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.

 Snap 2018-01-20 at 13.37.52

 

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.

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Preparing for Mobile Office Work

Mobile, by definition, means the ability to move or be moved freely or easily. These are my long-term goals as I prepare to move a part time job from my home to our future in an RV.

Back in December of 2016 I posted an update on our financial planning. That month I’d brought up the idea a current employer wanted me to keep a part time office job.  Doing so would prevent having to draw from retirement funds while on the road. What a great opportunity and a good business deal that was good for both of us.  It did not take long for me to accept the offer. Since then I’ve become more confident keeping the job will work out. Especially after meeting others who are already working an office job from their RV and contacting others online regarding connectivity such as phone service. I really appreciate those of you who spent time answering emails or responding to comments on the topic. Thank you!

In January of 2014 I sold a small construction contracting business which employed five people. I sold it to the then superintendent who kept me on as it’s office manager. In short, the job requires about 10 hours of my time each week. I work from my home on Tuesday and Thursday evenings and again on Saturday mornings. The hours are flexible, but I always try and make myself available on the phone on those days for consistency.  Folks know they can get in touch with me during those days.

For the past several months I’ve kept a notebook at my desk and wrote down by category each major task I typically accomplish on the days I work. Usual office stuff such as payroll, customer invoicing, monthly/quarterly tax preparation and such.  Maybe not so typical is bidding floor plans from prints.  I came up with 20 titles for tasks I perform in my job where I needed to figure out how to get them done on the road.  Always keeping in mind, the greater goal is to make the move in a way which will cause the least inconvenience to my boss, customers, vendors and employees. I suppose success will be that few people will even know I’m sitting in sunny locations hundreds of miles away from them.

I’ve got the list sitting next to me as I write this. There are a few areas that have been more challenging to figure out and I would appreciate any advice you have to offer.

  • Mail service when a business is involved: Karen and I will establish a mail service in whatever state we decide to domicile within for personal use.  I’ve read everything I could find regarding how the Escapees RV Club mail service works for example. They are a little vague about business mail but state they provide the service. I’ll most likely end up calling each service for an explanation as to how they handle business mail. I’ve starting moving everything possible over to online service to avoid mail but there simply will be a need to receive some mail and for sure scanning services where they open the mail and scan it when requested.
  • Computer hardware for tiny homes: I’ve already decided a laptop and external monitor will be the way to go. When I’m out of range for WIFI or cellular service I’ll have the ability to drive down the road to connect. But what about printing?  Again, I’m doing what I can to go paperless. I mostly receive floor plans, maybe three to four a month, via PDF files. I may try and find a software to use in taking measurements but generally must print them off on an 11×17 printer.  Maybe half a dozen times a year, it’s better to have them printed in larger format by a service provider such as Office Depot. The boss says this one is easy. Tell the customer to send prints in a format I can use, or they will not get the best quotation (price estimate) possible. For lack of better ideas, I’m thinking to just go with the smallest laser printer possible and keep the 11×17 printer in a box for those times I need it.
  • Changing the business office address: Correspondences come to my home address now. The business address will change to the boss’s office once we leave in an RV. There will be times he has to forward items on to me. And there will be times I mail items to him to sign and expect him to forward it on in the mail, such as quarterly taxes. I’m thinking about training him on using a phone application to take photos to send to me and maybe getting with his wife, whom I’ve worked with in the past, regarding items he needs to sign and mail.

I’m hacking away at the list of converting the home office to a mobile office. It will help that we are planning to purchase the RV well in advance of going full time. That will give it a chance to test everything out from a local RV park or wherever. If anyone wants to have a longer discussion on the topic, just post in the comments section. I’d love to talk about it.  Here are a few more areas on my list to improve for a mobile office:

  • Signing up for mobile tax payments and filing forms. (In progress)
  • Customer invoicing. (Some already prefer emails)
  • Cutting down on business “junk mail”. (Faxing a form letter to take me off their list)
  • Cutting down on need to print stuff.
  • Working with accountant to submit end of year documents for taxes. (Will use their file server)
  • Researching affordable internet and cell service. And signal boosting.
  • A work area in the trailer.
  • Having all or most all vendors submit bills electronically.
  • Finish scanning old documents.

