Know Your Numbers
Do you track your spending habits in a financial software program or phone app? Can you name your monthly income and expenses? If so, congratulations! You’re ahead of the game and almost ready to hit the road. If you don’t know what your lifestyle costs, don’t turn the key just yet. Getting your financial house in order is mandatory before you ever drive the first mile.
Tracking household finances is easier than ever thanks to an abundance of consumer-oriented financial software. Free budgeting apps for smart phones are readily available from most banking institutions and software developers like Intuit. Even keeping a simple Excel spreadsheet with your yearly expenses is better than not doing anything at all.
The point of this exercise is to get well-acquainted with your monthly expenses, and to know if you generate enough income to pay for your lifestyle without going into debt—which can quickly put an end to the full-timing adventure if you lose your ability to bring in money.
From what you spend at the grocery store to how much you pay for health insurance, knowing your numbers will help you create a realistic household budget. The more time you devote to tracking your finances, the better baseline you’ll have to create a more accurate full-timing budget forecast. To tailor your budget to the full-timing lifestyle, visit my blog for a free downloadable budget spreadsheet template that illustrates the categories where our money goes as full-time RVers and mobile entrepreneurs (http://wp.me/pcxXa-1he).
It’s Not Always More Expensive
The biggest misconception many people have about full-timing is that it’s more expensive to live this way, but that hasn’t been our experience over the last six and a half years. For us, some expenses decreased, some stayed the same and some inevitably increased after we started full-timing. But by ditching the financial burdens of home-ownership and consumer debt we have the joy of seeing more of this world while living on less money and a whole lot less stress.
We live in a 24-foot fifth-wheel, which drastically impacts what we can buy and keep. And although your rig might be larger than ours, you’ll still be living in a smaller space with more limited storage than your stick-house, so it’s realistic to expect that you’ll save money by curbing any shopaholic tendencies you currently possess. Break yourself of the habit of shopping as entertainment, start getting rid of clutter now, and don’t keep anything that you can replace later.
Another area where we save money is rent. When it comes to paying for places to stay, even the most expensive RV parks are significantly cheaper than renting an apartment in the same city. RV park rent can vary from $300 a month in a rural community to $1,200 a month for a beachfront RV site in San Diego. You’ll need to gauge what your level of comfort is and then base your rent forecasts on that. I use campgroundreviews.com to see what people are saying about parks before we ever check into one.
What living expenses might stay the same once you hit the road? Well, consider those everyday needs that never change. For example, our medical insurance and health maintenance costs remain constant even though we switched state residencies. Money that we spend on our dog is the same, and so is our food budget even though we eliminated weekend bulk-buying sprees at our local warehouse club. In addition, our costs for vehicle and property insurance are about the same as they were when we had a stick-house; our expensive homeowners insurance has been replaced by less costly RV insurance but our truck insurance cost went up because we have a newer, larger vehicle. But once again, these costs cancel each other out.
Increases to Expect
The biggest monthly increase we experienced after hitting the road was Internet connectivity. Because we are mobile dwellers we can’t take advantage of popular consumer packages that bundle land line telephone service, cell and Internet utilities together. As a result we pay much more to use a cellphone and to get online with business-class mobile satellite Internet, as well as a wireless hotspot device for redundancy. Some people end up paying less for communication needs because they eliminate a land line from their lives, but if your livelihood requires reliable, secure Internet connectivity, be ready to pay for the luxury of taking it anywhere with you. We currently pay $285 a month in order to make our living online—ouch! But remember, this is a business expense specific to our nomadic lifestyle. Others traveling in retirement or not dependent on connectivity will have a much lower bill for their data plan.
Two areas where you can expect to spend more during your first year out are fuel and entertainment. Our first year found us spending more than we ever did before on activities like visiting national parks and quirky landmarks and enjoying local cuisine. But the longer we’ve been on the road, the more we’ve discovered fun ways to find inexpensive things to do in new cities, which keeps our entertainment budget under control. Keep a healthy cushion in this category during your first year on the road.
Fuel costs will fluctuate but again, during your first year out you’ll probably spend more than later years due to your excitement about seeing the country. You can get a general picture by checking out the KOA’s Fuel Cost Estimator (http://bit.ly/KOAFuelCalc). This shows you what it costs to drive a given number of miles based on your mpg and demonstrates the impact of rising fuel prices on your vehicle. We always spend more on fuel during spring and fall as we chase down good weather.
The Greatest Consideration: Your RV
Perhaps the greatest variable when it comes to knowing what your full-timing lifestyle will cost is the amount of loan payment you might incur by purchasing a full-timing rig. The KOA website (http://bit.ly/KOAcalculators) has two handy calculators that illustrate RV loan costs based on lending amounts, interest rates and payment schedules.
I hope these considerations enhance your research about the full-timing lifestyle. As you can see, by understanding your complete financial picture you can comprehend the true costs of switching lifestyles and feel more secure in your decision to get on the open road. If you have any questions or want more clarification about what I’ve discussed, contact me at my website, LiveWorkDream.com.
Rene Agredano and her husband Jim Nelson have been full-timing since June 2007. As non-retired full-timers they love showing others the benefits of the full-time RVing lifestyle by chronicling their adventures at LiveWorkDream.com.