I LOVE mini-retirements. As many of you know, my family and I are on a 17-month mini-retirement in Ecuador as I write this. Mini-retirements, whether it’s a month or more than a year, allow you to reap the benefits of a traditional retirement lifestyle without waiting until the end of your life to enjoy it.
So, today I’m excited to bring you a guest post from someone who’s become an expert on mini-retirements. Jillian Johnsrud of MontantaMoneyAdventures.com has taken 5 of them so far (along with her 6 other family members!), and she has used rental income from a small number of properties to help fund them.
Below you’ll learn how Jillian and her husband got started ($50,000 in debt and earning $12,000 per year!), and how they built a solid financial foundation that allowed them to regularly take fabulous mini-retirements while still reaching financial independence in their 30’s!
If you like what you see, I highly recommend Jillian’s free, limited-time training called “Take a Month Long Mini-Retirement in 2018!” I really want you to benefit from mini-retirements like I have, and that’s why I reached out to Jillian about this guest post and about promoting her free training and her affordably priced paid course on mini-retirements (I earn an affiliate commission if you register). If you see a mini-retirement in your future, Jillian is the perfect person to show you how.
Now let me turn it over to Jillian …
Being able to take a little break from the 9-5 sounds alright, doesn’t it? Time to rest, pursue a hobby, tackle a big project that you are excited about, travel, or scale a business. We are currently in our 5th mini-retirement. We have used our time away from the 9-5 to do all of those things. Despite taking these five mini-retirements, living abroad for four years, spending over 40 weeks traveling Europe, and adopting 4 kids (plus two bio kids!), we hit financial independence in our 30’s. No regrets!
I want to show how a little rental income plus low fixed costs can go a long way to being able to custom build your life and sprinkle in some mini-retirements along the way.
Three Houses in Three Years
It took a long time to buy our first property. 10 years in fact. We started married life when I was the ripe old age of 19 and a combined debt of $50,000. Oh, and we made $12,000 that first year. Smashing success, for sure! It took a couple of years to pay that down and start saving. We finally had something that could be considered a down payment right at the height of the housing bubble. And we were living in DC. Not buying our first home then, ended up being one of the top 10 best choices I never made. Then we moved overseas.
So after 10 years of reading, saving, and studying we were excited to jump into owning property. It had been like playing monopoly for an hour and only landing on Chance or Get out of Jail spots.
We bought three houses in three years.
Ugly, broken down, sad houses. Armed with only YouTube videos, we slowly renovated and rented them out.
We used two of our mini-retirements to buy and renovate these properties. It has become a fun self-feeding circle where mini-retirements help create passive income which then helps fund more mini-retirements!
Our first home purchase had a flooded basement. There was an offer on it before us, but it fell through when mold overtook the soggy drywall and started creeping upstairs. The bank dropped the price $30,000 and we pulled out all the moldy drywall with ventilation masks, box vans, and a portable dumpster in 2 days. The remediation cost us about $500 and ended up being the most profitable two days of my working life.
Six months later we put an offer on our first rental. This house had sat on the market for close to a year due to a broken furnace, broken water heater, 27 breaks in the pipes, leaking flat roof (in 4 places), and general neglect. This house had scared off every reasonable, sane person. So we bought it. $6000 and 30 days later, we had replaced the furnace, water heater, fixed the pipes and patched the roof.
We waited almost two years until we bought our next property. We negotiated a month off to take care of all the critical repairs and take a family vacation.
Rental Income plus Low Expenses
Our rental income is $1200 a month. That might not sound impressive until you see how far a little rental income can go in helping us custom build our life!
After the mortgages, taxes, repairs, and expenses, we clear $1200 a month. We keep $10,000 in a rental slush fund to buffer large repairs and vacancies. For two rentals, it’s actually really decent cash flow. There are $700 of principal and interest that one day will start to go into our pocket as well. But for now, $1200.
