We often hear how we must be rich, you must have inherited money, we are risking our retirement, it’s a good thing we don’t have kids (we’ve met several families doing similar travels so that doesn’t hold up), among other questions that center around how we are able to travel like we do at our age. Our favorite is we have “secret money”. If anyone knows where this secret money resides, please let us know so we don’t have to work anymore.
While most just say it for something to say, some are actually curious how we do it, so below is a general outline of what it takes.
- Our plan originally started with the rather fuzzy idea that we would retire at a typical 60-65 years old, buy a 50-60ft boat and sail off into the sunset.
- As we worked for a few years and we had the Silverton (31′ power boat), the plans started to gel, we saw that if we saved aggressively, we could retire in our late 40′s on a 40-50′ boat.
- I’m the nerd (mike) and I keep the household budget on a spreadsheet. One day for no real reason, I took the budget and looked at the retirement formula from the opposite direction. Instead of figuring how much we need to save, I looked at how much we needed to spend. Once you got rid of the ongoing expenses of living in a house and commuting to a job, it turned out to be very inexpensive to live on a boat. I brought this up to Tammy and next thing you know we are planning and taking action to make the plan a reality. We’ve been lucky but planning has been 90% of why we can do this.
Prep work:
- Get debt free and on a budget!!! This the key to making this work. If you are still trying to pay a mortgage, car payments, credit card payments and the bank account is always running dry, it is always going to be a controlling factor and it makes it 10 times harder both to save up and cover your day-to-day expenses. It’s not as hard as it sounds. It just takes a little discipline. The only hard part is the first 6-12 months while you shed your old lifestyle and the debts that go with it. The banks and credit card companies are not doing you a favor by lending you money. Eventually, you still have to pay for what you buy and then you have to pay the interest. We followed the Dave Ramsey plan which I will outline in a general terms.
- Set up a budget for the next month that includes any and all expenses (do your best the first month and fix what isn’t right in future months). If it’s not in the budget, you don’t spend money on it. PERIOD. The budget for expenses must not exceed the income. This isn’t all about pain and going without. Other than not spending more than you bring in , you can spend the money on whatever you want. If you want to spend $2000/month eating out, that’s fine as long as it’s in the budget up front and you are covering all you other bills. If your goal is an early retirement and getting rid of debt, $2000/month eating out is pretty silly but the point is you must consciously decide up front what you are spending money on. When you do that, you will find that many extras cost a lot more than you realize and it’s easier to focus your money on items that are really important to you.
- If you don’t have one already, set up a small emergency fund (say $1000). You don’t want to keep taking out new debt every time the car breaks down (of course, you should cover maintenance as part of the normal budget but until you have been updating the budget for a few months, there may be things you miss). Once you are debt free, you can quickly set aside 3-6 months in an emergency fund.
- Take all the extra money you can squeeze out of the budget and after making minimum payments on all your debts, put everything on the smallest debt. When the smallest gone, go after the next smallest. If you apply yourself, you will be surprised how quickly the debt disappears. Unless you have an insane amount of debt, you should be looking at 6-12 months if you attack it aggressively.
- Consider selling “stuff” that won’t be going on the trip with you. I’m not talking about selling grandma’s wedding ring but if you have a new car with a $30,000 loan, sell it. Even if you only get $25,000 for it, you can buy a $10,000 used car and you have cut the amount you owe to $15,000. Snowmobiles, ATV’s and similar toys are good options to sell. Garage sales to get rid of junk in the attic are another great idea. This will speed the debt free process greatly.
- If it’s for a short time, consider a second job. If you are already covering your bills, all of this money can be used to get debt free. An extra $10,000/yr can go a long way toward clearing out your debt.
- If you are a couple, it is absolutely critical that you both agree to and follow the budget. If partner 1 badgers partner 2 into the budget then partner 2 ignores it and spends more than budgeted, you will fail and probably have a lot of arguments in the process.
- Future Budgeting: Once you get the idea of budgeting down, make a copy and start updating it based on your best guess at your future travel expenses. No it won’t be perfect but it gives you an idea of the ongoing income or savings you will need to make the trip a reality. As you research your trip, you will find tidbits about expenses and also how to control them. For example, if you pay for marina slips on a nightly basis they typically run $30-60/night. If you sign up for a week or even better a month, those rates often come down to $10-20/night. So if you plan for a few moves in quick succession followed by a period where you don’t move, the costs are much lower than moving every 3-4 days.
- Retirement Savings: We had been aggressively saving for retirement and while we slowed down, we have continued to save for retirement over the past 4 years. That money is not to be touched until we are truly ready to retire.
