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Ask Money

Go on trip

Chris Farrell Oct 6, 2009

Question: My wife (30 yrs old) and I (31) have been saving for multiple years to take a 6 month world trip and I am hoping you’d give me your opinion if it is too financially risky to take this trip. I can take a leave of absence from my work with the expectation that I’ll still be employed when I return. My company is an FFRDC [Federally Funded research and Development Center] so it is relatively secure. My wife will have to quit her job and search upon return. However my job is 2/3 of our income and we could live off my job alone if needed. We rent so we should be able to cut most expenses while we’re away. We have zero consumer debt, though we have $45,000 in federal student debt at 2% APR. We estimate the trip will cost $30,000 and have $40,000 so that we have a good buffer. This is not our only savings as we have been saving for retirement for multiple years and already have about $100,000 toward retirement in our tax advantaged plans. We also have several months (~4 mo) expenses saved up in the bank for a rainy day. However I am still a little worried. With the poor economy and losing 6 months of pay is this just foolish conspicuous consumption that will put my wife and I in financial peril or is this a small, calculated risk which, given we are young, can course correct even if the unexpected happens? Obviously I’d love to make this trip, but I like feeling financially secure as well. First Name: Nichols, Redondo Beach, CA

Answer: Okay, I’m jealous–really jealous. It sounds like a wonderful adventure. I guess I’m supposed to act like a sober-minded guardian reminding people not to take unnecessary risks when the economy is down. But I can’t do it. I don’t believe it. As the 15th century French poet Charles D’Orleans wisely wrote, “It’s very well to be thrifty, but don’t amass a hoard of regrets.”

You can’t get rid of the risk that when you return you face a rough time. It’s in the nature of your adventure. But you’ve carefully thought through the risks and rewards of taking the trip, and you’ve done a lot to minimize the risk of hitting a tough patch when you return. You’ve prepared your employer for your leave. You’ve saved a lot, leaving yourself a decent margin-of-safety to fund your wife’s job hunt when you get back to California. The global downturn also means that in many places you’ll be able to take advantage of cut-rate prices. Bon voyage.

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