With our new collective bargaining contract getting settled recently I thought I would take a quick look through to see what changes there were from the contract I had originally signed a few years ago (yes, this is what teachers do on Tuesday mornings in August). One item in particular caught my eye and that was the new educational sabbatical option. Here is the deal in a nutshell:
• After two years in the school division, you are eligible to take a year educational sabbatical and 1/3 your salary.
• After five years in the school division, you are eligible to take a year educational sabbatical and ½ your salary.
• No union dues or pension contributions will be deducted during that year.
• Your seniority will not be affected.
• You need to present proof of schooling to the Division.
• You have to sign an agreement that says you will work for the division a minimum of 2 more years after you return.
For Your Voyeuristic Pleasure
This is very intriguing to me, but there is no doubt that the financial sacrifice would be substantial. Before I ask you to help me out with my reasoning, here are a few personal finance facts about my current circumstances:
• I live rurally, so my mortgage is $462 a month.
• I live with my common-law girlfriend who will be a student for two more years before she too is a teacher. Her summer employment usually pays her enough for her schooling and she also buys most of the groceries. The rest of our household expenses comes out of my cheque.
• Other than my mortgage, my expenses total about $900 a month.
• I have no student debt, credit card, or consumer debt of any kind.
• I will make about $57,500 this year, and next year (the potential year of sabbatical) I would be at about $62,000.
• I also co-own a web business, but we’ve been advised not to reveal what our profit margins are. We’ve reinvested everything back into the company so far anyway, so I’m not depending on it for income.
• I’ve made a few grand in freelance income over the past couple of years whenever I’ve had a little free time.
Don't Need No Education
I had not considered any option like this, but I have been looking at pursing my Master’s of Education degree part-time over the next 4-5 years. So far I’ve completed a couple of courses towards the 36 credit hours that are needed. This credential would automatically bump my annual pay by $6,000 and give me a higher ceiling. It would also open up a whole other world of promotional opportunities. I figure that if I took this year off, I could polish off 30 of the 36 total hours needed (two courses won’t be offered during that year, so I’d have to wait to finish the whole degree).
Initially, taking a massive paycut when my girlfriend is already in school might seem like a pretty dumb move. If anyone is aware of the future compound interest loss I would be looking at (being that I would invest a decent amount of my salary in a registered account) it is me. All that being said however, I think the sacrifice might be worth it. Here are some of the pros to weigh against the main con of going from roughly $62,000 in salary to roughly $20,660.
- My take home pay would not suffer nearly as much as my gross pay would. I figure that after all of my deductions are taken off and the higher tax bracket is taken into account, I’d be looking at about a $20,000 vs $36,000-$37,000 comparison (which is still obviously pretty substantial).
- I could easily make $500 a month in freelance web work per month just by accepting the current offers that I get on a routine basis. I think a reasonable goal if I truly committed 25 hours a week or so to freelancing would be $1000. My education load wouldn’t be that heavy, and many of the courses could be taken online.
- The pay bump from having the Master’s degree a couple years early would help offset the long-term costs.
- A key factor is the huge load of stress it would take off of me trying to do my Master’s degree and working full-time, along with the blogging side business and plenty of extra-curricular volunteer work as well.
- I could pour more time into our online ventures. We have a big project on the horizon that I’m super excited about, and it could have some great spin-off opportunities.
- The following year after my sabbatical our household income would likely jump to $115,000 or so assuming my girlfriend could find full-time work (in a rural school division where she will have done all of her student teaching, and have some pretty good connections thanks to a special someone, this isn’t too big of a concern). At minimum, I would be guaranteed employment at my new increment of roughly $66,000. Yet our expenses won’t increase at all.
- I could always substitute teach a couple days a week when I wasn’t in class to supplement my income. The going rate is about $140 a day.
Risk and Reward
Just from crunching a few numbers quickly, I’m fairly certain my expenses can’t rise above $2,000 a month. Even if I had a major maintenance repair or something, when averaged out over the year I can’t see that number climbing above the $2K level. That obviously leaves me with a $4,000ish gap in my budget once my 1/3 pay kicks in (but that I wouldn’t be paying much tax on). I know that I could easily make this up in freelance work and substitute teaching. I also have a little emergency fund built up, and I could decide to cut back a little on my RRSP contributions for the upcoming year in order to give myself even more of a cushion going into my proposed sabbatical.
How cool an option is this to explore? People will pay me to study… seriously? It almost sounds too good to be true. Also, I’d get to keep all of my sweet benefit package from my current teaching position. In an absolute worst case scenario, a basic LOC to fall back on when our household income would skyrocket the next year isn’t exactly Apocalypse Now. The part where some of you are really going to hate me out of jealousy (and I wouldn’t blame you one bit) is when I reveal that a year-long sabbatical would give me 14 months of no-day job living. It’s a pretty cool little halfway option relative to several of the bloggers out there lately who have quit their day jobs and jumped in with both feet.
I guess what I’m asking is does anyone seen a solid reason I shouldn’t do this that I’m missing? I’m pretty sure of my ability to resist lifestyle inflation at any point, but I’m positive I could resist it if it meant going into debt. What do you all think? Is this a great opportunity to get paid to further my “day job career” and invest serious time and focus into my online endeavours, or is it merely coping out when I should be working hard and maximizing my earning potential (I am only in my 20s after all)?
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