Posts in Category: Blog

Budget lesson after three years: Choose a little more living and a little less dwelling

  • Julie Hagerty and Albert Brooks in 'Lost in America,' as she loses the nest egg. Don't let it happen to you!!!

By Tom Nichols

(Read Part 1, Part 2, and Part 3 about our finances, and our post about Obamacare, a big piece of the puzzle.)

Get in the mood for our discussion of early-retirement finances by watching Albert Brooks in "Lost in America," explaining the Nest Egg Principle to Julie Hagerty. 

New American Nomads is based on the proposition that early retirement is possible for many of us under 65. My mission is to inspire you to take up wandering, but my fiduciary duty is to report how much money it takes, at least for us.

About three years ago, Judy and I left our jobs, sold our house, bought the Epic Van and tapped our retirement nest egg to travel across America. We were 59, and 58, respectively.

When Judy showed me blogs about full-time RVers while we were still employed, they were heavy on where to find beautiful camp sites and how to customize your dream travel vehicle. Frustratingly, they were vague about the cost of travel life without a house. Of the blogs I studied, most focused on retirees who were work camping or boondocking, often in fixed locations, hustling to make ends meet. Others described glamorous travel by those with enough wealth in retirement to afford RV travel for several months a year while returning to their house or homes.

There wasn’t much information about middle-income retirees who want to live mostly on wheels. That’s why I decided to write about our money adventure, allotting $60,000 a year, a median U.S. household income, and see how far we could go.

We’ve learned our budget was slightly unrealistic, but no so much to alter our plans. We will keep rolling for as many years as our health, and that of our family, permit it. It’s a good thing, because a U-turn at this point probably is undoable, until we’re 66. We can’t walk back into our old jobs or home.

Specifically, we spent $62,765 in 2015, $69,490 in 2016, and are projected to spend $65,000 for 2018.

That’s an average of $65,752 a year, which is about 10 percent over our budget. You might cringe at that budget gap, but I am relieved. I worried that traveling 20,000 miles for about nine months a year might burn much more cash, based on our spending patterns during work life. If we could not keep spending under $75,000, a five percent withdrawal rate from the nest egg, I’d consider our Epic Van idea a bust. We’ve kept it to 4.3 percent for our first three years of travel.

I’m doubly relieved because we began our retirement in 2015 as sustained growth in stock indexes, which rebounded in 2008, continues. Unfortunately, market growth isn’t a given, especially short term. 

For us, Investment gains nearly offset our withdrawals during our first three years of travel. The total value of our assets (60 percent stocks, 25 percent bonds and 15 percent cash) is less than one percent lower than when we took off in the Epic Van three years ago.

Adjusting for the Consumer Price Index, 0.7 percent in 2015, 2.1 percent in 2016 and about 1.7 percent so far this year, the purchasing power of our nest egg has been further reduced.

Nevertheless, we are beneficiaries of bull markets and low inflation. Not all retirees get off to such a pleasant three-year start. Think of those who began their retirement in 2006 or 2007, just before the Great Recession began.

Finally, I’m triply relieved because our son Nate landed a full-time job with health insurance benefits this year and has his own apartment in Phoenix. He’s out of the spare bedroom at his grandmother’s place, freeing it up for us this holiday season.

A look at our spending categories during 2016 and 2017 shows little change, with the exception of ballooning dining and entertainment spending. We budgeted $400 a month, but spent $550 in year one, $740 in year two and $792 in year three.

Our projected budget was $50 a day budget for groceries, dining, entertainment, camp fees and laundry. In year one we spent $57 a day. Lower grocery spending in year two offset our rising dining-entertainment costs, keeping our daily spending at $57 a day. In year three, dining-entertainment and a rising grocery bill pushed our daily outflow to $63 a day. Our camping and laundry fees have been within budget.

Fortunately, we’re spending a bit less than expected on our Epic Van costs, thanks to lower than estimated diesel fuel costs. Income taxes are lower than expected. Our cell-phone spending is lower in year three because of Verizon’s new data plan. Blogging costs a bit more than expected but you diehard followers are worth it. Clothing expenses were a bit higher in year three because of the rain gear we bought in Northern California.

During our work lives, we spent a $1,000 a month on dining and entertainment. In retrospect, it was unrealistic to try to cut it by 60 percent, to $400 a month.

Sharing food and conversation with new and old friends is one of our biggest joys in our nomadic life! We now have more time and inclination to visit with folks. Plus, it takes some money to visit a new museum, fair or cultural event, our primary source of entertainment.

To stay true to our credo of “minimum home, maximum life’” the New American Nomads should have budgeted a bit more on the life and a bit less for the home.

