When you look at data, you see these stories time and time again of people like on their
deathbeds or later in life being like, I wish I did this.
And yet you don't really see this massive shift of people responding to that data, like
that information that we have about how people wish to live their lives by changing their
life while they still have like the control to do so.
You know how sometimes it feels like the universe is trying to drop a truth bomb in your
lap?
Recently it feels like I can't escape content about the power of the sabbatical.
The idea of a sabbatical comes from the academic world.
Traditionally, professors are granted a paid year of leave for every seven they work and
they typically use it for things like study or travel, which sounds lit.
But I want you to imagine for a moment the lifestyle of someone who's either barely
hanging on financially or trying to attain early retirement.
Hell, maybe that's you.
This exercise may not require much imagination.
You are constantly prioritizing work so you can earn more.
You're spending less to avoid slowing yourself down.
You're stealing doggie bags from the park to avoid having to buy more on Amazon.
In other words, you are fully embracing the hustle now so I can chill later mentality.
Global independence is a hard path to pursue in moderation because it has a very distinct
rush to the finish line vibe.
You might not intend to take things to extremes, but for high achieving goal-oriented people,
the slope from, I'm going to make my own lunch more to I created an algorithm it works
to identify which meetings are catered and then hacked my way onto the invite lists is
a slippery one in one that I have traversed personally.
In that context, the suggestion that taking substantial time off and spending some of
your savings, I know, gasp, might actually be productive, could feel preposterous.
And that's why we're talking about why and how you should totally do it.
Welcome back to the Money with Katie Show Rich Girls and Boys.
I'm your host, Katie Gatti Tossan, and today we have a couple of guests.
The first is Jen Fisher, the human sustainability leader at Deloitte.
She recently published a TEDx talk all about her experience navigating burnout and why
Deloitte now offers sabbaticals to their employees.
I was Deloitte's first chief well-being officer now I am our human sustainability leader
so kind of continuing that commitment but human sustainability in terms of how we're defining
it right now because it's still an evolving area is kind of this long-term view of well-being
from an individual organization, climate and societal lens and how do those things all intersect
with one another.
Welcome back to our conversation with Jen in a little bit, but in the meantime, the second
guest is our very own Money with Katie Show listener Rich Girl Rachel who wins against
her uber ambitious tendencies to take a break from her impressive finance career in her
late 20s.
Now Rachel and I, we have a lot in common.
What we don't have in common is the fact that she actually did take a year off and she
lived to tell the tale.
So why would I, a personal finance hobbyist who is obsessed with financial independence
and thrilled by the prospect of all of you becoming financially independent as soon
as possible, flag the sabbatical as a potential power move.
Let's imagine you keep your nose to the grindstone for a couple of decades.
You're plowing mercilessly forward towards your early retirement date, you're pushing
off your downtime until later when things calm down, repeating the phrase, I just need
to get through this week and then I'll be fine every single week for the next 20 years.
And then you hand in your two weeks notice, it is the best feeling and then that's it.
Slam on the brakes, throw it in reverse.
No more work, no more income, in fact not only are you not adding more income to the pile
that you have been tending like Scrooge McDuck reincarnate, you're actually going to start
using some of that money.
That's right no more contributions, understandably a lot of retirees early and otherwise really
struggle with the shift, especially if they've just spent the last 15 or 20 years doing
nothing but cultivating a fat net worth.
So it begs the question, should you rush to the finish line if you have nothing to do
once you cross it, we'll unpack that question after a quick break.
So what happens if you pull the plug on the only thing that you do all day and then you discover
that you actually don't have much else to fill your time and not only that, but you have
to start withdrawing from your precious brokerage accounts.
The bottom line is that it can be disorienting.
A couple of months ago, two figureheads in the real estate sector of the financial independence
community, Mindy and Carl of Bigger Pockets fame went on to meet Satie's podcast to talk
about how they were having a hard time spending their $4.3 million nest egg.
So for the number crunchers out there, that is an ultra conservative 3% safe withdrawal
rate of $130,000 per year or more than $10,000 per month.
Despite reaching their financial independence number several years before they're in their
50s now, they were still doing more or less the exact same things they had been doing leading
up to their big day.
Mindy was still working full time.
The couple was still flipping houses.
They were still doing all of the renovations themselves.
And this is what they were telling themselves at the time.
I feel security in the investments, but I don't want to touch them for the future.
Not to be too blunt, but when's the future?
Now, this is the exchange that occurs when we meet presses Mindy and Carl on why they're
so uncomfortable letting their foot off the gas despite having more than enough to spend
very safely.
It goes to show that the money in the bank that we think is going to grant us permission
to downshift often doesn't if we are not psychologically prepared for that shift.
But you might say, you know what, it seems like they just really liked what they did.
Why should they have to start using their assets if they don't want to quit working?
But as they tell Remete in the interview, they did want to stop.
They didn't find enjoyment in flipping homes or working full time anymore.
They just didn't know how to start spending their money.
Because the idea of drawing down on that big pile instead of frugally adding more to it
made them feel so uneasy.
To get them to understand that the future is now, Remete asked them how much money they're
set to have if they just let that $4.3 million compound for the next 30 years.
And the answer was roughly $33 million.
He asks them, so what are you going to do with $33 million when you're 80 years old?
You got some fun plans?
And it was really powerful.
The financial independence grind is a lifestyle and the same way that luxury is a lifestyle.
If you have conditioned yourself to work as hard as possible and spend as little as possible
for decades, the transition can be jarring.
And in Mindy and Carl's case, they had been accumulating their $4.3 million nest egg
for the past 30 years.
And now there miles beyond the finish line, they're unsure what to do next.
And Mindy and Carl are friends of mine.
