In our last blog I discussed that we are moving forward with going full time in our RV later this year. As you will recall we didn’t expect to have to make plans so far in advance, but it became quickly apparent after a visit to one of the resorts that we were actually almost too late. Since then we put down deposits for November and December to reserve a space.
While this is a current unexpected expense, it is refundable if we don’t meet our timeframe goal and need to cancel. It also gives us some much needed flexibility by booking two months instead of one. Additionally if we do meet our November 1st goal, the deposits go toward the space and the out of pocket cost will be lower at that time. So there really is no risk of losing any money by making this move and it gives us peace of mind.
One of the big questions we always have is how will going full time change our financial situation. Once we are full time and reach FI, we plan on living on a $5k per month budget. In the intermediate term, while we are still working, we are going to try and get as close to that as possible, but there will be expenses that come with still working that will probably keep us above that mark.
The real savings during this transition period comes with a large reduction in fixed expenses. While we have a maximum monthly budget of $1500 for resort rental, that number is all inclusive. It will cover the space, water, electric and sewer. And if we want to save more money after we reach FI there is always free boondocking on public land. But that is a story for another blog.
So how much will our fixed expenses change when November rolls around? Here are the monthly expenses we are giving up:
Mortgage & Property Taxes=$1,800, HOA Fees=$435, Electric=$85, Water=$50, Gas=$15, RV Storage=$175, Homeowners Insurance=$85, Internet Service=$70
Total Reduction = $2,715
This reduction in expenses gives us an expected net savings of $1,215 per month if we spend to the max on our resort budget, which we don’t intend to do if we can help it.
But wait, there are some other hidden expenses we expect to incur and some other expenses we expect additional savings from. It’s just hard to fully quantify them at the moment.
The possible increases in expenses include the following: We will need to refill our propane tank more often, but how often is unknown. We have had our RV for two years now and have yet to refill the tank. The cost could be nominal or possibly the equivalent of the monthly gas bill we already have. In addition to the propane we are also faced with having a potential increase in our cell phone bills. We already have the unlimited data on our phones because of the business. But will we need to increase that data plan once we no longer have internet service in a home? These are the unknown increases that could impact our budget.
On the flip side there are additional savings possible and even likely. First is the auto insurance for our son’s car as well as the fuel and maintenance costs that come along with it. He isn’t taking the car with him and we don’t plan on keeping it. This should be another sizable reduction in expenses once we sell the car and close out the insurance on it. I probably don’t need to tell some of you how expensive car insurance is for a teenager! Additionally, we spend at least $300 a month on resort fees for weekend adventures in our RV. This fun comes with additional fuel costs, California fuel costs BTW, and many other expenses, like beer. Once we are living in our RV there is no need for these additional expenses or continuous weekend rendezvous as that will just be everyday life now.
The net effect of these additional expense reductions could add another $300 to $500 dollars to our monthly savings. That would put us over $1500 a month in net savings just by moving into our RV full time. That means every month we will be saving the equivalent of our monthly resort fee budget for future use. If we continue working while our son is in college as expected and bank this savings we can save 4 years of future resort fee budget. Not a bad deal!
Of course this savings doesn’t have to be allocated to future expenses. What if we decide to allocate that money to paying off our RV early? For those that don’t know, an RV loan is much like a home mortgage. It’s tax deductible in many instances and if you pay it off early you can save a ton of interest. By paying it off early we can also reduce our monthly FI number to $3,500 instead of $5,000 with the payment. That would mean as soon as we payoff that debt we could already be Financially Independent and every penny saved would just be icing on the cake! Wow, the big picture is starting look great!
We have a lot of work to do but we couldn’t be more excited about what the future holds. Financially this decision makes saving more of what we earn much easier and much more efficient. This decision gets us to the goal we have been working for many years to achieve and we put ourselves in the position to decide when we have worked enough and it’s time to pack up and head to another beautiful part of the country.
When we get to that final phase of our transition there will be more freedom in our lives than we ever imagined and also another tremendous opportunity to further reduce our monthly expenses. But that too is a story for another blog.
Until next time…………………
2 thoughts on “Full-Time RV Finances”
Nice post, I did not know you are paying son’s insurance.. is it typical practice in the US?
Yes, minors are added to the parents policy and an exorbitant cost.