Today, my friend Jillian, from Mini-Retirements Mastered course and Montana Money Adventures, is sharing a guest post about mini retirements. This subject is something I find to be super interesting and she is definitely the expert at it! Below is her story and advice.
Fifteen years ago, I fell in love with my husband and we started planning our life together. But I had this crazy idea. What if we took mini-retirements? Mini-retirements go by many names: Sabbaticals, Gap Years, Time Off.
Essentially, it’s all the same idea: taking time away from the 9-5 to focus on things that really matter to us. It could be for a year or two, or just a month off.
The problem? We were in NO place to be thinking about mini-retirements! That first year we had over $50,000 in debt and only earned 12k. The next year was a little better, but not by much. Still, I held on to that dream.
I just turned 35, and we are currently in our 5th mini-retirement. We have taken a few short ones (month long), some medium (6 months) and this one is going on two years now. Mini-Retirements might seem almost impossible, until you understand how to plan, prepare and execute them. After that, you’ll be able to sprinkle them in every few years and just maybe grow your net worth in the process!
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Four common misconceptions about mini retirement
1. You have to be a high-income earner
This just isn’t true! Our combined income averaged between 30k-60k over the last 15 years. Without a high income, you might need to start with shorter one-month mini-retirements. But there is a LOT of really cool things you can do with an extra month off. When I was 24, I took a month off from my job to travel cross country with my best friend. It was an incredible trip! And we did it for under $2,000.
2. You need to be self-employed
All five of our mini-retirements we either negotiated off from a regular employer or walked away from traditional employment. In my free video training, I walk through the exact process to negotiate a month off from an employer, even if your company doesn’t have a sabbatical program. This can be scary if you have never done it, but with a little preparation, it’s totally possible!
3. You can’t take time away if you have debt
It might take you ten years to pay off your student loans, or 30 years to pay off your mortgage. If there is something you are passionate about pursuing, I don’t suggest pushing that off until you turn 65. If you have a lot of credit card debt, it will be really helpful to pay that off first. It will help supercharge your savings rate and lower your monthly expenses once that bill is gone. But there is no reason you can’t have an amazing month-long experience if you still have a mortgage payment.
4. Taking time off will postpone financial independence
Maybe. But it doesn’t have to! During two of our mini-retirements, we also bought and renovated houses. Taking that time away actually greatly increased our net worth and passive income! If you really want to increase your income and net worth, simply add some of those activities to your mini-retirement. There are no rules about what you can or can’t use this time for.
There are so many incredible things you could do if you had a bit of time away from the 9-5. The first step in my full Mini-Retirements Mastered course is to help you narrow down what you really want to focus on in the next mini-retirement! Which things are very time-sensitive and if you don’t tackle it now, the opportunity might pass you by.
Four Mini-Retirement Options
1. Once in a lifetime opportunity
There are a few things in life we just don’t get second chances on. Sometimes because the timing is never right again or life just changes. We had a chance to move overseas when I was in my 20’s for four years. While we were there, we traveled almost every month. I took art classes in Amsterdam and literature classes in Rome. Everything was close by and made it affordable. Because we had made financial sacrifices earlier in our marriage, we had the resources to invest in those experiences.
I have known people who took time off to hike the entire Appalachian Trail or bike along the Croatian coast. In our current mini-retirement, we are traveling in a pop-up camper in the summers with our five kids. They are between two years old to ten. It just wouldn’t be the same if we waited 20 years! Seeing all the US national parks has been an amazing experience and we just didn’t want to miss this time with them.
2. Passion project
People often have that ONE THING they want to do. Maybe it’s volunteer overseas for a year. Design and build a house with minimal help. Start a non-profit. Or adopt a sibling group from foster care. These are the things that, if we do very little else with our life, at least we can look back and say, “But I did that!” And these are the perfect things to fit into a mini-retirement!
By saving an extra 10-15% of your income a year, you would have enough to take a year-long mini-retirement every decade!
3. Build Financial Freedom
When we moved back to the US from Germany, the housing market had crashed and was at an all-time low. We took time off two more times to buy and renovate our primary home and then two rentals. There were other people who might have wanted to do that but didn’t have the free time to make it happen. Taking those two mini-retirements actually helped us build $1,200 in passive rental income and grow our net worth. Instead of derailing our path to financial freedom, it sped it up!