I think it was incredibly brave of them to talk openly about this on Remete's show.
Because these are conversations that often only happen behind closed doors or not at all.
Mindy and Carl might be retired or able to retire.
But many of us are still a long way away.
And in the meantime, how can we make sure we have something to retire too?
Well, what better way than by practicing retirement?
When I first heard the idea of a one year sabbatical, I was like, that is insane.
Why would you slow your progress?
I'm only five years from five.
I got to keep my foot on the gas, baby.
No breaks.
But the more I thought about it, the more I questioned.
What's the rush?
What difference does it really make if I take one of my retirement years now,
and then the rest in seven years from now?
Because if I'm going to draw down a year of assets early,
I'll need to work a little bit longer to build it back up.
A sabbatical of any length gives you the time and the mental bandwidth
to fully disconnect from your life as you know it.
And discover what exactly you would actually do with a ton of free time.
Whether that takes a month or six or 12 is up to you and your comfort level.
Because here's the thing.
I think we like to romanticize what we would do if we didn't have to work.
I'd live in Southeast Asia.
I'd learn another language.
I'd become a great cook.
I would backpack across Europe.
I'd sleep until noon.
But the reality, I think, is that you find out just how much you really want those things.
If you give yourself a seemingly endless expanse of unpunctuated free time to experience them.
We all have the post-work aspirations.
But when we live inside those safe small nine to five bubbles,
we really shield ourselves from walking the walk.
The job can be an excuse to avoid those pursuits just as much as it is a legitimate barrier.
I can't backpack across Europe for a month.
I have a job, Karen.
So what if you didn't have a job?
You're free.
Now what?
It's scary, but it's scary.
We all need to face sooner rather than later.
If we think early retirement is a goal that's worth working hard for.
It's just a test drive, right?
So let's talk about a few indications that this might be a solid move for you.
The first is that you're gaining momentum with a side project or a career shift that feels promising
but a lack of time and energy are major barriers to pursuing it fully.
The second is that you've made a lot of financial progress already,
but you still have a reasonably long time to go before you'll be fully financial independent.
And the journey is beginning to feel unbearably long.
The third is that you're feeling stagnant or chronically burnt out in your career path,
despite having made a concerted effort to get re-engaged with your work.
No matter what you do on the weekends or how many short vacations you take,
you just cannot seem to shake this feeling that the path that you're walking down
is not the one you want to be on, but the next step isn't clear.
And let's talk about that last one really quickly, because those who may be feeling stagnant
burnt out or drawn to a change that they might not have fully envisioned yet
is a really interesting case study for sabbatical.
Burnout is career kryptonite.
As I shared before, our first guest, Jen Fisher,
intimately dealt with burnout, and I wanted her to share more about that experience.
I basically prided myself on getting to the gym for an hour a day, no matter what was going on.
That meant that I was working or doing whatever it is that I was doing in my life for another
18, 19, 20 hours a day. And I was one of those people that said,
I'm good on three or four hours of sleep.
I had this mentality that I'll sleep when I die, not really knowing and realizing that
I was going to die a lot sooner.
I thought it was sustainable.
I thought that I had it all together until I didn't.
I had a lot of anxiety.
My emotions were all over the place.
I had like no ability to control my reactions in any way, shape, or form to anything
that was said or done.
I had no ability to rationalize or view things in a bigger picture state of the world type of thing
or state of my life.
Now this reads like text book burnout, right?
But the interesting part of what Jen shared is that she didn't perceive this as burnout.
She perceived it as failure, which fueled her fear of not being able to step away.
We live in a world that constantly is telling us that we need to do more.
Whether it is the wearables that we wear on our wrist that tell us that we need to stand or
that we need to walk more steps, we don't get rewarded for doing less.
That's the world that we live in.
And so I didn't know what I was going through.
I knew that there was something wrong with me, but I looked around and I was like wow,
everybody else seems to have it together.
So I processed it as I wasn't good enough.
I wasn't smart enough.
I didn't belong here.
And so to me that meant failure.
A lot of it is self-permission.
The world puts the pressure on it, but a lot of it is our own self-permission too.
I would thrive on things that people would say, like Jen responds to email in 10 seconds flat.
Or I think Jen sleeps with her phone and we would laugh and giggle about that,
but secretly that was true.
Like I would be on my phone at 2 a.m. responding to emails.
Nobody else was on email.
It was me.
And so it was the pressure that I was putting on myself to get everything done
in some unreasonable amount of time that nobody had communicated to me.
Nobody was giving me those deadlines.
I was putting them on myself.
And the final piece of this stage in her life,
which Jen touches upon so beautifully,
was redefining what success in life actually looked like.
I had this view of like, well, if I just work harder than everyone else,
then I will be successful.
And I also looked outside of myself for a definition of success.
And I think what I realized after I burned out was like,
wow, I actually never defined it for myself.
And I think part of the reason for my burnout was that I was chasing this definition of success
that wasn't my own definition of success.
And so I was always chasing something that I was never going to catch,
because it wasn't mine to catch.
Eventually, Jen shares she had to step away from the job as her burnout had taken an overwhelming
physical and mental toll.
I just got to the point where I physically and mentally couldn't engage in life or work
in any meaningful way. I couldn't get to the gym.
I couldn't focus on my work.
I couldn't be present in my relations.
Like, I just couldn't.
And so I had to take a leave of absence from work.
And I had to step back and really focus on myself from both a mental health and physical health
perspective. And I had to seek out professional help.
And if you ask me what I wish I'd done differently,
I wish I would have sought out help.
Whatever that means to you much earlier in the process.
Or I wish I would have listened to people when they told me,
hey, I think there might be something going on with you.
I asked Jen to tell me more about how her definition of success shifted after her experience
and how she began to deprogram decades of belief around what it meant to be good.