Our expenses over the last two years of our mini-retirement have averaged $28,000 a year for our family of 7. Part of that is because we paid cash for our current home (link). This includes about 8 weeks of travel a year, more fun stuff than I have the energy for, a bathroom build out and having a baby. It’s an easy, comfortable number for us.
We do have other passive income, investments, cash, and optional side income. But let’s ignore all that for a minute. Just so you can see how $1200 in rental income and low fixed costs could allow you to lavishly sprinkle in mini-retirements and do some custom lifestyle design.
Mini-Retirements with Rental Income
Let’s look at my numbers:
$1,200 x 12 months= $14,400 a year
Ok, that’s not really an FI number, is it? But the goal here isn’t to binge watch Netflix for the rest of our life, but rather build a life we are excited to be living. Here are some ideas for you could do that.
Take a year-long mini-retirement three times every decade:
$14,400 a year x 2 years of saving that rental income= $28,800
Hum… in two years, we have a full year of living expenses saved up.
Take the 3rd year off: $28,800 (now in saving account) + $14,400 that years rental income = $43,200
Now in this example, we are assuming you aren’t saving anything over your expenses except normal retirement contributions plus 5%.
When you come back to work, you only really need to earn just above that $30,000 mark to take a year off every 3rd year if that is what fits your lifestyle best. Or you can find a high paying job, keep stocking the rental income to fund your mini-retirement, but bank your extra income towards more rentals or investments.
Part-time work option:
You work a job that earns you $15,000 by working a few hours a day. It gives you healthcare, dental, vision, a retirement savings plan and 14 weeks off a year (along with every weekend, and holiday). That’s what my friend does as a school bus attendant. You have every single day off that kids are out of school and 5 hours in the middle of the day to work on your passion project. You could do that for a few years while you build up your own business.
Seasonal work option:
You work 4 months out of the year in a seasonal job you love earning that $15,000 and take 8 months off every year. I have friends who travel the country doing art/craft fairs in the summer. They tinker/create in their garage or basement during the winter and travel in the summer.
We took 5 mini-retirements and still hit FI in our 30’s. I have seen and worked with a number of people who stacked multiple mini-retirements and still “retired” before 40. Having witnessed so many early retirements fail during our time in the Army, I firmly believe that mini-retirements are a great test run this early retirement option. It gives us time to test early retirement and grow into a new purpose.
A little rental income creates flexibility
Once you build a little bit of rental income, life opens up. We start to have so many choices and options. Then the challenge becomes shifting gears. From trying to build more and more income/savings/investments/properties to actually starting to live the life we are excited about.
If you are just starting out and can only take a month off….take that month off. If you are in a spot to take 6 months as a long break between jobs to hike the Appalachian Trail, then do that.
In the work I do with students in my courses and as a mentor, this is the sticking point I see:
People build up some financial freedom. Not 100% FI, but something. Maybe just low expenses + $1200 a month in rental income. But change is scary. It’s easier to just keep doing what they were doing, even if they are miserable. Or even worst, if life is just mediocre.
Creating financial freedom with rental income is no guarantee you’ll use that freedom.
If you are just starting to create that freedom, keep up the good work! And start planning what you want your life to look like once you have made some progress.
If you have created some financial freedom, start figuring out how to use it. A mini-retirement might be the perfect option to buy a rental/remodel, dig into a passion, life goal, or focus on your priorities for a while.
Thank you, Jillian, for sharing your story and inspiring us to take our own mini-retirements! For those of you who would like to learn more about taking your own mini-retirement, be sure to join Jillian’s free training at Take a Month Long Mini-Retirement in 2018. The free course will get you started, and if you want even more help, Jillian has an outstanding paid course at an affordable price to help you even more (I took it myself).
Would you like to take a mini-retirement? Do you have any questions for me or Jillian about our mini-retirement experiences? Have you run into any mini-retirement roadblocks with your finances, job, family, or other reasons?
We would love to hear from you in the comments below.
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