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.
Note: Now keep in mind that I prepared this entry concentrating on 12/31/07 numbers, and I've tried to not let the market conditions in early 2008 influence how it's written.
Actual Expenses Compared To Budget
We'll start with our line item expenses as compared to our 2007 Budget.
Campground Fees - $3,898 (Budget $6,375)
Our budget was based on $25 a day, $750 a month, for the months of May thru December 2007. Since we knew we would have a free campsite due to volunteering January through the middle of April, our budget was only $375 (half of April) during that period.
We ended up with a daily average of $10.68, $325 monthly, for the year. Of course that includes about four months of free camping while volunteering, staying with friends, etc.
Let's pick it apart a little more. If we knock out the 4 months of free camping and divide our total for the year by the other eight months ($3,898/8) we get a monthly average of $487 or a little over $16 a day.
For the five months of 2005 when we started and had no free camping, we averaged $554 per month or about $18.50 per day. For 2006, we had 2 1/2 months of free camping. Knocking out that 2 1/2 months, we averaged $512 a month or $17 per day for 2006. With the $16 a day for 2007, there has been a downward trend.
So, in our first 29 months on the road (Aug 2005 - Dec 2007), we have averaged right at $400 per month ($13.33 per day) when considering all months including the free camping. Knocking out the months of free camping, we averaged $501 per month or $16.70 per day.
We are very pleased with those numbers. :)
RV Clubs - $109.00 (Budget $155.00)
Escapees renewal ($70) and Golf Card International membership ($39) renewal. Decided not to renew Good Sam this year since we don't use any of their other products, we don't stay in Good Sam RV parks that often, and we can live without the Highways magazine.
Note: Escapees changed their referral program in 2007, so you can get credit against annual dues for referrals. We probably won't have that renewal fee for 2008.
RV Insurance - $914 (Budget $950)
Averaged $912 a year for first three years.
Propane - $56 (Budget $80)
For the winter, we volunteered and got free propane for Jan, Feb, Mar, and Dec. We've averaged about $8.50 a month for our 29 months on the road.
Cell Phones - $1,085 (Budget $972.00)
I lost my cell phone and had to purchase a new one along with a new adapter for our cellular signal amplifier. Otherwise, we were right on target on our $81 per month budget for our Verizon account. It will be a little higher for 2008.
Note: Price includes: Two lines, America's Choice National Plan with free long distance and free roaming, 700 anytime minutes, free nights & weekends, free IN-calling from other Verizon customers. Base price is $70 and taxes take it up over $80 per month.
Satellite Internet - $0 (Budget $0)
We classify this as a business expense. For reference, we pay $798 per year (less any referral credits we may have) which comes out to $66.50 per month.
Note: For Hughes.net service for Datastorm F1 .74 meter dish with download speeds up to 1MB and upload speeds rated up to 200 Kbps. Can get 2MB download service at higher price, but need larger dish.
RV Taxes/Registration - $624 (Budget $700)
I overestimated the Kentucky personal property taxes just a little on the RV.
Note: We are still maintaining Kentucky as our residence for cheap insurance, free mail service (via a friend), and a couple other personal reasons. Unfortunately, that means personal property taxes.
Satellite TV - $853 (Budget $900)
I budgeted for an increase in the middle of the year. Fortunately it didn't go up as much as expected.
Note: Current service is $72.70 a month as follows: $48.99 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 $3.73 for tax.
RV Maintenance - $549 (Budget $600.00)
We included $50 per month for "just-in-case" stuff. Our expenses for 2007 broke down as follows:
Miscellaneous light bulbs - $27; Replacement water pump (and a back-up) - $140; Inspect gray tank, lube wheel bearings, fix lighting - $182; Replacement shower head and hose - $18; Replace gray tank and kitchen faucet - $181.
Note: Our FreedomCare extended warranty covered the replacement of the gray tank and kitchen faucet except for a $50 deductible and the cost to ship the parts to the dealer. I found out later it would have also covered the failed water pump. Oops.
