Two of the most common questions asked of people who travel full time are: “How much does it cost?” and “How do you earn an income while traveling?”. In this post, I’ll share my spending details for the first three months of 2017. I’ll continue these updates each quarter. This may help you estimate how much you’d spend living a similar lifestyle. In other future posts, I’ll share more details of how I saved and invested in order to create (what I hope will be) enough lifelong income to fund all my spending.
I want to show you that a lifestyle like mine – full of travel, adventures, living in beautiful places, meeting fascinating new people, and even pursuing hobbies that aren’t exactly inexpensive – can be had for quite little money.
First, some clarifications
- I will share a spending update at the end of each quarter.
- I track and include every single dollar of spending. These updates are not just the money I spend on travel or my van, it is every dollar I spend.
- I’ll share the total of how much I spent, and details of what I spent the money on. I’ll differentiate between spending on what I’ll call “essentials” and “extras”. If you’re thinking about how much you’d need to spend for a certain lifestyle, it’s likely my “essential” spending amounts will be more useful than the “extras”. The lists below show what I include in each category. As you’ll see, there are grey areas, and a lot of what’s in the essentials category is not truly essential. But for the sake on simplicity, this is how I’m categorizing them.
- Food (including eating out)
- Healthcare (Insurance, any services, any supplements)
- Hygiene products, household goods, internet, clothes
- Anything else that doesn’t fit in the “Extras” category
- All spending on hobbies
- Any extra travel (like if I fly somewhere to see family or friends)
- Alcohol, tea
- Books, movies/shows, concerts
- Any other spending on entertainment
- When I sell some hobby equipment, I count it here as negative spending
- I have a more or less fixed income of around $1,500 per month. I spent a decade being a good cog in a large manufacturing machine. I invested much of my income and those investments are now the source of my ongoing income. So far, the $1,500 per month seems like more than enough to fund my lifestyle. I’m motivated to spend less than that, but I don’t much desire to spend as little as possible. Many other travelers are in different situations. Some work full time and need a way to find enough income to cover their spending. Some who travel have saved up some money and are spending that cash. Once they run out of money, they’ll go back to work. These last folks have much more motivation to spend as little as possible because it means traveling longer. My income will continue no matter what I’m doing, so I don’t have those reasons to reduce my spending as low as possible. Other people who travel or live in a vehicle full time have told me they spend only $200 per month.
- One of the reasons I’m sharing my spending is to help dispel a common misconception people are indoctrinated with from childhood: that spending money makes you happy. For the most part, there is little connection between spending money and happiness or joy. Recent data currently shows that happiness increases as income increases, but only up to $75,000/year, and then it doesn’t really make a difference. Consider for a moment that this data comes from a population indoctrinated that more money means more fun. Much of the money I’m spending is not to “buy happiness”. It’s mostly just to exist as I do. My happiness and joy come primarily from the perspective from which I view things, and secondarily from how much I’m learning/growing and how many fun things I’m doing. Much of my spending on “extras” is to buy things that I will use and many many times. It’s not trading money for one-time happiness or entertainment. It is important to break yourself of the common misconception that spending money = entertainment/happiness. I don’t mean to say that spending money on experiences is wrong for absolutely everyone, but I do think many people spend money this way indiscriminately. I’ll surely rant on this in later posts.
Spending Update – 2017 Q2
For Q1 of 2017, my average monthly spending was $895. This is a little higher than I’d like, but not bad. I spent an average of $813 per month on essentials, and $82 on extras.
My “essentials” spending was higher than normal in June. I paid for 6 months of van insurance ($186), and bought a bunch of new clothes ($376). That clothes spending would fit better in “Extras”, but I’ll just stick to the categories as I set them up.
Spending Vs. Income
The chart below shows how much I spent each month (the red bars) compared to how much income I had (the green bars) and a running total showing the surplus/deficit (the area). This chart starts when I started traveling full time in the van.
Here’s the same chart, but starting the surplus/deficit from scratch at the start of the year:
I’ve saved and will reinvest 40% of my income so far this year. Nearly all the income came from investments. YAYY! I also got a tax refund, because I worked the first half of last year. With that, I’ve saved nearly 60%. While not even working.
Investment changes. More income!
The vast majority of my income is from dividends. I didn’t like my old employer’s 401k investment options, so after retiring, I converted my 401k money to a Traditional IRA. In that IRA, I put the money into a handful of Vanguard funds that pay decent dividends. I’m not a big fan of them, because the dividends vary and seem a bit unpredictable. The yields also aren’t all that great.
In June, I converted some of my Traditional IRA money from VYM (a well-diversified fund of large companies paying moderate dividends) to some REITS: OHI, WPC, and SBRA. These pay much higher dividends.
In my Roth IRA, I had money that I converted from Traditional to Roth earlier this year, plus some more from dividends within the Roth. I bought O (Realty Income Inc.) with that money.
These changes resulted in a $1,900 per year increase in dividend income. I’ll probably convert more of the Vanguard funds into individual stocks over time.