Financial Decisions

Updating our financial plan annually has become much easier since the major overhaul in 2014 when Karen and I decided our future was going to be in an RV. It was encouraging to see in print where we had made quit a lot of progress over this past year. And there were a few decided and pending decisions I can highlight for your review and input. If you’re really into the topic, just go to the blogs financial category for past thoughts. I’m happy to report we are still on track for my “retirement” date of November 1, 2019. Actually, it might be the last day of October, so I can setup retirement benefits to begin on the first of the month. Here are a few comments regarding our plan as it stands today:

Be Conservative

Keeping estimates reasonable has been in our plan for not only estimated expenses, but also income and the value of assets we are selling. I know our current effective income tax rate is lower than what I’ve estimated. I’m still planning for federal and state taxes at the same rate as during our “working years”.  I’ve included state income tax among our expenses knowing we will domicile in a state with none.

Other examples of being conservative has been using the lowest Kelly Blue Book price for what our current automobiles can be traded in for at a dealership. Another is after selling property through Craigslist, or wherever, I know the price we get will be lower than we might think. To that end, I’ve estimated household goods very low (I think) to include tools, yard equipment, guns and electronics. And I’m betting most of our furniture, clothing, rugs, artwork and such is relatively worthless.

Make Decisions Earlier That Benefit the Future

We have sold off and banked the money for more expensive property as early as possible. Although their book value was not much, the extra truck and boat went sometime ago. Both were maintenance hogs and it’s nice not to be paying property taxes and insurance on them for what would be our final two years or so before moving on. Next to go, and soon I hope, will be one of our two remaining cars and a motorcycle. Months before any of the proceeds are used in buying our truck for travel.

We all know healthcare expense is the number one concern for us pre-Medicare retirees. Karen and I decided to max out the tax deferred contribution to our Health Savings Plan which is $6,500 annually in 2018. And we took advantage of the $1,000 extra you can put aside for those who are 55 or older. Hopefully we will have a decent balance in the account once we hit the road. Does not sound like a lot of money to some. But on my wages, it is. Because of reduced expenses elsewhere it was made easier. I even called the cable company and told them I’d be on a fixed income (someday) and asked it they had any deals. Saving $40 or $50 dollars a month here or there makes a difference over time. No worries, we are still enjoying life and really don’t have any financial concerns. Not because our income is way out there. We became debt free last January when the house was paid off.

Friends at work are retiring off and passing on what they learned. One figured out that our retirement plan is based, at least in part, on the two highest years of salary. So, he suggested to skip taking the overtime pay and ask for comp. time which we are never expected to use believe it or not. Being paid for all unused sick time and comp. time the final year will significantly increase the final years earning and hence, the amount retirement benefits are figured against.  Seems strange work will be paying for those hours I earned years ago at the much higher current salary rate.

Don’t Procrastinate When Big Decisions Have to be Made

It would be hard to tell that Karen turned 62 but she did.  And we decided it was best for her to start taking her social security benefit. I’d be happy to discuss the reasoning behind this with you in the comments section if you’re interested.

In August I’ll have to look at the pros and cons of receiving an early pension from a past employer. That decision is on my calendar for the day I’m elidable. We planned on taking it in November of 2019 anyway. But when one micromanages finances, even 16 months can make a difference in the decision process.

Not having delayed estimating what it will cost on the road I hope will prove to be beneficial. And perhaps even more importantly, knowing the cost could be higher the first year compared to years after. Karen and I decided to fund a travel/reserve account. In the past we called it our safety net in case we lost our jobs.  We decided to compromise between what she wanted to do and what I wanted to do. So we included in our financial plan to have the equivalent of four months expenses rat holed away on top of the additional $7,656 our first year of travel will cost compared to the second.  I’d suggest not waiting to decide what you need to save. Nor just assuming it should or could come out of the proceeds of something you sell – like your house. For us, it’s been a little easier to save as I have a part-time job that only requires 10 hours a week of my time. Not that the hours, on top of my day job, don’t suck. I’d not have the positive attitude about the extra work if it were not for knowing our traveling lifestyle is not far off.

For now, we also made the decision to purchasing a 10 year life insurance policy rather than taking a reduced pension that has surviving spouse benefits. I say for now because I’ve only shopped for term life insurance policies online. If the actual prices come out different I might change my mind. Again, that’s a big decision we can discuss in the comments section if anyone is interested. Simply put, the life insurance is cheaper per month than what we lose with a reduced pension benefit. And we have other assets should one of us croak earlier than the other.

Truck and Trailer Budget is Huge

I’ve kept our budget for the rig the same as it’s been over several updates to our financial plan. For those of us who are not “wealthy” the cost sure seems to be huge. Perhaps because as we get older it seems like stuff costs a lot more. It’s easy to overspend, thinking this could be the last ride of one’s healthy life. And when we first start researching it’s possible we think we need to spend more.

As our expectations of what we could or should spend have come down, the budget stays the same. I suppose this is another example of being conservative, believe it or not. I’d rather over-estimate and spend less. Just because the bank account will be fat from selling everything and increasing savings because our expenses are now less, does not mean it did not take a lot of effort and time to accomplish saving up that much. Not to mention the truck or trailer will be worth less than half of what you paid for it when you decide to sell it. Can’t get that money back without an honest job. Reading about other’s travel experiences in the RV lifestyle or meeting with them in person really has helped to gain a sense of what is important about it all. I’m planning to come in under budget which will perhaps be an excuse to have spent that much:)

Know-it-all’s Should Listen to Other Opinions

Thanks to Karen, our house is worth more.  At least more than business major/financial savvy me thought it was. No, we have not had a real estate agent appraise it’s worth. And no, we have yet to put it on the market where it could sit for months. The house is in a unique location and agents tell me they are having a hard time even getting enough houses to sell (listings). Karen took a look at what I’d valued the home at for the purpose of planning. She shot a new number at me that know-it-all me thought was at first ridicules. Then I found even more ridiculously prices houses in the general area that don’t have acreage to go along with them.  I know she will prove to be right. But, other than adding in the cost of a new sewer connection to the city system, I barely increased the estimated value in our financial plan just in case.  We will make sure and use something closer to Karen’s number than mine once we meet with our real estate agent. Damn, things just seem so much more expensive today.  Hay, another reason to justify the RV budget!

