How Can You Afford to Travel So Much?

Feb 28

When we sold our large suburban home after quitting our corporate careers, we had some idea that being home free would reduce our expenses. In hindsight, we had a vague idea that our “normal” 9-5 life with corporate careers in a high-cost-of-living city was expensive. We didn’t realize just how much that lifestyle was costing us. Now that we own a tiny home in a rural area of the United States, we see how expensive our suburban life was.

About Us

Darren and I are early retirees who left corporate careers in our late 40s. We are nomadic except for three months a year when we spend time in our tiny home in the Great Plains of the United States.

We spend 40 - 120 days per year thru-hiking in the EU and about 90 days per year in the Caribbean and Central America. This blog documents our journey to nomadic living and financial independence and the adjustments we’ve made to make the lifestyle work.

Our website is ad-free; however, we use Amazon affiliate links for some of our recommendations. We make a small affiliate commission whenever you use these links at no additional cost.

Thanks for supporting our little blog!

No Trust Fund, Lots of Planning

When we left our careers, our goal was to travel extensively for the foreseeable future. We knew we wanted to downsize and simplify our lives by getting rid of a lot of extra things that we no longer needed since hanging on to extra things was going to cost money (storage costs, depreciation, and deterioration). Over the course of a couple of years, we got rid of a LOT of stuff. We now have a small house that we use as a home-base part of the year.

As we were downsizing and making travel plans, we came up with some estimates of what this new lifestyle would cost us. We didn’t know how it would all shake out, though, until we started living it. Even then, we figured we wouldn’t know the actual costs or savings for a year or two due to the lumpiness of spending through the year.

Now that we’ve been traveling for 18 months, we feel very confident about how much less this lifestyle costs us. Here, we share several areas where we’ve seen significant savings. Everyone has different values and, thus, areas where they want to spend or save money. Therefore, some of the cost-saving measures here may or may not resonate with you!

So if you are considering how we afford such frequent travel without a trust fund, read on!

What Does Traveling Cost You?

When we left our careers, our primary goal was to travel. Of course, traveling costs more than staying in one place due to the added costs of transportation, lodging, and restaurants. We’ve found that, on average, the cost to travel six to seven months per year adds $25,000 gross to our current annual budget compared to staying in our Great Plains house full-time.

We don’t anticipate traveling six months a year forever. Eventually, our go-go years will yield way to our slow-go years and no-go years. As we are currently nearing 50, we expect to have about 15-20 years of active travel ahead of us.

Who knows what the future will hold? Perhaps we will get tired of traveling after a few years. Or maybe we will find a couple of places we love and alternate between them throughout the year. For now, we plan to keep traveling to new places and going on long thru-hikes.

5 Key Areas Where We Changed Our Spending To Afford Travel

We’ve eliminated or reduced several things that enable us to spend more on travel. There are an infinite number of ways that people can save money. Here, we’ve tried to focus on prominent items that make a more big impact.

Everything on this list saves us at least $1,000 per year. As we evaluated our highest costs and where it made sense to save money, we found that these fell into five categories:

Finances and Taxes
Housing
Vehicles
Health and Life Insurance
Recurring Expenses

Finances

We Manage Our Own Financial Affairs

In our corporate careers, we had a financial advisor for six months until we read the fine print and saw how much this advisor cost us. Holy sh#t! Not only were some of our investments in funds with high expense ratios, but the advisor fees added up.

Instead, we took time to learn about saving, investing, drawdown strategies, and insurance and have now eliminated the recurring expense of a financial advisor (and are invested in funds with lower expense ratios).

Now, we save about $20,000 annually by managing our investments instead of outsourcing the task to a financial advisor.

We learned more from blogger and author Ramit Sethi about what it means to work with a commissioned financial advisor over a long period of time. On his blog, Ramit gives a simple overview of the opportunity cost of using a commission-based financial advisor.

For people saving $10,000 per year over 40 years, a commission-based financial advisor can cost you almost $440,000.
Super savers saving $25,000 annually over 40 years lose out on $1 million over their lifetimes by using commission-based advisors.