It was therapy. It was a lot of re-evaluation and self-awareness around my own behaviors.
In particular, that led to burnout.
My own behaviors and my own beliefs, as you've mentioned, right?
Because a lot of it is our own value set or our own beliefs about what success looks like,
right? And so I had to do kind of a full re-evaluation of like, what are those behaviors
and beliefs that are actually harming me, that are getting in the way of me being healthy.
I also kind of have a personal mission of what I want my life to be.
And it's really around being a role model for people like my family, friends, loved ones,
colleagues that you can be successful in your career and live a well and healthy lifestyle.
It requires some trade-offs, but it can be done. And it can be done in a way that is useful
and helpful and meaningful. So she brought that mission not only into her personal life,
but her professional one. Now as the human sustainability leader at Deloitte,
she's focused on long-term wellness, not just one-off sabbaticals, since taking a break and going
right back to the same environment that caused you to burn out isn't going to be effective.
She shared more with me about Deloitte's true purpose behind sabbaticals and what they're
doing to address burnout as well. The history of a sabbatical is like in academia,
people take sabbaticals to do research and to write books or to be innovative, right,
to give themselves that space in that place to shut out the day-to-day life,
but to do that to create meaning and value and impact in their work or in the world.
I think that it's important to understand that that is the intent of a sabbatical.
I know that, in many cases, it's being used now because people are feeling stressed out or
overwhelmed or burnt out. To me, what that points to is that we need to take a big step back here
and say, okay, what is it about the cultures that we're working in that are creating
such high levels of stress and burnout that people feel like they need a sabbatical just to get
away from it? Because what happens is, okay, Katie, you take a one-month sabbatical,
you come back to the exact same environment that you were in that got you burnt out in the first
place and you haven't really solved anything other than you took a month off and suddenly you feel
a lot better, but how quickly are you going to get back to a place of burnout? And so I think
sabbaticals are great, but I think what we need to be looking at is like what's the risk of not
fixing the systemic issues that are creating the need for people to feel like they need to take
a sabbatical because they're burnt out and actually create a system of work that is sustainable
so that when people think about taking a sabbatical or an organization is able to offer a sabbatical,
it's actually a positive and not a negative. I don't want to be always in a place where
work is a detractor from our well-being. Work can and should be an enhancer to our well-being,
and I believe that we absolutely can get there. We'll get right back to it after a quick break.
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But how do you actually walk away from work for a period of months or a year without sacrificing
your long-term goals? If you don't have the luxury of a paid sabbatical from your current
employer or endless amounts of money, I was doing some digging and found a whole cottage
industry of sabbatical coaches, people who make a living from teaching other people how to take
meaningful time off. One tidbit I picked up on is that there's a common throughline of fear
for those who are attracted to this idea, but are afraid to enact it. It's a similar but
different kind of fear that Jen illuminated. What if I can't find work again when I'm ready
to re-enter the workforce? One such coach, Jillian Johns-Rude, suggested sending out an email at the
beginning of your sabbatical to your entire professional network and letting them know your intentions.
That you are taking a sabbatical for a certain amount of time, but you intend to return to the
workforce and that you'd really appreciate it if they could just let you know if they hear of any
interesting opportunities in your field over the next few months. She said the types of opportunities
that arise for her coaching clients are plentiful because every other American you know is going to
be really uncomfortable with the idea of you not working. According to Johns-Rude, she was like,
trust me, your network will want you to find another job because it's going to make them feel
weird as hell that you are not employed. I suppose that's a bigger issue we should explore in the US
that will devote a different episode to later this year, but in the meantime, this type of break
is a more drastic between jobs approach to sabbatical. As I reflected more on this concept,
I realized that's probably the most realistic way to pull this off. Asking your current employer
for six months of unpaid leave because you're looking to decompress might not go over very well,
though feel free to give it a shot. Business owners face the same type of dilemma. It's terrifying
to put the breaks on something, especially when it has a lot of momentum and step away for any
period of time, let alone months on end. But after more internet stalking of Johns-Rude's work,
I found more often than not the people she worked with who walked away for a year,
often ended up with better, higher paying opportunities after the fact. A reality that's especially
true for those who have been with the same company for a long time. In this way, a sabbatical
can actually be seen as a pretty strategic career move. I asked her if we could set up a
recorded call so I could talk to her about some of the advice that she would give someone like me,
and here's a clip from that quasi-coaching session before which she sent me actual homework to do.
Like, I don't know how to downshift at work. I don't know how to achieve a more sustainable
pace. I feel like the only solution is just like stopping everything entirely. Do you work with
people like that a lot? Like, what do you tell clients of yours that just feel like they're so
spread thin that like there's no room for anything else, but they have no idea how to even taper back.
So I think what I would dive into first because I did notice in the homework that you sent over,
there was a lot of like, here's how much I want to work, here's how much I want my work
week to look like, but it seems like you're working about three times as much as you want to.
And you don't have to necessarily go nuclear, but sometimes it can help to think that way.
So in your business, I would ask, what are the drivers of income?
Is the first one like to be real honest about that? And then we would look at what are the drivers
of marketing that are moving people through that customer journey? What are the things that you're
getting the most ROI from looking at that 80-20 of what's the 20% that is actually producing 80%
of the results? And there are phases that entrepreneurs go through and it sounds like you're just
coming out of what a lot of people describe as the spaghetti phase where you've thrown a whole bunch
of things against the wall to see what sticks. And in doing that, like that's important part of
starting a business. You got to try a lot of different things. You got to do a lot of different
things. And you have to see what moves the needle. But then after you know what moves the needle,
then we need to stop doing all the things because doing all the things isn't a long-term plan.