Diesel - $2,600 (Budget $3,300)
We budgeted $300 a month except for Jan - Mar when we were volunteering and would only have local travel. For those months we only budgeted $200.
The $300 a month budget was based on driving 1,000 miles per month, getting 10 mpg, and diesel prices averaging $3.00 per gallon.
Note: We get a solid 10 mpg while towing, about 15 mpg highway when not towing, and somewhere in between when in town. Those figures have stood up since we got started and our overall average is 12 mpg over 29 months.
We drove the truck 10,383 miles in 2007 for a monthly average of 865. Of the total miles, we towed 4,647 miles (387 monthly average) and drove the truck separately 5,736. Now, we were stationary five months of the year, so we actually towed an average of 664 miles a month for the other seven months in which we actually towed.
We paid an average of $2.8922 per gallon for diesel in 2007. That's way up from 2005 ($2.6552) and 2006 ($2.7284). Our 29 month average for diesel has been $2.7223. We are budgeting $3.50 a gallon for 2008 since it doesn't look like our 29 month average is going to hold up. But we won't be driving the truck as much anymore.
Now, when we did the budget for 2007, we didn't know we were going to buy a Jeep and have it to do local exploring for six months of the year. Had we not done that, we would have been quite a bit over budget in this category with much more driving of the truck at well over $3.00 per gallon for diesel the last part of the year.
Gas - $1,239 (Budget $0)
We had no idea that we were going to have Gas expenses in 2007. But in July, we bought a used Jeep Liberty to provide us some additional flexibility in our lifestyle. More on that purchase later.
We don't intend to double-tow the Jeep behind the fifth wheel, therefore we will have the extra expense of one of us following in the Jeep as we travel. However, that extra cost is offset because of the better mileage of the Jeep (averaging 19.5 mpg so far) for local exploring instead of the truck. Also, with gas currently being cheaper than diesel, we get an additional offset.
We drove the Jeep 8,462 miles the last six months of 2007. Of that, 2,518 was following the fifth wheel on travel days, 4,338 was area exploring, and 1,606 was for a roundtrip drive from Mississippi to Louisville in November for Thanksgiving, a reunion, and an unexpected funeral.
For the entire year, Truck & Jeep, we averaged about 840 miles per month in local exploring. Of course, our local exploring miles are higher in the months we are stationary when the towing miles are zero.
In 2006 & 2007, we averaged about 1,200 miles a month in total mileage (towing & local exploring). But now we have to add 400 miles a month for the Jeep to follow the rig during towing.
That will cost us an extra $60 per month, but by driving the Jeep the 840 miles a month for local exploring instead of the truck, we will save over $100 a month. So by having the Jeep, we should have a $40 net gain on fuel assuming the same travel habits. If we do more traveling (towing), we will lose that savings, but at least our addition of the Jeep will not create as big an additional fuel expense as we first thought.
Even though we didn't budget for the Jeep, and we had it for six months, we were still only over our total fuel budget by $539. If we would have had it all year, we could have reduced our diesel expenses by that amount and been right on the $3,300 fuel budget for the year. :)
Truck Maintenance - $519 (Budget $590.00)
In April, we did a complete 30,000 mile service at $423. Then we did another oil change and service in October for $96. No major complications and the truck is performing just fine.
Jeep Maintenance - $48 (Budget $0)
Again, this category didn't exist when we did the 2007 budget. We did one oil change service late in the year.
Truck Insurance - $705 (Budget $745)
Budgeted for an increase over 2006, but estimated a little high.
Jeep Insurance - $312 (Budget $0)
Paid six months of Jeep insurance.
Truck Taxes/Registration - $627 (Budget $600)
Slightly underestimated the Kentucky personal property taxes.
Note: We are still maintaining Kentucky as our residence for cheap insurance, free mail service (via a friend), and a couple other personal reasons. Unfortunately, that means personal property taxes.