Do you have other opinions to offer?  Such as when is the best time to put it on the market? Should we allow the agent to expect 6% for the fee to sell when we are not buying another home afterwards? Fortunately, we have already completed a few major upgrades to the 16-year-old home. And Karen will finally be getting the new carpet she has wanted replaced 10 years ago. I’m planning to finish up the outside painting and landscaping this season. While next winter (our last here!) will be spent on inside repairs and heavy cleaning.

Plan Ahead – But Maybe Not Too Far

If you have been following this blog for long you already know our financial plan includes an exit strategy for when we come off the road. I’m still satisfied with the decision to estimate our time on the road to be six years for planning purposes. As well as our plan B for income which is to make use of retirement accounts or rely on being young enough to go back to work.

After crunching all the numbers again this year, I’m a bit more comfortable with the funds we are leaving behind for a new home someday. Maybe that number will be larger as Karen opened my eyes to the potential value of our current home! One thing for sure that has worked out was deciding back in 2014 to dust off an older financial plan and review it every year since. I know other’s have made the move to fulltime RV living with only a few months of planning. We will see how that works out for them. Or maybe without realizing it they amassed the funds to do so over more years or with a better paying profession. A couple blogs I am reading include some scary financial stuff I’d not be able to cope with.  But maybe those folks are younger and yet to move through the years where they can achieve their maximum financial potential. But spending your last X dollars from your 401K plan to continue the journey is, well, not to call names – stupid.

I took a look at the portion of our financial plan that included a timeframe beyond just simply what we had to spend once we come off the road. I actually started to consider how that money could be spent, such as renting a place while we wait for our truck and trailer to sell. Or maybe we could get a small loan to buy a new car, paying it off with my social security check. Well that’s also stupid. There are simply too many variables to consider that far out. I think I’ll just stick with the advice we were given by another RV full-timer. That is make a deal with Karen to give the other at least six months’ notice when they are ready to come off the road. Then we can plan the next journey from there on.

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Buying Used vs 35% Off New MSRP

I’d like to cover a few topics in this post. Buying used vs 35% off new MSRP and cost of depreciation. Also buying a brand of RV that has less chance of going out of business than another.

What got me to thinking about this topic had to do with someday knowing we would have to buy a new home and the money we would have left to do so. After I crunched all the numbers I believe I came up with a relatively accurate figure as to what money we will have left to buy a new home. Hate to already be thinking about an exit strategy but the plan would not be complete without it. Karen and I talked briefly a few months ago about what that left over money would buy in a house today. Not nearly what we live in now for sure; not that we are ever going back to the same lifestyle/house. We took a look at the current houses that are for sale to get an idea of what we could afford later – scary.  I might have to build one..

Let’s assume you get 35% off MSRP on a new $90,000 fifth wheel. The selling price would be about $58,500.  After five years that “$90,000” trailer could depreciate as much as 55% off original MSRP and might be sold for $40,500.  That is about $18,000 less than you paid for it.  So, it cost you $3,600 a year or $300 a month to own it – or worse.  Now consider if you bought a couple year old quality trailer of any brand(add an extended warranty) for maybe $46,800. Then sold it five years later for the same $40,500.  You spent just $6,300 or $105 a month over five years for ownership excluding taxes, insurance and added equipment. And assuming the used RV market is not saturated with used units the baby boomers are moving out of.

It goes without saying the fix for trailer depreciation is finding an exceptional deal to start with.  But I still stand by an earlier view about RV depreciation which is I’m not letting that stop us from buying one.

I’ve been studying the 2015 and newer models for some time now.  One of the problems are new floor plans and our attraction to them.  If we stay more flexible we might be able to save a ton on our upfront costs and leave more for a replacement trailer or a new sticks and bricks once we come off the road.  At least this is how it works for those of humble means.  Some of our favorite floor plans were offered back in 2016 but far fewer than I’d hoped for.  Lack of a certain floor plan could have an effect on what trailer makes it as the one we finally decide to purchase – if we decide to buy gently used.  I’ll be plugging the numbers into my spreadsheet to figure out the value of any specific used trailer. I’ll bet a used one would easily come out ahead of a new one for value if we can find the same floor plan.  And I’d be asking for a lot more than 35% off original MSRP to make the deal.

Redwood Interior – Rated with 8,000 pound axle capacity, H rated tires, extra large brakes, all solid wood cabinets with soft closing drawers.   RV gas/electric fridge is an option! The 340RL comes in at just 36’7″ in length and was first built in 2017. With over 4,000 pounds of remaining cargo capacity.

It was only a few years ago when several popular brands for full time RV living went out of business. Some had been around a long time. Some models were reinvented where the brand had been bought out by another company. Lifestyle Luxury RV comes to mind.  As does the original fifth wheel which is the Hitchhiker. The list goes on to include trailers built by Newmar and Peterson.  You and I have been studying fifth wheels for a few years now. Bet you would be less likely to buy one that is no longer in business or built!  And some people may not have even heard of a once great brand they now find eroding on a used trailer lot at a fraction of the price it once sold for. This brings up the risk of buying a model today that is out of business or discontinued tomorrow.  That already happened to my once favorite which was the Augusta Ambition, replaced by the Augusta Luxe Gold and it’s laminated construction.  Oh well, it was out of our price range anyway and yesterday there was only one used model I could find for sale in a floor plan we are not interested in.