I think for me, I'm realizing that I actually haven't spent that much time sitting back
and looking at the big picture of working on the business versus working in it. And I think
I'm always just in it. So would your suggestion then be the things that are not really seeming to
drive much ROI in the way of revenue or marketing like kind of just drop it? Or what would you
counsel next from that phase? So from this realization, the next thing I would suggest is
you need like a CEO retreat. You need three or four days in a hotel by yourself or with like one or
two teammates. And you need to dig through all of this. And it's the same thing I recommend if people
are going to do a mini retirement or in their marriage or whenever we're doing life planning and
business planning is actually like two sides of the same coin, which is why I have people start with
a lot of life planning. Because what are we optimizing for? So have a little life business planning,
CEO retreat. I recommend two to four days, no work obligations. And it's the same thing in
people's marriage. I always tell people like there's a lot of conversations. You can't have unloading
the dishwasher. There's a bunch of answers you will not get to in the first 10 minutes.
The answers that you get to after three or four or 12 hours are different than the answers that
you get to after 10 minutes. And those are the answers we we need to work with. I think it is
revealing some things. Particularly that when you're like two to four days, CEO retreat,
no work obligations. I'm like, when do I have two to four days? And like that in itself is a bad
sign. Like that in itself is probably an indication that like of how sorely this is needed. I want
to have an artsy hobby that like doesn't have a path to monetization and like isn't there's no
pressure on it to be quote unquote successful. It's just going to be something I do for fun.
But I was kind of saddened that when I was thinking about actually doing those things,
it made me feel like more overwhelmed and exhausted at the prospect of like, oh well great,
now I need to go figure out how I'm going to think piano lessons. It just felt like more work
should you just start doing them and then let the other things fall into place. Like it might
just be on tell. What does that tell you as a coach that that was my response? This is your burned
out. The plate is full. It's very full. Yeah. And it's full to that point where like,
it doesn't add joy, the fullness. It creates fear and anxiety because if you get sick,
if someone goes on vacation, if something happens in your life, you're going to drop it,
you're holding too many plates. I would not add a whole bunch of stuff to that and think that
it will magically make the situation better. Like I don't think that's the cure at this point.
Cancel my guitar center appointment. So after your CEO retreat, after you look at here's
here's the profit drivers. Here's the things in marketing that really are moving the needle,
the most. I like to have people start with this idea of like, if you only had 10 hours,
interesting. Knowing what moves the needle, marketing wise, what brings customers in, knowing
what creates profit in your business. If you only had 10 hours, what are the things you absolutely
have to do in those 10 hours? Like what parts of your business you're like, if I have 10 hours,
that ain't happening. Sometimes we have to start with a very small container versus like, I have
60 hours and I need to whittle that down to 40. It can be easier to say, if we only had a tiny bit,
what is the most essential? But what if you do have a sense for what you would do differently?
What if you're in the aforementioned camp that has a burgeoning side project or business?
Could the sabbatical also be for you? When you're working full time and working part time on a
passion project, it can feel like the exact wrong time to downshift because you need the income
from your primary source of employment to keep the light suns you can burn the midnight oil,
right? I've written in the past about how originally, money with Katie was a hobby that I figured
would entertain me in early retirement, not make any money. I had a goal to retire by my late 30s
and I knew I needed something to fill my time after I exited stage left from building marketing
briefs and checking email throughout meetings with 17 other people who were also checking
their email. The idea of taking any time off felt totally ludicrous, so I didn't. I built
money with Katie over the course of 18 months on nights and weekends before it became something
that actually had legs. I figured the slog of working 80 hours a week between my various jobs
and special side projects was the path that I needed to take, that it would be irresponsible
to take a couple of months to reassess what it was I actually wanted to do. But how much more
quickly would I have realized that money with Katie was viable full time if I had given myself a
three month grace period between employers just to test the waters? My expenses were incredibly low
at that point in my life, they were less than $2,500 per month at the absolute highest and I had
more than enough in savings to support such a jump. Something that took 18 months may have happened
in a quarter of the time with my full attention and focus. At the very least, I would have realized
beyond a doubt that I needed to make a change. And what did I get in exchange for those months
that I stayed at work? I would estimate somewhere in the range of $25,000 give or take, which with
the benefit of hindsight I see was a pretty insignificant sum of money compared to the realizations
and potential larger picture that that time and space could have unlocked. It's also worth mentioning
that money with Katie was very much born out of a sabbatical adjacent experience.
Being forced inside thanks to a pandemic and those first few quiet weeks where Microsoft
teams had not yet infiltrated every square inch of my consciousness with my full fitness class
schedule canceled and my full time job in a brief liminal space as the leaders in our department
scrambled to figure out how we were going to do user experience work from home. I had the idea
of one boring Wednesday afternoon to see if the URL for money with Katie dot com was taken
and it wasn't. And here we are. I keep that memory close whenever I find myself falling back into
that trap of the should. I should be working a certain way. I can't take time off because
something might fall through the cracks. It would be wrong to suggest we try doing less so we can
refocus on what matters more and if you'll recall this is pretty similar to how Jen told us
she was feeling. So this might be an entrepreneurial twist on the idea but if part of the reason a
sabbatical appeals to you is because you have another path that looks promising it's possible you
wouldn't even need to draw down on any savings as long as your other venture can cover your cost
of living expenses and of course it's still similar in that it involves walking away from
traditional work and exploring only doing what you plan to do in early retirement. You might
also be in a position where you're in slow and steady mode but you're just discouraged by how
long the path in front of you looks and at some point the rubber needs to meet the road and we have
to talk about two things money and planning. I'll be honest I don't think this is something that
anyone could do right away regardless of their financial or professional situation. I think this
is something that for most of us it's going to require a lot of pre-meditated strategizing in the
form of number one how you're going to pay your bills while you take time off and number two
how you're going to exit and eventually re-enter. So let's talk about number one first you got to
take a look at your cash savings or any other sources of income whether that comes from a side hustle
a partner or something else because this is where shake is real for most of us. The financial
component does have a few layers because if you're anything like me you don't want to completely
derail your progress in this time. So you got to think about supporting your needs over the time
you'll be going without income or with reduced income if you're taking the enjoyable side hustling
approach and we have to think about calculating the opportunity costs of the investments you would
have been making during that time had you stayed the course like contributions to your 401k or
your other accounts and this will help grant a fuller picture of the financial ramifications of
this decision though as I noted I could have never anticipated how much my life would change
financially from having a couple of weeks of quiet time in solitude. It's impossible to account
for every single outcome and many of them may actually be a lot better than you're even anticipating.