We budgeted $1,600 a month on our vehicle, about one-third of our $5,000 monthly budget. If we committed $1,200 on our vehicle, or about one-fourth of our $5,000 monthly budget, we would have a extra $400 a month to spend on dining and entertainment.

The budget lesson is clear. Limit the cost of your camping rig to 25 percent of your monthly budget so you can maximize your social and travel life and come closer to making your budget.

We found it takes $65,752 a year to live our early retirement dream instead of $60,000. So what should we do?

We could volunteer at parks for five or six months a year or work camp for pay, spend more time at inexpensive camps in the West closer to Arizona, or stay put in Scottsdale, where we spend about $1,000 a month less than we do on the road.

Yes, we could find a way a trim $5,000 more out of our annual budget, but to do so would begin to undermine or goal as nomads: exploring, socializing and learning something along the way.

We’re spending less than half of our pre-retirement income, even though we are over budget, and having triple the fun living slowly and more simply. If our nest egg is substantially reduced in the next three or four years because of economic calamity or disability, we will have to reduce our ambitions for sticks-and-bricks housing after 66.

Living in a small space is transformative. Judy and I are forever weaned from a big, fancy living space. A cabin, apartment or condominium of 1,000 square feet will suit us perfectly when we decide to settle down.

By then, we both qualify for “full retirement” under Social Security. We will have defined benefit income, we call them “half pensions,” based on about 15 years of employment for each of us. (We do risk losing half of the Social Security income if one of us dies, but our pension will go to our spouse if either of us dies.)

Still, we believe our premise for early retirement is sound. You can enjoy a middle-class life on the road if you are willing to dump the overhead costs of a traditional house for a few years.

Expense category Budgeted amount 2015 monthly average 2016 monthly average 2017 monthly average
Groceries 850 914 751 986
Dining-Entertainment 400 550 740 792
Camp Fees 200 210 198 91
Laundry 50 35 29 33
Subtotal 1500 1709 1718 1902
* * * * *
The Epic Van loan payment 615 612 612 612
Diesel-propane 500 416 394 399
Van maintenance 250 33 378 266
Van insurance 120 121 150 134
Van license 115 194 109 100
Subtotal 1600 1376 1643 1511
* * * * *
Health insurance (includes dental) 720 721 716 645
Prescriptions and copays 0 100 144 53
Household storage 265 265 267 270
Phone-data (for 3) 285 310 370 235
Subtotal 1270 1396 1497 1203
* * * * *
Income taxes 200 173 128 100
Clothing 100 113 159 229
Haircuts-Personal care 50 43 97 84
Mailing 50 35 95 45
Charity 100 110 162 121
Health club* 50 104 86 98
Blogging costs 50 37 158 105
Misc 30 23 47 18
Subtotal 630 638 932 800
* * * * *
Total 5000 5119 5790 5416

Roadster love in Florence, Oregon

  • Florences, everywhere.

Earlier this month, when we were camped near Florence, Oregon, we stumbled onto the 10th Annual Invitational Rods ‘N Rhodies Car Show, a kaleidoscope of brightly painted, souped-up vintage roadsters.

We wandered up and down Bay Street peeking in the windows and under the hoods, marveling at the beautifully restored 1960 Cadillac Coupe DeVille, called the Copper Caddy, which was featured on Bitchin’ Rides, Season 2.

There were woodies, Thunderbirds, Bel Airs, Mercurys and more, all buffed to a sparkling shine.

We met Gordon Orloff, the owner of a 1934 Ford Panel Truck originally owned by the Wasco County Coroner’s Office. Orloff had painstakingly restored the truck from the wheels up. He believes these historic cars should be driven and has taken it from coast to coast.

A couple of times, it broke down, once right in front of the White House. Once, Orloff got it to a garage, but the owner took one look at it and said, “I can’ let my guys touch that.” Instead, he told Orloff to take the last bay, use any tools he needed and even let him borrow the garage owner’s car to go get parts. That’s how much people love these vehicles.

I’m sharing the love with some pictures. Enjoy.

Today’s hike: Oregon Dunes

  • Footsteps heading up the dunes.

The Oregon Dunes, the largest expanses of temperate coastal sand dunes in the world, stretch 40 miles along the Oregon coast between Florence and Coos Bay. They rise nearly 500 feet above the ocean and were designated a National Recreation Area in 1972.

Imported European beachgrass has created a foredune along the ocean. Behind it, winds create a deflation plain, scouring sand down to the water table and providing tiny oases for plants and animals. Transverse dunes, or ripples on the dune surfaces, are created by shifting summer winds. The largest dunes, called oblique dunes, can be as tall as 180 feet and move inland three to 16 feet each year. Parabola dunes interact with the surrounding forest, sometimes losing ground to the trees, sometimes smothering them, and sometimes leaving pockets of forest called tree islands.

