From 150k to 60k: How we realized our full-time travel dreams

Selling our house and cars and trimming our daily spending allowed us to retire seven years early and tour America full time in our fancy van.

  • It costs $1,600 a month to finance, fuel, maintain, insure and license our adventures in The Epic Van (an RS Adventurous by Roadtrek), which gets 18 miles per gallon of diesel on the road.

By Tom Nichols
(Part 2 in a series. Read part 1 here.)

I once lived the $150,000-a-year life in Scottsdale, Arizona.

Loved it for the food, family vacations and health club. Never cared about fancy cars, nightlife or fashion. Always viewed a house as a financial asset, nothing more or less.

These are the weaknesses and strengths I brought to the game of changing my ways and living full time in a fancy van on $60,000 a year, or less than half of what we used to spend.

The decision Judy and I made to live on much less money began seriously four years ago. It was possible because we had the foresight to begin saving in the early 1980s, never withdrawing or wavering from long-term, stock-focused investing discipline. But we also had the good fortune to have twin long-term jobs and rising incomes for decades, corporate assistance from 401(k)s, financial help from parents to buy a first home, inheritance money when my parents died, a bright son who earned college scholarships, federal aid for our current health care and the guarantee of a defined-benefit pension, Social Security and Medicare when we are 65. It took personal initiative and the help of a Village to get here.

So, for the next seven years, we’ll live off withdrawals from our investments and savings. We plan to follow the so-called 4 percent rule, a withdrawal rate many financial planners consider safe to maintain your nest egg over a long-term horizon. This year, while our son finishes college, it will be slightly higher.

So, as we begin our adventure in early retirement, we reveal part of our financial inner-selves and our conflicted behavior about money to help you decide whether it’s possible for you. The details of our pay, savings, investing and spending are seldom discussed among friends and family. Maybe it’s the last out-of-bounds subject in our lives.

My suggestion: End your repressed ways about money. Start talking with your spouse and others about the tradeoffs you are willing to make if you want to retire before 65.

If you’re thinking about retiring and living with less, carefully assess your emotional attachment to money, status, and work before you say goodbye to your boss.

For me, it was time to leave newspaper work at age 58. Pay flatlined. Health benefits eroded. Pension benefits froze. Work demands multiplied. But most importantly, satisfying job options evaporated, and the likelihood of being laid off loomed.

So if I wanted to keep the house and lifestyle I was accustomed to, I’d soon need to find any job I could, hustle even harder and get used to much less pay. (I’d also have to ignore advice I was giving my son: Find a career you can be passionate about and never work solely for money!)

You see, I was lucky to have a decent paying news job for 30-plus years. It was fulfilling. I did no harm, and maybe even a little bit of good. Judy already had flown the journalism coop, spending the last decade in university communications, but even those jobs were getting more demanding and less fulfilling.

While leaving the workplace was right for us, it might not be right for you. You must have a desire for simple, slower living and a willingness to accept a little more financial risk.

My idea of a good time is visiting a farmers market, hiking in a national park, browsing at a used bookstore, cooking an evening meal to share with my wife, grabbing a beer or two at happy hour or going to a free concert.

Put bluntly, if most of your joy comes from your workplace, your house, or social ties to your community, or having money to spend on everything you are used to buying, you shouldn’t play the early retirement game. Or, if you are extremely security conscious about money, terrified about losing part of your nest egg before you turn 65, or obsessed about whether you have enough long-term care insurance if you live past 90, the game isn’t for you either.

Be honest about the income necessary to finance your passions. There’s no easy way to turn the income faucet back on after you quit.

If you believe you still have the backbone for early retirement, assess your spouse’s fitness even more critically. I did. Fortunately, Judy also qualified for early exit from the workplace. She, too, can do without fancy clothes, cars and nightlife. She loves vacations as much I do and was eager to be her own boss and seek creative challenges. (She does spend more money on Diet Cokes and movies than she should, though she would say my spending on wild-caught salmon and gourmet sweet treats is equally extravagant.)

Both of us agree to disagree about how some of our money is spent, but we negotiated our 60k budget and resolved to meet it.

The chart below shows what monthly spending at 150k a year looked like for our family of three and what a 60k budget looks like for Tom and Judy.

In our previous life, we had $12,500 a month in gross income. Now we have $5,000.

So we sold our house to eliminate $2,950 a month and reduced a substantial portion of our $1,675 in monthly auto costs by selling two 10-year-old cars and paying off an auto loan on our son’s car.

We won't be paying $875 in monthly Social Security taxes. On the downside, we won’t be saving $1,750 a month in 401(k)s or receiving an additional employer contribution.

Those four budget categories total $7,250, more than half of the $12,500 that flowed out of our checkbook or into our investments each month.

You also will note $2,000 a month poured out of our bank account for groceries, household goods, dining and entertainment.

Clearly, spending like that on a 60k budget is unsustainable. We knew we had to do much better. It is doable. At least half of U.S. families manage to get along on less than our early retirement budget.

Although we no longer had a house or two cars to pay for, we still needed a vehicle big enough to double as a home, with bed, bath and kitchen, but fuel efficient enough to see lots of places and satisfy our passion for travel on 60k.

It costs $1,600 a month to finance, fuel, maintain, insure and license our adventures in The Epic Van (an RS Adventurous by Roadtrek), which gets 18 miles per gallon of diesel on the road.

It takes $1,500 a month for groceries, household goods, dining, entertainment, laundry and camp fees. That’s $50 a day to see America.

