Six Months Jobless and Homeless: Financial Update

Celebrating / mourning the end of a career, or celebrating / mourning another child

It’s been a bit more than half a year since we quit our jobs and took off in a brand new (to us) motorhome. We spent time in two countries, 18 US states & one Canadian province, three national parks, seven or so state parks, lots of BLM campgrounds, National Forests, Wilderness Management areas and the like (these are all free campsites and awesome), spent extended time lounging around in about ten cities, and spent a lot of time wrangling a toddler along the way.

Did you know full time parenting is a lot of work and can be kind of tedious challenging intensive? I take back all my complaints about the cost of daycare, it is the best thing since sliced bread. With that in mind, it appears one of us got pregnant while we were celebrating the end of her career, for a bit of interesting timing. What’s that they say about the best laid plans and all that?

Here’s how things have gone financially, logistically, psychologically, and what we’ve learned along the way. This was going to be a big six month retrospective, but in the interest of getting a post out before it is time for a one year update, I’ll break it and start with a quick financial update in the name of transparency, and because the numbers write themselves.

Show me the Money

Expenses: $11,500  (average $1,900 / month)
Income: $3,750  (average $625 / month). Excludes investment income, see note below
Starting Net Worth: ~$1,165,000
Ending Net Worth: ~$1,235,000
Spending Rate: ~2%
Withdrawal Rate: ~1.3%

The takeaway is that over the last six months we’ve spent almost $8,000 more than we “made” but ended up $70,000 richer overall thanks to low-cost diversified investments, and a roaring stock market. We can only control the former, but are happy with the latter, long may it last…keeping in mind that the stock market could just as easily leave us $70,000 poorer tomorrow.

Expenses

We’ve so far been spending less money than we planned for. Having never traveled full time nor owned an RV before, expected costs were kind of an unknown. We’re comfortable spending the traditional 4% of our starting savings annually (as comfortable as one can be with the unknown), and are so far averaging about half of that. Some large expected expenses should show up soon: deferred RV maintenance & dealing with some problems we ran into recently (sometimes literally ran into…), major pregnancy related bills will show up about three months from now and at that point we will also have an extra mouth to feed (at least babies are relatively cheap, healthcare and daycare costs aside). So we can perhaps expect our spending to increase as the year progresses.

For those curious, here’s a breakdown of where our money was spent over the six months, keeping in mind that when you are travelling full time and living out of an RV, the expense categories become kind of arbitrary. Everything could be labelled miscellaneous, entertainment, or travel and be correct.

Category Monthly Average Includes
Housing $750 Accommodations: Short term rentals, RV parks, campgrounds,  Air BnB, hotels
RV supplies: Propane
Transportation $300 Gas, parking fees and tickets, RV maintenance, public transportation, and tolls
Food & Drink $350 Groceries, restaurants, alcohol & bars, coffee shops, etc.
Health & Fitness $175 Old medical bills, replacing lost glasses, non-recreational drugs, some pregnancy stuff
Entertainment $50 National Parks pass, credit card churning fees
Bills & Utilities $65 Old utility bills, cell phone bills, new cell phone battery
Heir Care (Kids) $5 Diapers and misc. kids crap
Fur Care (Pets) $40 Grooming, preventative medication, dog food, pet fees at hotels
Misc $175 Bought a boat, web hosting fees, nomadic people problems (mail forwarding, etc), bike repairs, being too lazy to categorize everything, not knowing how or where to categorize everything

Income

We hadn’t planned for regular income while travelling, but in a pleasant surprise, it turns out that if you have plenty of time on your hands, are flexible, and willing to take advantage of opportunities you come across, that you can make a non trivial amount of money relatively easily and often for some extra fun (so far, knocking on wood). For an example, think along the lines of opening a bank account online for a promotional bonus and collecting a few hundred dollars, or getting paid to eat some fried chicken and offer your opinion. I wouldn’t be comfortable relying on fun opportunities as a sole source of income, we’ve made less than $4,000, but as a random supplement to investments, it works out quite nicely.

