The Learning Curve – Planning for Adventure

I only receive 80 per cent of my pay. By choice!

Let me give you some background. Three years ago I moved to Kenora, Ontario, when I accepted my new job as a Systems Administrator. As I got used to the fast pace of my new position, I also began getting used to the slower pace of a small town. However, in the back of my mind this little voice was always nagging at me, asking me if I had really made the right decision.

As I have two daughters, I worried that I might be taking something away from my daughters? childhood; Kenora doesn’t even have the large theatre or arts component, or the festivals, that Winnipeg (my home town) had.

Winnipeg is no Toronto, I realize that. But in Kenora, the town revolves around the lake, outdoor activities, sports, and more outdoor activities! It is beautiful, and a great place for any child to grow up. But I didn’t want them to miss out on the variety that a larger town might offer in any area they might grow interested in.

While exploring my new employer, I started looking into all the benefits they had mentioned during my interviews. And one of them really stood out to me: a self-paid leave of absence.

For four years you receive 80 per cent of your pay, and during the fifth year?while not working?you receive the 80 per cent of your pay the company has squirreled away for you. On paper it looks great, but for the first few years I didn’t think it was something I could really afford.

The self-paid leave of absence really kept my attention for a few reasons. First, who wouldn’t want a year off with pay! Also, I have always wished I had the financial means to travel more with my daughters. We go camping for a good part of the summer, but I haven’t had the chance to take them on an airplane or for the true adventures I wish I had growing up. I was raised in a single parent family, and as a child I didn’t have the opportunity to travel at all.

Finally, this would give them the chance to break out of the small-town living we have grown to love, and really branch out their interests. If I took a year off with my daughters, we wouldn’t stay at home. We would pack up our belongings, give up our rental house, and go overseas on a one-year family adventure!

But how could I afford to give up even a cent of my pay cheque? Honestly, as a single parent with kids who participate in 14 sports throughout the year, things get very tight. And then I began researching the tax implications, as well as the day-to-day implications of purposely dropping my pay.

Full-time students get amazing tax breaks?tuition credits and tax credits for the months you are a full-time student. However, I am in the ?grey area? of income earners, as I make just enough to push me into the next tax bracket. That means a higher tax rate, and I also start to lose my other benefits (e.g., GST rebate, Child Tax Credit).

The income tax taken from my pay cheques is higher, and my tax time refund is lower. I did the math, and by dropping my pay down to 80 per cent to participate in a self-paid leave of absence, the actual take-home pay difference would be minimal. I am actually sliding myself into the lower tax bracket!

I realized I could actually afford to opt into this plan at work, so I began asking around the community to see if there was someone else who had done something similar that I could bounce ideas off. And I realized that this type of plan isn’t that uncommon anymore. A self-paid leave of absence, deferred salary plan, or self-paid sabbatical is something that many employers are opting to offer their employees. As the economy is tight, it is one benefit that is not directly costing the employer anything.

Indirectly, there are staffing costs and administrative costs, but that is more palatable to many employers. I made some new friends in the community that are more than willing to share their experiences travelling throughout the world with a clear conscience, knowing they have employment to return to when their adventure comes to an end.

With my employer, you have to apply for the program and fit a number of prerequisites to be allowed to join the program. I was accepted, and April 1 began my salary deferral. Even though I don’t begin my leave of absence until April 2012 (or later if I choose), my daughters are absolutely excited about the trip. Not only has this turned my dream of travel and adventure into reality, and toned down my fears about small-town living, it has become another source of entertainment and education for my family.

In the five months since I first told my daughters about the idea, I have seen school library books come home on countries they may be interested in, and instead of playing online games, I have seen them read blogs written by different families who have participated in sabbaticals together.

Also, I have tailored my full-time studies so I qualify for graduation in January 2012. On my way out of the country I plan on stopping by Athabasca University for graduation?what an excellent graduation present I am setting up for myself!

What surprises me the most is that more people aren’t interested or participating in this type of program when It’s offered by an employer. My company employs over 200 people, and I am only the second person to ever go on the 80/20 program.

I think part of it might be that four years is a long time in the future. I just turned 30, and four years does seem quite far away. My daughters will be 12 and 14. Four years in the future, things might be totally different for me and my family. But there is always fine print: if I choose not to go on my adventure with my daughters, I can cash out the deferred salary that my employer put away for me at the end of the four year duration, with no penalties (other than the interesting tax situation I would put myself in for that tax year).

And if I decide to resign from my job, the money would be returned to me upon my termination. I urge anyone whose employer offers this type of program to take a second look at it. The tax and net pay implications may surprise you!

We are now beginning to look into overseas volunteer positions in Thailand and Russia, as well as the benefits of beginning to travel while still considered a full-time student. I was reading a travel book on Russia today during my daughter’s soccer practice, and another mom struck up a conversation with me. As I explained the program and my plans to her, she introduced another term for my five-year plan?the fact that I am putting myself on ?layaway?!

Stay tuned, as I look forward to sharing some of my hard-earned knowledge with my fellow AU students!

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