Retire in Your 20s? 7 Steps to a Mini Retirement

Tame Your Wild Money Habits in 10 Minutes a Week!

RETIRE IN YOUR 20S? 7 STEPS TO A MINI RETIREMENT

RETIRE IN YOUR 20S

Written by Alli, scroll to bottom for video

A few weeks ago at Fincon 2018 in Orlando, Florida, we gave a breakout table session on how to financially prepare for a mini retirement. If you are interested in leaving your job and traveling for a set period of time and aren't sure how to financially prepare, this blog post will lay it all out for you.

There's a lot of reasons that you might want to leave a job but the most common is that you're not happy with your current job or you dislike your location. Maybe you want to spend more time with your family. The main thing that holds people back (maybe this is you) is that they lack confidence around money.  Do I have enough money to make it through? When I return back will I be able to find work easily? All your questions will be answered here.

We SO know the feeling of going to your 9:00 to 5:00 every day feeling dissatisfied, disillusioned, stuck. We were those people just six months ago before we left our jobs. Going through the steps that we are going to show you really prepared us and gave us the confidence to quit our jobs.  We educated ourselves and eventually ended up saving 70% of our incomes right up until the point we quit. We made a plan to travel the world and experience new things. We also created a framework with backup plans so that we knew we had the confidence that if something didn't work out the way we expected we'd still be secure in our future.

So, what is a mini retirement?

We defined a mini retirement as taking a specified period of time off from your current employer. You could be either looking for a new job, looking to find a new passion, building a business, travelling, or spending time with family.

7 STEPS TO A MINI RETIREMENT

1. Get really clear on why do you want to take a mini retirement.

Your WHY will lead you through the hard times and the sacrifices that you have to make to financially prepare for this. Maybe your why is that you dislike your job or maybe your why is that you want to travel before you settle down and have kids. Maybe your why is you want to start a business and venture out on your own in an entrepreneurial fashion.

What is your why? 

2.  Decide what you want to do during your mini retirement.

A lot of people want to take some time off of work, maybe they want to transition to a different job, take some time figure out what they would like to do when they come back to work. Some people want to spend time with their family, but to go back to the same work that they were doing. Some people plan to start a business and never return to 9-5 work like us. All of these things are important to figure out so you know what your activities are going to be like when you're on your mini retirement.

What is your what? 

3. Reverse engineer how much your expenses will be.

If you're planning to travel the world during a one year sabbatical your expenses might be kind of high. You will have to pay for a lot of airfare, a lot of travel and everything else while you're gallivanting around the world. If you're planning to stay right where you're are but really buckle down and work on some businesses you might be able to drive your expenses pretty low. It's important to have this number in your mind so when you reach mini-retirement, you’ll be confident and ready.

How much will your expenses be? 

4. Decide the duration of the travel or the mini retirement.

If you want to travel for a year then you can calculate how much you will need exactly for that year. For example, if you're looking at staying home and buckling down on your businesses, you know from the past few steps that you only need $24,000 to live where you are currently living. We recommend saving 10% more to give you some cushion so you feel SUPERCHARGED confident. Obviously just multiply the amount of your expenses by how many years or how many months you plan to be “retired."

How long will your mini retirement be? 

5. Execute your budget and savings plan to achieve your goals!

Once you have that really clear picture of what you need you just have to get to work!

Something to note: how much money you save in cash and investments. If you are saving for a mini retirement, you would want to keep more of that money liquid savings account and in a vehicle that's not potentially going to lose value right before you leave the job. Even though that money won’t make you money right now, we recommend keeping it in a safer investment whether that's bonds or just in cash.

Where will you save your money? 

6. Maximize your work benefits

If you have an annual bonus that gets paid out every year make sure that you qualify for that annual bonus and leave right after you get that. Also save up your vacation time so if you are planning on going to travel for a year maybe the year before that don't go on vacation then you'll get an extra paycheck or two when you quit.

Are you maximizing your work benefits? 

7. Plan for health insurance

Almost everyone's health insurance is provided by their employer. So if you have anything you need to get checked up on or any health conditions that are outstanding, we recommend trying to take full advantage of the medical care you have right now to get those taken care of. That way, when you leave your work health insurance and transition to a marketplace health plan or a health sharing ministry (like us) you won't need to eat up a bunch of your deductible taking care of things you could have done while you were previously on your employer's health care.

What will you do for health insurance? 

401K Considerations

What about your retirement accounts?In the US we have an eighteen thousand five hundred limit on our 401ks, so we made sure to max that out before we left our jobs in April of this year.

Backup Plans

In case the businesses don't take off, we have backup plans. One of those is that we can get lower paying jobs. We’ve already saved a significant amount in our 401ks. After running some numbers on that we found that by the time we're able to get access to those at sixty five, that money would be able to sustain us for the rest of our lives. So we've almost already assured our retirement just by heavily saving for last four to five years. The other plan is that we have a specific set of skills. We are both engineers so we have degrees that we can fall back on.

