An Unexpected Sabbatical – 1 of 4 Reasons Why It’s Even More Important Now To Prioritize Financial Independence

After posting to Costa Rica FIRE multiple times each month for over four years, I resolved to take a break in fall 2022. However, I ended up taking off much more time than one season — my last blog post was almost a year ago! As a career coach, I see these longer-than-expected gaps pretty regularly, when a job search or career pivot takes longer than expected. It’s one reason why achieving financial independence is so important.

1 – Financial independence as disability insurance

In my case, I was shifting my writing focus to my Forbes.com column, but once I had caught up on that platform, I came down with a case of shingles that is taking months to unwind. I cut out work entirely for two months and am still working about quarter-time (down from half-time or even full-time depending on the project).

Financial independence is what enabled me to stop working immediately and not have to go into debt or dip into retirement savings. In this way, FI is a form of insurance against interruptions to your livelihood. Unlike disability insurance, which doesn’t cover every circumstance, achieving FI and therefore not relying on a job for income ensures you can take time off whenever you need it – sickness, sabbatical or whatever reason.

2 – Financial independence as a buffer to rising expenses…

Even without the health complications, I could use the extra time on our real estate portfolio. While we still have property managers for each of our rentals, real estate is less passive right now. Half of our units, including our primary residence, are in Florida, and Florida’s insurance market is a mess. We have never filed a claim on any of our properties and still have had policies cancelled on us.

Where we are able to get renewals, we still face double-digit rate hikes or worse. The insurance on one of our properties almost tripled year-over-year.  The insurance mess is a problem for both condos and houses, and for both rental investments and residences. For our condos, HOA dues are up considerably in large part because of insurance premium hikes, so even though our insurance policy only covers the interior, we pay for the hikes in our HOA dues. Our primary residence is a condo, and the insurance bill to our complex was higher by an unexpected $200,000.

3 – …and surprise expenses

In addition to the higher insurance expenses, there are other additional expenses on our real estate. Two of our condos are in complexes that need to replace their roofs. One roof replacement was expected, but the second was due to poor decision-making by the complex before we had purchased there. Still, as current owners, we’re paying to clean up previous decisions. Two roofs mean two special assessments in the thousands of dollars.

We actually have three simultaneous special assessments. Another of our condos is in a 17-story building which is considered a high-rise and subject to a new regulation in Florida requiring full funding of reserves for high-rises. (The new regulation is due to the Surfside building collapse in south Florida.) While the regulation makes sense, the speedy rollout means many buildings have to play catch-up on collecting reserves. In our case, this means another special assessment of over a thousand dollars.

In addition to these special assessments, there is always ongoing maintenance on real estate. With the recent uptick in inflation, these ongoing expenses are more expensive in terms of labor and material. The AC in our Costa Rica vacation rental needed to be replaced this summer. The attic steps in one of our Asheville rentals needed repair. The deck on another Asheville rental needed power washing and some repair. The list goes on and on!

4 – Financial independence to soften the blow to Asian-Americans from artificial intelligence

I had posted before about how artificial intelligence is a threat to financial security, and FI is one way to overcome it. A recent study forecast that Asian-Americans may be harder hit by AI, as the technology is most likely to displace jobs held by Asian-Americans (as well as the college-educated and higher income of all races!).

As an Asian-American, now I need FI to stem the tech tide for me and my kids!