And what about getting service advise when something breaks, especially if the company itself is out of business? All those who bought new Lifestyle Luxury fifth wheels were left with a useless warranty and a much stepper depreciation curve as the used price dropped considerably.

The Redwood is our number one favorite when compared to others in our budget range.  Although it’s not at the top in terms of value or when comparing what it costs for the features we want.  The Redwood came out in 2010. Per Redwood, they decided from the start to build a full time trailer for the baby boomer generation. Well, Redwood has gone through some changes. For the best I think. However, at least here in Missouri the baby boomer generation peeks out in 2020 and starts to decline as a percentage of the total population thereafter.  I’m thinking that is why RV companies have begun focusing on the next big generation of buyers which are the millennials. Heck even the Escapees RV Club started the Escapers RV Club to focus on that next younger (and larger) generation.  Wonder if the millennials will have the same disposable income to buy fancy new Redwoods years before retirement?  Maybe or maybe not. And that’s what is worrying me about our most current favorite trailer that’s in a price point higher than say a base priced Montana, Cedar Creek or Bighorn level trailer.

2018 Montana 3120RL at 35′ in length. With many features of a 40′ rear living room! Pantry, front facing washer/dryer closet, usable kitchen and bathroom. And over 4,000 pounds of cargo capacity. Unfortunately the floor plan is brand new. They made some needed changes in the 2018.5 version by the way.

Anyway, hope that gives you a few more things to think about when it comes time for you to buy an RV. The other day Karen said she thought we had found the trailer we were finally sold on. It’s a Montana 3120RL. Well, need I remind her we are not done until we buy one.  Things change, and deals might be out there that are too good to pass up. Being able to spot a good used one is a benefit of having studied these things for the past few years. Now I’m just hoping there are no new 2019 floor plans we are more interested in😊.  Believe it or not some of the 2019 Heartland models starting showing up and other brands will follow as soon as March of 2018.

Bighorn 3270RS at 35’2″ with over 3,000 pounds of cargo capacity.  This brand has and will be around for a long time. The Bighorn is Heartlands top selling luxury fifth wheels and among the top three selling luxury fifth wheel manufacturers.

Congratulations to a reader of this blog David who found a heck of a deal on a gently used 2016 Bighorn 3270RS. A trailer that has routinely been in the top five for us as well. That floor plan was still being offered in 2018. Go to the bottom of this comment section for the dialogue. Or maybe David will post something in this blog post comments about his success?

Next weekend is the local truck/car show. I hope to be back with a post about our tour soon. I’m also considering a post regarding RV friendly clothing and laundry concerns.

One final point you might be interesting in hacking apart. Right or wrong I’m leaning towards starting negotiations for new fifth wheels at 35% off the dealerships MSRP. And even more of a discount for last years models as a new unit.  And for new dually trucks, I’m going to take a swing at 22% off MSRP to include promotional savings. And I’ve started to lean towards shopping on the internet as a way to negotiate upfront before I walk on a sales lot.  More on that later I’m sure. (update 3/3/18 – I am researching the merits of negotiating for a new truck from invoice price rather than MSRP while keeping an eye on factory incentives so I don’t give the dealer any of that money. ) A friend just bought a completely loaded 2018 Ford F350 dually lariat at about 13% off MSRP. And he is a tough negotiator.

 

From blog reader Peter who mentioned a couple products you might consider for your new RV. Added RV fridge safety shutdown – ARP Controller prevents fridge fires; see arprv.com, material cost $175. Add soft starter for air-conditioning (ramps amps up slowly) for single A/C when boondocking, called EasyStart; see microair.net, material cost $300.

Budgeting Part Three- First Year Draft Expense Budget

Thanks for following along for this last of a three-part blog series regarding budgeting for our future in an RV. I began the series with a few background comments of importance. The second post was regarding our fifth wheel and dually one-ton truck capital budget which includes the vehicle purchases, taxes and basic furnishings. This final edition is our draft copy of what we expect to be our first-year travel expenses.  We plan to move around more the first year than subsequent years which, judging by following other blogs, seems to be the norm. The bottom line number is $48,156 which includes income taxes.

I have a second-year budget outlined in our financial plan but I’m not ready to post that yet.  If you read back far enough you will find a few relevant details. One final note before I share the numbers. Estimating healthcare costs is a highly debatable topic. I’ve tried to cover my research in prior posts. However, we all know when you are providing your own insurance (pre-Medicare) the availability and costs must be looked at on an annual basis. It was interesting to find the 2018 federal subsidized healthcare plans (Affordable Care Act) reduced the premiums for many compared to the prior year. We will see what happens in 2019. And I’ve given up on finding a plan that covers you outside of network. Although I’ve heard you can get nationwide coverage out of Florida.  Let me leave healthcare with that said. Go to the Wheelingit Blog for more of your own research. Last week I read an article regarding RV Health.com which is worth looking over at some point.

The numbers for our anticipated first-year expenses.

 

 

Explanations by line item

Taxes and Insurance – Non Medical

• Includes Life Insurance at $126 a month.
  • To replace an income if one passes away
  • If I take a 50% survivor benefit on retirement accounts that would equal $101. But does not match my income or hers for non-retirement income. Hence, I’d rather secure the income with life insurance for 10 years and rely on retirement savings should one of us pass away after then.
• RV – $87 based off another’s cost
• Truck – $137 based off another’s cost
• Roadside Assistance – $150 annually or $12.50 a month.
• Maybe an extended warranty on truck and trailer – but would come out of initial RV/truck capital budget and not this expense budget.
• Federal income tax on earned income only (no state because of domicile)
  • Have to keep combined income under $32,000 to avoid paying tax on at least a portion of social security.

