Some people sell everything and leave for a life of adventure, often when some significant event occurs to either make them realize that life may end at any time, they become free from obligations or just simply need a change. This can be a very effective plan if you are a free spirit and don’t mind some bumps in the road, welcome it as an adventure and embrace minimalism. For examples, read the financial blog from 1Dad1Kid where he had very little, but did have some job skills, and left. Also Lainie on Raising Miro had a life change and she and Miro headed out and figured out a plan as they go. There are many stories like this and they are very inspiring. It can be done! You can figure it out!! For assistance on this check out the different ways you can fund your travel.
But, the bigger your family, the less likely you are going to be Couch Surfing, staying with friends and family around the world, and flying by the seat of your pants. We have six children and while I value my freedom and independence from working 9-5 and managing a house full of “stuff,” I also value my financial independence and not depending on crashing with family while I get things sorted out. This is not to say that we don’t have extended visits with family, but it’s a choice, not a requirement. They are welcome at my home and I am welcome at theirs. I would not feel comfortable if I felt like I was burdening them with our needs, like housing or food. Instead, when we visit, I purchase food, cook meals and help clean.
I’ve seen people head out World Schooling only to realize that their budget was simply too limiting. While they were surviving, and their needs were being met, they were unable to partake in any enriching activities. They couldn’t afford to go to the National Park once they had sailed for a month to get to the area. They couldn’t go out and to eat the local foods occasionally at restaurants without a significant sacrifice somewhere else. So, while they were surviving on a very frugal budget, not going into debt, not working, and getting to be home with their kids, they didn’t find it as comfortable and satisfying of an experience as they were anticipating. So they returned to their home country to work, invest and plan. Still traveling with their kids, still homeschooling, still experiential learning, but not yet full time traveling, although I’m sure they will do it again.
We all do what works best for us and our family and what is within our comfort zones. For us, it was planning, investing, frugal living and putting everything extra into savings and investment in order to be economically self sufficient despite not working full time. We have put in years of sweat equity in our investments also. I feel it’s been totally worth it. That does not make other approaches any less successful or wrong. And it took years of sacrifice, preparation and anticipation. It’s not glamorous, but it can set you up for long term success and a lifestyle others can’t even perceive is possible. And with the average household savings/spending plan, it may not be possible. 78% of the average American households do not have savings. You may have to live outside of the box financially or be immensely successful at what you do for a living. And here’s to you if you are financially comfortable and able to afford to take your family traveling without having to sacrifice. If this is you, take my kudos and you may as well move on to the directory of excellent family activities and events so you can dive into your adventure. But if you are still working on your financial success, here are some strategies that will help get you ahead:
First, live below your means.
No matter how little you make, you can usually live on less. This may mean having less than others around you. It’s OK!! We’ve been conditioned that you’re not successful if you don’t have what others have. REDEFINE SUCCESS. You have to get to the root of consumerism, to the triggers in your brain that give you the high after making a new purchase and re-train those brain connections to perceive the reward after paying off a debt by using the snowball approach, or reaching a particular goal in your savings each month. Teach your brain that each of those goals being met is one step closer to the freedom and lifestyle you want.
People have related that saving for them has been like dieting. You do very well one month, so the next month you ease up and reward yourself for your hard work. In the end, you come out net neutral or even worse off than you were when you started. Depravity doesn’t work except for the most disciplined of people. Instead you have to address the foundation of the priority. Realize that there is limited resources (in this case money). If you use it on one thing, you are choosing NOT to have the other thing. You have to prioritize and VALUE the freedom and lifestyle that come along with the frugality.
One tactic could be to start slowly indulging in the World School lifestyle that you want. Instead of satisfying your reward centers with a purchase, consider rewarding it with a trip. Take a night at a nearby lake or mountain region camping (same price as most “whim” purchases). Or make it a point to budget in a monthly excursion where you add experiential learning into your lives slowly, but surely. As you see and feel the value of what you are getting compared to those people who are driving a fancy car or have the latest iPhone while drinking their latte, you won’t question your decision. Your life will be so much richer!!!
Second, snowball your debt.
Work very hard to try to live debt free. This leaves you with a financial freedom that few experience in industrialized nations, but it’s very satisfying. There is such thing as good debt and bad debt. It’s a no brainer that bad debt has no place in your financial freedom. If you are paying interest on debt that was acquired for things that are not adding an increase to your net worth, you are living above your means. Sometimes in a temporary pinch, this may be necessary. But as a rule of thumb, you should pay off credit cards, car payments, boat payments, or any debt on something not adding value to your net worth.
Snowballing is like rolling a snowball down a hill and it keeps getting bigger and bigger. You pay off one debt and have increasing income for each subsequent debt payment. Read more about it here.
Student loans DO add value if you get the right degree for yourself. Educational costs have gone up dramatically, but time and again studies have shown that you more than recover your investment if you get a degree and use it. There are numerous reasons to get a degree, but it’s not right for everyone. Some VERY successful entrepreneurs haven’t even finished high school (the founder of Wendy’s). But on average, it’s a good investment and worth the debt. Even better if you can pay as you go or save up or parents can start educational funds to help support the effort. For most degrees, it doesn’t matter if you graduate from a prestigious school or your local college, what matters more is your work ethic. One of the most cost effective ways to go about it is start the first two years in a community college, then transfer to any University for the second two years. This takes planning and making sure your classes are transferable, but can save you thousands of dollars and you graduate with the degree from the University like everyone else. So you can spend $40,000 or $200,000 and have the exact same degree. Look at your education as an investment. Would you buy the same model car for 5 times the price?
