I consider myself to be a bit a specialist when it comes to sabbaticals aka. mini-retirements. I don’t want to discuss whether It makes sense in your specific path to FIRE but share the financially most impactful learning I made: Time your sabbatical well!
For example, consider that you want to take a one year sabbatical and you want to do it in a financially optimized way. My recommendation: Start in July and end in June the following year.
The reason is, that for each calendar year, you will earn 50% of your yearly salary which will effectively result in less than 50% of your current taxable income in the tax statement. Depending on where you life, this can mean that you only pay CHF 5000 in tax instead of CHF 20000 for the two years combined which already finances your sabbatical for a decent part.
Furthermore, there is a chance that you will be entitled for benefits such as discounted health insurance (which you will receive only 2.5 years after your sabbatical in the example starts).
Do you have good tips to get most out of a sabbatical?
very interesting point indeed! exploiting progressive taxation this way^^
Thanks @ElMago for your insights!
I don’t have any tips yet, but I have loose plans to take a sabbatical in 4-5 years, when my son will grow up a bit, but before he’ll go to school - once he’s in school it’s probably more complicated to take a half year off with him. I’m planning to go to South America or Sout Asia or Pacific (not sure yet where, but to some low-cost but safe countries). I would love to have that a mini-FIRE test - that is I’d like to live from my investments on the sabbatical.
I still have lots of stuff to figure out, but that’s my initial plan.
My personal experience is, that transportation is one of the biggest budget posts when you are traveling in low cost countries. If your plan is to visit different countries you could stay longer in one area instead of moving every few days to another hotel.
For example, if you have six months and you stay for 1-2 months at a place, you will be able to rent an apartment for a good price instead of paying for hotel rooms. This gives you an in-depth experience of a handful of amazing places. And probably your son will enjoy it a lot if he can make some friends and get to know the local kids.