Taking ownership of your financial affairs may be the only thing high-income professionals need to do to fund decades of travel in retirement.

In case you need some inspiration for letting go of a commissioned financial advisor, here are some travel examples of what saving $1,000,000 on financial advisor fees could fund:

5,000 nights in a four-star hotel in Switzerland
Over 300 international flights in business class
10,000 days of thru-hiking, including meals and three-star lodging in Spain or Portugal

We Stopped Contributing To Our Investments

Since we have already saved and invested the money that we will live off of for the rest of our lives, we no longer need to invest new money in our IRAs, Roth IRAs, or Brokerage accounts.

Saving and investing was a significant “expense” for us in our working years, even though technically, we were paying our future selves. We were aggressive savers and investors, which meant that a sizable amount was going directly from our salary into investments and never into our pocket. Since we are no longer doing that, we consider this a savings of about $30,000 annually compared to when we were working.

We Got Taxes Right in Early Retirement

If you’re considering early retirement, you’ll need to get on top of your taxes and your life-long tax burden at least two to five years before you enter early retirement.

For those considering early retirement, it would be wise to have a tax and cash-flow strategy before pulling the trigger. One of the great benefits of retiring with pre-tax investments (i.e. 401(k)) is that one can effectively manage their income by deciding how much to withdraw each year and effectively manage their tax bills most efficiently. Establishing a multi-decade tax plan can save middle-income taxpayers over $100k over their lifetime and upper-middle-class taxpayers potentially over a million dollars.

Most tax media and advertising focus only on the short term—how to save on tax preparation software or professional tax preparer fees and how to minimize the current year’s tax bill. I’ve yet to see an advertisement on how good tax planning can save you and your family six or seven figures.

To get a good overview of Tax Planning, check out this podcast episode by Andy Panko at Retirement Planning Education, where you will learn how to find a tax planner.

If you’re interested in doing DIY tax planning and looking at numerous scenarios from the comfort of your laptop or iPad, we highly recommend NewRetirement’s Planner Plus software. This is a powerful tool where you can enter your financial information and create various scenarios to help you develop your financial plan.

We estimate that we save over $6,000 per year on lifetime federal taxes by taking action on paying taxes on tax-deferred income through Roth conversions and 72(t) withdrawals in these low-income years.

Housing

We Don’t Have a Mortgage

62% of owner-occupied houses have a mortgage.

In our experience, to get a higher wage, we had to move to an expensive area and take out a mortgage to be close to these higher-paying jobs. Once a person or couple leaves the workforce, that home in a high-cost-of-living area may no longer be a necessary expense.

During the pandemic, we saw an increasing number of American homeowners take the opportunity to sell their homes and purchase different homes elsewhere for considerably less. By moving to rural areas and smaller cities, many Americans could reduce their home costs and either eliminate or at least reduce their mortgage.

We sold our too-large McMansion in the Raleigh-Durham area of North Carolina and later purchased a small house with cash in the Great Plains for a fraction of the cost. By eliminating our mortgage, we save $15,000 per year in mortgage interest costs.

We Did Property Tax Geo-Arbitrage in the Great Plains

*Typical morning view from our small house in rural U.S.*

Moving to a rural area also reduces other costs, like property taxes. Schools in rural areas tend to be more modest when spending on buildings and overhead. Property taxes are typically based on the value of the property, and thus even when taxed at the same rate, a less expensive house will cost less in property taxes.

In researching the cost of living where we purchased our smaller place, we found the cost of living in the county is 70% of the national average. If your annual cost of living in an urban area is $50,000, moving to a similar rural area could save you $15,000 per year. A large portion of those savings come from savings in property taxes.

The apparent downside of living in a rural area is limited shopping, dining, entertainment, and other spending options. Regarding transportation, many rural areas have surprisingly easy access to airports, as agriculture brings a lot of business to rural areas. Many proactive communities have door-to-door, low-cost, on-demand transportation available during the week through USDA grants, considerably cheaper than Uber or taxis.

