2006 Year-End Financial Recap

Well, let's see how we did on the financial side for the year.  As usual, we open up all our finances for comparison purposes.

Actual Expenses Compared To Budget

We'll start with our line item expenses as compared to our 2006 Budget.

Campground Fees - $4,863.02 (Budget $9,000.00)

Our budget was based on $25 a day, $750 a month, and we ended up with a daily average of $13.32, $405.25 monthly.  We had about 2 1/2 months of free camping and we rarely went over the $25 per day.

RV Clubs - $97.00  (Budget $152.00)

Escapees renewal and Workamper News subscription.  Good Sam was included with the Golf Card membership in Entertainment since we renewed both together.

RV Insurance - $924.50  (Budget $950.00)

Propane - $158.55  (Budget $90.00)

Had a boondocking experiment in the summer with our propane generator.  That caused us to fill up both of our 40 pound tanks an extra time.

Cell Phones - $1,352.27  (Budget $972.00)

We were right on target on our monthly service at $80 per month.  But we bought an amplifier and two extended service area antennas for more remote connection.  Well worth it.

Satellite Internet - $0.00  (Budget $1,130.00)

We budgeted for satellite internet based on the annual price we paid in 2005.  However, in 2006 we determined that the vast majority of our use is for business and we classified it as a business expense.  So the $800 actual expense we paid in January for 2006 service and in December for 2007 service were not included in our living expenses.

RV Taxes/Registration - $754.00  (Budget $1,120.00)

Guess I overestimated the Kentucky personal property taxes on the RV.  That was a nice surprise.  :)

Satellite TV - $640.87  (Budget $744.00)

Had paid for a full year in 2005, so we didn't have a charge the first three months of this year.  Otherwise I would have underbudgeted.  We will have to bump the budget up to about $840 in 2007 for DirecTV.  Our $67.95 a month is $45.99 for Total Choice Plus, $9.00 for Distant Network Service for Mobile Customers, $5.99 for DVR (TIVO), $4.99 for our second receiver, and $1.98 for tax.

RV Maintenance - $146.98  (Budget $600.00)

We included $50 per month for "just-in-case" stuff.  We were fortunate to have only minor expenses in 2006, but we have some big plans for 2007.

Diesel - $3,452.28  (Budget $3,600.00)

We did good on our $300 a month estimate.  We drove 15,081 miles in 2006 for a monthly average of 1,257.  That's a couple hundred miles per month over what we planned as we want to be right at 1,000 miles per month. Of the total miles, we towed 5,650 miles and drove the truck separately 9,431.  We paid an average of $2.627 per gallon for diesel in 2006.

Truck Maintenance - $160.17  (Budget $590.00)

Again we were fortunate on the maintenance.  We did what we were supposed to do.  Of course this category doesn't include the $2,000 we spent fixing the truck after I dropped the trailer on it.  See the Miscellaneous category for that.  :)

Truck Insurance - $692.84  (Budget $800.00)

Budgeted for an increase over 2005, but estimated a little high.

Truck Taxes/Registration - $674.00  (Budget $600.00)

Slightly underestimated the Kentucky personal property taxes.

Groceries & Dining Out - $5,027.66  (Budget $4,800.00)

We have a pretty tight budget for food at $400 per month.  We're pretty happy to have been only a couple hundred over for the year.

Laundry, Clothing, & Hair Care - $1,002.86  (Budget $600.00)

This one was a shocker.  I was quite surprised that we were $400 over on the year.  Looking back, we had a large $100 make-up order for Linda, and she splurged with her hairstylist when we were in Louisville for my 25-year high school reunion.  But mostly, we were over because of clothing purchases.  Since we have fewer clothes, we wear the same things over and over.  That means they wear out quicker and have to be replaced more often.  :)

Entertainment - $2,920.18  (Budget $2,400.00)

We did good on our $200 per month budget.  Only our fly-fishing lessons and equipment purchases late in the year pushed us over.  It was worth it.  :)

Insurance - $3,106.36  (Budget $4,853.00)

Our Umbrella policy came in $70 lower than expected, our life insurance came in on the button, our health insurance was almost $500 under budget since we increased our deductible, and the $1,200 we budgeted in December to transfer to our Health Savings Account was determined not to be an expense but rather simply a transfer of funds so the budget was over on that.

Medical & Dental Expenses - $463.54  (Budget $0.00)

We didn't budget for anything for 2006 because we didn't expect to have any of these expenses.  However, since we unexpectedly spent almost three months back in our old hometown of Louisville, we went ahead and made some appointments and got some annual check-ups done.

