Financing a full time dream...

[Glas Robin]

Just dreaming at the moment, like many of us.

But starting to explore the possibilities for stopping working in a couple of years and moving to extended trips / full-timing. We’d both be 48 and kids would be at/past uni and off the books. We have a suitable van. We’ve had a health issue in the past couple of years (resolved) which makes you reappraise life and he balance between accumulating stuff

It all boils down to financing how you live, and how you preclude for the unexpected life throws at you.

We have generally been lucky in life so far (worked hard, mortgage free) and reckon we could downsize, retain a small UK property, see the kids right and release a pot of circa £200-250k equity. We are fortunate enough to have NHS pensions which we could access from 55, but preferably 60, or later. So we would need to fund a period of 10-12 years I reckon before work pensions came on stream and then state pensions later. Ideally we wouldn’t need to work, but wouldn’t be averse to that when we were in the UK.

I’ve looked at budget posts and folk seem to do it for from between less than £1k per month to three times that. I’m a long way from settling in figures, but am thinking of £2k as a reasonable start.

So, after that scene-setting, my questions.

*Has anyone extended/full-timed in a similar situation to us?
*Is it necessary to retain a UK property? I like the security of a bolt-hole which we wouldn’t rent out as we would be living in it a fair bit initially as we moved from extended trips to closer to full timing. I don’t think we would ever be fully f/t. We could stay with both sets of parents when home, but I would be anxious about retaining our right to free NHS care if I couldn’t demonstrate residency.
*How do you manage the issue of older parents - although we would propose to return to UK a few times a year.
*Has anyone done it via downsizing and a pot of cash - living off a mix of the interest/investment income and the capital?
*Is a £250k pot enough for our time period, assuming we stuck with the lifestyle that long?
*What am I missing?

Many thanks for any thoughts - I am grateful for any guidance I can learn from.

Robin

 

[Glas Robin]

Re-reading that has just made me realise how incredibly fortunate we are. We’ve taken a few risks and worked and saved hard, but our generation is perhaps the last to have it like this; especially property value.

 

[Ingwe]

There's a brilliant blog by a young couple (compared to me) who've written very helpfully on how they attained financial freedom at 40 to travel full time.

https://ourtour.co.uk/home/
I'd have read as they offer tons of excellent, FREE advice. You can also by their books.
Good luck and follow your dream!

 

[The Wino]

I would start by looking at what you spend now take off the costs you will not have to pay if not working and add on the likely costs of running a motorhome. This will show what you need to live the lifestyle you now have. If you think you wil spend more when travelling visiting places you will need to add that in if you will not spend on things like say work clothes take it off. I suspect the £2k will be nowhere near! The decision then is can you adapt your spending to that level try it now and see if you can you can go forward with more confidence.

When I say look at what you spend now I mean look at your total spend from your bank accounts over the say past 2 years less subs to the kids.

 

[Sucoz]

I can't give you a proper answer atm because we have only just started full time/ long terming. However, those people who cope on less than £1000 per month have my admiration. We are pretty careful but shopping and fuel take quite a bit. We are hoping to stick to around £1200 per month.
My husband took his pension at 55, made life much easier with teenagers, but carried on working, (so he got another lump sum etc again) we couldn't see the benefit of leaving it later and I'm paranoid the pension pot will go bankrupt.
We rent our house to family to supplement our travels.
The budget depends also upon whether you eat out /drink out
Visit attractions/ museums etc
Stay in campsites.
Or avoid all these extra costs.

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[Jason Buckley]

Hi Robin - I'm Jason from the ourtour.co.uk blog. If you search Amazon for Funding Freedom you'll find our free eBook on how we financed the last few years of travel. We also wrote the Motorhome Touring Handbook (again on Amazon, but costs money) which has a section on costs, renting out your house etc.

On you original questions:

*Has anyone extended/full-timed in a similar situation to us?
Yes - we opted to rent out our house though - spend 2 years full-timing, then came home and rented a smaller house before heading out again 2 years later for another couple of years. We now mix it up between living in part of a house in the UK (we rent the bedrooms out) and a few months out and about in Europe in our B544.

*Is it necessary to retain a UK property? I like the security of a bolt-hole which we wouldn’t rent out as we would be living in it a fair bit initially as we moved from extended trips to closer to full timing. I don’t think we would ever be fully f/t. We could stay with both sets of parents when home, but I would be anxious about retaining our right to free NHS care if I couldn’t demonstrate residency.
As I understand it (I'm not an expert in this), as long as you pay your taxes in the UK it won't matter if you don't own property here. The question is perhaps more whether you've enough capital to enable you to retain a house here while also spending money travelling? Don't forget if you leave a property empty for any length of time your house insurance may become void too. Another area to ponder is post: you need to register your vehicle at a UK residential address for example - can you use your parent's address?

