goal. I want FI so that I can pursue my own business and my partner views savings as the 'Two marshmellows later' way of life, not as a means to stopping work.

I think 20k seems like a very realistic budget. We will be working with similar, but of course have to get off our little island (NZ) to start so flights will be pretty expensive.

tomsang

  • Handlebar Stache
  • *****
  • Posts: 1085
Re: Taking a Year Off
« Reply #9 on: September 03, 2014, 04:51:39 PM »
Sounds like a blast!!!  Journal on the way.

Some concerns or questions would be your ability to make as much after taking a year off. Sounds like you found a job that pays triple what you were making a few years ago.  Will your skills, networks deteriorate by taking a year off?  If your current job is unique in its pay, does that concern you? 

If you aren't worried about your careers by taking a sabbatical than I say have a great trip. Obviously this will push you FI date back a few years, but it sounds like you are good with that.

Have fun!!

Rage

  • Stubble
  • **
  • Posts: 147
  • Location: SoLoNoCo (aka Longmont)
  • Eat the Horses
Re: Taking a Year Off
« Reply #10 on: September 06, 2014, 10:38:48 PM »
My wife and I quit our jobs and traveled around the world for a year.  Our total cost was $43K, including two around-the-world tickets (~$9K for those).  We hit everywhere except Asia, which we skipped entirely because that's how cheap around-the-world tickets work.  Anyway, we could have done it much *much* cheaper.  Your first trip around the world is always the most expensive because you want to hit all the big sites :)  What is a trip around the world without seeing the Parthenon?  or Michaelangelo's David in person?  or the Galapagos (OMG crazy expensive)?  Or the pyramids?

A few tips:

1) stay in hostels.  They are an awesome experience (usually - every hostel is different), and crazy cheap.  Also great: couchsurfing and renting apartments for 1 week to 1 month. 
2) Cook all your own food.  You know how people say the food is great in Italy?  That is because they saved up for 5 years for a one week trip of a lifetime and didn't notice that the food and the experience in restaurants there mostly sucks (exception: Napolitano-style pizza, which also happens to be cheap).  Many hostels also have a "stuff people left" pile - you can seriously eat for free.  Also: farmer's markets in most countries are amazing and amazingly cheap. 
3) Slow travel, like someone else said.  The longer you spend in one place, the cheaper the per-day cost.  You will also burn out if you move around too much.  Stay in one place and you will start to meet locals, have favorite shops, and generally enjoy and experience a place more.  If we had it to do over we would probably pick 12 places and stay a month in each.
4) Avoid tourist traps as much as possible.  The pyramids, machu picchu, Uluru, the Sistine Chapel - these things are all overrated, and don't compare to the experience of, say, wandering the Tuscany country side and happening upon the half-excavated remains of a roman amphitheater and walking amongst the columns without a soul around for miles.  Of course I can say this as a jaded world traveler who has been everywhere :)

Finally if you do travel the world, when you get back America will seem like a foreign country for a while.  Why is everyone so obsessed with jobs all the time, you might wonder?  What is this obsession with following the letter of the law and blatantly ignoring the intent?  Why is public transportation only for homeless people?  I could go on, it's jarring to come home and not feel at home.  Also, no one will care that you traveled the world.  No one will want to hear your stories.  "This reminds me of the time I was mountain biking in Baraloche, Argentina and ..."  Yeah, everybody hates that asshole, so you're better off just never mentioning it all.  When someone returns from their 8-day trip of a lifetime to Rome and Cinque Terre and is gushing about their adventure, you can slightly condescendingly mention that you spent some time there once. :)

Rage

  • Stubble
  • **
  • Posts: 147
  • Location: SoLoNoCo (aka Longmont)
  • Eat the Horses
Re: Taking a Year Off
« Reply #11 on: September 06, 2014, 10:42:40 PM »
One other thing: if you take exactly one year off, take it starting in the middle of a calendar year and ending in the middle of next - saves you a ton of money on taxes.  I think I calculated that this saved us something like $15K vs taking it all within the same calendar year.  However, if you do take off a calendar year, that's a good chance to do a 401k/IRA to Roth IRA rollover...