Jeep Taxes/Registration - $0 (Budget $0)
Taxes & Fees for the Jeep for 2007 were mostly sales taxes, so we included that in our total Jeep purchase expense we will talk about later. Included this here to remind us to budget for the personal property taxes for 2008. It should be about $200 and a true additional expense for the Jeep (just like the insurance).
Note: We are still maintaining Kentucky as our residence for cheap insurance, free mail service (via a friend), and a couple other personal reasons. Unfortunately, that means personal property taxes.
Groceries & Dining Out - $5,589 (Budget $4,800.00)
We had a pretty tight budget for food at $400 per month. It was based on $300 a month for groceries (3 $100 trips) and $100 for dining out.
Well, we blew that by about $65 per month. It can all be traced back to some dining out splurges that got out of hand and more restaurant eating than anticipated.
For our 29 months on the road we have averaged $433 per month in this category. So, we'll compromise between that and our 2007 average and set our budget at $450 per month for 2008.
Laundry, Clothing, & Hair Care - $937 (Budget $840)
Since we were $400 over in this category last year, I increased the budget to $70 a month. It seems that I underestimated clothing purchases since we wear the same casual clothes over and over and they tend to wear out faster. :)
But even with the increased budget, we were still over.
How could that be since we had free laundry for 5 months? Looking back, we bought some water shoes, a wide-brimmed hat, and a few other things we hadn't considered. Also, Linda splurged on hair and make-up for a wedding since she had just hurt her back and couldn't do it herself. So, all in all, not too bad. I'm only increasing the budget to $75 a month for 2008.
Entertainment - $2,647 (Budget $2,700.00)
We had a few large entertainment splurges during the year (single expenses from $100 to over $400) which blew some monthly budgets. But we kept our eye on this category and came in under for the year.
Insurance (Life, Health, Umbrella) - $1,983 (Budget $3,653)
We expected our $1 Million Umbrella policy premium to come in at $200 and it was only $128. Our two (one for each of us) $250,000 life insurance policies came in on the button at $953 (they should have since they are 30-year level term policies).
The big difference in this category is in Health Insurance. Our first two years on the road, we paid our health insurance up front for a year at a time until we got a feel for our finances. I budgeted for an annual premium of $2,500 in 2007 as well, but we decided we were comfortable enough to go with monthly premiums and let the money sit in our account and earn some interest.
So our monthly premium of $180 for five months (started in August) was only $900 compared to the $2,500 budgeted annual premium.
Medical & Dental Expenses - $743 (Budget $600)
We knew we would be in Louisville and have the opportunity to get some annual medical and dental check-ups. But we didn't anticipate Linda's back injury and the resulting $260 in expenses from that.
Miscellaneous - $1,982 (Budget $2,400)
This is the category I hate. I just don't like having a "catch-all" category. But I've resigned myself to the fact that there are just some things that pop up that don't fit anywhere else without having 473 specific categories. :)
We include the following: small gifts for others, birdseed, firewood, new accessories (ladder, folding table are 2007 examples), and a myriad other small expenses that add up.
RV Upgrades/Budget Cushion - $6,366 (Budget $5,040)
We knew we wanted to do an electrical upgrade in 2007, but we weren't sure exactly when or how much it would cost. I set it at $5,040 because it fit into our budget to make the total $36,000 for the year or $3,000 per month. Real scientific, huh? :)
Well, we upgraded our electrical system for a cost of $4,020 ($1,660 for Xantrex 3000 inverter & monitor, $1,496 for 4 AGM batteries, $864 for wiring, shunt, Trimetric monitor, connectors, and other items).