Camping Fees

• We may save additional because we will be workamping/volunteering at times for a spot but less in the first year. And we will most likely take advantage of weekly rates in great places during the season or monthly spots for winter at the least. We plan to keep overnight stops at the least price as possible and we are equipping our trailer for at least some boondocking.

Medical Expense

• Medical using high deductible plan per Health Sherpa recommended plan is $312. Livingston TX zip is 77351. So far, this is our first selection for domicle.
• Karen will have Medicare by August, I’m paying for my own and am basing this off the current Affordable Care Plans
• Doctor/Dentist/Eye – Using Howards from RV Dreams at $75
• Maybe a supplemental plan for hospitalization. I can get it at my current job and the price stays the same when we leave (about ½ off the open market price) at $64 a month. Or we may use this portion for telemed plan or local doctor who does not except insurance.
• Prescription drugs are included in the Affordable Care plan but may change after she gets Medicare D.
• Doctor’s visits are coming out of our Health Savings Account which I’ve been building up to include the extra $1,000 you can put in the year you turn age 55.

Fuel

• Diesel (truck) – For now just using what I’m seeing in budgets with same travel style and using truck for daily driver. At $500 a month that’s maybe 21,600 miles a year.
• Gas (generator) – guessing with moderate boondocking eight gallons a month

Travel/Parking

• For tolls and such based off another’s budget.

Groceries

• Using our current costs plus 10% because will be buying in unfamiliar stores and in markets that could cost more than here in Missouri.

Eating Out

• Just using Howard’s budget at RV Dreams of $150

Entertainment

• Just using an overall average from a few blogs I follow and your suggested plus another 15% because it year one.

Department Stores

• We buy most clothing at thrift shops now.

RV/Truck Repair and Maintenance  

• Will be less the first year. For now, just figure $30 for truck and $100 for RV

Utilities  

• Electricity and Propane

Phone/Cable/Internet and TV

• Current part-time job will pick up the cost of my phone and work data plan.
• We enjoy television, so a portable satellite is in order. Figured our current plan at $50
• Karen’s phone $60
• Data Plan (excludes what work provides) $50 for 8 gigs

Miscellaneous

• Memberships
  • Good Sam’s – $23
  • Escapees – $40
    • Because of mail service
  • Passport America – $37
• Haircuts- Based on our current costs
• Laundry – Averaged based on other’s budgets.

Big Ticket Items

• I’m not including anything that it takes to get started in new trailer or equipping truck with is part of our startup capital cost to purchase the truck and trailer.
• This could be a catch-all fund or just used to buy cool stuff we find others traveling with.

Mail Service

• I’ll provide our own for personal mail. In addition, and not part of this budget, is a part-time employer will pay for business expense as necessary such as scanning, higher annual. $215 to get started or $18 month
• Plus shipping which I’ll guess twice a month at $12

Extras  

• Include storage unit $45. At this time we anticipate keeping a small storage unit for items we don’t want to depart with. Also to store property we are not sure if we will want to take on the road or not.
• Gifts and all other $50

 

Final Thoughts

I suspect there will be changes to this draft budget with input from others.  I also included a little inflation as the budget is for the year beginning 2020. The healthcare portion is the scariest part of the budget and we have not yet decided on all our options. This budget exceeds our estimated annual income, so we are saving up for the difference.  Karen and I have agreed to maintain at least four months of expenses in our travel account. I’ve decided to keep most of our income sources private but am happy to discuss them offline.

I’ve definitely not liked this part of the planning process. We are good at not having to keep a budget while living in our sticks and bricks house. And we seem to be good at just living within our means.

Budgeting Part Two – Initial Start-up Cost for Trailer and Truck

This is the second part of three posts regarding our budget for fulltime RV living. You can hit the back button or go here for the first part. Thank you for the comments on the last post. 

And happy new year to all!  Karen and I are looking forward to 2018 for many reasons. One is the vacation time I’m able to store-up and roll into the following year is maxed out. Finally, in 2018 we will be taking all the vacation earned that year.  My fellow employees may not like it, but 2019 is going to be the year I’ll be able to take the equivalent of one week of vacation each month breaking in the future RV.

My first post on budgeting included a few comments of how we got to this point in the process. This next post is about the budget for initial start-up costs for the truck and fifth wheel. I’m working on the final post which is our draft expense budget. I’ve learned from others the first year on the road is most likely the most expensive time, so you will see I’ve planned accordingly.

I’ll be including just a few key points as explanations when writing about the truck and trailer budget.  

This budget includes purchasing the truck/RV, equipping it and all associated taxes, and licensing fees. At the advice of others, we are avoiding a few initial purchases for furnishings until we get on the road and figure out what works for us.

Earlier, I came up with a list of accessories to furnish the RV or truck. Landed a few Christmas gifts off that list. Thank you family!  But the real purpose was to establish a possible budget for equipment depending on how extravagant we might be. Here is a link for Items to Purchase in a spreadsheet you might want to purchase over time. Another blog post to refer to might be the summary as of May 2018 regarding the truck and RV purchase decision. Here is the link to that post. I should also point out, once a year I go back and look at our financial planning, which was first updated to include going fulltime to an RV in September of 2014. The plan includes our expected income at “retirement” and net assets. To get to what amount of cash we wanted to spend on a rig was a challenge. I suppose the best way to summarize that process is I came up with a conservative net worth, meaning I tried not to overestimate what we could sell stuff for and the return on our retirement savings accounts. I looked ahead to our retirement date and added on inflation costs for a truer picture of what it would cost to buy more stuff and how much less our old stuff would be worth. Karen and I had to talk – a lot – about how much we wanted to keep stashed away for when we eventually come off the road or whatever. I’ve had a financial plan since 2001 and have grown to trust the numbers.