The other piece as we alluded to is the logistics of exiting and re-entering the workforce.
So if you're beginning to feel like you're reaching the end of one chapter and yearning for
another one like you know maybe your company is facing layoffs or if you were going to begin
looking for another job anyway this path might be rather obvious. But if you're a business owner
who's looking for some extended time off this period might mean finding areas of the business
that can be automated or downshifted or delegated or even paused outright until you choose to return.
But regardless pinpointing the when and how of your departure and sharing the news with your
professional network once it's finalized with the ask that they will send you interesting
opportunities along the way is the first step that takes this from like a nice idea to an executable plan.
For example if you are planning to take six months off and you know that's going to cost
$30,000 of cash savings to achieve and you're going to forego roughly $45,000 in gross compensation
during that period of which you would have saved and invested 15,000 in your 401k or other
investments. Your total net cost to take this time would be the $30,000 in savings that you'll
need to use assuming it would have just sat in cash anyway and assuming no other sources of income.
And then the $15,000 of investible income which you can assume would have grown at a rate of roughly
7% per year between now and your financial independence date. In other words if you're currently 15
years away from financial independence based on your current trajectory that $15,000 of not
invested income is worth about 41,000 to you in 15 years from now. Now you can look at your overall
timeline. I like to use the financial independence tab in the money with Katie Wealth Planner just
to make this easy and you can see how big of a difference does $41,000 make to this overall timeline?
Is that two years worth of compounding that I'm giving up to take six months off right now
or is it delaying my retirement by two months? My suspicion is that most of you will find it's
going to be a lot more negligible than you're probably expecting it to be. But how much financial
progress is enough to do this quote unquote guiltlessly? Because anecdotally speaking,
sabbaticals seem to be a popular choice for those who have already attained something known as
coast fire or the point at which they know they have enough invested already that if they get
average market returns between now and retirement they're going to have enough to live on.
For example, someone who's 30 years old with $300,000 invested can plan to reach age 65 with
roughly $3.2 million in today's purchasing power even if they don't continue to add to their total.
Realistically, I think anyone who has already reached that coast number for compounding where
time is going to do the majority of the heavy lifting is probably in a place financially where
this is a relatively low risk decision. But I remember a TikTok I saw a while back about a gal who
did a mini retirement every fourth year of work. So she would work for three years, save one third
of her income each year. And then by the end of each year three, she would deploy the entirety of
those savings to support a work free year four. While I like the creativity and I applaud her point
about spreading retirement out throughout her life, I think there's an obvious issue. Eventually,
you're going to reach a point in your life where you physically or mentally cannot work anymore.
For most people who work beyond traditional retirement age, this occurs somewhere in 170s or even
80s. And at that point in your life, you're going to need some savings to live on, especially if you
require extra care beyond just social security income. So deploying your life savings every four
years and then starting from scratch all over again in perpetuity works well until it doesn't.
So well, it might not be an immediate decision. That's not to say everyone couldn't plan for
this type of pit stop. If you knew that you were going to be on a six month or a year long vacation,
how would you approach your life differently now? Would you feel comfortable working more or
finding temporary higher paying work or turning down expensive outings for the time being? Because
realistically, as long as you know how much your life costs, you already have the keys to the
freedom castle. My lifestyle has expanded considerably in recent years choices that we made with intent.
I might add now that I'm doing full-time work that I'm really happy with and many of our other
financial goals were met. But if both my husband and I wanted to take a three month break, we would
need to have about $30,000 saved to support our expenses during that time. And who knows what I would
discover in that time? Who knows what work would present itself on the other side? Sometimes a busy
schedule is the enemy of clarity. And once you have that clarity, what might you find? Well, I think
that's the scary part and the part that I'm probably subconsciously avoiding. But ideas about
the value of leisure time are ancient, literally. Aristotle, who was rocking this planet circa 384 BC,
believed leisure time was the most valuable time that humans have because it is intrinsically
valuable. Whereas things like your occupation or wealth accumulation, they're only
extrinsically valuable. They're valuable in that their means to other ends. Jack Maiden writes for
philosophy break, quote, work, of course, is a financial necessity. And for the overworked and
underpaid, emphasizing leisure may be regarded as hopelessly privileged. But as Edith Hall notes
in her book Aristotle's way, Aristotle believes it is only in our leisure time that the full human
potential can be realized. End quote. And sometimes reaching your full potential is a terrifying
process. Usually it means detaching from things that are inherently holding you back and stepping
into the unknown, which is exactly why I wanted to talk to Rachel about what prompted her to step
into the unknown only a few years into a prosperous finance career. Rachel, thank you for being
willing to sit down in the hot seat with us today. I would love to start with the basics first,
if you're willing to tell us a little bit of background about who you are and how you would
describe your relationship with your work. Absolutely. Well, thanks so much for having me.
