Budgeting and finding ways to save


Nothing to do with finances… but we are hiking the Wicklow now!

We hear this a lot when we tell people we’re full time travelers. “Wow, you guys must be rich?” I’m not sure what part of “We sold what we owned, carry our possessions with us and lived for three months in Guatemala” screams of wealth. My definition of rich is a second home in Hawaii. (Or maybe that was my definition.)

The reality is, I retired at 57 and hope to defer Social Security until I’m 66 1/2. We will not receive Medicare until we are 65. I won’t claim poverty, but we need to mind our money.

I’m fortunate to have a pension (albeit skinnier than the pensions of old). Additionally, IBM set money aside to pay for medical costs, including insurance. (They did this when they eliminated free medical coverage in retirement.) That account will pay for roughly two years of health insurance.

In general, we live on my pension augmented with monthly withdraws from a savings account. We try to withdraw as little as possible. When we turn 66 1/2, we will collect social security, but that day is more than seven years away. Then, I’ll begin to tap my 401(k). But for now, those things are in the future.

So how do we do this?

One key is, we don’t have bills. Beyond our medical insurance (which IBM is currently paying), we have a cell phone bill. No new tires for the car, no home insurance, no electricity bill or property taxes. And no storage unit.

Our living expenses are highly variable and highly discretionary. We choose less expensive countries or tiny apartments. Our apartment in Paris is 275 square feet and rents for 1200 euro per month. (That’s the apartment we lived in for three months last year and the one we’ll move to February first.) It’s Paris; we have low transportation costs and wonderful and affordable markets.

If Paris is too expensive, an expat could retire very well in Guatemala for 1200 dollars a month. We spent the winter there and met lots of lower budget retirees living happily in the land of perpetual springtime on a thousand dollars per month. We spent the winter there to offset other more expensive months last year.

Like San Francisco in August where rent was three thousand dollars for a month in a modest basement apartment with no functioning kitchen. Ouch. Couple that with twenty five dollar glasses of wine, and you have a treat we won’t be repeating for a while.

We’ve found it easy to live inexpensively; it’s harder not to fritter away money. We need to do better on this. Here are our focus items:

International flights: This year, we are making our last summer trip home. Since our dates are flexible, we will fly the other nine months of the year.

 Living in US cities: This is probably the last trip I’ll be making to the West Coast. We will focus on cities where our kids live, and we will stay with them when we can. (Is that cheering I hear?!)  This year we all met up in Ireland. I hope we can do that again.

Staying in apartments for less that 1 month: We always receive a substantial discount (~40%) for staying at least a month. To date, we’ve moved before we needed a long-term-stay visa. Next year, that will change when we live in Paris for a year. Reductions in moving costs will move than offset the visa fees. (Click for more on finding apartments.)

Thinking we are on vacation: This is big. Vacation implies eating out, concerts, museums–a general loosening of the rules. It is a time when you spend money and don’t manage your health. We can’t think of our life as a vacation. We happen to move more than the average person and to more countries. But once we settle in, we are home. We have to think of it that way. Occasionally, one of us will say, “Let’s be on vacation this week.” When the week is over, vacation ends.

Moving: At times, we go from one home directly to the next. Often, we travel for a week or more between apartment rentals. This is where we spend a lot of discretionary money. In the future, I plan to manage our moves tighter.

Health Insurance: Right now, our health insurance costs are covered by IBM, but this coverage will end before Medicare (age 65). I have lots of work to do here. Move to a cheaper plan? Move our medical coverage to Europe? When Pat needed surgery in Budapest, the experience emboldened us to seek non-US options. I’ll let you know what we decide.

Storage: Our storage unit cost $250 per month. In retirement, we elected to get rid of it.

Renting cars: This is costly and extravagant. In the US, with insurance, plan on spending nearly a thousand dollars per month. If you rely on credit card insurance, call them. My credit card only covers the car (no liability) and only for 30 days. (Last year, we rented a car for 90 days.) We stopped renting cars whenever possible and put a bit more money towards rent in the costlier, city-center locations. We use Uber and public transportation when we must. In general, we walk.

Those are the big items, but I also manage the small expenses.

Taxiing to/from the airport: After an international flight, it’s so easy to hop into an awaiting car. This might be relatively small, but it’s a strict rule with us. In Europe, public transportation from the airport is frequent and cheap. (The key, travel light!)

Reducing bank fees: ‘Bill pay’ from our bank cost 5 dollars a month if we have fewer than three bills. I cancelled this and pay my cell phone directly with Sprint. It’s only sixty dollars a year, but that’s a dinner out.

Managing ATM charges: I use a CapitalOne 360 debit card for all international ATM withdrawals. My bank charges 2% per international withdraw. (Another good international ATM option is Charles Schwab.)

Managing Credit Card Fees: I use a CapitalOne credit card because it has no international transaction fees, and I get a bit back on travel expenses.

These small fees add up, so last year, I went on a small campaign to reduce them.

Bottom line, this life is as inexpensive or expensive as you need or want it to be. The choice is yours.

For us, full-time travel was the means to be able to retire before social security and still explore other cultures without spending down our savings. We view our life as a gift, not a sacrifice. So yes, in that sense, we are rich.


Wicklow Update: In three days we have completed 42 miles–or about half the trail. I’m posting this from the lovely Glenmalure Lodge where we have a rest day. Tomorrow, we hit the trail headed towards Dublin.

Categories: How To

6 replies

  1. You two are an inspiration!

  2. I love this post, you are answering some of the practical and pragmatic details of the way you are managing to live the life. The comment of thinking you are on vacation, rings loud and clear, an easy trap. The ATM and credit card fees is also an interesting topic and we need to investigate, there always seem to be enough fees to add up to a significant percentage of the transaction. I hope the walk has gone well, I was surprised to see some photos of pretty rugged conditions, BRAVO.


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