Well, let's see how we did on the financial side for the year 2008. As usual, we open up all our finances for comparison purposes. This is that annual entry where I cringe before I hit the "post" button wondering if we really should put out this much detail. :)
Actual Expenses Compared To Budget
We'll start with our line item expenses as compared to our 2008 Budget.
Campground Fees - $1,920 (Budget $3,850)
Based on prior years' experience, we reduced our budget for campground fees. For 2005 - 2007, we budgeted $750 per month ($25 per day) in months we didn't workamp. However, we've learned that we do more free and cheap camping than we expected, and this was a good place to cut expenses out of our budget. So, for 2008, our budget was based on $15 per day or $450 per month for the months we didn't workamp.
At the time we did the budget, we knew we were going to workamp in January, March, & April. But we didn't know we were going to workamp June - October as well. Those four additional months of workamping are what kept us so far under budget.
We ended up with a daily average of $5.25, $160 monthly, for 2008. Of course that includes seven months of free camping while volunteering, workamping, boondocking, staying with friends, etc.
Let's pick it apart a little more. If we knock out the seven months of free camping and divide our total for the year by the other five months ($1,920/5) we get a monthly average of $384 or about $12.80 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. For 2007, we had 4 months of free camping. Knocking out that 4 months, we averaged $487 a month or $16 per day for 2007.
So, in our first 41 months on the road (Aug 2005 - Dec 2008), we have averaged $328 per month ($10.93 per day) when considering all months including the free camping. Knocking out the months of free camping, we averaged $461 per month or $15.37 per day.
So, in our three and a half years on the road, we've reduced our average monthly campground fees, while traveling and not workamping, from $554 in 2005 to $384 in 2008. However, I don't anticipate that trend to continue and we will maintain a budget of $450 per month ($15 per day) for the months we don't get free sites. :)
RV Clubs - $44.00 (Budget $140.00)
We are still members of Escapees, but we had enough referral gift certificates to cover the annual renewal for 2008. We dropped our Good Sam membership and my Golf Card International membership. However, our initial 3-year Passport America membership expired, so we did renew that for one year at $44.
We'll probably budget $50 in this category in the future.
RV Insurance - $714 (Budget $950)
Averaged $912 a year for first three years, and had a nice $200 drop this year.
Propane - $210 (Budget $100)
We got free propane while workamping in Jan, Feb, July, Aug, Sept, & Oct. However, we did not get free propane while working at Arches National Park in Moab, UT in March/April. We used propane to keep our trailer warm even though we were provided a "cabin" for housing. Because that was our choice and wasn't a necessary expense for the Park Service, we did not get reimbursed. Those two months alone cost $140 due to some pretty cold temps.
We've averaged about $11.00 a month for our 41 months on the road and there is no significant difference between workamping and non-workamping months.
Cell Phones - $1,098 (Budget $1,020.00)
I drowned my phone in a canoeing accident and had to purchase a new one. Otherwise, we were right on target on our $85 per month budget for our Verizon account. We'll budget $90 a month for 2009.
Note: Verizon plan 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 around $75 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 - $564 (Budget $636)
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 - $961 (Budget $900)
Didn't budget quite enough for the expected price increase.
Note: For 2008 service was $79.04 a month as follows: $51.99 for Total Choice Plus, $11.99 for Distant Network Service for Mobile Customers, $5.99 for DVR (TIVO), $4.99 for our second receiver, and $4.08 for tax.
RV Maintenance - $157 (Budget $600.00)
We included $50 per month for "just-in-case" stuff. Our expenses for 2008 broke down as follows:
New Check Valve - $80; Re-wire battery monitor after rodents chewed the wires - $32; New Thermostat - $45 (turned out the thermostat wasn't the problem, so now we have a back-up. :)
Diesel - $2,266 (Budget $1,730)
Bad budgeting. :) Higher diesel prices were one factor, but the main reason we were over was I simply didn't budget enough mileage for the year - especially for May & June when we traveled from Moab, UT to Branson, MO and back to Pagosa Spring, CO (Workamping to Rally to Workamping). Of course we didn't know we would be working in Colorado for the summer at the time the budget was prepared.
Our typical budget would be $350 per month when not workamping. That's based on 1,000 miles per month at 10 mpg at $3.50 per gallon.
Note: With the truck, 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.