The small amount of extra income has been enough to cut our effective withdrawal rate below to 1.5%, this is probably not a long term trend, but I will take it for as long as it lasts. This speaks to the power of keeping your expenses low: If you are spending $100,000 a year, making an extra $5,000 might not seem that important, but if you are only spending $20,000/year, all of a sudden you just funded a quarter of your lifestyle costs.

Technical note regarding income

The income numbers above do not include investment income, neither interest income nor dividends in taxable accounts. As a total return investor, I don’t see a difference between spending investment income or “spending down principle” (at least in theory). Including interest and dividends in the income number would make the withdrawal rate look too low: spending interest and dividends is still a form of withdrawal.

Up Next: Travelling (Show me the Maps)

Coming soon-ish, more details on the traveling aspects of the last six months

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11 Responses

  1. Awesome job guys. And congrats! How has the motor home held up? Any breakdown stories? Interested to hear what you like/dislike about life on the road.

    • The MC says:

      It has held up well. Will give a more detailed update soon (won’t always be six months between posts, probably..). No problems with the engine, the problems we have had have been with the “house” part, or because it’s a bigger vehicle than we are used to, we decided to drive it into an urban area, and end up scraping and dinging things along the way.

  2. zeejaythorne says:

    Congrats on the pregnancy! Life certainly can come at you fast. It seems like y’all are learning well on this new journey.

  3. Physician on FIRE says:

    Thanks for the update! I’m guessing you’ll be nesting in one spot soon to prepare for the upcoming addition to the nomadic family — congratulations!

    It’s encouraging to see your expenses as a family. We plan to do something similar (not adding a child, but touring in an RV) in early retirement in a couple years. That should be a year of great adventure and an exceptionally low withdrawal rate if we can keep our expenses in check as well as you have.

    Cheers!
    -PoF

    • The MC says:

      Thanks. We have nested for the summer and are waiting for baby arrival. RVing definately seems like one of those things you can make as cheap, or as expensive as you want (not counting unforeseen repairs and maintenance, which might be unavoidable)

  4. DadsDollarsDebts says:

    Kudos- living my dream of RV living, though our toddler through a monkey wrench into the plans…glad to hear you guys are having a good time on the cheap.

    • The MC says:

      It’s a mixed bag with the toddler and the RV: you can imagine that having a toddler in a small space can be tiring at times (though really, even if you have a bigger space, I find they tend to follow you around anyways). On the other hand, assuming weather holds up, we are always able to get outside, and being outside really subdues him. I think it’s all the nature and visual stimulation. It gives him something to go crazy about that isn’t bothering us.

  5. Joe says:

    Do you have health insurance? Don’t see it in your expenses…

    • The MC says:

      The law requires you have health insurance, and I wouldn’t break the law 😉

      The first three months we were covered by my wife’s work insurance, her employer had a program to extend healthcare benefits for a few months, depending on the circumstances you left on, and we took advantage of it. We did pay a portion of the premiums out of her last paycheck. The timing meant we pre-paid three months of premiums before we retired, so it didn’t show up when I looked at our total expenses over those six months. From an accounting point of view, it looks like an expense we incurred while still working, instead of retired. That’s an ommission on my part, I should have shifted those expenses into retirement for more accuracy, good catch.

      For the last three months, and going forward, we are covered under an ACA plan from the marketplace. The effective premiums after applying the tax credits are a whopping zero dollars. It’s possible, but unlikely, that we’ll have to repay some of those advance credits next year when filing our taxes. I don’t expect any problems as we can to a large degree control our “income” to be as low as we want.

      From a policy point of view, I’m not sure I agree with the wisdom of subsidizing an expensive private plan to that level, but that is the way the law is written, and I won’t look a gift horse in the mouth. The law requires that you have insurance, and that is what we went and got 🙂

      • Joe says:

        Thanks for the reply. I was wondering because I’m early-retired as well. I’m on ACA as well but I am not subsidized, health insurance is by far my largest expense…

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