Reduced amenities may be a deal-breaker for many people; someone with children in school should shop school districts carefully. However, one could take those savings and spend them on travel half the year as we have.

We save $7,000 yearly on property taxes by living in a rural county in the Great Plains versus in Durham, NC.

We Established Our Domicile in a No-Income Tax State

Not all states have an income tax. There are currently eight states that do not charge tax on personal income: Alaska, Florida, Nevada, South Dakota, Texas, Tennessee, Washington, and Wyoming.

While we have no traditional income as a paycheck, we are taking distributions from our pre-tax accounts, which are reported as income for tax purposes. Regardless of where we reside or travel, as Americans, we must pay federal income tax on this income (i.e., withdrawals). As nomads, we can choose where we establish our domicile. Most nomads and full-time RV-ers in the U.S. choose South Dakota, Texas, or Florida. We chose South Dakota.

State income tax in many states exceeds 5%. By traveling more than half the year and having our legal domicile in South Dakota, we save over $6,000 yearly on state income tax.

We Do Our Own Home Repairs and Renovations

The tiny house we purchased in the Great Plains needed some renovation. Since we are no longer in the W2 workforce, we have more time and enjoy working on house projects.

Home renovations can be expensive, especially if you outsource them. However, many people don’t have home improvement skills and/or the desire to do this kind of work. We, on the other hand, like the challenge of learning new things.

Even though we have some experience with many aspects of home renovations, we frequently have questions about techniques and newer building materials. We turn to YouTube advice and practical resources. You can find useful episodes of This Old House and Vancouver Carpenter, which show you how to fix common old home repairs and renovations.

From these channels, you can learn specifically what types of tools you need to buy or rent. Many towns of 5,000 people or more have a business specializing in renting tools which can be a great alternative to purchasing a tool that you may only use once or twice. Other options for sourcing tools: ask friends and neighbors to borrow tools, or purchase used tools on Facebook Marketplace.

Depending on the year, we save $1,500 to $20,000 annually by doing most home repairs, maintenance, and improvements ourselves.

We Got Rid Of Many Of Our Things

Every item you own has three costs: the cost to purchase it, the cost to store it, and the cost to dispose of it.

Getting rid of most things reduces the size of the home you need and can eliminate the need for a storage unit.

By eliminating a storage unit, we save $1,500 per year.

Vehicles

We Became a One-Used-Vehicle Household

While used car values were escalating in 2021, we sold our two vehicles and purchased one used vehicle for cash. Since we are only driving our vehicle less than half the year we also save on gas, maintenance, and insurance costs.

By changing to a one-vehicle household and not driving half of the year, we’ve saved $5,000 per year on gas, insurance, maintenance, registration, and tax.

Health and Life Insurance

Get International Health Insurance

Anyone who has shopped for or purchased health insurance in the US knows how expensive it can be, even for healthy individuals. An option for those that travel internationally for a significant amount of time each year is to consider getting an International Health Insurance plan.

Start by getting quotes directly from providers (Cigna, Allianz, etc.). In our experience, these International plan premiums were less than half the cost of what it would be for us to purchase a similar plan through the major health insurance providers for coverage ONLY within the US.

To get more specific, our premiums would be $16,900 per year (2023 cost) for a Bronze plan if we were to purchase it through MarketPlace. For comparison, our Cigna International Insurance is $6900 for one year for a gold plan (2023 cost).

Part of why these plans are so much less expensive is the lower cost of medical treatments outside the U.S. While this plan provides worldwide coverage, it also allows us to be in the US for up to 6 months per year. The bottom line is that we save $10,000 a year on health insurance by using the international health insurance plan and have a financial incentive to travel internationally.

We Canceled Whole Life Insurance

Many years ago, we purchased a couple of whole-life insurance policies before we realized how inefficient they are, especially for a child-free couple.

