How can a person afford to take a year off? Gap years seem to make sense for a 20 year old unsure about their life direction. But what about a 33 year old unsure about what the next season should hold? One with 5 little kids, 3 houses and a dog? Well the process isn’t all that different. Keep expenses low. (We have $0 of debt, including our cars and home.) Create some passive or residual income. Build up your investments. Keep a good reserve of cash. Then jump.
This is Part three of a 4 part series wrapping up our gap year. In Part 1, I shared about all the unknowns and dealing with the fear of failure. Part 2 I looked at all the questions we had before we started, and the new questions we ended up asking after we started. Today is the numbers. I will go into our yearly expenses more in January, but it looks like 2016 will clock in around $33,000-$34,000 including our giving.
Your gap year budget can be broken into a few categories.
- Your basic expenses: By tracking your expenses for a year before then adjusting, you will have a solid idea. If you have long term travel plans, some expenses like rent or an extra car might also go away. For us 12 months of expenses plus 1 long trip was $33,000.
- Your extra expenses: Are you going to be traveling, renovating, or starting a business? Save or create extra income to cover those expenses. During our year off we also purchased a pop up camper for our 6 week road trip and classic car.
- Create a buffer: During our year off we kept a pile of cash. In our Net Worth 2016 update, we showed about $50,000 in cash. That buffer allowed us to have fun and enjoy the year with minimal stress. Sometimes people assume that if you aren’t working, you wouldn’t need an emergency fund. The reality is that expensive emergencies can happen anytime. It also bought us extra time after our year off to find a good job, or create a new business.
We are making plans for 2017. We will be transitioning back into earning income. But now it’s on our own terms. No more crazy hours. No more working every weekend and holiday. We will talk about what all that will look like in Part 4. I have set a goal of building our income to $2000 a month in 2017. Mr. Mt was offered a few jobs during this year off. To say the shine has worn off the old 9-5 (if we are lucky), 40-50 hours a week, 10 days of vacation, is an understatement. Especially when the social service salaries average $22-$35k in our area.
Between our low expenses and some residual income, we have the flexibility to create the mix of work, travel and family that is right for us. Taking this gap year opened up a whole new world of possibilities for us. We spent quite a few years keeping our heads down and pushing through. This year has allowed us to pause, take a look around and chart a new course.
If you want more detailed steps about how to save and plan a gap year, make sure you sign up for my newsletter and download the free pdf.
What is something you would like to try that would require more than 10 vacation days? Any plans for some time away from your work? If you had an extra month, what would you try to do?