The definition of financial freedom is when your assets/income cover your expenses. This is our goal. You have already taken the first step and established your overall budget (if not, then go here: RVer budget), and now it is time to apply what we learned in our budget to help us make plans. That’s right, people, that exercise in budgeting will not go to waste! It is time to take what you learned and apply it, so you can make the best decisions for yourself. Don’t let those budget numbers sit on a piece of paper, use them for your benefit! Set yourself up for financial freedom! You can absolutely do this, and I am here to show you how.
Let’s take a look at how to use those budget numbers together…
Typically, the biggest financial concern with RVing is what it will cost for campgrounds. As an RVer, gone are the days of the same rent/mortgage payment that unrelentingly came each month. Instead, your housing expenses will vary from campground-to-campground, week-to-week, month-to-month. It is the changing factor of this variable that can be intimidating. How can you budget for your housing expense when you know it will constantly be changing? How can you really control your budget when one of your biggest expenses will not be consistent? I get it. This can be frustrating and may lead to some worry as you make plans. We do not want anyone to feel unnecessary anxiety in making their plans, and that is why we want to share our experience with you.
What we want you to do is to recognize that the housing expense will vary and then use that to your advantage! Allow me to explain…instead of being committed to an exact number every month, the change of housing expenses due to RVing actually allows you to make choices to impact your housing expense from month-to-month.
Let’s look at our documented numbers to see how this plays out.
For our entire first year as fulltime RVers, Chris and I tracked our expenses. At the end of the year, we averaged our campground cost to determine our AVERAGE monthly campground rate, which came to $1,013.00. That was the average for the year, but let’s take a closer look at what those numbers actually meant from month-to-month. Our first year on the road covered July 2015 to June 2016. During that time span, Chris’ slowest months for his business (which is in the construction industry) are the winter months. What did that mean for us? Well, we knew that since our income would be lower in the winter, we had to decrease our expenses in order to live within our means. For example, in February, our campground expense (including all utilities, heat & internet) was $666.00. Several months later, once we were back to our increased income, we visited California. Our campground expense for June in which we spent a few weeks in California (which included three free night stays with no utilities/internet) was $1,339.14. That is a $673 difference. This is a good example of how we were able to recognize that we would have a lower income and then use that information to purposely adjust our campground expenses in a way that would work to our advantage. Furthermore, it shows how we had to resort to free nights in order to help balance our expenses in California (by far the most expensive state).
Now that you can see how adjusting your expenses gives you more control over them, how can you put this plan in to action for yourself?
While my above examples seems easy to follow, it is more difficult to actually put it into action on a weekly basis. There are unexpected reasons that will make you pay more for a campground than you anticipated. Sometimes the only available campsites will be in the expensive campgrounds, sometimes you won’t have as many options for campgrounds, sometimes there will be something special that you don’t want to miss but it is so popular that all of the campground rates are higher, sometimes you may need repairs done and have to stay close by.
So, how did we deal with the inconsistent numbers and still maintain our financial freedom with confidence? We had a secret…it was to establish a nightly rate. We established a nightly rate that fit our budget, so that we had a baseline to use as we made campground reservations. Since we did not have a set monthly income, we decided to make our rate a range instead of a set number. If you have a set monthly income, then your rate will be easier to set. Our decided rate according to our budget was between $30 – $35 a night. Simple, yet so effective. Now we knew that if we stayed somewhere for more than $35 a night, then we had to balance that number with an under $30 a night campground for the next stay. In the case of California, we made sure to save money the month before in preparation, and then after California we knew what we had left to make up in our next few stays. Being able to focus on a simple nightly rate made planning so much easier and less stressful.
How did it work out for us overall? Well, if you take our average monthly campground cost, which was $1,013.00 and divide it by 30 (for the days in a month), we get $33.76. Exactly where we wanted to be for the year, within our $30-$35 dollar range. Another beautiful point to make with this system is that if your income changes, then you can also adjust your nightly rate baseline as needed; with a mortgage/rent, if you lose some income, your mortgage/rent remains the same despite the loss. This is why RVing is a method that some people use to save money – RVing gives you a method to decrease one of your biggest monthly expenses as needed and effective immediately. Mortgages and rent NEVER allow that freedom.
Establishing our nightly rate baseline made it so much easier to check campground rates and see how they would or would not fit in to our budget. It also allowed us to enjoy some of the beautiful, amazing RV resorts out there by scattering in cheaper stays around them.
However, a word of caution: This system only works if you commit to making up the more expensive stays with cheaper stays. If you can not commit to that, then this system will not work for you.
Even if you are not interested in full-time RVing, this lesson still applies. If you are just doing weekend/short trips; then build your vacation line item in your budget accordingly, so that you have a budget for RVing that fits in to your overall budget. With your vacation budget, figure a nightly rate that will work for the trip you are planning and book accordingly.
Our campground cost was the single most expensive line item in our budget, and we had a lot of control over it from week-to-week. Pretty amazing when you think about it.
We truly want anyone who is considering RVing to be able to get a real handle on the cost. We want you to understand and be able to apply this system for yourself. So please leave any questions you may have in the comments, and we will be glad to help.