We drove the truck 5,165 miles in 2008 for a monthly average of 430. Of the total miles, we towed 4,763 miles (397 monthly average) and drove the truck separately 402. Now, we were stationary seven months of the year, so we actually towed an average of 953 miles a month for the other five months in which we actually towed. I'm still amazed that my initial estimate back before we went on the road of 1,000 miles per month (when not workamping) is still holding up.
We paid an average of $3.9072 per gallon for diesel in 2008. That's way up from 2005 ($2.6552), 2006 ($2.7284), and 2007 ($2.8922). Our 41 month average for diesel has been $2.9004. For 2009, we are going to stick with the $3.50 per gallon as a budget as prices have gone back down significantly.
Gas - $2,058 (Budget $2,190)
We drove the Jeep 13,368 miles in 2008. Of that, 4,762 was following the fifth wheel on travel days and 8,606 was local area exploring when the RV was parked. So that was an average of 717 miles per month in local exploring.
We paid an average of $3.4619 per gallon for gas in 2008. We averaged $2.8693 per gallon from the time we got the Jeep in mid-2007 through the end of 2008. We'll use $3.00 per gallon for the 2009 budget.
With the difference between gas and diesel prices and the better gas mileage of the Jeep, using the Jeep for local exploring rather than the truck saves us between $120 and $150 per month. That definitely covers the cost of having the Jeep follow the RV when traveling and nearly covers the entire annual gas costs for the Jeep.
I'll say it again. For us, getting the Jeep has been the second best lifestyle choice we've made right behind the Datastorm Satellite Dish for internet.
Truck Maintenance - $157 (Budget $590.00)
Not much maintenance to do when you only use the truck five months and drive it 5,000 miles. :) In November, we rotated the tires and did an annual service.
We'll keep the budget at $35 per month for 2009.
Jeep Maintenance - $230 (Budget $240)
We budget $20 per month for this category. We did four oil change services and bought a new battery in 2008.
Truck Insurance - $708 (Budget $745)
Budgeted for an increase over 2007, but estimated a little high.
Jeep Insurance - $654 (Budget $670)
Pretty close on the estimate for 2008.
Truck Taxes/Registration - $578 (Budget $600)
Slightly over-estimated 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 - $145 (Budget $200)
Over-estimated the Taxes & Fees for the Jeep for 2008.
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 - $4,930 (Budget $5,400)
Our budget of $450 per month is based on $12 per day for groceries ($360 for a 30-day month) and an additional $90 per month for dining out. That's pretty tight on food, but we came in at an average of $411 per month for 2008.
For our 41 months on the road we have averaged $426 per month in this category. So, we'll go ahead and use the $450 per month for our 2009 budget as well.
Many have asked how we keep our food expenses so low. The biggest thing is we keep our dining out under control. We eat at home as much as possible. Linda cooks and I grill. But we keep meals simple.
Also, our tendency to stay in remote locations helps. We aren't tempted by fast food or fine dining restaurants. It's cheaper if we have to cook ourselves. :)
Another thing is that we don't spend a lot of time in social RV parks where there are lots of friends. Whether it's in the budget or not, we will follow the crowd out to dinner. Peer pressure can be tough on budgets. :)
We like a fine dining experience here and there, and we may splurge occasionally, but we make up for that the rest of the year. Another factor in keeping our costs down is that we drink very, very little alcohol.
As for grocery shopping, we shop at Wal-mart Supercenters whenever we can. Whether you like Wal-mart or not, their food prices are definitely better.
When not shopping at Wal-mart we make sure we have a shopping card (customer loyalty card) for all other groceries. Kroger, City Market, & King Sooper are all affiliated and any one of their cards work at the others. There are other affiliated stores like that as well.
Note: Also, the grocery cards get you a few cents off at the grocer's gas pumps and up to ten cents off of fuel with certain dollar amounts of accumulated grocery purchases. The gas prices are reasonable as the grocery chains often use their gas stations as loss leaders to get you to use the grocery, so the discounts often make the grocery the cheapest place in town to buy fuel.
We don't buy choice cuts of meat unless they are on sale. Sometimes we buy bulk meat and re-package it for several servings using Linda's Food Saver. We don't buy lots of bulk products often due to storage limitations, but we do have a big pantry and 12 cu. ft. refrigerator, so we can at least have lots of things on hand. Linda can work miracles if she has a full inventory of basic ingredients. :)
We buy store brands rather than name brands. Often the ingredients are exactly the same or very close, but we aren't paying for all the advertising and packaging. Sure, we still have our favorite name brands, but we are much more selective and diligent about reading labels if there is a store brand alternative.
