One Year of Nomading Expenses and a Financial Advice Rant Adventure

This post will be interesting to some while tedious and to be ignored by others. We have now spent one full year exclusively in Europe, and I thought it would be useful to look at expenses over that time period.

First some unsolicited advice, which no matter how much I champion, no one seems to heed. Probably, a not so subtle rejoinder that I refuse to acknowledge. But alas I will once again jump upon my soapbox and preach the gospel of Squishy.

Track your expenses!!

I don't mean glance at your bank statement or just have a rough idea of what you are spending your money on. I mean track every single penny you spend. If you buy a pack of gum for twenty five cents it goes in the spreadsheet.

I have done this since June of 2008. It's really not that hard. I just download our credit card and bank statements into a spreadsheet and run a pivot table. Probably takes me 15 minutes each month. This exercise provides two incredibly valuable pieces of information.

First, I did find some leaks. Cutting out unneeded insurances, extra cable boxes we didn't use and getting a more affordable phone plan reduced our expenses by roughly $250 a month without any change in lifestyle. Cutting expenses is a double edged sword (in the best possible way.) We now had an extra $250 a month to save/invest to get us to our goal that much faster, and it also meant we need less money when we retired since our expenses were that much lower thus getting us to our goal faster. Assuming the standard safe withdrawal rate of 4%, by cutting expenses $250 a month means we would need $75,000 less to retire ($250 per month * 12 months / .04 interest rate = $75,000.)

Secondly, it gave us a clear picture of what our average monthly expenses are so that we would know how much we actually needed to retire. Obviously, expenses varied wildly from month to month but after 18 years of data, clear trends and averages revealed themselves.

Based on nearly twenty years of data, I felt confident that the following monthly costs would support our lifestyle. I made the assumption that costs would be similar regardless of what part of the world we were in and that we would maintain a similar lifestyle as when we were working stiffs. Was this accurate? We shall see what the data tells us.

Estimated Expenses

You may notice that there are no numbers for utilities. This was an epiphany that I had way too late when we were in the planning stage. I realized that when we rent an Airbnb it also covers water, electricity, heating, Wi-Fi etc. This can easily be over $300 a month.

A note on charity. Since retiring is financially stressful no matter how much you plan, I simply wanted to be conservative and suspend charitable giving for the first couple of years just so I could be confident everything was working as expected. It all goes to charity anyway after we die, so either way it will end up there (at least that is how I rationalize it.)

Finally, what you are here to see. Here are our actual expenses for the last 12 months.

Much to say about this of course.

The one thing that throws this a little off is that we book (and pay) for our Airbnb's six or more months in advance. The values you see is the month the charge was incurred not the month we were in the rental. When you book the Airbnb you are immediately charged for one full month. If we stay longer than we are charged the remainder at the time that month is up. So for example the $812 in November is for the last week of our time in London.

Here is the comparison of estimated monthly expenses to actual (a negative in the difference category column means we spent more than expected and a positive less than expected.)

I am pleased that most of the numbers fall close enough to the expected value as to not be an issue.

A misconception that people have about our lifestyle is that we are always on vacation. This is simply not how we live. We are living as we would normally at home we are just doing it in other parts of the world. Obviously this gives us access to unique experiences but it's not vacation.

So we still do go on vacation. Most of our vacation expenses are for cruises. We are taking a river cruise in October and have booked multiple ocean cruises that cover both transportation, housing, food etc. (Transatlantic cruise back to the US for example) but I just put the cost into the vacation category. As another example our one week trip to France I counted as vacation.

I really had no idea how much to allocate for transportation costs so I just randomly picked $1,000 per month. I put all our public transportation and air travel into this category. We were well under that number until this most recent month when we rented a car here in Iceland. Everything is insanely expensive here. That brought our transportation number close to the $1,000 per month.

I would say the surprises would be the cost of food and entertainment. Food is the category for when we eat out. We seem to be eating out a bit more than back home. It's not outrages but still a fair amount over expected. With more free time we have been doing more things that fall under the entertainment category such as movies, escape rooms and plays.

Overall I am more than satisfied with the numbers. I think the thing that I take the most comfort in is that we could easily cut expenses fairly dramatically if needed. Most notably in the vacation category.

In general new retirees spend more money in their first few years as they check things off their bucket lists. I am not sure if this applies to us and our lifestyle but my confidence is growing every day that we will be able to maintain this lifestyle for as long as we like.

Sheri and I understand how fortunate we are to be able to live this incredible life. I certainly didn't do anything special to deserve it. We were just lucky how everything seemed to line up for us and fall into place. I was born in a position of privilege and simply followed the bath of least resistance and here I am in Iceland. Luck is the only word to describe it.

There you have it. I hope you found this informative. We will see how the next year of expenses pans out.

Brad and Sheri