Do you long to lower your expenses and head out on the open road? If so, this post will help you make your dream a reality! We are looking at the real costs associated with RVing. What types of expenses will you encounter and what kind of savings do you need to make this lifestyle happen?
First, I want you to imagine going into a grocery store and filling your cart with everything from your grocery list. If you are like most of us, you toss in a few extras items and then head for the checkout.
Now imagine you are stopped at the door. Next to you there are a line of customers with grocery sacks full, ready to exit the store.
Here's the question: Did each customer spend the same amount on groceries? Of course not!
Cart #1 Spent $500. Their sacks are filled with gourmet treats and grass fed meats.
Cart #2 Spent $300. Cart two's sacks are filled with a variety of fruits, veggies, and pre-packaged frozen meals.
Cart #3 Spent only $150, but using an envelope full of coupons she purchased more items than both customers before her.
Get the picture? Every grocery sack holds different items with various expenses. This is a lot like traveling full time in an RV. Prices and expectations will vary.
If you are frugal at home, odds are you will be frugal on the road. If you live a first-class lifestyle in a stick and brick home, you will probably spend more money on your travels than many of your RVing friends. The truth is you create your budget based on your lifestyle choices; that's the great part about RVing - you have a lot of say in how and when you are going to spend your money.
Creating a budget is a hot topic among RVers. What will you actually spend while living on the road? Can you honestly afford to cut ties to a stick and brick lifestyle?
The information may surprise you.
Here are a few of the categories you should consider.
#1: Home vs. RV Ownership. In most areas of the U.S., real estate prices are going up FAST. In 2016, the average American mortgage payment was over $1,000 a month according to the Bureau of Labor Statistics. This statistic did not include taxes, insurance or other essential fees. And the average interest rate is 4-5%! Over the course of a 30-year loan, you will probably pay another $100,000 in interest alone!
In the end, however, your home may go up in value and will probably last for a generation or more. Will it go up more than the $100,000 you pay in interest? Will you make money by the time you make expensive remodels and landscaping improvements? As we learned in the 2007-2008 housing crisis, there's really no way to know.
Now back to our example. Let's say you pay $1200 a month for your home. Once a year, you spend several thousand for a family vacation on top of your regular expenses. In return for this payment, you gain space and stability, a fixed box location and a trip outside once a year.
For a $200,000 home, you will need approximately $40,000 as a down payment.
Now, let's turn that situation around. For a smaller space with the freedom to travel and explore, your initial costs for an RV can be as little or as much as you want. For example, the average used Motorhome is $35,000 and requires $3,500 down. The typical new Motorhome is $122,000 and needs $24,400 down. The initial out of pocket savings is significant. Of course, you may not want to finance your rig. Many people actually buy and restore vintage RV's so they can buy their rig outright. The choice is up to you.
While a home may require a $1200 a month payment, you could own your rig outright or have a payment as low as $500 a month. You see savings in your budget immediately!
The flipside, however, is that RV's decrease in value over time. Most will have to be replaced or upgraded within a ten year period. You will, however, save a lot in interest, but you won't have an increased investment at the end, that is if you count your investment only in terms of financial gain. A full-time RVer wins freedom. They enjoy watching the sunrise and sunset. They see their kids, grandkids or friends more often. They have more control over their day to day life and location. For many, that is a generous return on investment.
#2 Utilities. If your stick and brick home is 1500 square feet or more, you will average $250 a month in utilities depending on where you live. Utilities in an RV will vary on whether you are in an RV park or are living on solar power boondocking. Utilities could be as much as $250 a month or as little as $30 a month depending on your choice of location.
#3 Taxes. Traditional homes require property tax, and this can average between $100-$200 a month based on your region of the country. Property tax is non-existent in an RV. You will, however, have the cost of fuel. The cost of fuel is what worries many people. With the price of gas continuing to soar, how can you save money RVing?
Actually, fuel consumption is a personal choice. How far do you want to go? Would you prefer to stay in one place for a month? The choice is up to you. So in this regards, you decide how much to spend and when. If you are used to a stick and brick life filled with fixed expenses, fuel consumption actually feels freeing.
#4 Insurance. Home insurance can be less than RV insurance depending on your region of the country. If you are a resident of a Midwestern state with tornadic activity, you will have much higher than average home insurance. RV insurance is essential, but it too will vary depending on the age of your rig. In most cases, RV insurance will be a bit more than your regular homeowner's insurance each month.You can get a free quote at RVInsurance.com.