A bit about me. My name's Rachel. I'm 30. I live in Austin with my dog and my husband.
I grew up pretty middle class and Louisiana. And you know, kind of had a normal aspiration level
for my life in terms of I wanted to study hard in grade schools that I could get a scholarship
and maybe get into a decent college, wanted to study hard in college so I could get a somewhat
lucrative career that I could use to support a pretty traditional American life. You know, I wanted
to buy a house, raise kids, maybe take a couple nice vacations and be able to retire, which nowadays
feels like a bit more of a like higher class aspiration with how hard those kind of basic things
are becoming. But that was really what I wanted out of life. And so I was craving a lot of financial
stability. I went to school at UT where I studied finance and pursued of that stability,
really loved it, loved the subject. And then I started my career in investment management in Austin
where I was working with financial advisors at a large asset manager, loved my job, loved the people
I worked with and really loved getting exposure to people that honestly were just a lot more
intelligent than me. And also people that just had a lot more money than me to be frank. And seeing
how they approach things like work and life and money and financial planning was super formative
to who I am as a person today. Can you say more about that? What did you pick up on from them?
Was there anything that surprised you about their approach that diverged from your middle class
upbringing and the things that you witnessed? Absolutely. It would range from the small things to
the big things, right? So for example, working with a lot of my colleagues, the way that they
think about credit cards, for example, was very different than the way I was raised to think about
credit cards, kind of like the Dave Ramsey mantra of like all debt is evil and run away. Whereas I
saw these people kind of using debt and credit as like a great lover for them to travel for free,
for example, and really kind of maximize credit card points all the way through to, you know,
the investments that they chose, how they think about that, the vacations that they took,
the philanthropy that they engaged in. So getting exposure to that, especially at age like,
you know, 2021 was super valuable when people may not really experience that again, depending on
their upbringing until perhaps a bit later in their career or if they're really seeking out that
information through podcasts like this and other sources. Right. So it sounds like you were a
pretty ambitious kid. You always had your eyes kind of set on the future. You are driving toward
this career that you think is going to give you this stability that you're so interested in.
You're going along. You're having these conversations with these smart, wealthy people. You're
doing well at work. It sounds like what then prompted you to consider a one year break in your
late 20s? Because to me, that feels like a bit of a counterintuitive plot point for everything that
you've set up so far. You are absolutely right. I did not grow up. I was certainly what no one would
describe as a free spirit or as someone who was counterculture. I wanted to be normal.
For me, it was I think like any major light decision, especially when that's slightly counterculture
to the traditional way we do things in America. It was kind of an amalgamation of things that got me
there. I think one of the things was just the fact that I love travel personally. And you know,
as I mentioned middle class, I didn't travel a lot growing up. When I got my first like financial
independence, that was when I started traveling internationally for the first time.
Fell in love with it. Love seeing how other people just approach life and how other cultures function.
And so I very quickly went from being someone who was not well-traveled at all to being someone
who was hyperfixated on taking every day of PTO, you know, making those crazy Excel spreadsheet
itineraries, really leveraging credit card points and things like that. So that definitely
became a part of my personality. I would say a second reason was related to my work. And it's not
in the way that a lot of people think. I think a lot of people assume that if you're leaving your work
when you're, you know, 28, which is the age that I was, they assume that you're super burnt out,
that you hate what you do. You kind of want to like set a corporate world on fire and just
leave it all burning. And there's certainly you'll see a lot of people on social media that feel
that way. But that wasn't really the reason why my work influenced the decision to leave.
I was in a place, thankfully, where I had all of my needs covered, you know, I was
paying rent, eventually paying a mortgage. I had a decent car like those needs were met. I was
doing all the financial things that I thought I was supposed to do, you know, maxing out my 401k,
HSA, IRA, all of those things. And then I felt like I kind of had my life laid out in front of me.
Everything I had worked for was there. And yet I still felt like I wasn't really
hitting the mark of what I wanted my life to be. And so I was working with financial advisors,
like I said, and so these people were doing financial plans. And eventually when you're working
so deeply with money for so long, and it's, you know, using money as a tool to help people live
their life, you start to kind of think about what is the role of money, right? Which I know is a
topic that you talk about on this podcast a lot. You know, like I hadn't really considered that
beyond like building this life that I wanted, like the stability and, you know, the house and
those types of things, I hadn't really considered like, how can I use money as a tool to really live
out my best life? I think that's kind of what brought me to kind of just reconsider how I can use
it to not only say for the future, but also live my best life now. Which I think kind of brings me
to point number three. So the third reason why I kind of took this leap is really related to the
pandemic and my experience that I had at that time, like a lot of people my role was turned upside
down. I started thinking a lot more critically about my life path and my own mortality, like some
kind of dark stuff, right? And I saw these really sad stories like I'm sure you saw everyone saw
of these people who did all the right things. They worked their whole lives. They saved their money
diligently all in the pursuit of being able to live their best life and retirement, which usually
included some kind of travel. And they never got to see it because of this unpredictable nature of
life. And so all of those things, when I made that connection of those things, I had no choice,
but to do this. Were you scared to do it? You know, perhaps I was naive. I don't, I wasn't very
scared. I think the scary parts of taking a year off were the most exciting for me. The reason for
that I went to high school in Austin. I went to UT Austin. I built my career in Austin. I was
extremely comfortable with my life in Austin. And I think a lot of times if people are trying to
kind of jump outside their comfort zone, they move to a new city or they go study at a new city.