We certainly aren't starving. We just choose to manage the food budget so we can enjoy other perks of the lifestyle. :)
Laundry, Clothing, & Hair Care - $662 (Budget $900)
We came in at $55 a month for 2008. About $35 of that is for laundry each month.
We did much better in this category in 2008 than in 2007, but we're going to keep the $75 a month budget for 2009. I feel some clothing purchases coming on. :)
Entertainment - $1,676 (Budget $2,700.00)
Our entertainment consists primarily of nature tours, golf, fishing licenses & gear, park entrance fees, books, CDs, and occasional hotel stays for mini-trips (usually while workamping).
Our 41-month average has been $192. So we will maintain a budget of $200 per month for 2009.
Insurance (Life, Health, Umbrella) - $3,345 (Budget $3,439)
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).
Our health insurance went from $181 a month to $195 a month in August 2008. I had budgeted for an increase to $200, so we were a little under.
Note: Our health insurance policy is a Kentucky policy with Anthem Blue Cross/Blue Shield. It is a PPO with a national provider network, a $10,000 deductible, $0 co-insurance, and a Health Savings Account feature. This policy started out at $169 per month in 2006, increased to $181 a month in 2007, and increased to $195 per month in 2008. I've budgeted for an increase to $220 starting in August 2009.
Medical & Dental Expenses - $38 (Budget $600)
We budget $50 per month in this category. Fortunately, we had a very healthy 2008. :)
Miscellaneous - $2,133 (Budget $1,800)
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 budgeted $2,400 in 2007 and that was too much, so we decreased it in 2008 and that wasn't quite enough. But it should be for 2009, so we're keeping it at $1,800 or $150 per month.
RV Upgrades/Budget Cushion - $14,729 (Budget $6,000)
We went a little crazy in this category. We just used $6,000 as a budget because it made our total budget $36,000 or $3,000 a month. That $3,000 per month figure is the figure we keep tossing out as realistic, moderate full-time living number.
As it turned out, we had a combination of things that totaled a lot more than $6,000.
We had taxes, tax preparation fees, and 2008 estimated taxes that totaled almost $6,000. I didn't anticipate the capital gains taxes when we sold stocks to buy the Jeep in 2007. Oops.
Since we were in Moab, UT, the Jeep capital of the U.S., we decided to get additions to our Jeep so they would be done right. We got a heavy duty bumper, a winch, and skid plates for $3,653.
We also finished off our RV electrical system with 4 solar panels and a solar controller for $2,994.
And, finally, we changed out our fifth wheel tires and wheels for higher rated ones that give us more confidence and safety cushion. The total amount there was $2,230.
Holy cow! We won't recover any of that money, but all of it went toward improving our lifestyle in some way. Surely, after 41 months on the road, we won't have much more in the way of large "improvements". :) Therefore, we only budgeted $3,600 in this category for 2009.
2008 Actual vs Budget Summary
For the year we spent $39,977 on a budget of $36,000.
But, if we take out the tax-related items, the Jeep upgrades, the solar panels, and the new tires/wheels, our living expenses came in at $25,248 or $2,104 per month. We budgeted $30,000 for the year (or $2,500 per month) in normal living expenses. So we are really happy with the 2008 living expense numbers. :)
I've averaged all our normal living expenses since we started, and it comes out to a pretty consistent $28,000 per year ($2,333 per month).
Now, the only big variable is whether or not we are workamping. In workamping months, our living expenses average $1,660 a month. In non-workamping months, our expenses average $2,760 a month. Check out Our 2005 - 2008 Full-time RVing Expense Averages page for a breakdown in spreadsheet form - a more visual comparison. :)
So if we workamped year round, that would make our total annual living expenses about $20,000. And if we did no workamping at all, our total annual living expenses would be about $33,100. That's a big difference! So I see at least a few months each year of workamping through the foreseeable future.
2008 Business Summary
In 2008, we continued to increase our net income. Again, we still have a long way to go, but we are headed in the right direction.
For 2008, we made a total net profit of $10,023. That's a lot better than the $2,500 we made in 2007 and the $200 we made in 2006. :)
DreamLife Creations (Linda's beaded jewelry) made a profit of $1,273.
Ho-Hummers (Hummingbird feeders & accessories) made a profit of $504.