Miscellaneous - $7,136.56  (Budget $1,570.00)

This is where things got a little crazy.  We paid $2,000 to get our truck fixed after my screw-up back in May.  We also spent $1,700.00 on our new Sea Eagle inflatable pontoon boat.  In addition, we bought a SurgeGuard electrical system monitor, a weather radio, wheel chocks, an air compressor and other accessories - total of about $1,000.  There were several other things that just popped up.  I had hoped $100 a month would more than cover such items, but boy was I way off.  I might increase the budget for 2007, but it certainly won't be to $600 per month.  :)

2006 Actual vs Budget Summary

For the year we spent $33,573.64 on a budget of $34,571.00.  That looks really good except I had hoped we would be around $30,000 or less.  We don't have to look any further than our Miscellaneous category.  Hopefully, through a year and a half, we have bought all the toys and accessories we need, and we can keep the major unexpected expenses to a minimum.  For 2007 our budget might be about the same as for 2006 so that we have a little cushion, but I really think $2,500 a month and $30,000 a year will get it done.

2006 Business Summary

In 2006 we got all of our little businesses going with pretty good results.

Now we spent $7,500 over and above the living expenses we reported above.  But we covered that with business income and actually made a tiny $200 profit.  At least our tax liability will be nothing.  :)

DreamLife Creations (Linda's beaded jewelry) made a profit of $1,132.  And that was with quite a bit of start-up costs early in the year.

DreamLife Freelancing (Howard's writing & photography) made a profit of $984 and we haven't even tried to promote it or expand it yet.

Ho-Hummers (Hummingbird feeders & accessories) made a profit of $240.

RV-Dreams Public Speaking (Life On Wheels & other seminars) made a profit of $1,242.

Only RV-Dreams.com took it on the chin with a loss of $3,400.  Of course that included about $2,800 in satellite internet equipment and services.  We won't have $2,000 of those expenses in 2007.  Also, we purchased quite a bit of logo and promotional merchandise for advertising purposes.  With some promotional effort in 2007, we should get RV-Dreams.com profitable as well.

Overall Financial Picture

We started 2006 with $356,000.  We ended 2006 with $447,000.

Let's take out our IRAs which were $106,000 at the beginning of the year and $120,000 at the end of the year.  That was a nice 13% return.

That leaves us with $250,000 to start the year and $327,000 at the end of the year in accessible, non-IRA funds.  So our accounts increased $77,000 even though we spent $33,500 in full-timing expenses plus $7,500 in business expenses ($41,000 total).

Let's see how that happened.  With the final residuals from the sale of my company, tax refunds, and the $7,700 from our businesses, we brought in $80,000 in non-investment income in 2006.

But we spent $41,000 so that means we added a net of $39,000 to our accounts.  Since our accessible funds accounts increased by $77,000, the accounts must have earned $38,000.  So we had a really, really good investment year.

If we can earn our 9% target return in 2007 on our $327,000 starting figure, we would earn $29,430 which should pay for our lifestyle.  Nine percent every year should keep us on the road forever without us having to earn a penny working.

If we earn a profit on our businesses or bring in workamping income, that would be a bonus.  But there are no other income sources - 2006 was the last of those company residuals and tax refunds.  From now on it is strictly investment income and whatever we can earn on the road.

If we only earn 5%, that would be $16,350 and we would have to earn half of our expenses to keep from dipping into our savings.  If we had a bad run of 5% earnings years, we could stay on the road for 8 1/2 more years.  That assumes we don't earn anything on our own and we took our accessible savings down to our threshhold of $200,000.

We have determined that we will NOT take our accessible, non-IRA accounts down below $200,000.  That $200,000 and our IRAs are our reasonable safety net for our age if we are forced off the road for any reason.

So, we will still pursue our business opportunities and we will continue to look at workamping.  We just never know when those bad investment years will pop up, and we want to try to keep what we have from going down - at least not any faster than necessary.  :)

But just as I said back in August, I am much more comfortable and laid back with our financial situation than I was when we started.  We still have to keep an eye on our spending.  We still have to plug away at ways to earn money just in case the investment thing goes south.  But, even though we keep track of every penny, we are a little more free with things we want to do.

This year will be a good test.  :)

Our only intent is to post real information since I know how little good financial information is out there.  "How much does it take?" is one question, but "Where does it come from?" is the other important question that is not often answered in detail.   

Hope that recap was helpful.  Let us know if there are any questions.  :)