The most common questions I receive about our year of adventure relate to finances. 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 we travel?
Let us bring you adventure every day.
Like AdventurePossible.com on Facebook.
Are we saving and investing while we travel long term?
Short answer. Yes, we are saving and investing while on our adventure.
It’s really important for me to convey to you that 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 retire with dignity, pay for our kids’ college, and grow a real estate investment portfolio.
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.
I want to stress again that taking a year off from work doesn’t mean you have to stop saving, investing or thinking long term. It is totally possible, and responsible, to remain committed to long term goals while leaving the workforce to embark on an adventure.
How does our savings now compare to before?
Before our adventure, we maxed out our 401k’s each year, which if you look up online you’ll know is $17,500 per person.
While we’re traveling, our income is significantly reduced while we’re traveling, 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
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.
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?
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.
Save like mad ahead of your adventure
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, 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.