deborah

  • Walrus Stache
  • *******
  • Posts: 8944
  • Location: Australia or another awesome area
Re: Taking a Year Off
« Reply #12 on: September 06, 2014, 11:03:12 PM »
My wife and I quit our jobs and traveled around the world for a year.  Our total cost was $43K, including two around-the-world tickets (~$9K for those).  We hit everywhere except Asia, which we skipped entirely because that's how cheap around-the-world tickets work. 
They included Australia and not Asia???

jennifers

  • 5 O'Clock Shadow
  • *
  • Posts: 86
  • Location: Madison, wi
Re: Taking a Year Off
« Reply #13 on: September 07, 2014, 02:08:44 PM »
I am also wondering how future employers view the gap in work history when you take a year off?  Anyone have any thoughts? I was thinking maybe incorporating some volunteer time into the trip would give it a more positive spin.

bacchi

  • Magnum Stache
  • ******
  • Posts: 4032
Re: Taking a Year Off
« Reply #14 on: September 07, 2014, 03:02:55 PM »
I am also wondering how future employers view the gap in work history when you take a year off?  Anyone have any thoughts? I was thinking maybe incorporating some volunteer time into the trip would give it a more positive spin.

I have a gap year on my resume. It's been mentioned by interviewers a few times over the years and always in a positive light. Some were envious and some were curious and some also took a year off and wanted to compare notes.

Of course, that doesn't mean much. Maybe when my resume is passed over it's because of the gap year. "An ENTIRE YEAR traveling? I smell laziness and unreliability."


Elderwood17

  • Pencil Stache
  • ****
  • Posts: 525
  • Location: Western North Carolina
Re: Taking a Year Off
« Reply #15 on: September 07, 2014, 03:26:27 PM »
I am also wondering how future employers view the gap in work history when you take a year off?  Anyone have any thoughts? I was thinking maybe incorporating some volunteer time into the trip would give it a more positive spin.
My HR rep always assumes a gap in a resume was due to being unable to get a job for the duration - a red flag.  I have had to argue for a couple of folks who chose to take care of family, start their own business, etc.

Rage

  • Stubble
  • **
  • Posts: 147
  • Location: SoLoNoCo (aka Longmont)
  • Eat the Horses
Re: Taking a Year Off
« Reply #16 on: September 07, 2014, 09:32:32 PM »
Having a gap year is not a huge problem, once you have a few years of experience after it.  I label it a Sabbatical (I put sabbatical where you might put the company name).  I've been told it's better if you can disguise it as "self-employed", but I don't bother.  The gap in my resume is actually 2.5 years.  I don't want to work for any company that would care, and I kick so much ass at what I do that I can afford to be that picky :)  Right at the end of the time off it might have been a little harder to find a job than otherwise, and I probably made a little bit less than I would have at first.   

HR does not usually view your trip around the world as a positive in any way.  You are a wild card, a loose canon.  You care about things other than the continual advancement of your career.  So when I went back to looking for a job I said things that implied that I was back on the career track.  Throw out offhand statements like "now my wife and I are ready to settle down" (translation: going to have a bunch of kids and need a long term job), "we're looking at houses" (mortgage! need a long term job).  I talked about how I missed the community and culture of working for a company.  None of this was misrepresentation in any way, I just didn't mention that I'm still a loose canon :)


MsRichLife

  • Pencil Stache
  • ****
  • Posts: 539
  • Age: 42
    • Living My Rich Life
Re: Taking a Year Off
« Reply #17 on: September 07, 2014, 10:45:02 PM »
Finally if you do travel the world, when you get back America will seem like a foreign country for a while.  Why is everyone so obsessed with jobs all the time, you might wonder?  What is this obsession with following the letter of the law and blatantly ignoring the intent?  Why is public transportation only for homeless people?  I could go on, it's jarring to come home and not feel at home.  Also, no one will care that you traveled the world.  No one will want to hear your stories.  "This reminds me of the time I was mountain biking in Baraloche, Argentina and ..."  Yeah, everybody hates that asshole, so you're better off just never mentioning it all.  When someone returns from their 8-day trip of a lifetime to Rome and Cinque Terre and is gushing about their adventure, you can slightly condescendingly mention that you spent some time there once. :)

+1

I spent three years as an expat in the US and I felt this way upon returning to Australia.

For the OP, this was/is a dream of mine. My husband has yet to be convinced and given we have a two year old, I think we might wait a few years before we tried it. I'd love to do it before junior goes to school though. I'll live vicariously until then.