Planning

Let’s Talk About Money

Today’s post is on the very exciting topic of … budgeting! Ok, maybe not all that exciting but very important, especially when it comes to the self-sustained part of Self-Imposed, Self-Sustained Sabbatical (SISSS™).

Wait, wait, wait — you can’t talk about money! Uhhh, yea I can. And I have to if I’m documenting a sabbatical from work – i.e. making money. So, let’s get over this taboo and just talk about it.

The question I’ve received a lot is, “how long are you going to be on this sabbatical?” And the honest answer is — until I find a career that I feel passionate about or until the money runs out.

So that means I need to figure out when the money is going to run out.

Doing a little math

Without revealing specific numbers, here’s the financial situation:

  • We have a certain amount of monthly expenses
  • With me not working, the amount of monthly household income does not fully cover our monthly expenses
  • We have a decent amount of savings to make up the difference

So, it’s really about understanding that monthly difference in income and expenses, plus taking into account one-time expenses (Christmas presents, taxes), to figure out how long we can live off of savings (and how much we’re willing to deplete said savings).

Spreadsheets are your friend

There are a plethora of free spreadsheet budget templates available online, and I actually downloaded a few to help get me started. While these templates were useful in budgeting my monthly expenses, they didn’t help with calculating how long my savings would last.

So, it was off to make my own custom spreadsheet, and here’s where I ended up:

Regular, monthly expenses

I have one tab where I will fill in my regular monthly expenses.

monthly expenses spreadsheet
That’s a lot of entertainment subscriptions

This includes both fixed costs like rent and internet bill plus variable costs that I will need to estimate like gas and groceries.

Non-regular expenses

I also have a tab for non-regular expenses, broken down by month. This is mostly holidays and birthdays when gifts are purchased, but also includes expenses like taxes.

Spreadsheet of non-regular costs
These non-regular costs will reflect our budget or estimates.

As I start to get a better sense of specific costs related to my career exploration (e.g. in January I have textbook costs for an interior design course), I’ll likely put those expenses here.

Expenses vs. income

Finally, we bring it all together with a tab that breaks down expenses and income, and tracks the month-by-month difference between the two, along with the ending balance in our bank accounts.

Month-by-month expenses and income
Yes, yes, we still have separate bank accounts – don’t judge!

On this worksheet, the calculations will be automated by formulas.

Spreadsheet formulas in budget spreadsheet
Formulas make this all a lot easier

Calculating other options

In my budget spreadsheet, I will also be calculating costs related to some alternate scenarios – using most of our savings to make a lump sum payment to pay off a good chunk or all of our student loans.

Different budget scenarios
It’s tempting to just go debt-free but there are other factors to take into consideration.

Again, without getting into specific numbers, I will say that we could pay off our entire student loans right now. However, it would wipe out most of our savings and — without having done the budget calculations yet — it would likely mean that I wouldn’t be able to do a completely work-free sabbatical for very long.

On the other hand, paying off our student loans would remove a significant amount of our monthly expenses, as our student loan payments combined are more than our monthly rent. What this means is that once I do go back to work, I wouldn’t need to worry about making as much money.

So, what’s the verdict?

Well, I’ll be honest and say that while I’ve set up the budget spreadsheet, I haven’t filled in the  numbers yet. It’s something I will obviously need to sit down and complete with my husband.

There are also some costs — like health care coverage — that are up in the air, as we figure out the best option for us and that will likely have a major effect on our monthly expenses.

And, of course, we’ll want to be conservative with our estimations and make sure we have a cushion for unseen, emergency costs.

But this will be a good step in figuring out how long I can take this sabbatical; if I’ll want to take on part-time work to help make up that difference in our monthly expenses so that I don’t have to rush back into a full-time job; and what kind of income I’ll really have to make when I do go back to work.

Let the number-crunching begin!

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