And I just hadn't done that. And my husband and I had just never found a city that we were like,
yes, we'll definitely move there. So for us, like I think this was us basically being like this is
us getting out of our comfort zone. And we're excited to do that in a way that's just like a little
bit different than the way I think a lot of people do. Well, you already mentioned that you were a
homeowner. By this point, you were maxing out all your different tax-advantaged investment
accounts. So good for you. You know, you're painting this picture. And I think it's an accurate one
and one that resonates. If someone that has made the right choices, they are checking all of the
responsible boxes. And so then to put that on pause, so to speak, because I would assume not
contributing to a 401k anymore. If you are taking a year off, you are putting a pause to that.
I got to ask, like, talk to me about the financial side of this choice and how you
thought through the amount of money that you needed to make this happen or what that
process was like for you mentally as you are sitting back and assessing the landscape to
determine whether or not, quote unquote, safe for you to do this. That's probably the one I get
the most. And you're right. Like, I felt like it was kind of funny to be doing all the right things
and then do something that it's definitely not viewed as the right thing to do financially,
especially at that stage in our lives. There's two sides of the equation, but there's always
going to be a savings side and an income side. And so I'll try and kind of break down the way
that we approached it from both angles. So on the savings side, I just bought a house with my
husband. So we've kind of drained a lot of our liquid savings and that process. So then it became
the question of like, what are we saving for? Like, what is our next big goal? Like, for a lot of
people, like, the house is the goal, right? Like, once you get it, it's like, okay, then you have kids
and that's really expensive. So like, we got to, we got to pay for that. We were ready for that.
So we're like, okay, let's just put all of our energy into saving for this gap year. That's kind of
where we made that mental switch, I should say. When it came to how much we were saving,
everyone's going to be different because, you know, we're not necessarily like budget,
hostile people, but we're also definitely not like trying to resource every day. Yeah. Yeah,
we're kind of in a happy medium. So for us, we just took a look at our average spending in Austin
at home and said, okay, let's use that as like a rough guide for our monthly travel expenses.
As a result, using that as our rough guideline, we saved about $60,000 between the two of us. So
that's kind of the number we landed on for a year of travel. And top of that, I think a lot of
people consider selling personal belongings ahead of trips like this to kind of bolster those savings.
I did end up selling my car at the last minute because it's like, hey, not using my car,
I'm going to be gone. I don't want to pay insurance, you know, premiums on that. And this was,
you gotta remember, this is mid 2022. So like, so you had an appreciating asset on your hands?
I absolutely did. That was, I think, before Carvana's stock had just really gone, who I are.
So that added like a little more than 20,000 to our savings as well, which was a nice little cushion.
And I always recommend like, if somebody's thinking about this purely from a savings angle,
after you come up with the amount that you think you need, definitely add, I would say 20 to 25%
on top of that just because travel is unpredictable. Like, there's always these weird expenses
that can pop up. But then also when you come back, you don't want to feel so stressed. Like,
you need to make a paycheck in the next three weeks. Otherwise, you're broke, right? So
totally giving yourself a little bit of cushion is always good.
And was that 60,000 inclusive of the mortgage payments that you were making? Or was that
in addition to a separate pot of money? I'll say that was sustaining your expenses at home.
Because I know that oftentimes when people will do this, they're typically renters.
So they'll allow at least to end. So they're not been having to maintain the cost of the shelter
that they have in their home city. But how did you guys approach that?
Not kind of parles us into the income side because we did not factor in mortgage to that.
In fact, what we did to kind of make up the fact that we were going to be spending money
on a mortgage while we were traveling was we put our house on Airbnb or something we had never done
before. Yeah, very millennial of me to kind of dive into the Airbnb hosting game.
You're sharing economy moment.
Yes, I'm not something that really can. If you're fortunate enough to have some kind of asset
that you can leverage an income stream off of, that can make this decision
and some ways more complicated, but in some ways a lot easier. For us, our goal, we didn't know
what to expect. So we thought, hey, it'd be awesome if we can make up like 70% of our mortgage.
Like, that would be a win through Airbnb income. And the great thing is is I could do almost
everything remotely. You know, I could hire housekeeping. I could connect with guests like all of
that I could do while traveling. The I would say 10% of the work that I couldn't do.
Thankfully, I had my sister in town and she could kind of step in and do that management for me.
I feel like those are the sorts of things at the margins where when you hear the advice to put
your house on Airbnb, you're like, but what about XYZ? I'm in Copenhagen and someone has a
leaky toilet. Like, what am I supposed to do? So thank you for kind of noting the realistic side
of having someone in the city. And you know, logistically speaking with the firm that you left,
I understand you were happy with that job. You did like your work. How did you leave things with
them? Was it the intention to get hired back at that same firm or were you thinking, okay,
I'm going to close this chapter and then start a new one when I come back. How did you approach
the mechanics of your exit? I try and talk about this a lot because I think it's really important to
if someone's considering doing this leave in a way that is not burning any bridges or like firmly
closing the door behind you. I would absolutely recommend someone going on a trip like this with an
open mind, which is what I did, both personally and professionally. Like, I wanted my ideas of work
and life to be challenged. Like, that is part of the point of travel in my opinion.
So I didn't leave with the idea of being like, I will definitely come back because who knows,
maybe after a year away, I realized, you know, maybe this work isn't really my true passion.
But at the same time, I didn't want to leave saying, I hate this, I'm out, and then come back and be
like, actually, that was a really good game. Like I said, I actually quite loved my job and I
love the people I worked with. But this was just a side passion of mine that I wanted to pursue.
So the good thing as I think about leaving a job to travel is that almost nobody is upset at you,
right? Like I think they get it. Yeah, they get it. Like if anything, they're kind of envious.
They're like, yeah, I wish I had done that. Or at least that's a lot of feedback that I got,
especially from older colleagues with kids. So that really made me feel good about the decision
and gave me a little bit more confidence. And also, you know, if you're working at the right place
and you have good manager and good HR, like they're not going to shame you out of that decision.