- Find a used boat/rv that meets your needs.
- New is just crazy. Our Gemini is still being built and sold new. Last I checked it goes for around a quarter million dollars. We paid less than a quarter of that. If your budget won’t handle that much, it is possible to get a boat for under $15,000. It will be smaller and not as nice but it’s doable with some research. Remember to stick with the plan to do this debt free.
- When looking at options understand, you won’t have the space of even a one bedroom apartment but also look at what you minimum living conditions will be. We’ve met the rare cruiser without refrigeration. They were happy. To us that is insane. Also look at the boat from a practical point of view. Imagine using everything on the boat.
- Most people at a boat show never consider using the oven. We use ours at least a couple of times per week. It’s an important feature along with the stove.
- Can you close the door to the bathroom while using it?
- How long will you deal with kicking each other in that V-berth?
- Imagine all these things while bouncing along in a seaway.
- Then step back and remember there is no perfect boat that meets all your needs.
- Look at fuel efficiency, maintenance and other hidden costs.
- Slower with smaller engines is usually the most efficient.
- A well thought out outboard will be easier and cheaper to maintain than an inboard diesel (Many small monohull sailboats have lousy outboard setups that won’t work in any significant waves.)
- An old rusted out drivetrain could cost more to replace than the boat.
- Catamarans often get charged extra due to their width (the Gemini is an exception being only 14′ wide that usually gets us out of this.)
- Work while traveling, saving for the trip or some combination:
- So far in our travels, we have been able to continue working remotely with internet and phone communications.
- We know of people who stop for a few months at a time to work and save up before they move along for a few months then repeat the process. This can work well if you go to popular tourist locations in season where they are desperate for workers during the peak but then don’t want to keep you on during the off-season.
- Working out of the country can be more difficult if you don’t have skills that are in demand. There are usually rules against it and you are often competing vs locals who make far lower wages than americans are used to.
- For our next trip, working regularly will be difficult as we will be in remote areas at times with limited internet access so the plan is to save up enough to cover a few years and then work when we can to stretch that money even further. This sounds hard but we are already used to an inexpensive lifestyle. As long as we stick to it, the bump up to full-time work and Tammy picking up a few groups should make it go pretty quickly.
- How much to budget?
- This is a trick question. It all depends on how you want to live.
- On the low-end, if you anchor out all the time, sail whenever possible, do all the maintenance yourself, dumpster dive for spare parts and upgrades (yeah, we’ve pulled a few nice things out). You could probably get it down to $1000-1500/month but you will always be hesitant to start the engine, you won’t have air-conditioning, you will have to row the dingy in rather than staying at a dock, many of the museums and other touristy activities will be outside your budget.
- On the high-end, the sky’s the limit. Eating out every meal, private tour guides, rental cars, and so on.
- We fall somewhere in between.
- We tend to stay at marinas/campgrounds most nights but tend to slow down in cheap areas and move quickly thru expensive areas with an occasional free stop away from facilities.
- We travel slowly which helps with fuel efficiency.
- We go out to eat 2-3 times per week at low to moderately priced restaurants.
- We get a rental car probably every other month for a few days to a week when we can get a good deal or there are sites we want to get to. (some marinas have courtesy car available that you can borrow for free if you replace the fuel. We will generally use these marinas if the nightly rate isn’t substantially higher.)
- We do most basic maintenance and upgrades ourselves but occasionally farm it out if it requires skills we don’t possess.
- Below is a sample of our budgets (plural). Some of the numbers have been rounded and you should enter your own where you have more accurate info.
- explanation:
- This table was developed to compare RV’ing in Europe to the Pan America. The other budgets were pre-existing:
- Present/Apartment: This is our current situation living in downtown detroit. It does include keeping the boat in a marina for the summer which is much cheaper than traveling about with short stays. It also includes a large value for saving up for the next trip. If I get extra hours or Tammy has a group, we can actually put aside more than this.
- Old/Boat/RV: This based on our last couple years where we owned and maintained both the boat and the RV. Getting rid of one of those would cut costs a bit. Before we got the RV, the costs were probably $2-300/month less.
- Europe & Pan America: These are a first crack at what we think it will cost based on our previous experience and what we have found for similar people on-line.
- One big question we haven’t decided on yet is what to do with the boat and 5th wheel. If we will be traveling for 3-5 years, it seems silly to pay for storage when we aren’t going to be using the boat. Plus storage seems to put more wear and tear on the boat than when it is in use. But far more than our houses, the boat is “home”. There is a sentimental reason to consider keeping her. If we do wind up selling it, that money will be set aside to buy another boat when we get back.