I suppose my office space can be the dining room table or sitting on the floor in the living room. But I’d rather figure something out that can be setup and torn down easily when not in use. Karen came up with a few interesting photos of mobile offices and I’ve been keeping a list of ideas I’ve heard about.

 

new flash  Vanleigh RV is introducing a new fifth wheel targeting the fulltime RVer. It’s called the Beacon. Click here for a brief video. I hope they do a better job with cargo capacity than the Vilano model has. I think they will because of 8,000-pound axles.

new flash Quick list comparing the 2016 Keystone Montana vs Grand Design Solitude differences per Camping World. I saw a similar list at the local 2017 RV show. This will give you an idea of what to look for that might not be easy to see.

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.

RV Depreciation

As usual, this blog post turns out to be a long one. If you’re just interested in quick RV depreciation opinions then scroll down to the text in red.

Karen and I decided to make a run to Grain Valley Missouri which for us is only a 45-minute drive. The town is home to three RV dealerships.  It was also the first time in a week Karen could get out of the house for an extended time. She had cataract surgery and received a new lens. She has had very bad eyesight her entire life. Those days are over. It was wonderful watching her excitement as we drove through the rolling hills which are in full bloom with green trees she can see at a distance.  Karen took a book to read for the drive as she normally does. She never opened it. The best part of the trip for me, now that I think about it, was watching Karen’s excitement. She gets the next eye fixed in a week.  Glad we have the time and money before taking off in 2019 to see the rest of the country together. Money well spent!

Speaking of money well spent what about depreciation on an RV purchase? I recall a conversation I had with a person when I was 18 years old regarding the need to purchasing a new television. Back then the selection of televisions was not as complicated compared to today’s models in varying sizes, resolutions and technical capabilities. Although I still don’t know what they mean by a “smart TV” because the darn things still require someone smarter than me to figure out how to set them up and use them. When I was 18 I hated spending money on something that might have to be replaced and still do. Because spending it reduces your net worth, a concept I had way back then. Perhaps the attitude came from learning the value of a dollar as a child, especially when you don’t have a lot of those dollars. The value of a dollar was further ingrained in my personality perhaps because I was a business major in college.  I spent some time in the corporate world, earning an income above our monthly needs. I kept the attitude to live below my means. I moved into public service as a law enforcement officer and the hourly pay became once again barely enough to save for a future. So, I found myself once again comparing expenditures as reducing my net worth, like I was 18 again. I compare the costs of large purchases against the hard-earned hourly rate for my time at work.

I’m sure these attitudes about the costs of things are shared with each one of you, regardless of income or life experiences. There is much evidence of this. The cost of living full time in an RV is front and center in much of what I read in your blogs, forums and articles.  It’s evident the ability to finance a retirement through savings and pensions may well be among reasons most of us do not retire a lot earlier. Especially for those of us who are in a hurry to move on to retirement, having already lived two thirds of our life expectancy.

I’ve not found the depreciation costs of an RV listed in other’s posted budgets.  It’s not in my estimated monthly budget either and will never be. It is however listed in my long-term financial plan. I know what our budget is for the RV and the truck purchases. I know my net worth and what it should look like if we stay on the road for six years beginning in October of 2019. I have an educated guess at what the value of the RV and truck might be worth when and if we sell it and move back to a stick built home. All the planning might not work out but I do have a couple plan Bs to cover possible changes. Although I can’t control most of what would affect Karen and me in the event of a financial catastrophe. Short of staying on the job until I’m much older, retiring and dying in what could be a short time later. I’m not willing to do that. Neither is Karen.

