Friday, November 27, 2015

How I Can Travel Indefinitely

Last night I was out for dinner with four new friends, one each from Austria, Germany, Switzerland and Holland. They were shocked to hear that I have saved enough money to be able to live/travel on $1500/month for the next 10 years. Their ages range from approximately 30-35. It is my understanding that two of them have professional careers similar to what I was doing at their age, and they may not have been as shocked as the other two.

It got me to thinking: how exactly did I get to this point and why do people find it so odd? I've done nothing extraordinary and I made less money than most of my close friends from home who had similar upbringings and education.

One of my new friends (Dutch) noted that the four of them likely pay higher taxes in their home countries than I do in the USA. After all, her university was paid for by the government and my Austrian friend is actually getting paid by his government to study Spanish language in Argentina. So I imagine it to be true that they pay higher taxes than me, and it is definitely a factor, but this post is not going to get in-depth on international tax policy.

Let's examine the various factors that helped lead me to this life of long-term travel.

1) Upbringing

When I was growing up it was my expectation that I would (1) go to college, (2) get a good job at a big company, (3) work my way up the corporate ladder, and (4) retire at age 65. So when I went to college I majored in both math and economics -- math because I liked it and was good at it, and economics because of reasons (2) and (3) above.

Until I was about 40 I continued to live out my obedient childhood where I mostly did as I was expected (except for getting married and making babies) and gained favor from my parents, grandparents and other older relatives. I believe my parents raised me as they did because they came from strict households headed by 1st or 2nd generation Americans who lived through the Great Depression and passed on to them the values of duty, diligence and obedience. Their upbringing was probably not too dissimilar from the stereotype we are familiar with today of Asian-American households, many of which are headed by citizens who survived the Korean or Vietnam war and have made large sacrifices for the benefit of their children.

2) Income

With my double major from a well-respected liberal arts college I achieved an initial salary of $18,000 at an entry level job with a Fortune 500 company who sold life insurance and financial planning. I worked hard and for three years I received promotions until I decided to become a ski bum at age 26 and live in Utah for two years where I earned minimum wage of around $6-$8/hour.

Do you remember Y2K when the world was going to end because computers were not originally programmed to handle the year 2000? Because I had a math degree I got hired back by the same financial services firm after my ski bum years. They paid me $40,000 plus a $5,000 signing bonus. Awesome! This was a huge surge in my income and I can attribute it to (1) math education, (2) crisis in the market, (3) my willingness to learn new skills, and (4) good relations I had built up at that company.

1998-2005 was a good time to be a computer programmer because the field was exploding and, with it, demand and salaries. I hung on for the ride and it was the longest I would ever work in any one discipline. Every day I was being challenged and learning and seeing visible growth/results. The instant feedback provided by computer programming was great. I could change code, re-run the program, and instantly know if I was on the right track or not. This was valuable for my happiness.

But I didn't see a future for myself in IT management. I wanted to be in Marketing because I identified more with the personalities I saw in management positions there. I knew, though, that I needed a bridge job to get into Marketing because I had zero experience in that field. So I got a job in Internal Audit which allowed me valuable face time with Marketing management, something I knew would help me in the transition.

It worked. After two years in Internal Audit I got the hip, innovative job I wanted. I would be helping to develop new startup business ventures under the safety of the corporate umbrella. I got to work for a startup with with very little personal risk. My salary rose with it until several years later when I moved to Montana in order to better align my lifestyle with my personal values (i.e. living fully in mountains and skiing frequently). I had gotten a taste of management and it wasn't for me. I was prepared to make less money but live a lifestyle more in line with my personal values, which I had spent time cultivating with help from my longtime employer.

And make less money I certainly did. I became a financial rep selling life insurance and mutual funds and made far less money. Then I took another financial step backwards when I quit that to buy a small business hair salon franchise in Colorado. I lost money as an entrepreneur, but I'm glad I gave it a shot.

3) Saving & Expenses

Aside from the last five years I was always pretty conscious of my expenses. Spend less than you earn seems so simple, but it eludes many Americans. After the 2008 financial debacle President George W. Bush urged us all to go shopping in order to help the economy.

When I got my first job out of college making $18,000 I immediately purchased a brand new car for $12,000 even though I already owned a perfectly good car in good shape with very low mileage (but it wasn't very good looking). Can you imagine buying a car that is valued at 2/3 of your annual income, even though you know it loses 30% of its value the minute you drive it off the lot? Perhaps you can. Many of us have done it. This photo is not my actual car (same make and model, though), but you can see why I wasn't too enamored with it as a suit-and-tie wearing, upwardly mobile 23-year old. Or maybe you are envious of me and my sweet set of now-vintage wheels.

Saving

In my 20s and 30s I always spent less than I made (see: Upbringing) and at age 29 I thankfully succumbed to the programming of working for a mutual fund company and finally began saving. For the next 12 years I maxed out my IRA contributions and put 20% of my salary into a 401(k) which was partially matched by my employer. I even put a little more into non-retirement mutual funds.

From ages 42-45, however, I earned about zero dollars and only lowered my spending by a little. As you can see via the above graph I was putting a significant dent into my savings.

College Expenses

In the United States it is not uncommon for parents to pay for as much of their kids college education as they are reasonably able to, at least among my peers. It is fairly normal for parents to try to pay between $10,000 and $20,000 per year for each of their child's 4-year college education. In many European countries they are essentially paying the same, but they do it through taxes. Or probably they contribute less in taxes because the expense is more equally shared among all the population, not just those with children. Since I never had children I don't pay this expense either directly or indirectly. However, since I do still value education, most years I donate a small sum to my alma mater.