RV-Dreams Workamping made $1,755. That includes stipends from Arches National Park and wages from V.A. Poma Ranch.
RV-Dreams.com made $6,491.
Some folks are interested in the website ad revenue. Here is the breakdown for 2008.
Google Adsense - $3,138
Affiliate Ad Income - $458
We had additional revenue from the Rally, cookbook sales, logo product sales, .... and donations. The donations came in at $729.
Total website hosting expenses were $1,325. That's where the donations go. Thank you! :)
Overall Financial Picture
We started 2008 with $436,400 in cash and investments. We ended 2008 with $272,200 - a decrease in financial assets of $164,200. OUCH!
We spent $40,000 in 2008 (basic daily living expenses plus the tax-related expenses, Jeep upgrades, solar panels, and RV wheels/tires). We had net income of $10,000 from our businesses. So, of that $164,200 decline, $30,000 was the net between our spending and business income. That means we had a decrease of $134,200 just from stock market decline.
Let's take our IRAs out of the equation. Not much left of them anyway. :) Of the $436,400 starting balance, the IRAs were $134,100. Of the $272,200 ending balance for 2008, the IRAs were $85,300. So, our non-IRA assets were $302,300 at the beginning of the year and $186,900 at the end of the year, a difference of $115,400.
Our 2007 Year-end Financial Recap talked about us earning 9% on our assets in 2008. HA!
In that 2007 Recap, as in the 2006 Recap, we re-iterated that we would NOT take our non-IRA assets below $200,000. Well guess what. We were below that threshhold before we knew it due to the quick drop in our portfolio.
But we aren't panicking yet. We spent a lot in 2008, but it's not like we spent the entire $115,000 decrease. A good portion of that value can come back if we curtail the spending of any more principal or at least slow it down quite a bit.
Also, we're feeling a lot more comfortable with a lower threshhold. I'd still like to have it at $200,000, but $150,000 would be okay. If it was to get down to $100,000, I think we'd definitely have to get back into a more "normal" workforce - kicking and screaming, of course. :)
The good news is that we have a really good paying workamper job for the summer of 2008 that will actually allow us to put money back into our accounts. In fact, if we have a good year with our businesses, we might get through the year with no principal reduction in our non-IRA assets. That might give us just enough time for the values of our financial assets to recover to reasonable levels.
I'm afraid it's going to be a long time before they get back anywhere near where they were. In fact, I'm afraid if they do get back to where they were too quickly, we're going to be right back in the same mess in a few years.
At any rate, we'll continue on with a slow growth business strategy and hope we find some good supplemental workamping income. I've said it before. The worst case scenario is we lose all of our investments, have to park the RV for awhile, and get "real" jobs. The good news about the "worst case scenario", is that we know exactly how much we need and we can find lots of jobs to cover our costs.
For those that are interested, here is a summary our finances since 2005.
Ended 2005 with $356,250.
In 2006, we had residual income from the sale of my company, some tax refunds, and other miscellaneous income from our prior life. The total income from those items was about $77,000. Investment values increased about $47,000 for 2006 for a total asset value increase of $124,000. In 2006, we had expenses of about $33,500 ($27,700 in basic living expenses and $5,800 in big ticket items). So we had a net increase of $90,700 and ended 2006 at $446,900. A great year!
In 2007, we had no more income from our prior life. We had only $2,500 net profit from our businesses and about a $41,500 increase in investment value for a total gain of $44,000. In 2007, we had expenses of about $54,600 ($28,000 in basic living expenses and $26,600 in big ticket items). So we had a net decrease of about $10,500 and ended 2007 at $436,400. Not bad considering it was such a big spending year.
In 2008, we had a net profit from our businesses of $10,000. And we had expenses of about $40,000 ($25,300 in basic living expenses and $14,700 in big ticket items). However, we also had a drop in investment values of about $134,200. That left us with about $272,200 at the end of 2008.
So 2008 wasn't the worst case scenario, but it was close. However, we're still filled with optimism and we're so glad we made the jump into this lifestyle when we did. There is a really good chance, having been with a large corporation in the real estate industry, that we both would have lost our jobs. And if we hadn't lost our jobs, the drop in the stock market would have just prolonged our quest for early retirement by several years. Even with the bad financial news and the recession, we certainly like where we are sitting as opposed to the alternative. :)
Here's hoping for a bright 2009! :)
We hope this recap was helpful. Let us know if there are any questions. :)
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