Unwavering Determination

In many ways it feels like life has been put on hold. We haven’t had a weekend RV getaway for over a month now. We haven’t seen any friends or family for weeks. Our son is home all day every day and his life has been turned upside down. These are difficult and strange times for everyone.

I often wonder how others are managing their lives through this crisis. Are people just sitting back and waiting to the government give them the all clear? Are they using this time and experience to review, fix or shore up their their financial strategy if they were lacking in some areas or overexposed in others? Or the worst thought, have people given up and think they will just figure it out later?

Having been through recessions and uncertain times before our strategy, for what it’s worth, is unwavering determination. For us this is a time to reassess, reevaluate, regroup and forge ahead. History teaches us that this will pass. How we come out of this crisis and what we learn from it is up to each of us. There is no better time than now to look at the big picture and make adjustments. It’s even a good idea to look farther into the future and prepare for tough decisions that might need to be made. Doing this could benefit you later and you might even discover that although you are reeling at the upheaval of your normal everyday life you are actually in better shape than you feel. So what have we been doing?

For starters this has been a good time to reassess and reevaluate our financial situation. What has changed financially in the last month? The stock market is down which stinks. But when we really think about what else has changed there is a surprising answer. Nothing! We are both still working. Mrs. RVF is still getting her biweekly paycheck and I’m still getting paid for my services. We are still able to contribute to our retirement accounts and our savings accounts. By all appearances, aside from the horrible market conditions, we are still in the same financial condition as we were before this lockdown. We also realize we are very fortunate in that respect.

If we take a step back and look at the big picture the timing of this downturn it could very well turn out to be a blessing in disguise. We are somewhere between 4 and 5 years away from retirement. Having a market downturn at this time is allowing us to invest at a lower price. It also affords us a good amount of time for a market recovery to take place before we take the leap into retirement.

Historically speaking having a downturn 5 years before retirement works out much better then having one within 5 years post retirement. The former allows you to accumulate while still receiving income which in turn speeds up the recovery time. The latter could force you to tap into principle early with devastating long term effects. If we needed a financial silver lining to this whole debacle this is it.

Another area we have been keeping an eye on is our ability to move forward with our fall downsizing plan. At this time we don’t see it being impacted. However there is one possible exception that could blow it all up. The housing market and housing prices. The good news is we live in California and in a highly desirable area. If there is one bright side to California it’s the persistent and resilient real estate market. This could insulate us from a severe downturn but the question becomes how low do prices go and how long are we willing wait it out?

If home prices drop we will be forced to decide if we are willing to take a lower price in order to stick to our timeline. If we are not willing to take a lower price when the time comes then we will need to determine how long we are willing to wait on a housing market recovery. The answer to that begs another question; what’s the cost? One of the main reasons to downsize is to save more money. Putting off the move in hopes of achieving a higher sale price also means burning more cash each month and less savings until the house sells. Because of this the price of staying put might not be worth the possibility of added home value. As of now that price is about $1200 a month which is our expected minimum savings once we move to RV living. When the time comes to list our home we will need to assess the market and make a decision as to which path is more financially beneficial in the long run.

Looking farther into the future we get to the really big decision which is pulling the trigger on retirement and financial life afterwards. As I said we are between 4 and 5 years away. With all of this spare time I have spent many mornings looking at our finances and spending. One thing I have come to understand more is the financial side of life on the road. I always knew there would be more savings to be had once we are no longer tied to a job and required to stay in California. The amount of savings is going to be substantial and makes us dream of the day we can get out of this state.

Here are a couple of examples; The cost to register our RV and vehicle in California annually is over $2k. The annual cost to insure our two vehicles in California is also over $2k. Additionally, while we are still working we have budgeted $1500 per month for space rental fees. And let’s not get started on the cost of fueling a vehicle and a diesel RV in this state. Absurd is an understatement. And then there are those wonderful California income tax rates. You know, the highest rates in the country!

Our long term goal is to become domiciled residents of the great state of South Dakota. So how does that compare to California? ZERO state income taxes is a great place to start. That alone is probably worth it. Registration for our RV and vehicle will be approximately $500 annually. I attempted to look into insurance rates but the task proved to be impossible so let’s assume it will be the same for now. Space rental fees can vary widely based on the quality and location of the resorts you choose to stay at. Spending $1500 a month in retirement however is not likely. Most full time RV folks average about $600 per month. Also there are always some awesome off the grid sites on BLM land and those are FREE. We enjoy glamping and certain amenities as much as we enjoy camping in remote areas so a safe average of $900 per month for space rental fees is a good estimate. As for fuel costs, the average price of diesel is about $0.75 per gallon higher in California than everywhere else in the country, except Hawaii and we are not driving there. With a 100 gallon tank that we usually fill up at 3/4 empty that will save about $56 every time we fill up. Of course how much we fill up depends on our desire to move locations. There are also hacks that RV’ers use to get excellent fuel discounts that will further lower this bill.

All told getting out California could save us upwards of $6k a year between just these categories. In our blog “Full Time RV Finances” we expected to save at least $1200 per month net just by moving out of our house. Add in these savings once we leave California and you are talking about $20k savings annually! A drop in expenses is crucial for us to reach FI and this will be the final major change that will allow us to achieve our goal.

So this is what we have been working on and planning out during these trying times. I find that looking at the big picture and focusing on our future goals makes the present situation more bearable. It provides a light at the end of this dark tunnel the country and the world is currently walking through.

It’s hard to say if or when society will get back to normal and we can resume our lives. But if we are going to be forced into staying sheltered and limiting our ability to socialize with friends and family we might as well make the best of a bad situation. For us that means staying focused and determined to reach our goals.

We would love to get some feedback on what you are doing during this lockdown? Have you made any financial moves or long term arrangements? Leave a comment below.

Thanks as always for reading our blog. Stay safe!

Until next time………………..

Joe

4 thoughts on “Unwavering Determination

  1. I also live in California and the taxes are definitely killing me. I have a long way to retirement, but moving anywhere away from California will be an increase in pay. I know a lot of people that have moved to Idaho, Arizona, and Texas. I enjoyed reading this post. Keep it up.

    Liked by 1 person

  2. I’m enjoying our lockdown, but I know I’m luckier than most. I am also still healthy and I’m determined not to fall into panic, anxiety, or fear, which could potentially impact the way I deal with money. So far nothing has changed financially, but I’m spending more time with people I love.
    Keep up the great work! You guys stay safe and healthy, too.

    Liked by 1 person

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