When I was in college I believe it was less common for parents to pay for their children because college wasn't nearly as expensive back then. But I was fortunate that my grandparents paid for my college, so while some of my peers paid first for their own college and then paid again and paid again for each of their children, I paid never.

Transportation

The average American spends $8000 per year (data here is a few years old) for each automobile they own. I always owned fuel-efficient, practical vehicles and ever since 9/11 preferred to ride my bicycle to work and to errands around town as much as possible. In the years before that I always took the bus to work. I don't know my annual transportation expenses, but they were significantly less than the American average. I also chose to live in central locations which helped minimize this expense.

Health Care

Some countries have extensive government sponsored health care and the people pay very little out-of-pocket to the doctor. Of course they still pay it, but they pay it in taxes. USA did not do this and the fact that I am a healthy person means I pay very little in health care expenses. I pay less for health care than non-healthy Americans and probably also less than many healthy Europeans because I don't pay as much to support others in ill health.

Current Expenses & What I Need to be Happy

I'm quite happy owning only what I can fit in a carry-on sized backpack, bouncing from hostel to volunteer farm to hostel over the next several years, and keeping my spending low.

Chance

On the income/expense graph at the top of this post you can see that I was doing quite well financially for myself until age 42 when I decided to scratch my entrepreneurial itch. The past three years I spent much more than I made, which took a big chunk (>$100K) from my savings. However, it just so happened that, after losing my mother to cancer in 2001, my father died of cancer this past April barely three months after diagnosis. From him I inherited almost exactly the amount I had lost the prior few years.

Which brings me to now.

Summary

So how can I afford to travel for about ten years on $1,500 per month?
  1. I got a good education for free
  2. I was obedient enough to work hard for 20+ years in jobs that, while I wasn't passionate about any of them, paid me a reasonable wage
  3. Kept myself healthy
  4. Took calculated risks that sometimes worked out (IT career) and sometimes didn't (entrepreneurial career)
  5. Save, save, save. Didn't get caught up in consumer culture.
  6. Lived in a lower tax nation (compared to some) that allowed me more control of the money I earned
  7. Understanding that material possessions do not bring me happiness
  8. Fortuitous timing
Last night's conversation sparked this analysis and it's been beneficial to me to write this. I look forward to more discussions with new international friends in order to better understand the world and myself.



6 comments:

Suse said...

Very detailed post on finances. I think many Americans spend what they make or more. This is inspiring since I am slowly changing how I view and handle my finances. I am in a good place but still can improve. My biggest problem was a marriage to a person who has little financial awareness and refused to quit spending. Life is better now-people should consider spending habits of a future spouse.

Suse said...

I like the adage, it's not what you earn, it's what you keep.

Suse said...

So, after 10 years of travel, if this played out, is money left for retirement or is this where passive income helps? I fear quitting a job and not contributing to a retirement account. Of course, my retirement account started later in life, due to a choice to raise my children, and not put them in daycare.

Kirk Ahlberg said...

Suse... retirement is in a different bucket. I don't believe I can rely on social security or my modest pension so I definitely need to earn more money for pre- and post-65 living. I'm writing a book and looking for other location-independent income streams.

And I share all this personal information because improving all of our financial literacy is something I'm passionate about and that I worked on a lot in my prior career. In our culture we don't like to talk about money and, as a result, it is hard for people to learn how to manage their money. I'd rather be an open book and start a conversation that might help someone than hold all my personal info in a personal vault for nobody to see.

Anonymous said...


I support your goal of improving financial literacy. The world would be a better place if the Western Europeans, and their decedents, lived within their means.

However, do I understand this correctly, you have $180,000USD at your disposal ($1500/month * 12 months * 10 years = 180,000)? Your life so far was an education paid for by your grandparents, which you used to get a job, expect being a ski bum for two years. Then you lost all the money you saved in a bad investment (hair salons in Colorado). Then last April your father passed away -I am sorry for you loss. You then inherited all the money your parents saved in their lifetime, and you are now going to spend the next 10 years traveling with that money.

Do I understand this correctly? And if so the lesson from your financial life is to be born in America to a family that gives you a good education and an a large inheritance. Don't mean this as an attack, you seem like a good and thoughtful person, but there is not much in your story that many people could use on their financial path.

Kirk Ahlberg said...

Thanks for reading and commenting, anonymous (if that is your real name). I appreciate your thoughts and your interpretation is pretty accurate.

To answer your question: yes. You understand my story correctly. I hope the Summary at the bottom of the post helps make my story clear.

This entire blog is just a personal journal that I have made public. Hence this particular post is not meant as advice, but is simply an analysis of how I got to be where I am today. It was sparked by conversation with youthful travelers from around the world which helped me crystallize the differences in my life and in my country compared to others.

So yes, you are correct and that was part of the point of the post. Where and to whom we are born matters a lot, which is why I tried to share my sympathy about the Syrian refugees. Our nation of birth is a topic for another post, but I find it sad how critical the circumstances of our birth can be in the living of our one precious gift of a lifetime.

You are exactly right that I am a lucky person in many ways. I was born in a free society that has certain monetary policy and to a family that benefited from the hard work of my immigrant ancestors. Though, in my own defense, I have also worked for 30 years (got my first job at 15) at jobs I didn't like and consistently spent less money than I made. I was also a thoughtful saver for much of that time, a beneficial trait that was instilled in me by my family -- so there we go with circumstances again.

For more on that please see this other post on Gratitude http://lotomojo.blogspot.com/2016/01/grateful.html.

As far as advice on how to travel long-term, I can only give advice based on my limited personal experience. My advice is to spend less money than you earn. Live simply. Realize that material possessions do not bring happiness. And don't be afraid. Go for it! Most people I meet traveling are doing it on a fraction of what I have saved up. It took me 45 years to figure that out and hopefully you can be on a faster path to your life goals than me.