I’ll get to the topic at hand. These numbers are accurate as of 3/2/17:

 Truck and Accessory Budget:  $65,000 for the truck and $1,700 for accessories.

• I’ll not get into it much as to why, but I’m leaning towards a Ram 3500 dually. With 4.10 gears and air suspension. Our max trailer weight will not exceed 18,500 pounds and this truck will also handle the pin weight.
• We hope to get the best transmission offered in whatever  brand truck such as the Ram Aisin. Ya, I know Chevy probably builds a better transmission even if their warranty is no better than Ford’s or Ram’s.
• You can refer back to the decision on trucks by going to this page.
• I’ve not given up on a Ford but generally believe the Ram is the best value when furnished the way I’d like it as a 2018 model.

• I’ve been shopping online for nearly a year, mostly to come up with pricing and typical availability. Same as others, I’m finding it hard to locate a truck within reasonable driving distance from home equipped the way I want it. Hopefully I’ll not need to order a new one. We are also not against buying one used if it has under 20,000 miles on it. These trucks hold their value, so we will have to consider the difference closely if not bought new.
• If we keep our color choices to a few and bend on leather vs cloth, the selections of what are parked on dealer’s lots increase.
• This time of the year and a bit earlier, I’m finding with incentives the new trucks are priced anywhere from around $8,000 to $12,000 below MSRP.  You might be able to save up to 22.24% off the original MSRP if you can find a one year old used truck with less than 20,000 miles on it.
• We are buying the truck before the trailer, maybe as early as next summer. Ford made major changes in the 2017 heavy duty. Rumor is  Ram is making major changes in their 2019 models, having already added few minor improvements in 2018. Maybe we can find a 2018 priced to sell just after the 2019s hit the dealers lots! Also Chevy/GMC made some engine upgrades in 2017.
• We are going to the February 2018 car show in Kansas City to check out the trucks in more detail. Yes Karen, we will also look at the cars. She is from Michigan and car shows are a big deal up there.

 

RV and Start-up Accessory Budget: $74,655 for the “luxury” fifth wheel and $10,000 for accessories:

• It took a long, long, time for Karen and me to come up with or short list. We continue to fine tune that list as new floor plans and construction details change at least twice a year.
• One of the tougher decisions has to do with what construction methods you prefer, especially for suspensions, tires, frames axles and more. Go here for my post on heavy vs lighter trailers.
• Another good way to eliminate fulltime trailers from your own short list might be to consider cargo capacity. For us, we are looking for 3,000 pound cargo capacity and above. Just remember, added options take away from cargo capacity so look for the sticker on the trailer that lists the actual cargo capacity. Often, you will find dealers post a photo of the sticker in their adds.
• Establishing a budget for the trailer is a big first step in deciding what price point you want to spend your money in. Unfortunately, this first step includes a ton of research and I hope being able to follow my own research has helped. As always, the details include what Karen and I want in a trailer, your expectations will be different.
• We remain somewhat open to a used trailer, maybe as old as three years. But are leaning more towards a new trailer in last years model. The new trailers are announced around February and arrive on dealer’s lots beginning around July or so. Prices start to drop on current year trailers in October or so according to my own online research.
• The new trailers announced in February will most likely have changes by the time they hit the dealership lots. And then more changes later in the year. For example, the 2018 Keystone Montana 3120RL is a recent new floor plan and just came out. That trailer caught our eye as a 35’ option that retains the same foundation construction as the longer units but with greater cargo capacity.

• I think we can reasonably expect a new trailer to be discounted 25% off MSRP. And if purchased as last years model, anywhere from 30 to 35% off MSRP. That’s my goal anyway. I’m not sure, but dealers may be able to manipulate the “MSRP” price so shopping around to get a better idea on starting price is a good idea. Either way, the deal has to be fair for both the seller and buyer.
• We have been hitting the local RV shows hard since 2015, often spending two days touring. In 2015 we used the show to decide on a fifth wheel because we want to be more comfortable when parked. If we planned to move a lot more and wanted to be more comfortable when traveling, we would have gone with a motorhome. Between the 2016 and 2017 shows (and dealership’s lots) we were able to finalize a floor plan which is the rear living room model. We also learned a few of our must have items.
• The 2018 RV show, considered a holiday around here, is next week. I’ve got my list of questions done by manufacturer. We plan to spend a lot of time checking the details such as do the kitchen and other storage areas work, shower size, electronics, seating and more. Thankfully our short list of brands to select from is down to a few and will most likely become even shorter after next week. All the brands we are interested in come to our local show other than one. A new RV friend toured that one for us earlier this year and reported back.
• We expect to buy as earlier as next fall. I’m open to holding off to early spring of 2019 as a last resort. We want to use the trailer for vacation before “retirement.” And to a lesser degree the trailer might become our go to home in the event our current sticks and bricks sells quickly once we put it on the market in the spring of 2019.

I’m looking at the RV and truck budgets as a sum total. We might save a little on the truck and spend it on the trailer. Or we might try and beat the budget and put the extra in our account for travel. Some might think this is too much to spend for something that depreciates and especially with a big chunk of one’s lifetime savings. I’ve come to believe RV living and travel is a calling. It’s something we got to do.  I’ll leave it at that.

Budgeting Part Three – Draft Expense Budget and Details by Line Item (coming soon)

Budgeting – Part One

Hopefully the below details might provide a little research assistance for others and perhaps solicit more feedback. I’m breaking the topic of budgeting for fulltime RV living out in three blog posts. This first part provides a little background on how Karen and I progressed through the process. The second part will include our anticipated start-up costs to purchase a trailer and truck. The third post will include our anticipated first year expense budget by line item with comments about each expense item.

