Sunday, 26 December 2010

How much do you need to retire early and travel ?




Many people are eager to know but embarrassed to ask us outright how we fund our lifestyle. They often begin by asking if we have won the lottery – no we didn't but we feel we live a millionaires lifestyle. 

Our life is funded by the income from a property that we have rented out in England, at the moment this is bringing in £840 (approx $1200) a month although we rarely spend more than £700 ($1000). We also have savings that we use for extra (non essential) things such as cruises. Not enough for us to travel and stay in top class hotels, go on campsites every night or fly first or business class but plenty to travel in a motorhome with lots of free camping or to back pack in less expensive countries.

In the early days we checked our expenditure on a daily basis. This did not work well as a big shopping trip could blow more than a days’ budget in one hit as could filling up the vehicle with fuel. Weekly accounting worked a little better but monthly was best of all.  This may be because our income is monthly but I also think that over a longer period the peaks and toughs have evened out.  A month may involve a week of heavy driving, sightseeing and eating out versus another camped at the beach where we spend absolutely nothing. Over the last 14 years our motorhome travels have averaged 1000 miles / 1600 km a month. Many months we come in under budget and save the extra for things like air fares and insurances. We could live on a lot less if we did not eat out so much, slowed the speed of travel and cut out many tourist attractions but we still have the desire and money to do this.

When backpacking the 3 necessities are accommodation, transport and food with sightseeing a common extra.  If you can get all these things cheaply in one country then you will probably travel cheaper than in a motorhome if not we find the motorhome is still our cheapest lifestyle.  

To generate and income it is good to assess what assets you already have. Many people have homes that are heavily morgaged but these can still be an asset.  Unless you are in a negative equity situation you have the option of selling the property and walking away with some cash. Renting your property out is another way to generate money providing the income is greater than any loan payments.

With hindsight instead of having one house rented out we should have bought 3 new small apartments. There would be no gardens to maintain, the property would be in good condition and would probably be rented by professional people. If one of the properties was not being rented out or if we needed to live in it then the other two would still provide enough income to live on.

We have met people who travel with no permanent income and few assets. It is possible to buy a motorhome in Europe (particularly Germany) run them for 1-year and sell for a profit in England although this is more difficult now the Euro has become stronger. Alternatively you can buy a motorhome in USA, travel in it, ship back to UK and make money. Other people do seasonal work (such as fruit picking) and work hard enough over a few months to travel the rest of the time. If you have skills such as hairdressing you could probably earn money whilst touring. If you can arrange an Internet connection it is possible to run an on line business or work the stock market whilst travelling. Another option may be to seasonally live and work on a campground earning enough money to travel out of season.

Once you are travelling and not working you will suddenly find you have far less expenditure. No suits or special clothing required for work. Goodbye water and electric bills and if you visit countries at the right time you won't have heating or air conditioning bills. Motorhome insurance can also cover contents so you will no longer be buying buildings and contents insurance for a property or paying council (property) tax. As you will be on a permanent tour there will be no annual holiday to pay for. Motorhomes are comparatively small and compact so you won’t need a cleaner and you can forget the gardener or pool attendant!

If you wanted to travel really cheaply it would be possible to do so by walking or cycling and camping in a tent but that would not be comfortable enough for us. In fact we met someone walking round Australia with a wheelie bin, emptying his contents out at night and using it to sleep in. When the wheels wore out he just called in at the next refuse depot and was given a new one!


If you are a couple it is important to talk through what your basic levels of comfort are and to try and go with the higher one, this should ensure a much happier trip. Too much compromising rarely works.


TIP

Don’t give up if you initially don’t appear to have enough money to live your dream. Try to see if you can make savings on any of the components. For example buy an older motorhome; travel in a cheaper country, visit less places or spend more time free camped in one spot.

Keep checking my blog for more money saving suggestions and inspiration!

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