*How do you manage the issue of older parents - although we would propose to return to UK a few times a year.
Our parents are all self-sufficient at the moment so I can't help with this. The only point to note is this will crank your costs up in terms of diesel and ferry costs. If you leave the van abroad your insurance might be invalid - ours is if we're away for 48 hours (I think).

*Has anyone done it via downsizing and a pot of cash - living off a mix of the interest/investment income and the capital?
Yes, we downsized and live off investment income. Interest on cash/premium bonds is effectively negative at the moment (1% say, minus 3% inflation) so we try to keep a relatively small amount in them. The rest is in rental property and index-tracking Vanguard ETFs inside ISAs. We have private pensions too which will start to kick in from 55. We're not spending down our capital though, we live entirely off returns and are still investing excess income.

*Is a £250k pot enough for our time period, assuming we stuck with the lifestyle that long?
We know folks who live on about £8k a year (maybe £10k including van depreciation). Some do workaways to reduce their food and pitch costs. When we were full-timing we got through about £15k a year, so £2k a month is definitely possible, including a small contingency for breakdowns, repairs, improvements, servicing, increased health issues as you age etc. Will your van last for 12 years though? Do you need to allow for replacement costs?

Motorhome life in Europe can be done very cheaply making the most of aires and free camping, but be aware Schengen 90 in 180 day restrictions will almost certainly kick in when (if?) the UK completes the exit from the EU, which you can work around by heading to Morocco, Turkey, Croatia and so on (if your insurers will issue a green card - unless you're OK risking 3rd party local insurance), but will make long-term continental touring less attractive.

*What am I missing?
You know the score I imagine: we're all trying to maximise the life we have left without pushing our luck too hard with our finances. We've met individuals who took the leap and were travelling Morocco and Norway when we met them, and have since died young (50s). They got to see some of the world before it was over for them, the risk was easily worth the reward. Most of us will experience better health and live much longer, so we need to work out a realistic financial plan assuming we'll live into our 80s or 90s. I'd suggest pulling up a spreadsheet, doing a ton of research into all the likely costs and income. Allow for inflation ramping your costs up. Allow for possible exchange rate drops (the pound could weaken further - who knows). Make a guestimate out into the future of how much you're likely to need. Allow for the fact one day you'll hopefully be old and might not want/be capable of living in a motorhome. Do a ton of planning, then plan some more.

Cheers, good luck, Jay

 

[Riverbankannie]

Could you explore taking sabbaticals for a year in a couple of years time ? Maybe rent out your house for that year and use parents address whilst travelling. It sounds like you have enough funds to carry you through a year without downsizing. Then you could really see how you like the life, how much it costs and how much you miss your home.
You need to consider whether you will need some of the downsize lump sum far ahead in the future when inflation will eat into other savings and your pensions may not keep pace. Hopefully you have many years to come and will need to fund major purchases such as a new MH or car etc.

 

[Glas Robin]

Hi Robin - I'm Jason from the ourtour.co.uk blog. If you search Amazon for Funding Freedom you'll find our free eBook on how we financed the last few years of travel. We also wrote the Motorhome Touring Handbook (again on Amazon, but costs money) which has a section on costs, renting out your house etc.

...

Cheers, good luck, Jay

Jay - thankyou so much for taking the time to reply in such detail. I am very grateful. I'm off to look out your books (free and paid).

Thanks again.

 

[Glas Robin]

Could you explore taking sabbaticals for a year in a couple of years time ? Maybe rent out your house for that year and use parents address whilst travelling. It sounds like you have enough funds to carry you through a year without downsizing. Then you could really see how you like the life, how much it costs and how much you miss your home.
You need to consider whether you will need some of the downsize lump sum far ahead in the future when inflation will eat into other savings and your pensions may not keep pace. Hopefully you have many years to come and will need to fund major purchases such as a new MH or car etc.

That's a good idea that might be possible. Certainly worth thinking about.

 

[Ingwe]

Great to see that Jay of Our Tour has posted. His blog was one of the main reasons we got a motorhome and the help and advice he and Julie offered was unstinting. We still look forward to reading of their travels in their Hymer, Zagan.
Currently, we're awaiting the check in at Rosslare for this evening's crossing to Fishguard after a brilliant two weeks in Ireland. Three weeks later, we return to France and then.........

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[Yorick]

If you infest the 250k wisely, you'll get a 5% profit.
That's 12.5k. Maybe take 10k cash as well.
Rent your house out. A few shillings there.

Possibly 30k a year to spend.