- Emergency: This has always been something we have maintained. It is our emergency backup plan if something went horribly wrong and we had to survive on as little as possible. It’s not something we would want to do for any length of time.
- Utilities: At marinas/RV parks, utilities are typically included. If you get a monthly rate, they sometimes meter your electric but it’s so much cheaper that there is no need to keep track separately.
- The insurance categories are self explanatory
- Phone/Internet: We have been using a cell phone and internet broad band card. When we leave the country, we will probably become more dependent on wi-fi/Skype at pay as you go phones.
- Cable: We will have to figure some of this out as cable or satellite we currently use won’t be available.
- Laundry: Self explanatory
- Groceries: We bumped up Europe based on past experience.
- Spending money: We have it broken down into 3 categories. This is something we figured out many years ago. We found that one or the other would wind up using their spending money when we went out to dinner or did some other joint activity. Eventually we separated out a combined spending category for joint activities. Within reason, you can spend your spending money on whatever you want (it does include clothes). The combined spending money must be jointly agreed on. We find this works very well.
- Rent, giving, presents are straight forward.
- Vacation: Minor vs Major. This was an issue we ran into. Either we couldn’t afford a big trip because we had spent the vacation fund on little visits to nearby stuff or we were skipping nearby stuff to save up for a big trip. We finally split it out so we could better account for it.
- Even on the Pan America there will be big side trips we don’t want to miss out on. For example: if we are in Ecuador, we don’t want to miss the Galapagos.
- Maintenance: This covers repairs and upgrades as needed to the boat or RV. It should be lower over the next few years, as we will only be maintaining a single RV.
- Fuel: straightforward. Estimated based on expected miles, local fuel price and fuel economy.
- Marina/RV Park: Covers the fees associated with that.
- Dog fund: Food, vet bills & occasional stays at a kennel.
- Several items are stockpiled items (maintenance, dog, vacation). If one months money is not used, we keep track of it and save it for when we need a big expenditure.
- There will be one time costs to factor in also (shipping the RV, border crossing/visa fees, etc.) Try to account for those up front as much as possible.
So if anyone knows where that couple hundred thousand in secret money is? Please let us know so we can take a decade off.
| Expenses | Present | Old | Europe | Pan America | Emergency |
| Apartment | Boat/RV | ||||
| Utilities | $60.00 | $0.00 | $0.00 | $0.00 | $0.00 |
| Insurance Boat | $90.00 | $90.00 | $0.00 | $0.00 | $90.00 |
| Insurance Truck/RV | $90.00 | $90.00 | $90.00 | $90.00 | $0.00 |
| insurance Apt | $20.00 | $0.00 | $0.00 | $0.00 | $0.00 |
| Phone/Internet | $100.00 | $100.00 | $50.00 | $50.00 | $50.00 |
| Cable | $45.00 | $55.00 | $50.00 | $50.00 | $0.00 |
| Laundry | $40.00 | $40.00 | $40.00 | $40.00 | $20.00 |
| Groceries | $280.00 | $280.00 | $350.00 | $280.00 | $200.00 |
| Tammy Spend. | $100.00 | $100.00 | $100.00 | $100.00 | $0.00 |
| Mike Spend. | $100.00 | $100.00 | $100.00 | $100.00 | $0.00 |
| Combined Spend. | $150.00 | $150.00 | $150.00 | $150.00 | $0.00 |
| Rent | $900.00 | $0.00 | $0.00 | $0.00 | |
| Giving | $40.00 | $40.00 | $40.00 | $40.00 | $0.00 |
| Presents | $50.00 | $50.00 | $50.00 | $50.00 | $0.00 |
| Vacation Major | $350.00 | $350.00 | $300.00 | $300.00 | $0.00 |
| Vacation Minor | $0.00 | $100.00 | $100.00 | $100.00 | $0.00 |
| Maintenance | $400.00 | $400.00 | $200.00 | $200.00 | $0.00 |
| Fuel | $200.00 | $200.00 | $400.00 | $300.00 | $50.00 |
| Marina/RV Park | $200.00 | $600.00 | $600.00 | $500.00 | $50.00 |
| dog fund | $50.00 | $50.00 | $50.00 | $50.00 | $20.00 |
| Plan B (Travel without working) | $1,500.00 | $0.00 | $0.00 | $0.00 | $0.00 |
| Total (Monthly) | $4,765.00 | $2,795.00 | $2,670.00 | $2,400.00 | $480.00 |
| Total (Yearly) | $57,180.00 | $33,540.00 | $32,040.00 | $28,800.00 | $5,760.00 |
Advertisement
