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To wrap up our traveler financial investment series, the following article shares the personal experience of two travelers pursuing Financial Independence Retire Early (F.I.R.E).
They began their journey 4 years ago with roughly 200k in debt. By making a budget, living simply, setting goals, aggressively paying off debt, and investing early and often, they are projecting to reach "retirement" by their mid-thirties.
This story is a testament to how powerful traveling can be for your financial health when planned and applied intentionally.
Simple beginning
Starting out as new graduates, My wife and I made about $40k/year each as permanent staff. My first job paid $20.66/hr to be exact, and her's was $22.90/hr. We were careful to design our lives around this income and keep our spending well below what we brought in. Even with our entry-level jobs, we were able to pay all of our bills and build a small savings. Very early in our careers, we realized the benefit of making a budget and sticking to it.
During school, my wife and I had accumulated roughly $80,000 in student loan debt. When we first started repaying the loans, we paid the "recommended monthly payment" provided by the lender. It wasn't until the end of the year that we checked our remaining balances only to find that they had hardly moved. We were essentially just paying the interest and barely any of the payment was going towards the principal.
We decided that if we were to ever pay these off, we needed to pay more aggressively towards these loans. In order to do so, we needed to dramatically increase our income. It was around this time that we learned about travel contracts.
First travel contract
After two years working as permanent staff and a few per-diem jobs on the side, we decided to start traveling together. We were very nervous about leaving the comfort of our home and jobs, but wanted to expand our careers and increase our pay. We saved up a healthy emergency fund so that we could get back home, if traveling fell through.
Our first contract paid us each $1800/week. We more than doubled our income within two weeks from quitting our old jobs and jumping into the world of travel. We couldn't believe how much we were being paid to do the exact same type of work.
Despite the extra income we still kept our spending habits the same as when we had just graduated. Now we had a massive amount of additional cash to direct towards our student loans. We were able to reduce our loans by $26,000 in just 13 weeks. We were exhilarated!
It takes money to make money
After we left our first assignment, we began to research all aspects of the traveling medical industry and how to get the most out of each contract. We got our California licenses to chase higher paying rates and open up more options. We also bought an RV and a truck to help reduce our housing expenses and increase potential locations we could work and live.
Before buying our new home on wheels, we did a thorough cost analysis to ensure profitability over the long-run. We established an acceptable budget, and assumed an additional $120,000 worth of debt for our motor-home and truck. It was nerve-wracking knowing we were on the hook for nearly $175,000, but the numbers made sense, and the motor-home held more value than renting Airbnbs.
California dreamin'
Within our first 6 months working in California, our student loans were paid-in-full! We had decided to double up on our weekly payments and chipped away at the remaining $54,000 debt by making payments of $2,100/week. After that we set our sights on paying off the RV.
We had been making minimum payments on the RV and truck since we bought them. Now that we had paid off our student loans, we could roll that additional money over towards the RV balance. Using the debt avalanche method allowed us to pay $2,500/week against the RV loan. We managed to nearly pay it off and dropped the principal by $65,000 after a 6 month contract in San Diego.
Getting back to zero
With a total remaining debt of $55,000 still hanging between us and being debt-free, we were highly motivated going into our next contract. We quickly paid off the remaining balance on the RV within the first 6 weeks of our next assignment. When we extended our contract, we were able to renegotiate for a higher rate. Between this elevated rate and rolling over the $2,500 we had just freed up by paying off the RV, we could supercharge our pay-off schedule for the truck.
Within one 13-week contract we managed to pay off a $40,000 truck. We were officially debt-free! In just under 2 years of traveling, we paid off roughly $200,000 worth of debt. Our net worth was officially out of the red, and back to zero.
Our budget and expenses
It wasn't until our second year traveling where we decided to create a budget for ourselves. Part of the reason we decided to do this was to get a hold on our spending. We also wanted to get a rough calculation on how long it would take for us to reach Financial Independence. Here is a breakdown of the general budget we created:
$1000/month for a RV spot
We saw the cost of RV spots vary depending on the area, but we figured a good average was $1000/month in California. We edit this part of the budget when we move locations and the rent changes.
$400/month on groceries
We started cooking more and made an effort to meal prep all of our lunches and dinners during our work week.
$400/month on restaurants
We decided to limit ourselves to only eating out twice a week. We looked at how much we typically spent eating out and saw that $40 was typical, so we rounded up to $50 per outing, twice a week, to get us the $400/month.
$200/month for incidentals
This part of the budget was just to cover any random expenses or planning fun activities.
So $2000 per month is what we concluded our base expenses should cost. And for the most part we were able to stick to it. We were pulling in about $8000/month each, after taxes and 401k contributions, so we were only spending about 13% of our net income. That meant the other 87% of our net income was going into paying off debts and after those were paid off, we started investing it.
Let it grow
Now that we were out of debt and still generating a hearty income, we had to decide where to allocate the funds now. Instead of inflating our lifestyle and buying more things, we decided to continue living a modest and meaningful life, while investing the additional money that was going towards our debts.
We now max out our 401ks, IRAs, HSAs, and put a substantial amount into a brokerage account every week. Given our time frame to retirement age and our risk tolerance, we decided to invest in low cost index funds. We personally favor Vanguard's Total Market Index Fund, given its diversification and low maintenance fees. According to the Networthify calculator and following the 4% rule, we should be in a position to "make working optional" within the next 5 years. After only 9 years in the medical field, we will be in a place to "retire" once our investments start to cash-flow more than we need to cover our cost of living. At this point we may decide to continue to take a few travel contracts per year or pursue an entirely new venture. Regardless of our choice, financial independence gives us options.
Central points
Our path to financial independence has been a collection of hard work, planning, luck, and living intentionally. Although we have been able to speed up our route to retirement by having two incomes, keeping our expenses low has played a substantial part in our progress. By creating a large gap between what we make and what we spend allows us to invest the difference. We keep our focus on our goals, and define specific steps to achieve them.
If you never get used to the feeling of frivolously spending every dollar you earn on meaningless things, then you will never miss it. Paying off your debts gives you a great sense of freedom and allows you to focus your time, energy and money on the things that bring you happiness and meaning.
Are you actively pursuing financial independence? If so, please share your story with us in the comments section below. Also, be sure to subscribe using the box below to receive our latest posts in your inbox. You can also join us on Facebook.
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