Everyone was super supportive. So they just made leaving a lot easier. And I maintained
communication pretty openly with my former colleagues while I was traveling and since I've come
back as well, I'm not going to say that they're going to keep a job for me. I would never assume that
right out of any kind of corporation. But if there is an opportunity for me to come back and I want
it and they want it and it makes sense, like I wanted that option to be on the table. So that's
kind of I approached it. There's also, of course, a lot of nuance of like, when do you tell them
and the actual mechanics of like how do you sit down and do it, which I think is a little bit more
specific to like your role and your relationship with your team. But ultimately, I think we left on
really good and kind of amicable terms. And what are you doing now? This isn't I think kind of digs
into some of the unexpected challenges I would say from the experience. So I mentioned, you know,
I wasn't really scared to leave. I wasn't scared to go. I was excited for the challenge of
traveling. What surprised me is that the travel part wasn't nearly as challenging as I thought
it would be. But where it did start to feel a little bit more uncomfortable was coming back.
Oh, because I had achieved what I wanted, right? Like I had changed kind of as a person through
this process. My interests had changed. My perspective on certain lifestyle choices and things had
changed. But then I came back to Austin. And this was in kind of late May of this year. And I was
trying to fit this new version of me or slightly new version of me right back into her old routine
and to her old life. And it was a slightly dissociative feeling. Like, and I don't think people talk
about that a lot. People who do these things. So I want to be super transparent about that. Like,
it might feel a little odd at first. And that was my experience. I kind of called it like a
trouble hangover. So the last few months, in fact, like, instead of diving right back into a
routine, my husband and I have been traveling a lot. Like we were gone almost all of August
traveling because it was like we kind of to kind of quote Jay Powell. Like it couldn't find a
soft landing, if you will. So, so we were bouncing up and down and around before we're kind of
just now settling back in. In that process, it was a lot more of like soul searching than I thought
I would need to do about my next career. It wasn't super obvious to me. Now it's good timing.
Like in the last couple of weeks, I certainly got get a lot more clarity on kind of my purpose.
And how can I fit like this new version of myself and my old skills and the things that I love
about finance of initial planning and and lifestyle and fit that all together. And now I'm actually
looking more towards the advisor side and helping people kind of get the most out of their money
and their money decisions so that they can live their own version of their best life
now or whenever makes sense to them. So super energized about it. You know, I'm in the beginning
process of like CFP and all of these things. So that's kind of where my trajectory is headed
there next. Interesting. Okay. Well, I was going to ask just for the other ambitious girlies in
the audience, which means I'm asking for myself, you know, how it impacted your career. But it
sounds like it gave you a lot more to think about than you maybe were anticipating.
It did. I think, you know, it's no secret that Americans have a very specific relationship
with work that a lot of people in other countries kind of look at with some confusion.
And they don't really understand it. And of course, we have got that a lot from people we met
all over the world. And I think that does make you wonder a little bit like when you're walking
around places like Copenhagen, which like every listicle out there is like, it's the happiest
place on earth. You do kind of feel it. You see it. And you don't see like this stressed out nation
of people working in cubicles until, you know, the dark hours every night. And I'm sure that
exists, of course. And I think when you travel, you probably only see the best of things. So I'm
cognizant of that. But it did highlight this disconnect that I think Americans have, especially
related to Europeans and the way that we approach work. And in terms of it changing my perspective,
this might not be what the ambitious girlies want to hear. But it did kind of make me
understand what aspects of my work are aligned with my lifestyle and what aspects are not. And help
me set some more definitive boundaries about how much of myself am I willing to give to work
and how much am I willing to just save for life. And so a lot of that has to do with
flexibility. Like that's a huge thing for me now. I think it's really hard for me to consider
going back into an office five days a week with no flexibility. That's also kind of related
to motherhood. Like I don't have kids. But I saw how people raised kids and how women with careers
raised kids and other countries. And a lot of times they do have flexibility to kind of make all
of those pieces work. And it feels a lot more effortless. I think then then we tend to have it
here in America. Those things really helped me solidify the fact that you can still be ambitious
and I can still pursue work that I love. But I want to pursue that work that I love on my own terms
and fit it into a lifestyle that feels authentic to me. Whereas building a lifestyle around the work
that I love if that makes sense. Do you feel as though you ever would have come to that realization
had you not done this? I would like to think that I would. But the reality is as I probably wouldn't.
My background was in very data driven investment. So I think all the decisions I try and make are
less from the heart, more from data. When you look at data, you see these stories time and time
again of people like on their deathbeds or later in life being like, I wish I did this. And yet
you don't really see this massive shift of people responding to that data, like that information
that we have about how people wish to live their lives by changing their life while they still have
like the control to do so. And I think that goes back to the pandemic as well. Like you heard a lot
more of those stories and that kind of very sombre period of our history. So I really did try to
internalize that and help that shift my decision making earlier in life instead of making that
turn into regret later in life. And who knows, maybe I would have come upon that more organically,
but I do think taking step away from your routine is going to force you to confront those things
in a way that you just can't really do when you have all the natural distractions of your day to day.
Rachel, thank you so much for joining us. This was illuminating for me personally and I'm sure
for our audience as well. A sabbatical might not be in my future anytime soon, but I think my
conversations with Jen and Rachel have thoroughly convinced me that it's something that needs to be
on the horizon at some point for the sake of both my personal and professional lives.
That's all for this week and I'll see you next week, same time, same place,
because I'm not taking a break on The Money With Katie Show. Our show is a production of Morning
Brew and is produced by Henna Valese and me, Katie Gatti Tossan, with our audio engineering
and sound design from Nick Torres. Dev and Emory is our Chief Content Officer and additional
fact-checking comes from Kate Brandt.