Mortgages, or home loans, are also considered a good debt. The value of the investment is likely to go up over time. But, nonetheless, it’s a debt that you will be responsible for. It can be nice to pay down or entirely pay off your mortgage to give you increased financial flexibility and a more cushioned monthly budget. There’s two ways to look at this:
- If you are hoping to live off of real estate investments, you may want to use leverage and purchase multiple properties for the minimum amount you can use as a down payment and therefore have more properties going up in value, more rental incomes, and a more broadly spread out equity base. Understand the pros and cons of real estate investing and management principles before getting into it. It looks very good on paper, but it’s not easy. It’s a job, even though you may be able to work remotely, you will be working for these properties. Often it’s a boom and bust, you work a little bit for months at a time, then you have a LOT of work sometimes. You also have to pay the mortgages whether or not they are rented. And if a tenant destroys your property, short of filing an insurance claim, you’re left holding the bill for the repairs. And the longer it takes to get the repairs done and paid for, the longer you go without getting a new tenant and collecting rent. But many traveling families have a rental property or two, so it’s totally possible and when it’s working, it works great!
- If you aren’t wanting to do property management and investing on a large scale, the more you pay down of the mortgage, the more monthly income you will be able to keep from renting your house and/or when you sell the house, the more equity you will get in a lump sum payment when you close escrow.
- If you are risk adverse, meaning you want stability in your finances, you will be better off paying more toward your mortgage, which gives you more security and a more reliable income.
- If you are more of a risk taker, you may choose to take the money and rather than pay down debt, invest it in the stock market, bonds, or other more liquid assets with hopes of getting a higher return on your money. If your mortgage interest rate is very low, this may work out well for you. If it’s around 4% or 5%, you may have to actively manage your account to secure higher gains. Realize this approach also puts you at risk for losing that money. The rule of thumb is NOT to invest money you’ll need in the next 10 years in the stock market. The riskier the stocks, the higher the returns, but also the more significant the losses. So, this is a consideration, but understand the risk as you engage.
Third, set a realistic travel budget
If you’re going to travel for a set amount of time – say one year or two years, figure out how much money you can set aside to make the trip. Say you can save up $50,000 and you’re planning on being gone for 2 years. Then you have to find a way to live on $25,000 per year and travel. This gives you an average of about $2,000/month for costs. But remember, this is TOTAL costs. If you don’t want to go over budget and you need to make big purchases, it all has to fit within this budget. Are you going to buy an RV or a boat? Are you paying airfare for the entire family? Will you only fly a single round trip, or multiple legs of a journey? Maybe you plan on annual train passes or other means of transportation? All of this initial cost needs to be taken from the $50,000, so you may be down to $25,000 at this point, or closer to $1,000/month for all of your other expenses. That may work out if you’ve purchased accommodations and transportation, but you’ll likely come up short if you’re taking a plane and still need accommodations, food, and sightseeing.
Read through the finance oriented blogs and you will see that more than once families went over budget when they took trips. After some reflection, most of them concluded that in the future, they would travel differently. Usually a slower rate of travel, getting a monthly rate on a rental rather than nightly, taking local transportation rather than rental cars, and immersing in the local culture rather than going to the museum for a day trip to try to take in all the information in a single day lends itself to a more sustainable budget. One of the biking families noted that the first year they’d spent thousands on accommodations, but now they’ve fine tuned their free camping skills and pay almost nothing for accommodations anymore. You will learn skills of affordable travel as you go and your priorities shift. There is a common thread of all of the blogs, they ALL plan to go again!!
If you are starting more of a lifestyle change rather than a finite trip, the better approach is going to be setting a monthly budget. This can be more predictable and adaptable. What is your income going to be? Will you have a rental income? A work income? What are your debts? Don’t forget recurring expenses – are you going to have a cell phone plan? Internet? Health insurance? Student loans, credit cards, mortgages?
Your budget should have more of a cushion if you don’t really have options for increasing work income along the way. If you can stop and work because you have a particular skill that’s easily employable, you won’t need as large of a cushion in your monthly budget. For example, say you’re a nurse. You can go home for a travel contract (or possibly pick one up wherever you are), save up some money, then return to the journey. If you are a credentialed teacher, you can maybe work locally or set up where there’s internet and work online for awhile to recover from going over budget. A job skill that’s in need in many areas and flexible is very valuable to help you make up for any surprises or splurges along the way.
To set up your budget:
- What is your income going to be? $_______________
- How much are your recurring expenses (mortgage, insurance, student loan, car payments, child support payments, etc)? $ _________________
- Whatever is left over (1 minus 2) is what you have to live on. This will need to cover your cost of accommodation, transportation, food, utilities, sightseeing, clothing and anything else you choose to spend. It is best to plan to save at least 10% of #3 for contingencies. Something ALWAYS comes up! Say a loved one falls ill at home and you want to visit. Your best friend just announced they’re getting married and they want to you come, purchase attire and spend a week celebrating with them. Maybe you live in an RV and the transmission goes out. Life happens, even when you set up a lifestyle that most people are envious of. It’s still LIFE. Nothing has changed. Murphy still has laws. Plan for contingencies.
I’m a planner. It would not work for me to just set out and hope for the best. I’ve almost always been independently employed and don’t have much of a retirement account to speak of. I don’t trust a government pension to sustain my future. My children are growing up to be wonderful, intelligent, very capable people, but I don’t plan to burden them with my financial needs as I grow older. I would not be happy or comfortable selling everything and walking away. Hats off to those who successfully do it!! But if it’s not for you to “sell everything” and walk away, you don’t have to!! If you can appreciate delayed gratification and value quality time and experiences over the latest and greatest “stuff,” you will find that the lifestyle you read about others doing is totally achievable for you!! Follow the steps above, live below your means, snowball down your debt, and set a realistic budget that’s sustainable, and you too will be financially independent and able to make your dreams a reality!!