Six Months Jobless and Homeless: Financial Update
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.
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.
|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|
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