The most common questions I receive about our year of adventure relate to finances. How much does it cost? How can you afford it? What about your debts? I’ve always considered money discussions taboo outside of family or business, but in the context of our adventure, I feel it’s important to share financial details to dispel any myths about what it takes to pull off such an adventure and to help others achieve their own adventure dreams.
Soon we’ll publish our first report of monthly expenses from our RV trip around America, just as we promised in an early article, How Much Does it Cost to RV around America for a Year?, in which we detailed our monthly budget and expected total expenses.
However, we get tons of other questions about finances that our expense reports won’t answer, so I’ll start addressing those questions in other blog posts.
A common question we receive these days is if we are saving or investing while on our adventure?
Are we saving and investing while on our adventure? (in 2016)
Yes, we are saving and investing while on our adventures.
This year of adventure does not mean that we are shirking our adult responsibilities and long term financial goals.
We didn’t raid 401k’s to make this adventure happen.
We’re not racking up credit card debt or borrowing money to pay for the adventure.
We’re not forgetting that we have long term goals to pay for our kids’ college, grow a real estate investment portfolio, and to leave a legacy for children and charity.
On the contrary, we’re continuing much of our saving and investing strategy, though not necessarily at the same high rate of savings as before when we worked full-time.
Taking a year off from work doesn’t mean you have to stop saving, investing, or thinking long term. It’s totally possible, and responsible, to remain committed to long term goals while leaving the workforce or scaling down work to embark on an adventure.
How does our savings now compare to before? (in 2016)
Retirement Savings (2016)
Before our adventure, we maxed out our 401k’s each year.
While we’re traveling, our income is significantly reduced, so we can’t max out our 401k’s.
Instead, since we’re eligible for the Roth IRA again, we decided to contribute the annual maximum to those investments, which at our age is $5,500 per person.
We had set aside cash in 2015 so that we could contribute monthly throughout the year while we travel to max out the Roth IRAs, but when the markets tumbled in January, we dropped all of the money into the funds to buy in the dip.
Our retirement savings are about a third of where they were, but we feel that is respectable considering our income will be down 80%.
Real Estate Investments (2016)
I have interest in real estate investment, as I’ve found it to be a pretty good vehicle for funding my adventure travels.
While we’re traveling, we’re sticking to our original real estate investing strategy.
Every dollar earned each month from our rental properties is invested for the long-term in mutual funds and ETFs.
We rarely touch these funds except for real estate purchases, and the money accumulates to help us purchase another property in the future.
College Funds (2016)
We’ve got a couple small kids aged 4 and 1.5.
We expect that one day they will go to college, so we’re planning as such. (Let’s hope public and in-state!)
We’re maintaining our same monthly contribution to the kids’ college funds while we’re on our adventure as we did when living in a house and working full time.
What’s the big sacrifice? (in 2016)
We bring in way less money than we did, so we can’t keep all of our savings and investments strategies in play while we travel, and we certainly have to make sacrifices.
As young as we are, in our early 30’s, the biggest sacrifice is probably the delta in our retirement savings and the compound growth that we would have experienced over the next 30 years for that additional investment.
After that, we’re sacrificing the disposable income and the occasional windfall from big deals that we would close in our jobs. Since we’re bringing in way less money, we can’t save and invest as much as we would like. We also have less flexibility to make new investments or wherewithal to take on new risk.
We saved like mad ahead of our adventure (2016)
To ensure that we could continue our investments on a reduced income while we travel, we aggressively saved money in the year ahead of our adventure, giving us the cash to keep investments going.
On top of this, we also reduced our monthly expenses while traveling, as detailed in our adventure travel budgeting articles.
We’re still not certain whether or not our lower income from various income streams will be covering our adventure travel burn rate, which includes expenses and investments, but we’re willing to deplete cash reserves to maintain much of our savings and investment strategy because we are focused on our long-term goals.
Update 2022: Investing while we adventure abroad in Chile
In 2016, when we spent the year touring the United States with a vintage Airstream, we managed to stick to our investment strategy. When we returned, we were pleased to find our net worth had grown during our year of adventure. We depleted cash on hand to fund our adventure and maintain our investments, though we didn’t sacrifice the long-term financial picture for short-term gratification.
Since having returned to work in 2017, we have remained committed to our long-term investment strategies. In most cases, we have amplified our investments, investing at a greater rate in equities, companies, and real estate. As we head into our 2022 year of adventure, we are committed to continuing investing for long-term wealth accumulation.
Prior to our year of adventure, during which our income will drop by about 40% due to Katie leaving her job, we saved and invested aggressively, front-loading our investments to get ahead of our long-term goals. For the last five years, we’ve been maxing our retirements, investing for our children’s college, and investing every month in mutual funds, occasionally pushing lump sums into the market. We got really aggressive in real estate, evolving our strategy to move away from single family homes to focus on commercial properties through syndication.
Through our adventure in 2022, we aim to maintain a high level of savings because we’re going to maintain an income through Mark’s employment. Katie will not contribute to her 401k since she won’t be earning an income, but aside from the 50% drop in 401k contributions, we expect to maintain our other investments.
Our goal for the adventure abroad in Chile is to cash flow much of it, using earned income through Mark’s job to support our daily living expenses and monthly investment allocations. Major expenses, like our cruise to Antarctica, will be paid for out of the adventure travel savings fund, but that’s fine by us as we set aside this money for adventure travel purposes. We expect the depletion of these cash funds will be offset by investment portfolio growth, and we’re hopeful for a return in 2023 that will show our overall net worth has increased, not decreased, due to the year abroad.
If you have any questions on the topic of our investment strategy behind the Adventure Possible life, ask by email. I’m not a financial advisor or able to offer advice, but I can share our experience on the topic.