As part of long-term planning I researched what others had already figured out for RV depreciation schedules. I hope you would agree the variables for what might affect depreciation are considerable. What someone paid for the RV to start with and what the economy might be at the time of sale are a couple big variables. Especially if they overpaid for the RV or sell it when the rest of the baby-boomers finally sell theirs, saturating the market.

Speaking of the baby-boomer generation who will eventually sell their RV’s, assuming they don’t kept them until they have zero value. It’s a little off topic but should be a concern for anyone who might want to buy a used RV or attempt to sell one in the future. I did a study back in the mid 1990’s as part of preparing for a presentation. I was assigned to work in the crime prevention unit at the time. I have a passion for protecting the elderly which developed after a terrible event involving an elderly person. I wrote a research paper trying to win a federal grant to fund a crime prevention program. Working with a local Rockhurst University professor, part of the grant had to do with estimating the average age of persons in my jurisdiction in various future years. What I discovered was that here in Missouri, the percentage of persons turning 60 years of age, as a percentage of the population, would change significantly in 2010 and peek in 2020.  This was based on census data. If I recall the figures correctly, our state would be moving from an annual rate of .7 percent of our population turning 60 years of age to 1.7% beginning in 2010.  It was a significant shift in our demographics. Birth rates might have changed some of those figures, regardless you can see the point.  It’s effecting RV purchases now with record sales of new RVs and may cause a future record for used units on the market. Hmm, this might even present an opportunity for those that have the time to find the right used unit.

You know I can’t stop from writing a desertion about anything RV related. I started just wanting to write out what I’ve researched regarding a simple RV depreciation schedule. Sorry, can’t do that. I write like I think and to this point I believe the above information must be considered when estimating what our rigs will be worth in the future. And more importantly how do any of us justify spending hard earned money on any large purchase that does nothing but depreciate? You already know the answer to that question but I’ll still give you my opinion in a few moments.

If you scrolled down for quick information on RV depreciation then start reading here.

In my own financial planning, I’m figuring a new  high-profile luxury fifth wheel RV will depreciate 54% in 6 years.  I’m using 50% for the depreciation on a new one-ton diesel truck over a six-year period. Right now, my total budget is $84,655 for the trailer and $66,700 for the truck to include taxes and some of the items needed to equip the RV and truck. Although I suspect we will purchase some of the RV/camping equipment with current income rather than out of savings as we plan to purchase our rig up to a year before retirement. I’ve got just over eight weeks of vacation to use in 2019!  I have already decided it is most likely we will buy a one year old truck with well under 20,000 miles on it and save an estimated 22.24% compared to a new truck.

I found an interesting article written at Camper Reports.com. The writer’s conclusion is on average a new RV loses 21% of its value when it leaves the lot. The best value is found in buying a used five-year-old RV based on his depreciation schedule research. He believes there is “no significant difference from year one since model years are announced a year in advance–helping resale of a two-year-old trailer which seems to be only one year old to a potential buyer.” You can check the trailer label for the date of manufacture. The author’s research goes on to estimate depression off the purchased price on fifth wheels at 25% by year three, 29% by year four, 37% by year five and 38% by year six. Depreciation begins to level off at year five. So, if I’m reading his article correctly, total depreciation by year six off the manufacturer’s suggested retail price is 59%. That assumes you lose 21% when you drive it off the lot and another 38% by year six.

I can’t find the link but have it in my notes the writer at RV Research.com estimated the depreciated in general for RV’s at 50% by year five. This guy at Axleaddict.com has done a lot of research on motorhome depreciation where he compared two specific units. His research estimates total average depreciation at 58.9% through year five.

It’s okay to stop reading if you were just after a few opinions on depreciation schedules.

There may be other cost considerations as part of this. Such as inflation rates and what one loses in interest by not keeping the money in the stock market (or whatever) rather than spending it.  The “old me” might have considered that! I’m planning not to think so much about the money details someday which will be the “new me”.

