The cost of full time travel feels expensive because of the visible costs of travel and lodging. In normal life these are incremental vacation expenses on top of ongoing life expenses. But that’s not how it works as a nomad. Nomads shrink or eliminate many “normal life” costs to pay for the higher costs of travel and lodging.
The best way to figure out the money is to do a comparison: What will a year of full time travel cost, compared to cost of a year of normal life? For our situation, the numbers came out to be about the same. Read on to see why.
The Change from normal life to nomadic life
We lived in nice house in Boise Idaho with all the things we had collected over 20+ years of raising kids. We were living an upper-middle class existence with all of it’s associated costs: two cars, a house, vacations and hobbies. When we became nomads, we eliminated these costs, and in fact, our house became a source of income.
To become nomads, we sold, lent or gave away most of our stuff. Except for our travel things, everything we kept went in a 10’x10′ storage unit.
We rented out our house, then ultimately sold the house and invested in a vacation rental house in a resort community near extended family. We block out time in the vacation rental to be there a few weeks a year. Otherwise it is an income property and we are off traveling somewhere.
Our nomadic travel method:
We each have a carry-on suitcase and a personal-item-sized backpack. The less we bring, the easier to travel. We can travel on most airlines without checking a bag. How do we live with just a backpack and a carry-on bag? That’s another article we need to write. We have some things stored in an owner’s closet at the vacation rental. This includes clothes and gear to swap out for different kinds of trips and to break up the monotony of wearing the same 5 shirts until they wear out….
The rough plan is to take four 10-week trips per year, staying in a particular area of the world for the duration of the trip. We sometimes pick up additional locations with an extended layover on the way to or from the main destination. Between trips we come back to the US to see friends and family. We stay at our vacation rental or rent a car and travel around to visit family. So that works out to about 9-10 months of travel and about 2-3 months in the vacation rental or visiting family.
By downsizing possessions. selling the house and buying an income property (vacation rental), we freed up money and added an income stream to help pay for nomadic life.
As a nomad, some expenses go down, others stay the same and a few increase. Here are the details for our situation:
Expense that decrease:
Cars: The true cost of ownership for a car, purchased new, operated for 5 years and then sold, is around $5500/year for a Toyota Corolla, and $11000/year for a top end Chevy Tahoe (see TCO calculator at https://www.edmunds.com/tco.html). Two newer cars in the garage actually set you back between $11,000 and $22,000 a year. This is a real annualized expense, but the pain is spread out over time so that most people are oblivious the the cost. If we were at home, we would likely have two relatively inexpensive cars.
Housing: Discounting possible appreciation, the annual cost of owning and living in a house is thousands of dollars a year. (maintenance, repairs, mortgage interest, property tax etc.) The finances are quite different if the house is converted to a rental, or sold and the equity is invested. This net savings helps fund nomad life.
Clothing, hobbies: We just need travel clothing for now, so good quality, small quantity. Expensive hobbies are put aside for now. Good hobbies to maintain: photography, reading, exercise/hiking, blogging.
Expenses that stay about the same:
Food: When travelling, we generally stay in houses or apartments with kitchens. We eat out sometimes but we also shop in grocery stores and make simple meals at the apartment. We aren’t travelling at the pace of a tourist, we are mainly just living life in different, interesting places. The overall cost is about the same as if we were living in a house in the US.
Medical: US Medical insurance costs stay the same. We schedule regular doctor and dentist visits to correspond with the times we are back in the US. We also buy a yearly medical travel insurance policy for a few hundred dollars a year. This covers emergency medical needs when overseas and evacuation to get back to the US for serious issues.
Expense that increase
Lodging: We live in a hotel or apartment 9-10 months a year, which is the largest nomad expense. A few techniques can lessen the cost: Landlords will often reduce the daily rental rate for longer rental periods (a week or more). Rental rates for locations on the edge of town are cheaper and may offer more space and be quieter. Alternately, staying downtown may have higher rents, but can be closer to things to see, saving local transportation costs. Some countries are inherently cheaper than others (Thailand vs. Switzerland). A mix of high and low cost destinations can even out the expenses for the year.
Transportation: Nomads spend significant money on planes, trains, taxis buses and rental cars. However, longer stays overseas means fewer long roundtrip airfares per year. We walk or use public transportation in the cities. Trains or regional airlines get us around the country or to neighboring countries. We rent a car when the price is reasonable and the things we want to see and do are best done by car.
When we are in the US, we either stay at our vacation rental (in low season, when it was not likely to rent anyway), or we sometimes stay a few days with friends or family. We also rent a car.
Here is our estimate on the costs of “normal life” vs. nomadic life. Your mileage will vary, but this at least provides a reference point for consideration.
Cost of full time travel: nomadic life vs. normal life
First, a few assumptions:
- Assumes owning a home with a mortgage, and selling it to be a nomad. In our case we had no mortgage, sold the house and reinvested in a vacation rental. The effect on the cost differential is about the same for the sake of this analysis. Real estate tax law make this a more complicated analysis beyond the scope of this article.
- Expense categories that are unaffected by lifestyle choice have been excluded: gifts, charity, US-based medical insurance and out of pocket expenses, and income tax. So this is not a full yearly budget, just a comparison to see which lifestyle costs more.
More ways to economize
Are these estimates of the cost of full time travel still too steep for you? We recognize that our “normal life” spending is higher than the average person’s, so by comparison we can afford a more expensive nomad lifestyle. There are ways to economize further, while still having wonderful opportunities to explore the world.Here are a ideas:
- Travel slower by staying longer in each place. This will result in fewer airfares, less in-country travel and likely a larger discounts on accommodation rates. Book accommodations well in advance if you want to stay in one place for many weeks, otherwise even one weekend reservation by someone else in the middle of your planned stay will make that property unavailable for you.
- Slow down even more. Plan to spend several months in one location and rent a furnished apartment by the month. This is considerably cheaper than nightly/weekly rental options through AirBnB and other short-term rental options.
- Travel in off-peak seasons and to inherently cheaper locations, such as Eastern Europe or Southeast Asia.
- Travel as a group. Two couples is perhaps the ideal number. Split the cost of a rental car or Taxi four ways. A two bedroom AirBnb is not much more than a 1 bedroom. Note that you need to be really really travel-compatible friends or else the trip ends badly.
- Eat out less often.
- Choose cheaper lodging. (personally, we are past the age where staying in a hostel is fun…)
- Set up low airfare alerts for places you want to go and let the cheapest airfare determine your next destination.
- Lodging is the single largest expense category. One way to save significantly is to become a travel house sitter where you have free lodging in exchange for some pet and plant duties. We have done three gigs as housesitters so far, and so far, so good.
- Some full-time travelers have learned our to use hotel points programs to greatly reduce the cost of food and lodging. A bit too much time in hotel rooms for our taste, but a compelling option for some.
Conclusions
Use our ideas as a starting point and then make adjustments for the kind of travel you want to do. Do the math for your situation and you will likely find a way to make the cost of full time travel, or part time travel work for you.