 

[spitfire]

If you infest the 250k wisely, you'll get a 5% profit.
That's 12.5k. Maybe take 10k cash as well.
Rent your house out. A few shillings there.

Possibly 30k a year to spend.

Do tell where you can get 5%

 

[Glas Robin]

There's a brilliant blog by a young couple (compared to me) who've written very helpfully on how they attained financial freedom at 40 to travel full time.

https://ourtour.co.uk/home/
I'd have read as they offer tons of excellent, FREE advice. You can also by their books.
Good luck and follow your dream!

Is it just me or is the website down? Was working for me earlier today...

 

[MichaelT]

Do tell where you can get 5%

and me

 

[HandyAndy]

Don't sell the property or down size, just rent it out! You'll always have a house to come back to if the shit ever truly hit the fan. But that rental money is free money if the mortgage is already paid off!

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[Glas Robin]

Don't sell the property or down size, just rent it out! You'll always have a house to come back to if the shit ever truly hit the fan. But that rental money is free money if the mortgage is already paid off!

It’s not a great house for renting...a big 1650s farmhouse... way too big for two of us, and a money pit in terms of constant maintenance. And it has acres of land. Presently I love it, and keep cows etc. It’s not a good rental proposition.

But priorities are changing. Jay’s ebook is really resonating with me. The balance for me is switching to time rather than stuff/status.

The plan is crystallising around cashing in, downsizing without a mortgage (possibly to rent out via an agent) and giving up work to live instead.

But I’m only at the beginning of this thought process...although it’s been rumbling around in various guises in my mind for years now.

The missing piece of the jigsaw is generating income from the capital in big enough quantities to live as we’d like. But that might be possible from investment plus rental income. But then there is no UK base to come back to...

 

[Glas Robin]

and me

And me!

 

[HandyAndy]

It’s not a great house for renting...a big 1650s farmhouse... way too big for two of us, and a money pit in terms of constant maintenance. And it has acres of land. Presently I love it, and keep cows etc. It’s not a good rental proposition.

But priorities are changing. Jay’s ebook is really resonating with me. The balance for me is switching to time rather than stuff/status.

The plan is crystallising around cashing in, downsizing without a mortgage (possibly to rent out via an agent) and giving up work to live instead.

But I’m only at the beginning of this thought process...although it’s been rumbling around in various guises in my mind for years now.

The missing piece of the jigsaw is generating income from the capital in big enough quantities to live as we’d like. But that might be possible from investment plus rental income. But then there is no UK base to come back to...

You don't think its a good rental proposition but there maybe people out there looking for a family home with land to run a business from.
Nothing stopping you putting feelers out at some pie in the sky no brainer rental amount to see if anyone is biting first... could be eye opening.

 

[chaser]

You have got me here, you have a farmhouse and land and you can't make enough to live on with renting it out, something wrong there.

 

[chaser]

You have got me here, you have a farmhouse and land and you can't make enough to live on with renting it out, something wrong there.

Around here farmhouse rent is about£1500 a month ,land £100 an acre a year.

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[HandyAndy]

Could build a Do it yourself Stable yard, menage and divide up the fields for grazing / haylage
Posh kids and their horses... Money for old rope

 

[Minxy]

You have got me here, you have a farmhouse and land and you can't make enough to live on with renting it out, something wrong there.

I suspect the rental income won't make it feasible after the cost of the upkeep for it, assuming of course that there is someone who wants to rent it in the first place.

 

[Minxy]

You can get a good income from property but you have to think 'laterally' ... we have a couple of lodges on a small luxury holiday site (properly built from the base up, the same as residential property, not a static caravan base with a mock log cabin on). We bought them for a good price and are getting a guaranteed 8% return on capital outlay which for us works out at just over 7% after insurance and utility costs are deducted. We went for the 'permanent' built ones rather than static ones as the former increase in value whereas the latter can lose value. At present we get over £1,400 a month from them (about £1,250 net), obviously it means our money is locked up in them but its better than anything we can get in a bank etc and you'd be hard pushed to get that sort of return from a normal residential rental property.

If you do decide to keep a home in the UK and not rent it out then obviously you'd have less to invest to get a return/income. Unfortunately with the changes in 'buy to let' rules if you bought a second property purely to rent out you'd get hit with the extra 3% stamp duty on anything over £40,000 so need to build that into your calculations (note that this is NOT applicable to lodges etc on a proper holiday site). I appreciate you want to see your kids right but you may not realistically be able to do so in which case you really need to put your needs first IMV if this is something you really want to do.