For my planning, the estimated depreciation only tells me what I might be able to sell everything for and then use the money to buy a home or whatever should we ever come off the road. OR elect to buy another RV and continue on.  The old me sees the depreciation in our budget as something costing on average around $7,618 a year or $634 a month. Add the truck and the monthly expense becomes $1,097 given our budgeted purchase prices over a six-year period. I know some of you are going to figure it up on your own – it comes out to $78,984 for six years.  At 7% earnings that money would generate $33,178 if invested rather than spent. Sorry – the old me chimed in at the last moment.

So how does one justify the expense of it all. The old me says; the hotel rooms for a year could cost over $27,000 or maybe $162,000 in six years, the food would be expensive if not cooked at home and you have to own a car anyway.  The new me says; what price does one place on looking out over a view that photos can’t capture, what price do you place on spending time with family and friends, what have you been saving for, is it really that important to work until death and I hope we can do this before the North Koreans figure out how to launch a long-range missile. If you want more opinions on if the depreciation is worth it, go to this 22 page forum thread.

Karen, with her new eyes, and I are going on an adventure. I’m not giving a second look at depreciation because it does not matter short of how much will we have left for our next adventure.

Updated Summary of Trailer and Truck Purchase Decisions.

Karen and I started touring RVs in January 2015 with a visit to the local RV show. In time, I came up with an outline of seven steps we might consider leading to the eventual purchase. As usual my personality provokes me into over-thinking every aspect of the decision. It has been a fun process as I enjoy research and meeting others who have gone through the process of selecting their rig. Karen and I agree with the concept of buying your third trailer first. In other words, whatever we get we are planning to keep for a long time and avoid taking a hit on depreciation should we trade out the trailer within a couple of years. I have read several times where others estimate trailers depreciate quickly in the first five years.

Continue reading

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. 

Snap 2017-04-10 at 19.18.44
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.

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

Health Care Research – Direct Medical Care

Just a quick follow up to my last post regarding health care planning. I had mentioned a coworker uses his health savings account (HSA) to pay for medical care with his family of four. His doctor charges a set fee which is believed to be about what an insurance company would have paid the doctor or less.  I met with him briefly for more details.

The doctor’s web page is directmedicalcare.net.  There are two levels of payment depending if your family is a “member” or not. An annual fee is $800 for a couple or $1,200 for a family. Basic doctor’s visits, annual physicals and more are free for members. For non-members a doctor’s visit is $70 for example. And the doctor offers on-line medical care they call “virtual care” at $50 during office hours or $60 after hours. Also, the doctor will met him at the office after hours for care such as if he need stiches at a cost generally lower than an urgent care facility.

I asked my co-worker when he might use his insurance coverage and he said only for major medical issues such as for hospitalizations or referral to a specialist. Under the direct medical care service the doctor’s office does not file insurance claims. You must do that on your own, however the doctor’s office will provide you with the appropriate codes to submit to the insurance company.  I also asked how this affects meeting his annual insurance deductible. He has a high deductible plan and does not worry about it because he does not ever meet the deductible unless his family has a major-medical issue. I’d want to check with the insurance company to see if I could maintain records to show how much I had spent out of pocket or how they are handling services from doctors who except cash payment. Luckily, Karen knows how to file accurate insurance claims.

I could see doing more research in finding a doctor who does not take insurance but charges a lower fee such as this. Perhaps we might find a service in whatever state we decide to domicile in or spend our winters. Then have all the records sent to the new doctor. Or another option might be to switch to a doctor who is near our current home where we intend to later visit family for longer periods. I really am interested in the “virtual visit” portion of the plan. Not only would we not have to subscribe to another service while on the road but our established doctor would have a better idea of our issues before we hit the road, such as the need for prescription medications and more.

I wonder if having an established doctor in the state we select as a domicile will make a difference in establishing a “legal” domicile or not?

This is the first I have ever heard of such as service.  Once I started surfing the internet I found it to be more common than expected. Click on the link for direct medical care and have a look.