Hey everybody! One of the primary reasons I started Money Buffalo was to help tell others how my wife & I effectively managed our money to change careers and “settle down” into a less stressful lifestyle. The decision to make these changes didn’t just happen overnight. I didn’t quit my golden handcuffs job on a Friday and sing “Kumbaya” around the campfire on Saturday.
What is an Adult Gap Year?
Typically when you hear the term “Gap Year” it’s referring to a high schooler that takes a year off to “discover themselves” before going to college or entering the full-time workforce.
An Adult Gap Year is when an adult that has been in the workforce takes a long sabbatical to change careers, take car of family issues like an ailing parent, or just needs a break from a stressful job.
Saving for an Adult Gap Year
It took us three+ years of planning, praying, and waiting to finally garner enough to say “I quit.”
While I had been waiting to say those words (in a more professional manner of course) for 6 years, it was probably the hardest decision I ever had to make. It was time to finally have my actions reflect my thoughts and words of wanting a better quality of life that allowed me to be home for my family.
It’s been a year and a half since I turned in my notice and we are doing fine.
If you are thinking about jumping ship from your current job(s) and considering taking an adult gap year, I want you to know some of the steps we went through to make sure we could afford to make the drastic changes we pursued.
Step #1: Become Debt-Free
Debt is the albatross around most people’s necks. Being able to afford student loan payments was the primary reason I chose the career path as an operations supervisor instead of my original career intentions. $50,000 in semi-rural America goes much further than $35,000 in urban America.
After paying off $50,000 in student loans and a $27,000 car loan, I was debt-free for two years. I had been saving up during these years, but, enjoyed a 50% savings rate for the two years I had no other monthly payments.
We were able to pay for half of our home construction costs from our savings and we still have a sizable emergency fund that wasn’t touched. I potentially could have had more money had I invested it in the market instead of keeping it in a high-yield savings account, but, as I mentioned before, I was looking for my “door of opportunity” for some time and favored instant liquidity.
We do owe $60,000 on our mortgage now, but, this is our only debt. Had we bought instead of built, we couldn’t have afforded to take a Gap Year so soon. It’s nice to be married to a contractor’s daughter sometimes. 🙂
Step #2: What Will You Do Next?
Future Income>Future Expenses
I’ll be honest, I wasn’t planning on taking a Gap Year when I first quit. My original intention was to take an operations supervisor job “back home” at the end of the year (4 months after I quit) and do side jobs until then. That job didn’t open up until a year later. Needless to say, I politely declined the job (I had first dibs) as I moved on and found a better opportunity.
Until you find a new income stream to fund your gap year, SAVE SAVE SAVE with your current job. Taking a sabbatical from work is like a mini-retirement except your savings is your 401k or IRA. If nothing is in the bank, you will be like a college student surviving on Ramen.
Taking a sabbatical from work is like a mini-retirement except your savings is your 401k or IRA.
We didn’t leave until we knew we could make more than we would spend each month. It was still a “leap of faith” as our plans changed. You can’t quit and think life will be fine. Unfortunately the “real world” isn’t a Hallmark movie.
Sorry Junior, you might not be ready to jump into the boxing world just yet. But keep it up!
When looking for my new full-time income stream here were my requirements (Yours might be different):
- Didn’t require much travel
- Wasn’t the graveyard shift or weekends
- No 12-hour shifts
- Allowed me to help build our house on the evenings and weekends
If any potential job was like my “good” one, it was a no-go. This is primarily because it had a similar lifestyle and paid significantly less ($80,000 vs $35,000). While I try not to make money the center of my life, if I’m going to work my life away it’s not going to be for peanuts.
My one condition was that I wasn’t going to quit my job (my previous job of 7 years) until I lined up steady work. I accepted a job offer and turned my notice in the next day. Two weeks later we moved and I started my new hourly job.
You can say God has a sense of humor. That job was nothing like I was told during the interview and we parted ways three weeks later. At that point, my wife & I were truly wondering if we were crazy for what we did.
This is why I started blogging and writing and started teaching Spanish the next academic year. While I brushed up my abilities and learned new ones, thankfully, my wife taught dance and music to help us pay the bills until I started earning a steady income again.
Because we are still establishing a presence in the community, we are still having to scrimp every penny and live very frugally. I must say that a Gap Year isn’t exactly for the faint of heart as a lot can change in a year and taking a year off work during your prime isn’t exactly cheap. We have a house to show for our year, but, you still need to find a way to pay the monthly bills.
Unavoidable Expenses…Gap Year or Not
Where Will You Live?
Rent/Mortgage has always been my most expensive monthly bill. We had the luxury of being “boomerang children” by moving back into my wife’s parents house while we built our own house. We paid utilities and this was a lot cheaper than renting a studio apartment.
Before anybody asks…we all get along fine & since we were all busy living our own lives, there were no bitter fallouts or lost limbs during this year together.
It was cozy having two adults and an infant living in a small apartment that had a small kitchenette, but, it worked for us. It was incentive to get our house completed as soon as possible to return our life to normal. And, it allowed me the time to focus on building a new presence in my present self-employment endeavors.
Benefits and Other Bills
We essentially took a 60% paycut when I left my job. No matter who you are, that’s a sharp drop in income. As a result, we had to cut our spending to keep our ship from sinking.
Besides living expenses (rent, electric, water, etc.), our 2nd largest expense is insurance. Namely health insurance. Our monthly marketplace premium for 2016 was $550/ per month before any tax breaks. Instead, we became members of a Christian health-sharing ministry that is significantly cheaper than conventional insurance plans.
We also re-learned the value of saving for large purchases or going without with simple Amish money hacks. Even though my wife & I were frugal, with a 50% savings rate for 2 years, we didn’t wince whenever we made a purchase. Now we look to buy used on Craigslist and pay more attention to our monthly budget.
There’s a lot of expenses that you might not realize your employer pays until you leave. Besides health insurance, you might have life insurance, 401k matches, and HSA contributions. With your next paycheck, see how much is withheld for employer benefits. You might have to find substitutes that aren’t included in your projected budget.
Those “Oops” Moments
We could have poured all of our remaining savings into the home construction costs to keep our final loan balance as minimal as possible. Thankfully we didn’t.
A week before we planned to drive 7 hours to visit my parents for Christmas, the transmission in our family vehicle started lunging. We borrowed another family member’s vehicle to make the trip and we found another reliable vehcile to make these road trips a few months later on Craigslist. We paid for it in cash and still keep the other vehicle to get around town.
You are going to have unexpected expenses in every step of life. Sometimes it’s only $100, other times it might be $5000. Keep some cash aside in an emergency fund for these moments.
Before Making the Leap
Our secret to affording any type of lifestyle change is to get out of debt and stay out of debt. Not having a monthly payment means you can store the money under your mattress, in the bank, the stock market, real estate, etc. Just about anything is more productive than continuing to pay the lender’s light bill and buying their annual plane ticket to Hawaii.
You are just a number to them and they will move onto the next customer when you decide to use money that helps afford your true life desires. Not how you want others to perceive you.
- Save as much as you can
- Get debt-free as soon as possible
- Future Income Must Exceed Future Expenses to sustain a gap year until your opportunity arrives.
Have You Taken an Adult Gap Year? What Steps Did You Take To Prepare?