Employment Gaps

The biggest concern with employment gaps would be if you work in an industry where those skills atrophy or where things change super super quickly. In a position like IT, you need a lot of training on the job to stay on top of recent changes whether its regulatory or just technology. In that case, it might be a little bit more difficult to overcome this employment gap. But overwhelmingly, from the research I did, most employers are not too concerned about an employment gap as long as you have a good reason for taking it. So, they're definitely going to ask you if you have a gap of employment but if you're trying to start businesses or something like that, you can always put what you were up to and the activities and projects that you completed on your resume.

Remember that by keeping your expenses really low you can work whatever job you want!

You don't have to go back to that corporate career making six figures or whatever you were at prior. You can work a job that really satisfies your soul and makes you happy. Also remember that your backup plan is everyone else's regular life 😉

You will never have today again or tomorrow or your youth so if you have a desire to go out explore the world, build a business, take your mini-retirement! There's really no better time other than now. But you do need a plan to execute to make sure you're not sacrificing your future for the present. But as long as you do it smart, take some of the advice that we’ve given, we think you can absolutely afford a mini-retirement.

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Get your Honeymoon for Cheap

How to Get a Cheap Luxury Honeymoon

Tame Your Wild Money Habits in 10 Minutes a Week!

How to Get a Cheap Luxury Honeymoon

Get your Honeymoon for Cheap

Welcome to Owen Your Future!

Me and Alli wanted to give you a little breakdown on a recent travel hacking experience where we significantly cut the cost of our Honeymoon down to ~30% of the average American honeymoon. We did all that while maintaining a super luxurious stay (way higher end than we would normally do but hey… you only get married once) and want to show you how you can do the same.

We looked up what other couples were spending on their honeymoon and the average in the US is:  7days/6 nights and costs $5,000 per couple.

We did ours for 8days 7 nights for $1,680 including bribing some Mexican federales…

Watch the video below or keep reading if you're more into the reading the words rather than hearing them 😉

Travel Hacking Your Honeymoon
The view from our Ocean View Suite

First we want to explain some basics of "travel hacking" since this is the first post we've discussed this topic, but before we begin, we have to make sure you understand that if you carry a balance on any of your credit cards. Travel hacking is not for you. It is only suited to people who pay their balances in full each month. If you don't pay your balance in full you'll end up paying interest and it won't save you any money, it will cost you money. If You are still working your way out from under some credit card debt definitely check out some of our other posts to see how you can demolish that debt fast!

Most people know credit cards give you points that can be used for travel when you spend money on a credit card. Travel hacking is the art of optimizing those point systems and particularly, the generous sign up bonuses that many cards offer for opening an account. Again, Cards give you these bonuses to get you to do business with them in hopes you'll carry a balance with them… Don't be that person. Another thing to mention is that we don't spend any additional money to hit these bonuses. We just make sure what we are spending, gets spent on those cards. We will talk about more advanced tactics like manufactured spending in other articles if you are interested in how to supercharge your rewards point accumulation!

We signed up for three cards that helped us get this trip for cheap. We will explain which cards and how we used the points at the end. But first we'll go through the breakdown of what we spent.

For our honeymoon, we spent 5 days on the Island of Cozumel and 3 days in Playa del Carmen in Mexico. We stayed in an all Inclusive resort on Cozumel for 5 days which included $1,500 worth of resort credits which could be used for Scuba diving, time in the spa, romantic dinners, or other excursions. We then spent 3 days in Playa del Carmen where we explored the city, visited nearby ruins in Tulum, and went snorkeling in a famous Mexican cenote.

The reason we split the travel is that we had initially intended on getting married in Mexico. We thought we would like a small beach wedding as it seemed very "us". We had booked stays at two hotels we were thinking we might want guests to stay at and planned a trip down there to scope out different venues and get all of the details put together. After we had planned our scouting trip we found out that Allison's Dad's house was going to be an option and opted to take the free venue and make a change of plans. We canceled our southwest flights for free and one of the hotels refunded us. The other would let us move the reservation but didn't allow for refunds so we decided to tie it into our honeymoon travel plans!

honeymoon Iguana
Alli Found a friend in the Jungle

So here is the breakdown of everything we spent!

Cozumel - $1180

Flights - We spent $75 per person on taxes and fees using a Southwest companion pass and southwest points. It took 30,000 points to get us both round trip flights from OKC to Cancun. We spent $33 in food at the airport. (Read more about these cards below!)

Transportation - We paid $34 for two bus tickets from the airport to the ferry, $40 for the ferry to Cozumel and back, and $20 for cab rides while on Cozumel. Totaling $94.

Hotel - Cozumel Palace - almost Free - We booked this through Chase travel portal with chase points which covered the all inclusive room. We paid $100 to upgrade our room to a balcony suite when we arrived.