#5 HOA vs. Clubs. If your stick and brick home requires a home owners association, your fees can range from $25-400 a month or more. According to Investopedia, the average yearly HOA is about $300 a year.
Many RV owners choose to purchase travel memberships that offer them a discount of up to 50% at RV parks. If you buy three different clubs a year, your total cost would be about $100. Obviously, it's easy to save money here.
#6 The Internet, Phone, & TV. Internet, phone, and TV is not only easier in a stick and brick home; it is far cheaper. Mobile data plans are much more expensive than your traditional broadband home connection. If TV is important to you, then Sattelite is your only option, which will cost more than a stick and brick due to your ever changing location.
#7 Space Rent. There's no getting around the fact that an RV needs someplace to park at night. You can't travel all the time. You can, however, minimize these expenses. Here are a few methods many full-time RVers use to save on monthly space rent.
Boondocking. There are many areas of the country that allow free parking overnight or for extended periods of time. If you plan ahead and own the proper off grid equipment, you can easily save thousands each year.
Six month or Annual Space rent. Do you want to enjoy the winter sun? If so, you could be paying upwards of $600 a month in the Southwest; that is unless you know the secret of annual space rent! If you purchase an annual package, you pay as little as $250 a month and can come and go as you please. Suddenly, you have a home base whenever you want to enjoy the sun. Annual rents usually include a ton of amenities like access to pools, tennis courts, entertainment and golf courses.
Trade. There are hundreds of work camping jobs around the nation. Simply secure a position in a location of interest. In exchange for 10-20 hours per week, you can enjoy free parking, utilities, WiFi, and laundry. You also get to explore the world around you!
When devising an RV budget, you will have Fixed Expenses and Variable Expenses. In some areas, your budget can be lowered by choice, and other areas will remain the same every month.
Let's take a look at a couple of examples from online RV bloggers.
Heath Padgett of www.HeathPadgett.com has an amazing story. He and his bride to be decided to travel the U.S. in an RV for their honeymoon. The catch? They never stopped! They loved living in their home on wheels so much that they kept traveling.
Here is a peek at a year of their expenses:
Gas = $6,593.57. Yep, that's a lot of fuel, but it took them across 18,000 miles in 48 states over 200 days. Will you do that much driving? Probably not.
Lodging = $2,710.84. I would categorize this as rent. They didn't spend a lot in this area because they used their discount memberships extensively, especially Passport America.
Groceries =$2,053.05 + $512.88 Restaurants. Looks like they ate at home a great deal, which is one of the joys of RVing - you get to choose where you spend your money!
Maintenance = $1,955.72. Owning an RV is like owning a high tech vehicle. You should always budget for expenses like tires, repairs, oil changes, etc.
Misc = $3,432.60. This includes everything else, even entertainment. Personal items like a gym membership, data plan, and giving are also listed on his website.
Heath's total cost was just over $19,000 for the year. The main thing you will note from these expenses is they did not have any monthly payments. They bought an old RV for $11,500 cash and did not have a car payment. Great if you can do it, but most people will have baggage from their former life. (Note: Heath and his wife upgraded to a brand new Winnebago Brave after this trip selling their old rig for $9,500)
In our case, we own our RV outright, but we lease our car and have some business investments that we pay each month. As I said, your grocery sacks will be different than Health's or ours.
Let's look at another set of online bloggers:
Howard and Linda have been full-time RVing since 2005, and they have recorded their entire financial history since they began. At their website RV-Dreams.com, they share three sample monthly budgets based on your choice of lifestyle. You can choose from Thrifty to Moderate or Money is No Object. They have literally analyzed every expense you can imagine and have also recorded their bigger outlays that were one-time expenses.
Items they discuss that were not included in Heath's blog and are worth the time to research include expenses like:
- Health Insurance and Medicare
- Life Insurance
- Umbrella Insurance
- Benefits of Social Security
- Creative options like property caretaking
To see this post, visit rv-dreams.com/financial-information.
So what does it cost to full-time RV? As little or as much
as you choose to spend. Anyone can do it and most can live on a lot less than a traditional home. It all depends on your goals, your destination and of course, your income!