Part One – Background Comments of Importance

Our budgeting process started on September 10, 2014 when Karen and I decided to spend our future in an RV. Back then, we planned to take off in 2023, but like so many others, moved the date up. For us to leave earlier required taking a closer look at finances and placing a degree of faith in what others had been experiencing on the road in terms cost.

A month later, in October of 2014, I had completed a search for fulltime RV budgets. Anyone that has researched the topic for more than a few hours quickly learns there are many styles of travel and each has its associated costs. I discovered RV forums and found many new friends willing to share information. Karen and I talked and came up with what we think will be our form of travel. Over the years we have somewhat fine-tuned our expectations. Today, our plans would look like this; Spend the first year moving around more often than in future years and not lock ourselves in, budget wise, to volunteering or workcamping to reduce expenses. After the first year we might “settle down” a bit. This seems to be a common theme. You have to start somewhere and for me that was reviewing Howard’s years of actual costs over on the RV Dreams website. I also found Kirk and Pam over on the Escapees RV Club forum. Averaging their budgets became the starting point for ours. Since then, like others, I read blog posts for current actual costs and comment back and forth on blogs and in forums for more specific questions.

By November of 2014 I began taking a closer look at more detailed financial planning which mostly considered income sources. It did not take long to discover that healthcare expenses would be of greatest concern and I’ve been reading everything I can regarding the subject. When we move along in our future RV Karen will be eligible for Medicare about nine months later and I’ll be providing my own health insurance. Today, healthcare cost remains a big concern and fortunately we both currently have no big medical issues.

Finances became the guiding light in establishing our new take off date of November 2019 and required we save to retire early. A side benefit of taking years to plan was for the most part we stopped buying anything we could not easily sell, use in an RV, throw away or give away. That really helped reduce expenses. I also kept a side job for added income which became a job I’ll be taking on the road and requires about 10 hours of my time weekly.

I decided to budget two ways. One for initial start-up costs and second a budget for annual expenses.

Coming up with a budget for our RV and truck start-up costs has really helped reduce the number of trailers we considered and is a great starting point in your own search. I included everything in the RV and truck budget that makes up these start-up costs to include sales tax and licensing. So those will not be part of our first-year expense budget. Over a year or so, I modified the RV and truck budget to meet our expectations once we had a better idea of what these things cost at the price point we found ourselves drawn to.

A long time ago a wise man, who was the budget officer of a major corporation, told me  there are two words that make up a budget.  And as one goes along they may find themselves adjusting the numbers for good cause.  He said that’s why they call it a “budge it.” Of course, these revised estimates had to become part of our financial planning as the money does not appear out of thin air, especially if one wishes to remain debt free. For those not overly concerned about being debt free on the road and earning there way as they go, check out the Camper Chronicles blog. I’ve been following Lee and Tracy Perkins since January of 2015. So far, they are proof it can be done. Although their form of travel (lifestyle) is not ours, their example surely does provide one of many backup plans.

All I’ve written about so far has to do with our budgeting plans leading up to the day we take off. The picture is not complete unless I mention an exit strategy once we decide to come off the road. Yes, I know planning that far out cannot be done with 100% accuracy and there is much that can and will change. If we were able to make this lifestyle a permanent change the planning would be easier but that’s not practical. In comes having remaining finances to make a big change later. So, I decided to use six years as our expected time on the road.  Sure, our time on the road could end earlier and sure it could end later.

Regardless there will be major expenses to consider, such as buying/renting/financing a new home whether that be a replacement RV/truck or not. For us, we found a way in our financial planning, for the most part, to leave most of our retirement savings alone and a chunk from the sale or home. The sacrifice will be having to work on the road or volunteer at times for a minor portion of our expenses. Planning takes the fear out of the unknown. So we have a plan A, B and C. Things change and having backup plans we are willing to do has taken the fear out of this for me and Karen. Although for the most part she trusts my opinion and lets me figure out the financial portion on my own. Karen and I have talked about what each of us wants in our future lifestyle. There are no compromises that we are both not willing to take together. We both appreciated a comment from Sharon and John of the On the road of retirement blog. They both agreed that if one or the other wanted to come off the road they would give six months’ notice. We met with the bubbly couple here in Kansas City back in June of 2016.

Thank you to everyone we have meet over the past three years in-person and online for all your advice and friendships. You are good people and set great examples of how to make the fulltime RV lifestyle work whatever one’s expectations might be.

Part Two – Initial Start-up Cost for Trailer and Truck

To complete the budgeting process I think it will be appropriate to explain what has become our needs and wants out of a trailer and truck. I’ve posted several times in the past on the subject and over time changed our financial planning to meet the changing budget. There are so many ways to get started on the road and a lot of opinions to go with it. I’ll give you the background and the reasons we are using in this next blog post. 

Part Three – Draft Expense Budget and Details by Line Item (coming soon)

In following other’s examples, the last portion of this three part series will include our detailed first year expense budget and plenty of comments about each line item. I’ll do my best to draw from earlier blog post or research to cover some of the thought processes that went into each expense item. Hopefully helping other’s out that are just getting started and soliciting comments from them or those more experienced.

There are many sources out on the internet that provide a template to get started. For me, I decided to copy, buy, borrow other’s work as a starting point. I’m handy when it comes to spreadsheets. But decided to purchase John Hinton’s work from the On the road of retirement Blog.  Budgeting for the Full Time Rv’er ebook comes with his spreadsheet. John writes about expense categories and included them in the spreadsheet.