Great - $1,000 under budget. Oh but then we were invited on an 8-day cruise of the Mexican Riviera for a friend's 50th birthday. The cruise was $1,400 plus $800 in expenses while we were on it. So there is why we were over in the category. We may regret spending the money later, but it was fun! :)
2007 Actual vs Budget Summary
For the year we spent $34,383 on a budget of $36,000. Okay, so even with the cruise, we came in under budget. If we take into account the change in the way we paid Health Insurance, that $1,600 difference puts us right on the mark.
If we take out the electrical upgrade and the cruise, our living expenses came in at $28,017 or $2,335 per month. We are shooting for a maximum of $30,000 or $2,500 per month in normal living expenses. So we are pretty happy with these results. :)
In fact, I've averaged all our normal living expenses since we started and it comes out to a pretty consistent $28,000 per year.
2007 Business Summary
In 2007 we did a little better with all of our little businesses. Still have a long way to go, but we are headed in the right direction.
Now we spent $6,300 over and above the living expenses we reported above. But we covered that with business income and actually made a decent $2,500 profit. :)
DreamLife Creations (Linda's beaded jewelry) made a profit of $1,440.
DreamLife Freelancing (Howard's writing & photography) lost $505 due to a new camera purchase. We still haven't done much to promote this yet, and it should be no worse than breakeven in the future.
Ho-Hummers (Hummingbird feeders & accessories) made a profit of $562.
RV-Dreams.com even made a paltry $36. :) But at least we covered all of our website hosting and maintenance costs, plus our satellite internet, and even a new laptop. So things should be a little better next year.
And we even picked up $1,000 in stipends from driving the nature tram at Santa Ana National Wildlife Refuge at the beginning of the year. :)
Now we just need to increase that $2,500 profit to about $15,000. Rome wasn't built in a day. :)
Overall Financial Picture
We started 2007 with $446,892. We ended 2007 with $436,396. Uh oh, that was a decrease of $10,496.
But considering we spent $15,547 for our 2003 Jeep Liberty (that includes the base price, taxes, new tires, and a receiver hitch), we were pretty happy to only be down $10,496.
We spent $56,230 in 2007 ($34,383 in expenses from above; $15,547 for the Jeep; and $6,300 in business expenses). Considering we had no income other than our business revenue of $8,830 and investment income, we were thrilled with the performance of our assets.
Let's take out our IRAs which were $119,786 at the beginning of the year and $134,102 at the end of the year. That was a nice increase of $14,316, a 12% return (even with the year-end downturn).
That leaves us with $327,106 to start the year and $302,294 at the end of the year in accessible, non-IRA funds. So that paints a little worse picture with those assets dropping $24,812. Those are the assets we will have to draw from to help cover expenses, so we certainly don't want to see drops like that.
Okay. So we brought in $8,830 in business income and we spent $56,230 for a net decrease of $47,400 (better not have any more years like that). Yet these accounts only decreased by $24,812. That means we had investment earnings of $22,588 which comes out to about 7% on the beginning balance.
Note: The actual return was a bit higher since the balance went down all year due to our spending with no corresponding income to offset it. In other words it's not really fair to calculate the return on the beginning balance since there were less assets than that to work with during the year.
If we can earn our 9% target return in 2008 on our $302,294 starting figure, we would earn $27,206 which would come really close to paying for our lifestyle.
If we earn a profit on our businesses or bring in workamping income, that would be a bonus. But we have no other income sources to rely on. From 2007 forward, it is strictly investment income and whatever we can earn on the road.
If we don't earn anything on our own and we get zero dollars in investment income, that would only give us three and half years on the road. Where did I come up with that?
Well, 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. :)
I am a little less comfortable with our financial situation than I was at the beginning of 2007. But we brought that on ourselves with some big ticket spending during the year.
We still have to keep an eye on our spending and keep track of every penny. And we still have to plug away at ways to earn money just in case the investment thing goes south. But I know we will be able to stay on the road a lot longer than 3 1/2 more years if that is what we choose to do. :)
This year, 2008, will be another good test. :)
We hope this recap was helpful. Let us know if there are any questions. :)
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