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One thing I realized more recently is the value of building your nest egg early. Sure, you have many years down the road to earn money, but the later you earn i

One thing I realized more recently is the value of building your nest egg early. Sure, you have many years down the road to earn money, but the later you earn it, the less time that money will be working for you. Put it away early, don't touch it, and it quietly grows. Burn down your reserves now, and you get no benefit of all the upcoming years of interest (or ROI, etc).

omosubi 8y ago
Yes you can wait a while to do something like this but a lot can happen in the intervening years - marriage, kids, house, medical issues, aging parents, etc that can hinder your ability to take time off and explore things you are interested in. If you've ever wanted to try something like this I would suggesting doing it young. I'm currently doing a smaller version of what Joshua describes and had to get approval from manager to get unpaid time off from work. His response: I wish I could have done the same thing. He later even admitted that he was living vicariously through me! That being said, do save as much as you can as early as you can. Just don't let saving get in the way of living your life
usaar333 8y ago
On the other hand, marginal tax rates are a thing. If you take six months off (across a year boundary), you might be only losing 55% of your salary or so, not the entire thing. (That is your marginal rate is much higher than effective) Say you get 5% real returns in stocks after taxes on distributions. After 15 years, you've lost about 10 months of salary at your effective rate. Having to work 4 extra months 15 years in the future to take 6 months off now seems like a reasonable trade. (It's a 3.5% annual discount rate on the future). PS: if you get into a situation where you have an income surge one year (say an IPO), it's a no brainier to do this. The tax rate differences on income now vs future can be high enough to match all stock returns.

omosubi 8y ago

Yes you can wait a while to do something like this but a lot can happen in the intervening years - marriage, kids, house, medical issues, aging parents, etc that can hinder your ability to take time off and explore things you are interested in. If you've ever wanted to try something like this I would suggesting doing it young. I'm currently doing a smaller version of what Joshua describes and had to get approval from manager to get unpaid time off from work. His response: I wish I could have done the same thing. He later even admitted that he was living vicariously through me! That being said, do save as much as you can as early as you can. Just don't let saving get in the way of living your life

usaar333 8y ago

On the other hand, marginal tax rates are a thing. If you take six months off (across a year boundary), you might be only losing 55% of your salary or so, not the entire thing. (That is your marginal rate is much higher than effective) Say you get 5% real returns in stocks after taxes on distributions. After 15 years, you've lost about 10 months of salary at your effective rate. Having to work 4 extra months 15 years in the future to take 6 months off now seems like a reasonable trade. (It's a 3.5% annual discount rate on the future). PS: if you get into a situation where you have an income surge one year (say an IPO), it's a no brainier to do this. The tax rate differences on income now vs future can be high enough to match all stock returns.