 

Stay tuned…

It’s All About the Travel – Cost to Equip a Rig

It would seem to be common sense that one should know there are additional costs beyond just buying a trailer and truck as part of a new full time RV lifestyle. I had not actually written down a specific list of additional equipment costs until now. A long time ago I simply came up with a budget based on how much of our net worth we would be willing to spend on a rig, guessing we might use it for six years. That became the budget.

I had little to no real idea which trailer and truck we wanted and therefore what the true cost would be. Heck, I didn’t learn what the dealerships were referring to as a “price point” until well into my research. Of course, the “budget” should have quickly become more of a limiting and necessary factor as Karen and I began to tour trailers and learned what the anticipated discount off the listed price might be.

I should go ahead and apologize for the sarcasm that you are about to read. It has a point in that it demonstrates how I can become ridiculous in my quest to find a simple trailer and truck.  I’m also not intending to criticize anyone that has the means to purchase whatever rig they want. And hope I don’t loose any readers over this one as I depend upon your comments and suggestions. I am hoping this post helps others in a similar position come closer to selecting their own rig.

Luckily it did not take but a few hours at an RV show to know a big Newmar diesel pusher was not in our future. Internet searches taught me there were specific categories of fifth wheel trailers lumped together within any one manufacturers list of products. In our case this category was the luxury full profile trailers. Simply put, these are the ones that are nearly 13′ tall in the front. Examples being perhaps the Heartland series to include the Big Country, Bighorn and Landmark.  Or the Keystone Montana and Alpine. The choices for a new trailer are overwhelming. Especially if one throws in the idea used trailers from several higher price points might be within a budget. So I kept them on one large list within this blog site thinking I’d eventually know the pros and cons of each trailer.

For some sadistic reason, I also decided to learn about all the nice options one could add to a trailer, pushing the base model into a higher price point.  I had to go out and read a dozen blogs about what others had added to their campers, sometimes a short time after buying the trailer. Such as a MorRyde independent suspension, heavier axles, H rated tires, full body paint jobs and disc brakes. What to do? I guessed just check them all out and see how much the stuff, I mean excellent equipment, costs added at the time of initial purchase. And then dream as if the budget could be increased to a magical level. As if my pension and savings would grow to the necessary level by the time I retired six years early.  Hmm – that seems reasonable…. for about 10 minutes when you think about it.  At least that mindset took less time to flush out of the decision process compared to the “let’s spend more of our savings now on a depreciating asset and buy a shed to live in later.”

Then a voice came out of heaven (actually from a blog follower’s comment). That comment was “it’s all about the travel” and not the trailer. Thanks Ingrid! I have thought about that comment for many months and it truly helped. I should have included the concept from day one when the initial budget was created.  To me “it’s all about the travel” includes a long definition. Among which at the very least might be the trailer and truck get you from point A to point B so you can enjoy the scenery. Intuitively we all know a new car, boat and RV will someday loose its luster and become just another object to get rid of or replace. Just like the homes many of us are now downsizing and selling off.

All this being said, for us we still don’t want to take the fun out of travel by moving into a new home we will not enjoy. Or worst yet, perhaps be the deciding factor why we give up the lifestyle. I’ve owned a popup camper and there is no way that would work for us. Nor do I have any dreams of quickly mastering backing into a spot with a 45’ trailer towed by a Volvo semi truck after avoiding the trees, vehicles and other objects next to the campground roadway.

I was thinking it would someday be nice to go back to a few ideas mentioned in prior blog posts and let the reader know if the idea or plan worked once we had been on the road for a period of time. I think I can attempt that now even without having spent a day in our future fifth wheel. At least when it comes to developing a truck and trailer budget. And I might add I am taking to heart and very much appreciate all the great advice I’ve learned from experienced travelers . There are so many ways to travel in an RV and all methods offer great points of reference.

I think I did it right in September of 2014 when I dusted off the old financial plan for retirement and brought it up to date. Also later when I took an inventory of financial assets at the time and future in the case of investments. I’ve got a fairly good idea of what will be our net worth at the time of retirement. Karen and I have discussed ad nauseam what our expectations will be for purchasing a home once we come off the road and how much cash to hold back for that. It’s not fun for Karen but is amusing to me that some of the conversations include her telling me we already talked about that three times. Someday I’ll be able to tell her “don’t you remember we talked about that three times” should there be a flaw in the plan. I do like it when she suggests we may not need to worry about a new place to live beyond buying a new trailer to continue the journey. I however like plan B’s that allow us to change course 180 degrees if necessary.

I’ll get to the point now.  And that is I should have taken the time to come up with a close list of extra costs to equip a trailer and truck rather than just assuming it would fit in the budget. Because that would have helped narrow the selection of a rig even further. Admittedly, much of these costs would be learned perhaps after finding them on someone’s blog, an article or through my own study. Others appeared to have figured out the real costs rather quickly, having bought their rig in a matter of months.

I’ve been compiling lists on pages in this blog as I learned about equipment others are purchasing for their trucks and trailers over years of travel. I’ll never have those lists complete with every possible item to choose from. In about four hours I wrapped that research up using a large Camping World catalog. And had fun dreaming about all the cool junk, I mean important equipment, one might need that was not already on the list.  I then took 30 minutes to go to my States Department of Motor Vehicles website to get an idea on what the taxes and fees would be to register a new to us rig.

I don’t have this perfectly worked out and don’t intend to even attempt that. But I’m assuming we will spend 5.25% for State and local taxes on the truck and trailer purchase which could be in the neighborhood of $5,400.

For equipping the new truck and the trailer that could start out as low as maybe $2,517 to drive it off the lot and plug it into full hookups at a campsite. This includes a fancy fifth wheel hitch. But more likely we will want to spend about $6,367 on new equipment initially to include more costly items Karen and I have talked about, apparently during at least three individual conversations.

