Monday, February 25, 2008

Traveling before your MBA

I've heard from many admits that they would like to travel before their MBAs but that the cost of an MBA and the lost income are already enough burdens from a financial perspective. Then there's also other issues faced such as health insurance coverage, leases for your apartment, etc. Hopefully this post will change your minds though.

Cost/lost income: Say you decide to travel for 3 months before your MBA. And let's say you earn $4K a month post-tax. So you'll forfeit $12K for the 3 months - that's about the same as the average sign-on bonus after our MBAs! Also, the cost of traveling is probably about the same as the living expenses during that time. The money you save on rent (say $2400 for 3 months) can be used for a round the world ticket. The remaining living expenses (utilities, food, car, nightlife) you save will get you quite far when you back pack! Btw, this is also a great way to use all those frequent flier miles since your travel dates are most likely very flexible.

Update: At LBS, you can also expect to make about $30K through your summer internship and the Second Year Project. Check the stats for 2008 here (expand "Tuition fees and funding").

Health insurance: Yes when you quit your job you'll lose your benefits (in the US at least). But you can either enroll in COBRA, which is quite costly (was $350/month for me). Alternatively, there are travel insurance packages that cover you while on your trip (outside of the US only though!). I paid $260 for a 5 month coverage (no deductibles) with very good coverage (e.g. $1M in medical benefits). The insurance company I used was HTH Travel (picked TravelGap Voyager - plan for those without domestic insurance during travel). There are also a bunch more listed on The US Department of State website. The website also lists non-US providers.

Apartment: Ok if you own your place, then I can't really speak to this. But if you rent, then sublet your place or ask your landlord/landlady if you can terminate the lease 3 months ahead (depending on your terms). If finding someone to sublet is hard for your luxury penthouse then consider subsidizing it with a couple bucks.

Most importantly I believe that the time before your MBA will be your last chance in your life to just take off 3 months (yes I sound so dramatic :-). After your MBA, you most likely have to start that new job soon, then one day you'll have family, and soon you'll rather go to that all-inclusive resort with your kids. So even if you forfeit $20K in total during those three months - it's little cash when considering the amount we'll make over the next 30 years as corporate slaves.

Ok, enough of my crap - but hopefully I could convince some of you :-).


Bryan said...
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Bryan said...

What about Post-MBA travel?

I finished up a part-time MBA from Indiana University Kelley School of Business in Aug 2007. It was 100% paid tuition, no strings attached. I'd like to travel and work abroad in-between jobs for about 6 months starting July 2008.

Something in business development, consulting, entrepreneurship, or corporate finance would be great.

Thomas said...

Hi Bryan,
Traveling in between jobs is also a great thing, but much harder to pull off I think. The nice thing about traveling before an MBA is to know that you have a set plan when you come back from your travels. I don't think any employer will give you a job offer with a start date 6 months out.
So if you do travel and come back, then you'll have to look for a new job which could take months.
Some employers also let you take a couple months off unpaid after you've worked there for 5+ years or so. But that's rare too.
Anyways, don't want to discourage you. Enjoy your journey if you decide to travel/work abroad!

wip3out said...

hey thomas...

nice blog entry, that has me rethinking my pre-MBA plan. I was about to actually offer to work til Mid July making sure to get that last bit of money and then have 2 weeks to move and pack my things before I fly off to the States... Now I am reconsidering.

Nevertheless, I think there might be an opportunity to travel post-MBA if maybe not for an entire 3 months.

You are right about whether there will ever be a time again where you can take out that much time, especially without any strings attached (as in: no family ties).

Ah well, life is great and there is always FOMO (fear of missing out)...opportunity cost in anything you do...

mbabound said...

You don't have to convince me :) I'm already planning my 6 week travel break. (+3-4 weeks of loafing around at home)

Thomas said...

yes I'm hoping that after the MBA we can also travel a bit - maybe 1-2 months before the start date of our jobs if we're lucky.
Cool that you're reconsidering your pre-MBA plans. Life's short, we might as well have a good time before we're too old :-)

That's the way to go! Traveling a bit and just taking it easy to charge our batteries before the stress begins.

Rishi said...

Hey Thomas - How did you manage to travel on such a shoe-string budget?

Thomas said...

Depends on what you define as "shoe-string budget". The money I spent in 5 months could esily have lasted a stingy back packer 1 year. Transportation will be the most expensive part of travelling (while food and accomodation will be where you save). The cheapest place I stayed at cost $3.50 a night (in Laos).