 

[nomadic]

I agree, you need to keep some bricks and mortar, be it your existing or downsizing. We found, when we started extended touring that a very good supplement to your income was working as a campsite warden, or what ever they are called today, for the season, and travel to warmer climates in the closed season. The two main clubs offer good contracts, and with the free pitch, gas, ehu, laundry, we were easily able to live comfortably on one wage and invest the other, until needed.

A residential address is essential, not necessarily your rental property, parents maybe, so that you can register all your bank accounts, insurance policies etc, and , if applicable annual MOT.

 

[Glas Robin]

Thank you to everyone who has commented so far. I know I haven’t responded to every post individually, but you are all very kind to take your time and every comment is giving me ideas or making me think. And plan!

Jason’s Funding Freedom was an absolutely breathless read on my train commute home tonight. It could have been written for us!

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[movan]

May I ask you something, please?

I may, not through choice, end up fulltiming.
I cashed in all private pensions to look afted mum and dad with alzheimers (please don't turn thread into that .. as it on other threads and can be boring for people) .. but means that I get nowhere near the £1,200.00 per month minimum spoken of on here.

My question is ..(I can work out mh costs) .. how much of that £1,200 pm are you assuming is 'site' costs? Or are you all wildcamping somewhere? Or is there an alternative as to where you intend to 'live'?

 

[Loveshack]

Hi Robin; your post and some of the replies are really interesting.
Having had a van for about 10 years with a sort of ambition of getting close to 6 months out in Europe in the van, each year, I’ve realised that our van is just one part of our retirement way of life.
Over this period, we have managed on average,2X6 trips plus a number of shorter trips around the UK in the van each year. These European trips have cost, on average about £2K each, say £330 per week, or about £1500 per month.
We charge “costs” as ferries, diesel and campsites. Everything else is similar to being at home. We are not on holiday, we are trying to maintain a lifestyle that includes eating out, sightseeing and “interests and hobbies”.
It is for this combination of circumstances and reasons, that I know that we could not plan to “full time”. It would be a mistake to put all of our eggs in that one basket.
I understand that life is not about “things”, possessions and appearances, but I like my vinyl, I like, nay love my painting, and eating out is a source of pleasure.
Add in friends and family and there’s no way we could or would need to be away in the van for even 6 months. Add to all that the fact that although I don’t suffer from claustrophobia, I do find our pvc snug after week 5!
I do like to be able to do things inside and outside. Our base, a house is an important part of the plan. We also like our community.
I think we could finance 6 months out and about, but I’m 70 , so the fire’s not in the belly so much now. Also, if we had been seriously thinking about fulltiming, we would have needed to do it in a way that would safeguard doing retirement in the way we now do it. If this sounds cautious, that’s the way it is. We like the mix we have, and work has been a thing of the past for 10 years now.
I wish you good luck, and do it (whatever “IT” is) your own way.

 

[Ingwe]

Is it just me or is the website down? Was working for me earlier today...

Working for me now at 22:10pm. Been on ferry till now

 

[Sucoz]

Hi Movan, the £1200 per month is what we have and so to make it work we will have to budget accordingly. Most of it goes on food and diesel. We are only a couple of months in, so early days. We are currently in France and stay mainly in free aires, but not always. Things may alter after Brexit, but the plan is to overwinter in Spain in campsites ( longer stays - cheaper rates) and cutting down on diesel costs.
Campsites in the UK that are open in winter sometimes have good deals.
We have to be quite careful with our money and that wouldn't work for everyone, but for us we get to travel, see some lovely sites and everyday is a surprise- the option is going back to work - no thanks!

 

[Jason Buckley]

and me

Just one area where a return greater than 5% is possible (I'm not suggesting anyone does this - I'm an investment amateur - PLEASE read, read, read before investing - The Simple Path to Wealth is a good book, jlcollinsnh.com has the same info from the same author for free, meaningfulmoney.tv is also a great personal finance resource or just talk to a independent financial advisor).

Long-term (multi-decade) returns on low-cost index tracking ETFs such as Vanguard's VUSA (tracks the Standard & Poor 500 US stock market index) are roughly 7% including dividends (including the occasional big crash), giving a safe withdrawal rate of approximately 4%. In other words you need 25 times your expenditure invested to get long-term draw-down of all your financial needs with a low probability of not running out of money over a multi-decade period. Some folks think an SWR of 3% is more appropriate, in which case you need 33 times your annual expenses. If you sell during a market crash, there's a good chance you'll fail to get this return, which is what most people do (they end up selling low and buying back in high - the opposite of what you really want to be doing).

That's just one example as an alternative to property investment. No, you won't get 5% from cash or premium bonds, you need to invest, which means learning how to take appropriate risk - it's not easy but it is possible.

Good luck folks, Jay

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