Sticking to $50 a day will determine whether our seven-year early retirement plan succeeds or jeopardizes the nest egg, reducing our income after 65.

Our other major monthly expenses are health insurance, household storage and phone/Internet, totaling $1,270.

That leaves $630 a month for income taxes, clothing, haircuts, blogging, mailing, charities and other miscellaneous expenses.

Health insurance deserves a closer look. We wouldn’t be able to go nomad without Obamacare. Under the previous system, no private insurer was going to offer an affordable premium to two people in their late 50s with pre-existing conditions like cancer and Celiac disease.

Once Obamacare was available, we were finally able to leave our employer-based health plans.

In the chart below, you’ll see an asterisk next to the $720 we budgeted for monthly health-insurance payments for both of us. Those payments are linked to our 2014 federal income tax return, which still reflected wage income. We estimate our health insurance next year will be about $500 a month.

Other 60k budget matters worth explaining:

* Our son’s education and living expenses for his final year in college are not included in our 60k budget. Our financial obligations to him are winding down. He is building a career plan, has a part-time job and knows about the limits we face on an early retirement budget. He gets an individual monthly budget statement, which tracks his spending. It shows how much income he will need after graduation to cover his current daily living expenses, which include an apartment shared with two roommates and a car. We also spun him off from our early retirement budget because spending on food, dining, entertainment and vacation in our 150k budget and his “education fund” were hopelessly tangled. We estimate his expenses at 15k for his senior year (2015-2016), thanks to his scholarship at Arizona State University and a tuition subsidy Judy gets as a former state employee.

*Judy’s mom, who lived across the street, is letting us use a bedroom in our old Arizona neighborhood so we can spend holiday time with our family from Thanksgiving until early February. It’s also nice to be off the road during the coldest part of the year and lower our operating expenses for a couple of months.

Remember that the goal of early retirement is to be happier than you were in your full-time work life.

Meeting a budget on a reduced income is an arithmetic exercise and empty in itself. Satisfaction comes in discovering what you gave up in buying power is worth less than what you gain in exploration and personal growth.

So far, Judy and I enthusiastically agree it’s been more than a good deal.

Questions about our budgets and early retirement planning are welcome at Tom@NewAmericanNomads.com.

Next: Are we really hitting our monthly budget targets?

This fall: Guide to navigating Obamacare

The $150,000 life

Routine monthly spending Amount
Mortgage/insurance/property taxes 1850
Utilities (electricity/natural gas/water) 400
Home repair and maintenance 300
Housecleaning 150
Landscaping 100
Pool 75
Exterminating/home security 75
(Subtotal) 2950
* *
Auto loan 525
Gas 400
Auto repairs/licenses 350
Auto insurance 300
Parking 100
(Subtotal) 1675
* *
Groceries/household goods 1000
Dining and entertainment 1000
(Subtotal) 2000
* *
Federal/state income tax 1500
Social Security taxes 875
401K contributions 1750
(Subtotal) 4125
* *
Vacation 550
Clothing 200
Health club 230
Cable/Internet 215
Health/dental/vision/life insurance 300
Charities 255
(Subtotal) 1750
* *
Total 12500

The $60,000 life

Routine monthly spending Amount
The Epic Van payment 615
Diesel 500
The Epic Van Maintenance 250
The Epic Van insurance 120
The Epic Van license 115
(Subtotal) 1600
* *
Groceries/Household goods 850
Dining and entertainment 400
Camp fees 200
Laundry 50
(Subtotal) 1500
* *
Health Insurance* 720
Household storage 265
Phone/Internet (for 3) 285
(Subtotal) 1270
* *
Income taxes 200
Clothing 100
Hair cuts/personal care 50
Mailing 50
Charity 100
Health club** 50
Blogging costs*** 50
Misc 30
(Subtotal) 630
Total 5000

*May be lower with Affordable Care Act subsidy in 2016.
**Suspended membership with option to renew.
***Web hosting, WordPress software, Adobe software, etc.

4 Comments

  1. Reply
    Jeff and Mary Jane Curry September 10, 2015

    Hi – Love this blog, will need to look up the prior. We enjoy your adventures on the Roadtrek Group site also. We are looking at joining the retirement life this year and seeing the states also. Jeff works for LA Times and his work life sounds very similar, more work, longer hours, no raises!?!?! I’m a Nurse Practitioner and had a Personal Chef sideline. We are starting to plan the shift in our lives also. We have a 2013 RS Adventurous and live in the countryside area of Camarillo, near Ventura. Hope to meet you both someday in person. Send us a PM on the RT Group if you plan any SoCal travels! Cheers for now!

    • Reply
      Judy Nichols September 10, 2015

      Mary Jane, Thanks so much. Our lives do sound similar. We’d love to meet you, too. We’re going down the coast this year, but not all the way to Ventura. We might get there sometime in 2016. Let’s keep in touch. Good luck on your plans. We HIGHLY recommend the life. Judy

  2. Reply
    Tom Corris May 28, 2017

    Tom and Judy,
    After much debate and deliberation, we have finally decided to forgo a retirement residence in favor of a nomadic lifestyle. We hope to stay the course with this decision and make this happen asap – aka to be determined. We owe much of this decision to you and your blogs. We hope to share a cocktail and camp fire with you in the near future.
    Cheers.
    Tom and Kirstin

    • Reply
      Judy Nichols June 2, 2017

      Yea!!!! We are so excited for you. Can’t wait to get together and discuss. Judy

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