Food - Free - All inclusive

Entertainment - We spent the majority of our time in Cozumel scuba diving. We spent $600 which included all of our equipment rentals which weren't paid for with resort credits, an extra night dive, tips for the dive masters, and some professional underwater photos. We spent $100 for a stingray experience and $60 for two massages.

Playa Del Carmen - $500

Hotel- We paid $200 for a hotel (not all-inclusive). Hotel Aventuras was a great little hotel we were looking at hosting our wedding guests at!

Transportation- We decided to rent a car to be able to drive to Tulum and nearby ruins. We spent $86 renting a car for 3 days. On our way to the airport to come home, the Mexican policia pulled us over for "speeding," in which the officer applied a pretty loose understanding of physics. The locals were flying passed me with guys in truck beds as we headed to the airport at 6am. After a few tense moments of trying to argue our way out of the ticket, we paid the man $100 in cash to cover the ticket and he let us go. We would have loved to continue the argument at the police station but it was miss our flight or bribe a cop… We opted for the bribe. That cheap rental car wasn't so cheap after all!

Food- We had one fancy rooftop dinner where we got sushi and drinks for $72, but everywhere else we mainly ate tacos and beer or margaritas. Our food costs totaled $143 (including the fancy dinner)

Activities- We paid an entrance fee to the ruins for $8 and rented snorkeling gear and a tour guide for $20 at the cenote.ng day did.

Travel Hacked ScubaDiving
This is how we spent the majority of our time on Cozumel

All in all, our 8 day, 7 night luxury honeymoon cost $1680, much less than the average $5,000.

And anyone can do this… Here's how we did it.

We strategically used 3 credit cards. The Chase Sapphire Reserve, Southwest Premiere, and Southwest Plus cards. We signed up for the two southwest cards at the very beginning of 2016. Southwest will give you a companion pass if you get 110,000 points in any calendar year which will let you bring someone with you on any flight for free for the rest of that year and the following year. So we got both of these cards which each gave us 60,000 points as a signup bonus after we spent $3,000 in the first 3 months.

Pro Tip - Make sure you time this right! Since you get the bonus for your reward year and the following year make sure you earn the pass in Jan/Feb and not in Dec!

We have used this perk for the last two years and saved a ton on travel. All of the weddings we have attended have been covered with points. I paid for our photographer's flight to our wedding with points. I don't think we paid for a flight for the entire last two years and we travel quite a bit! The SW Companion Pass is definitely one of my highest recommendations for travel hacking. If you fly mostly in the US you pay ~$12 for taxes and fees per person so for you and your companion it's $22 for a flight anywhere in the county. As we mentioned above its more to go international (~$75 in fees) but still a great deal considering you get another ticket for free! If you were to ever run out of points you could also buy tickets and receive the same companion benefit. So each $300 ticket you get another $300 ticket free! Points are also transferable from Chase so you can stock up you SW points if they ever get low from your Chase ultimate rewards!

We had ~130,000 points after our signup bonuses and the points for other money we spent on the cards. We usually spent 20-30k points on a round trip ticket in the US and even to Mexico. So we got a lot of travel for free just from these two cards alone!

The Chase sapphire reserve is a great travel card which I got at the very end of 2016. It had a 100,000 point sign up bonus as well as giving us $300 travel credit each year and access to airport lounges around the world with a Priority pass. This card does have a steep $450 annual fee but seeing as you get the $300 credited to your statement its really ~$150. We have discussed if we will keep this card open when our annual fee comes back up but haven't quite decided. If you travel a lot and can take advantage of the lounges to avoid eating in the airport this card can be a great addition to your wallet.

We used the 100,000 points from the sapphire card to book the Cozumel Palace which was 98,000 points for the 5 day stay. We used 30k of or southwest points to book the flights. The palace was normally $400 per night so we saved $1600 on the room and $1,500 on the activities. Overall saving over $3,000 on our trip vs paying for everything out of pocket. The flights would have been ~$800 for both of us round trip but thanks to our CP we only spent $150 saving another $600.

We didn't travel hack anything on our 3 day stay in Playa other than putting all our travel costs on the Sapphire reserve card which gave us 3% back in points on all travel spend. It also doesn't have any foreign transaction fees and gives you other good protections from luggage to rental car insurance. We are generally pretty frugal when we travel and we really try to live like a local as much as possible. Since this was a honeymoon we went a little above and beyond to treat our selves which after planning and hosting a wedding was well deserved in our book!

I hope you enjoyed this post and learned a little bit about how we set up our vacation to save over 60% of the costs! It wasn't particularly difficult and only took a bit of planning but it does require knowing what options are out there! Hopefully this article helped you see what posibilities are out there to capitalize on travel rewards.

Please post below and let us know what you thought and if you have any other pro tips for us to use when booking your travel-hacked vacations!

 

EDIT: looking for other cheap ways to travel? Check out AllTheRooms for some cheap honeymoon cruises!

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