Budgeting for Full-Time Travel

With our initial plans made for a life of full-time travel in 2016, there’s one salient question on our minds: how much is this all going to cost?

Without any experience living as full-time travelers, we’ve found it difficult to answer this question – especially in light of our flexible itinerary and desire to see a variety of places around the world. Van camping in Utah may cost next to nothing, while exploring museums and historical sites in a European city could work out to ten times the daily price.

Unlike many people in the personal finance community, I’ve also never used a budget to control my expenses. Instead of attempting to hold myself to an arbitrary dollar amount in each category, I’ve found it simpler and more effective to monitor my total spending each month and adjust accordingly.

Setting a target

Rather than disingenuously trying to craft a category-by-category budget for our full-time travel life, we’ve started by evaluating a spending level with which we’re comfortable – effectively asking, “How much can we afford?” Amusingly, this is the exact opposite of the approach I’ve taken for years as I’ve worked toward financial independence. Pre-FI, this line of thinking keeps most people from ever reaching their financial goals. Want to buy a house? “What’s the biggest one the bank says we can buy?” Eyeing that new luxury SUV? “How much does the dealership say we can afford?” In ordinary life, this approach leads to low savings rates and endless lifestyle inflation.

Now that we’re not earning full-time incomes, though, I think it’s important for us to establish a ceiling for our annual spending – not only to help us monitor how we’re doing, but also potentially to inform our future destination choices.

We’ll use the 4% rule of thumb as a guideline for a sustainable level of spending, though it certainly won’t be an unbreakable constraint. Can you imagine? “Sorry, I know we traveled all the way around the world to be here, but the 25 Euro admission fee to the ancient Greek city of Ephesus would put us beyond the 4% rule this month.”

Visualizing the 4% rule of thumb, which we'll use as a guideline

Visualizing the 4% rule of thumb, which we’ll use as a guideline

After evaluating my portfolio, my prospective rental and side hustle income, and our overall risk tolerance, we’ve set an annual spending budget of $40,000. That’s $3,333 per month, or $1,667 per person per month.

I hope we end up beating our spending target by thousands of dollars, but we’ve tried to be realistic – understanding our penchant for dining out and knowing that at least in 2016, we’re not going to be truly “slow traveling.” Depending on how much side hustle income we’re earning, this could result in a withdrawal rate well below or above 4% – yet another component of full-time travel life that we’ll have to figure out along the way.

Evaluating our fixed and variable expenses

While we don’t plan to hold ourselves to a categorized budget, we can project our fixed expenses with reasonable accuracy – though there really aren’t that many of them with a location-independent lifestyle:

CategoryAnnualMonthlyDescription
Home$0$0The joy of nomadic life
Van Expenses
Vehicle Registration$125$10Tabs for the van
Insurance$610$51We'll look into reducing this expense when we park the van during periods of international travel
Bills & Utilities
Health Insurance$2,760$230HDHP premiums
Mobile Phone$545$45Projected Google FI expense with 2 GB of monthly data; actual amount will vary based on data usage
Bank Fees$66$5HSA maintenance fees; I've looked at maintaining the minimum cash balance to avoid these, but I'd rather have that money invested in the market
Attractions$85$7America the Beautiful pass for National Parks and NFS/BLM land
Total Fixed Expenses$4,191$349

We’ll categorize all our other variable expenses as follows:

  • Van expenses: Fuel, maintenance and repairs, parking, tolls, and any other van travel-related costs
  • Transportation: All non-van transit expenses, including airfare, trains and buses, rental cars, and Uber and taxis
  • Food and dining: Our biggest vice! Groceries, restaurants, bakeries, breweries, and bars
  • Lodging: Campsites, hotels, hostels, and B&Bs. We’ll also include gifts for hosts in this category
  • Attractions: Museums, parks, historical sites… anything with an entrance fee
  • Entertainment: Any other amusement expenses. Everything from tickets to concerts and shows to rental fees for bikes or kayaks to ski lift tickets
  • Miscellaneous: Everything else. Health/personal care, miscellaneous shopping, and gifts and donations, among other items

With a total budget of $40,000 and fixed expenses around $4,200, that leaves us with $35,800 for all our these variable items. In shorter timeframe terms, we’ll have ~$3,000 per month – just under $100 per day – almost entirely at our discretion.

Achievable? We’ll see! I don’t think we’ll have any trouble coming in under budget when we’re camping and hiking for weeks. On the other hand, we know from experience that lodging, food, and attractions can eat up a ton of cash when traveling internationally. Whether we’re crushing our budget or embarrassing ourselves with an exorbitant outflow of cash, we’ll plan to share our experience and learnings here.

14 Comments

  1. Not being an expert at all in FIRE and world travel (2029 is my date), this plan looks to be robust.

    I quite like the 3 sources of income you have. Inspirational for my target FIRE situation.

    Given you are putting up a side hustle, I imagine you can be flexible here and add more time to this, or maybe seek additional local work while travelling.

    I am not sure that international travel has to be more expensive than US travel. Being from Europe, we think the opposite. 🙂 I guess it comes down to the exchange rate. It is quite favourable to have dollars now to spend in Euros.

    It would indeed be a shame not being able to enter a Greek national monument because of the 4pct rule!

    • Funny about our different perspectives on where it’s more expensive to travel! I think part of the difference is our comfort level at home with traveling cheaply — whether that’s figuring out where we can camp for free, having a better sense of which cheap hotels will be acceptable, or just speaking the local language. We’re also eager to dine out when traveling internationally, which will add to the cost as well.

  2. Thanks for sharing your breakouts! For health insurance, are you on an ACA plan? That seems super expensive given what your income must be — although maybe you have more income than I realize. 🙂 I agree with your moderation approach — using the 4% rule most of the time, but not making it so rigid that you miss out on major life experiences!

    • I’m not on an ACA plan, though I will definitely look at it for 2017. I’ve been buying my own coverage directly from an insurer the last few years (through a variety of complicated partnership tax laws, I’ve been technically self-employed for health insurance purposes), and I stuck with it for 2016 for simplicity and because I didn’t know how long into the year I would be working and how much side hustling I’ll end up doing.

  3. Based on our future budget plan for full-time travel, part-time side hustling, we’ll also be around $40k. If we have to work on contract for a period of time, so be it, but I think $40k is doable. 🙂

    • I definitely think so. We were tempted to push our target lower, closer to $30k, but wanted to be realistic that we may spend more traveling versus at home.

  4. We are going to be right there with you learning as we go. We plan an even more modest budget, somewhere in the $30,000 range, maybe less. We’ll see how that goes. The key is going to be how expensive travel gets. We’ll probably stay in each place we visit for at least two weeks at a time.

    The problem is I LOVE dining out at local restaurants, but of course, that gets super expensive. It’ll be a rare treat out there on the road. 🙂

    • If we could afford it, I think we would dine out for every meal. We love it, too! So far, we’re doing pretty well with cooking ourselves (though we’re not even two weeks in yet, so it’s probably too early to call). Camping in remote areas has certainly helped by eliminating other options!

  5. Have you considered joining a Credit Union? They offer essentially the same services as banks, but no fees! Oftentimes loans have more competitive rates! Good luck! God bless and safe travels ?

  6. I would love to hear how the planned budget compared to reality as we’re approaching the end of 2016. Thanks for sharing!

Leave a Reply

© 2017 The Resume Gap

Theme by Anders NorenUp ↑