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Seven things I learned during a Gap Year

I started this blog as an experiment in Early Retirement and as a result, spent the last year at home. I really enjoyed the year but had several realizations as I reflected on what I had learned.

What I learned during a gap year

  1. Work is an important part of work-life balance  – As the year progressed, after I had unwound and was reenergized, I had a hankering to go back to work. While I thought I would really enjoy retiring, I missed “work” in my work-life balance equation (who would have thought that!), and the sense of accomplishment and the social aspects that come with it. I needed more to feel like I was leading a fulfilling life. I felt guilty, like I wasn’t doing something impactful with my life.

  2. Passion does not always  = a job you will love – I started a pet care business because dogs are my passion. The business grew nicely and I had a strong roster of loyal clients who appreciated my services. But I missed utilizing my brain. I also realized while I loved dogs, having more than 1 at a time damaged my floors and left a lot of cleaning behind. Net, net, I didn’t really enjoy it unless it was only one dog at a time, which wasn’t enough money to pay for my lifestyle.

  3. Everyone’s source of security is different and it’s important to recognize and plan for this – I realized I didn’t feel very secure with cashflow coming in that could not cover my bills. And had a hard time with the idea of having to sell my stock and index funds to cover the difference, as I believed in buy and hold. I landed up becoming very careful with money, which made me feel stingy and deprived. I missed the freedom to spend when I wanted and not have to think about it. I started to dream of all things I could not afford like a Tesla!! This was pretty silly, because I would not buy most of these things even if I was working. Plus the stock market was doing so well, and the compounding effect was having a strong positive impact on our net worth but this was not about being rationale.

  4. Choose your source of income carefully especially if you are pursuing Barista or Coast FI – I expected a recession would hit us in the next 1-2 years. If it did, services would get hit really hard. This landed up coming true in Mar 2020 with COVID-19 hitting us and shutting down dog boarding. I wanted to have ample cash flow at that time to invest in the market. Luckily I went back to work in Apr 2020. This made me comfortable in investing some of my emergency funds back in the market in March during the drop. This has gone up 30%+.

  5. Traveling on a shoestring budget is not for everyone – While I love to travel, traveling without a positive cashflow meant I was watching every $ and wasn’t much fun. Although the trip I am referring to was to Costa Rica. The heat combined with a non air-conditioned room in some locales made for grumpy, hot kids wanting to head home!

  6. You always need an miscellaneous emergency fund – There are some costs I had not anticipated. For ex, one of my parent’s health deteriorated and I had not set aside any emergency funds for this. Thankfully I could afford to support them. Another cost that I hadn’t anticipated was property tax and HOA going up more than usual. I hadn’t planned on dental insurance; really missed my regular teeth cleanings! I am now savvier with how to deal with all of these and have baked in an emergency and a health fund into my FI number.

  7. Include costs that may not hit you monthly or annually in your FI number – I hadn’t included my kid’s college cost into my FI estimate though I had started 529s for each of them and saved some money there. I almost had a heart attack once I started to estimate it. Today I have built these into my FI number too and we are well on our way to hit this.

After realizing these insights, I decided I wanted to go back to work but not in the same way I had before. I changed my criteria for what I was looking for from work so that I could have balance between work and family and spend less time commuting. I was lucky to find a job that allowed for the lifestyle I was looking for. I am sharing these insights with the hope that some of these can help Financial Independence Warriors anticipate the battles along the road to Early Retirement.