4. Grow a business
This last mini-retirement has been focused around family/travel and growing a creative and entrepreneurial business. We carved out this time, starting with one year as a test. We wanted to lean into our interests. Test some ideas. See if we could find a project that we were passionate about and was a perfect fit for our lifestyle. Something that would leverage our talents and really help people. If there is a business you want to grow and see if you can scale up, a mini-retirement might be exactly what you need!
Of course, there are logistical challenges that scare us. You might be nervous about healthcare. Or scared that you won’t be able to find another job when the time comes. It might simply be the unknown cost! How much would this month-long adventure cost? How much would it cost to start a business, or travel the world for a year?
Once you decide you want to move in this direction, you will find, for every logistical challenge, there are multiple logistical solutions. Then it’s just the matter of finding the courage to live a life that perfectly lines up with everything you value, are passionate about, and meets your goals.
I want to dive into one of the logistical challenges that be top of mind for you. How can I afford this!?! This is the first logistical stumbling block for a lot of people. I want to show you how you can get started with any budget. Even a once-in-a-lifetime experience doesn’t have to break the bank to become one of your most cherished memories in 10 or 20 years.
Let’s start with the idea that you negotiated a month off from your current employer or find yourself between jobs for a month.
How to Budget for a Month Off
Find your Baseline Budget:
If you have been tracking your expenses and budgeting for a while, this might be an easy number to find. Maybe you spend $2,000, $3,000 or $6,000 a month. Now, this won’t include any investing or savings you do. We are going to put that on hold for a month. If you want to take multiple mini-retirements like we have, simply adjust your yearly investing to cover your off times. An extra 1-3% investing a year, could cover your investing during your mini-retirements.
Then subtract any extras from that baseline. Let’s say you normally spend $200 a month on entertainment. If you are going to be traveling for a month, that expense would be put towards your trip entertainment.
Now you have your month off baseline number. Let’s say it’s $2,500. (Even if you earn $4k a month, after taxes, investments and extra expenses, your core expense might only be $2,500.)
Find your Dream Budget:
What is it you want to do with this time? I like to focus on things that could only happen in this season of life. Things that, if I waited another 10 or 20 years, the opportunity might pass me by. I’m 35 now, but the trip I did at 24 isn’t something I could do again. I have five little kids at home. My best friend is now CEO of a large non-profit organization. There is simply no way we could both escape for a month long road trip! Plus, I have given up sleeping on the frozen ground or in the front seat of my Honda Civic. I’m in my thirties, I now require a mattress of some kind!
Once you know what your next month-long adventure will entail, it’s time to figure out the cost.
As I research each cost, I add them to an Excel sheet I name my dream budget.
A dream budget will serve two purposes. First, in the planning, your adventure will get better. You will refine and customize what you really want to do. Second, you will have specific prices for each piece. If you decide to start a side hustle to help save up for your mini-retirement, you will know exactly what your extra $100 earnings will bring you.
Your extra $100 might buy three nights at a youth hostel or national park campground. $20 will pay for food for the day. $80 will pay for a yearly science museum pass for the whole family.
Open up a dream budget checking account, and stash all the extra dollars in there. Each dollar is getting you closer to building that dream experience. Even $1 will buy you a scoop of gelato in Italy.
Let’s say you settle on a US road trip for two people. You plot it all out and come up with a dream budget of $3000 plus baseline expenses of $2500. $5500 is your total cost. If you want to do this in the next 18 months you will need to save about $300 a month between now and then. Maybe that’s in your budget or maybe it’s not.
Then the question becomes how do I hustle for $300 a month to put towards something I really care about? Or maybe you would be willing to give up your eating out budget to make this happen?
Once we narrow down exactly what the challenge is, we can start to problem solve and find solutions for that challenge.
This week I will be hosting a free training on how to take a month off. I’ll be teaching the three essentials to negotiate a month from an employer who doesn’t typically offer that benefit. I’ll also talk about how to pack a mini-retirement go bag for those unexpected opportunities. With all of this leading up to the only time this year my full Mini-Retirement Mastered course will be open.
If you ever want to be able to do something like a mini-retirement, you won’t want to miss it! Now is the perfect time to start laying the foundation!
What do you think of mini-retirements? Do you want to take one?