Someone purchasing a whole-life policy for $500,000 coverage at age 40 will spend about $280,000 on insurance premiums by the time they pass age 80, or an average of about $7,000 per year. If one had invested this same $7,000 annually in low-cost index funds, they would likely have made a little over $1.6 million at age 80.

If you need life insurance to provide for a family member, consider purchasing term life insurance. At about 5% of the cost of whole life insurance, you can purchase life insurance for the term and amount needed and invest the difference yourself or use it to travel.

We save $7,000 annually by canceling our whole life insurance. Read more here about why we keep term life insurance in early retirement.

Recurring Expenses

We Cut Back on Personal Care Items

According to recent research by marketing analysts, women spend approximately $3,500 per year on personal care. Men aren’t far behind, at $3,000 per year. Most of this spending is to maintain oneself for the workplace, to look clean, professional, and younger for our employers.

As an example, imagine a heterosexual couple routinely uses Groupon, shops sales, uses coupons on personal care, and manages to save over 20% per year, getting the cost down to an average of $5,000 per year. Over 50 years of spending, that’s $250,000 on personal care. Whew! Invested annually over 50 years at 6% interest, $5,000 grows to about $1.5 million. Who knew that looking great had that high of an opportunity cost?

We’re not so frugal as to completely stop spending money on personal care! But we have reduced our beauty regime to a very casual level. Our cost of personal care is about $2,500 per year for the last 2 years. By not needing to maintain business professional hair and makeup, we save about $3,000 per year in personal care expenses.

We’ve also reduced dry cleaning costs by 99%, there we save about $1,000 per year on dry cleaning.

We Use GoogleFi Cell Phone Service

We save $1,000 per year on cell phone plans by choosing GoogleFi instead of AT&T, TMobile, etc. Read more here about how we use GoogleFi in a rural area.

We Don’t Have a Television or Cable

The average American spends $2600 on cable or internet. We do not have television, cable, or streaming subscriptions. Rather, we only subscribe to fiber internet provided by a small, local telecommunications provider. In addition to saving $2,000 annually on cable and internet, we don’t have any costs associated with a television, high-end acoustics, or an entertainment center.

*A meal we cooked in a hostel while traveling (octopus, vegetables, wine).*

We Eat Mostly At Home

When we were working our W2 careers, we spent quite a bit more on fast casual dining, ready-to-assemble groceries, and some food delivery services because we had less time and energy at the end of the day to cook.

Since retiring, we have spent much less on food & restaurants and we are much healthier. We still go out to eat, but now it is two to four times per month, and it is more meaningful when we do. We save well over $1,000 annually on food by cooking at home and eating out less.

We Don’t Have Pets

We enjoyed having cats in our 20s and 30s; however, as those animals aged, the expense and care rose significantly. We also, unfortunately, developed allergies while having such pets, which rules out pet-sitting in others’ homes as an option for saving money on travel.

We decided not to replace our beloved Maine Coons as it was difficult to find someone to watch cats consistently while we traveled to work.

While many early and traditional retirees get pets to have as companions, they don’t fit well into the lifestyle of many nomadic people. Kudos to folks like Stephanie and Gillian, who travel full-time with very cute pets; we find that pets don’t fit into the thru-hiking lifestyle we have come to love.

By not having pets, we estimate we save about $1,500 annually. And that cost does not include the fees and vet visits required to travel internationally with a pet.

Our Summary

Traveling costs money but for us, it is enjoyable and very rewarding. We love visiting new places, meeting new friends, exploring nature, eating the local foods, and learning about the culture. We’ve made big choices that save money in other areas to fund our travels.

A few takeaways we’ve learned over the past 18+ months:

It’s important to get the big financial things right.
The insignificance, frustration, and tedium of trying to save a few bucks here and there is not worth the hassle.
It’s crucial to be clear on our values and priorities.
We better understand the value of our limited time versus money.

By taking a deep look at lifetime costs and doing some strategic financial planning, we feel confident we’ll be able to afford to travel like this as long as our bodies allow. Hopefully, another 20+ years.

Jolene Unland