Yup, I did a spreadsheet with all those items listed using the catalog price, my notes or taking an educated guess.  If I’ve linked it correctly you can look at it here: Items to Purchase

I went a step further and ranked each item in order of priority based on what we might purchase at the start and at various increments.  In total that list came out to $25,308 if one was to add all the previous mentioned upgrades, solar, built-in surge protection, a truck bed cover and much less expensive items.  You can look at the list for ideas. I could see us spending up to $9,775 in the first year or two of ownership to equip the trailer and truck on top of the $5,400 to license it. That’s a $15,000 bite out of what we have decided to be our rig budget. That pushes several trailers out of our budget by price point.  To include many if bought used that I’d want to own.

I do want to make one very important point that I learned from those more experienced than myself.  For the most part, we will do our best not to purchase any of these non-essential items until we have lived in our trailer for a period of time. Yes, we did buy an inflatable boat and use it now. Karen has an Instant Pot and uses it now. I guess I must also admit we bought a $15 grill top and a new light on a camping trip. But I did pass on the 50% off Weber Q 1200 grill at Walmart.  Bet I’ll regret that one.

It has been fun researching and dreaming because I had the past three years to do it. Kind of my right now RV fix I suppose. But realistically, deep down it surely must become all about the travel rather than the junk we will someday want to sell off. Especially for most of us who are on a budget. And for those who are not on a budget, it might be safe to assume they already bought their rig and spent the $25,000 for extra stuff. And it’s all been parked in their driveway at home for at least the past six months. For me, I’ve been there, done that and have a motorcycle to sell to prove it.

Thanks for reading and commenting. I hope you found this post amusing yet beneficial.

 

R.I.P Officer Gary Michael of the Clinton Missouri Police. Last call August 6, 2017.

Additional Health Care Planning

This will be the last of three blog posts concerning health care. I just completed truck research and will get that posted soon.  I’ve come up with a short list of trucks I’m interested in as well as an idea of how we intend to purchase one and when. 

On the home front, Karen now has an Instant Pot and loves it.  Three people at work also bought one and we all plan to share recipes. Karen made the best spaghetti she has ever made, browning the meat, putting in the sauce and noodles without dirtying any other dishes. And the chicken wings she cooked up were as good as any restaurant. 

 

Now on to health care.  I want to mention a few notes about legislature that’s in the works as well as a seldom known way to fund a Health Savings Account if you have a high deductible health insurance plan.

In an earlier post I mentioned how a co-worker uses a doctor who does not except insurance. His doctor is following this blog. On Dr. Rigg’s website there is a link to the Primary Care Enhancement Act of 2017 as well as a host of information concerning health care reform.

Per congress.gov  “this bill will permit an individual to pay primary care service arrangement costs from a health savings account; and allow an eligible taxpayer enrolled in a high-deductible health plan to take a tax deduction for cash paid into a health savings account, even if the taxpayer is simultaneously enrolled in a primary care service arrangement. Under a primary care service arrangement, an individual is provided coverage restricted to primary care services in exchange for a fixed periodic fee or payment for such services. For the purposes of certain tax-deductible expenses for medical care, the bill expands the definition of “medical care” to include periodic provider fees, including: (1) periodic fees paid to a primary care physician for a defined set of medical services or the right to receive medical services on an as-needed basis; and (2) pre-paid primary care services designed to screen for, diagnose, cure, mitigate, treat, or prevent disease and promote wellness.”

If I understand it correctly, this would allow an individual to pay a monthly fee to their doctor who provides primary care services for basic medical needs. And one could make the payments from a tax-exempt Health Savings Account (HSA) which might be a reason it is contested. In other words, this would become a form of health insurance whereby the darn insurance company (and their profits) are taken out of the equation.

Regarding funding a Health Savings Account (HSA): Karen and I are doing this through a plan at work whereby my employer also contributes money. At retirement, I hope to have built the account up. I’ll turn 55 years of age next year and will take advantage of the catch-up rule where I can contribute an additional $1,000 on top of the maximum allowed for a family. I just found out the law allows a once in a lifetime contribution to an HSA from an IRA.  I think this one-time transfer would be rarely used but might be a way to fund an HSA if one does not have the cash during a given year to make a contribution to an HSA. Here are my notes:

One time transfer of IRA money to a HSA account. The once-in-a-lifetime transfer from an IRA to an HSA does not increase the maximum you can transfer is your normal HSA contribution limit. In other words it’s not on top of your normal contribution limit. If you do the transfer, it reduces dollar-for-dollar the amount you can contribute in other ways, either directly or through your employer. The transfer from your IRA to your HSA is not taxable, but you also lose the tax deduction you otherwise would get if you contribute normally. If you do the transfer you must also commit to staying with an HSA-eligible high deductible health plan for 12 months. If you fail the commitment, the transfer becomes taxable and you’d have to pay a 10% penalty. The benefit is that the transferred funds and all earnings thereon could eventually come out tax-free, provided they are used for medical expenses. A qualified transfer from an IRA to HSA once you are on Medicare is not allowed.

• As a side note, government rules allow an investor to distribute IRA funds to pay for medical expenses. The 10% early distribution penalty may be avoided if proceeds are distribution prior to 59½. So you don’t need to move money from an IRA to an HSA to use it for medical expense. However there are special rules such as if you spend out of the IRA that years medical expenses must be at least 10% of your adjusted gross income.
• For 2017 the IRS defined “high deductible” as any deductible higher than $1,300 for an individual or $2,600 for a family, so your health insurance plan has to meet that threshold for you to qualfy for an HSA.
• My HSA has investment options so I would not be losing what the IRA savings would have earned through investment. 

Do your own homework before you decide to transfer money to an HSA from an IRA.

 Here is an interesting web site: Travel Tax.com – from Camper Cornicles blog.