We headed toward the dunes on the John Dellenback Dunes Trail near Eel Creek Campground. The trail meanders about one half-mile through lush rhododendrons, madrone and pines before opening onto the oblique dunes.

A brief rain the night before stabilized the sand and gave us good footing as we climbed to the ridge of the highest dune. We wandered along its curving edge about a mile toward a tree island. If you continue another couple of miles, you can hike all the way to the beach.

We saw shorebirds wading and feeding in pockets of water in the deflation plain, as fog rolled in over the trees at the edges of the dunes.

On our way back, we saw red fescue, described as “globally significant” and in need of protection. Signage notes that, although individual red fescue plants are common, “95 percent of red fescue communities are gone,” lost to competition from invading plants, like European beachgrass.

The Epic Van’s road is paved with pages of text

  • Some of the books we've just finished, which will be handed out to people who cross our path.

Books. How could you live without them?

Tom and I both love to read, and life in The Epic Van is rich in hours spent with books.

Back to the workplace in the redwoods

  • Tom and Judy standing by the sign at the entrance to Prairie Creek Redwoods State Park.

By Tom Nichols

After almost 2½ years of shirking, I went back to work as a volunteer.

The terms: Twenty hours of work each week, split with Judy, in exchange for a campsite with electricity, water and sewer. After two years of freestyle travel, we committed to spend March, April and May as information center volunteers at Prairie Creek Redwoods State Park, a U.N. World Heritage site about 40 miles north of Eureka, California. To upgrade our campsite from the maintenance area to a beautiful spot on Prairie Creek, we agreed to cabin hosting, which meant light housekeeping for four utilitarian units with bunk beds and living space but without kitchens or bathrooms.

Yellow Pine’s eclipse: Champagne, doughnuts, and inappropriate card games

  • Umi's homemade doughnuts were a sweet start to the eclipse in Yellow Pine, Idaho.

We ambled back from the Grand Tetons to Yellow Pine to watch the eclipse without crowds, and were rewarded with a perfect day.

Revisited: Mexican Hat Soup in the Redwoods

  • Corbin in his amazing lightweight camper.

Editor’s note: Corbin Shouse, our son Nate’s college roommate and now a dear friend of ours, is the guest blogger today, discussing the amazing soup he made us when he visited. He also roasted coffee and made me a cup every morning (heaven). And he invented the famous campfire-toasted peeps, which shall live in infamy. Enjoy!

By Corbin Shouse

Back in April, I had the great pleasure of dropping in to the redwood forest to see Tom and Judy, a.k.a. the New American Nomads, for a 10-day stay. I brought my little Runaway camper and set up in the “front yard” of their spacious campsite to weather the mists and rain with a couple of my favorite people in one of the most amazing places on Earth.

As Judy has already written about on this site, we had some fantastic dinners by the campfire, reminisced about life over excellent beer, and generally had a grand time in the Epic Van and around the North Coast.

Tom, ever the mobile gourmet, prepared a number of astoundingly delicious and complex meals in the small kitchen of the Roadtrek, much to my amazement. We also had bratwurst and grilled veggies from the campfire, along with the now famous Roasted Peeps with Reese’s Peanut Butter Eggs.

As the amount of hospitality shown to me by the Nichols grew and grew, I wanted to offer a small token of appreciation in return, and it came to me instantly: my great grandmother’s Mexican Hat Soup.

Yellow Pine: Now you know about it, forget it

  • The beautiful view on the road into Yellow Pine, Idaho.

I’m going to tell you about a place I love, and then I’m going to tell you to forget about it. Well, maybe not altogether, but mostly. Because, like Boo Radley, exposing it to too many people might kill it.

Yellow Pine, Idaho, population about 40, sits on the East Fork of the South Fork of the Salmon River, at the end of a 32-mile, one-lane, paved road, then about 15 miles of unpaved road.

Today’s hike: Taggart Lake-Beaver Creek loop

  • Taggart Lake is a pristine glacial lake in Grand Teton National Park.

Today, we hiked to Taggart Lake, one of the pristine glacial lakes in Grand Teton National Park.

The lake, at 6,902 feet, was formed by a glacier that flowed out of Avalanche Canyon, scooping out the basin and forming lateral moraines, or piles of rock and soil, along its sides. When the glacier retreated, water was trapped within the moraines.

From the trailhead, the path climbs next to a creek, through sagebrush flats and a recently burned area, for about two miles to reach the lake.

Capitol Reef National Park: Utah’s cascading barrier, oasis

  • The Waterpocket Fold in Capitol Reef National Park was a formidable barrier to travelers.

I knew nothing of the Waterpocket Fold that extends nearly 100 miles across southern Utah. But once we arrived in Capitol Reef National Park, I was captivated.