2013 was our first year of traveling the globe, and what a good year it was! We traveled by plane, boat, bus, car, bicycle, and foot through Mexico, Guatemala, Belize, and part of the US Pacific Northwest.
We swam with whale sharks, released baby turtles into the sea, swam in underground rivers, jumped off waterfalls, witnessed many wonderful sunrises and sunsets, and ate delicious foods. We studied Spanish, guitar, jewelry making, and Mexican cooking, skills and interests that we can carry through a lifetime.
We left the stresses and inconveniences of the working world behind, and found happiness and contentment through everyday experiences. We even learned quite a bit about the finances and tax benefits of early retirement, slow travel, and medical tourism. But perhaps the highlight of all of these adventures and experiences, we met a lot of interesting people and made many incredible new friends
By any metric, our first year of early retirement was a great success
Throughout the year we have shared details of our expenses, in order to inform others who may be interested in pursuing a life of travel and adventure themselves. Let’s look back on those expenses with the benefit of hindsight
| Details | 2013 Annual Expenses | Notes |
|---|---|---|
| Housing | $7,971 | ~$22/day |
| Healthcare | $2,779 | ~$8/day |
| Transportation | $3,139 | ~$9/day |
| Groceries | $3,295 | ~$9/day |
| Dining Out | $8,223 | ~$22.50/day |
| Alcohol | $1,395 | ~$4/day |
| Entertainment | $4,131 | ~$11/day |
| Misc | $2,496 | ~$7/day |
| Total | $33,429 | ~$92/day |
This isn’t the full financial picture, of course, as we had several atypical or non-recurring expenses that we broke out separately. These are expenses that, at the time, we assumed would be abnormal for other travelers, or as in the case of Spanish language classes, something better amortized over a longer period of time. (Over time I became more selective for what was considered unusual and these things found there way into the Misc category)
| Other Expenses | Atypical and Nonrecurring expenses | |
|---|---|---|
| Spanish School | $1,810 | ~$5/day |
| Laptop repair | $949 | ~$3/day |
| Cooking class | $150 | |
| 1 TB HDD | $112 | |
| Funeral Expenses | $1,559 | ~$4/day |
| Blog expenses | $211 | |
| Mother's Day & Birthday | $251 | |
| US Immigration Processing | $120 | |
| Vitamix Blender | $360 | |
| Guitar amp & cable | $15 | |
| Total 2013 "Other" | $5,537 | ~$15/day |
| Total 2013 Spending | $38,966 | ~$107/day |
Total spending then came in at a bit less than $39k for the year, or about $107/day. Based on the 4% rule, this could be supported by a portfolio value of just under $1,000,000.
This is a pretty reasonable sum for some rock star living.
For interested parties, it is possible to explore these expenses in great detail. A few things that I think are worth highlighting:
$2,563 (~$7/day) of our Healthcare spending was for health insurance (nearly all of our healthcare spending, in fact), which we decided to eliminate and self-insure. One factor that influenced this decision is the relatively low cost of healthcare outside the US. A recent visit to the doctor in Taiwan that included blood work, a chest X-ray, and an EKG cost less than $60, for example.
Many travelers could spend less than we do on housing and dining out. We have rented places with extra bedrooms in order to entice friends and family to visit, a practice that has not had a high return on investment. Going forward we will tend towards renting smaller places, but will be ready to welcome visitors with open arms
Our dining out expenses will continue to be high as a percentage of total spending. Once in Belize, on our way to eat lobster omelets for breakfast, we passed a picnic table full of backpackers silently spreading peanut butter on slices of white bread. We love peanut butter sandwiches as much as the next person, but we will continue to spend a little extra for the lobster omelets in most cases.
For many, the expenses in our “Other” category would disappear entirely, and many of the “Misc” expenses wouldn’t exist at all. If you could avoid dropping your laptop and already knew some Spanish, for example. This will be the case for us as well when we return to Spanish speaking countries, something we very much look forward to
2013 was a great year for us, one full of happy memories and a happy wallet. With it as a benchmark, we feel great excitement for the future and look forward to many more years on the road
Thank you for reading and for your support
Jeremy & Winnie
Go Curry Cracker!
Thanks so much for the great post! I also reread the “How Obamacare Saved Us From Extortion” article you linked to.
I think what you have constructed here is the best how-to guide on legally evading taxes / early retirement guide that I have ever come across (MMM is great, but it does not highlight the tax specifics that are so critical). You’ve done a great job of finding loopholes in our 1,000,000 page tax system and done the math on specifically how to exploit them. Since most of the current loopholes in our tax system are based off of income, not wealth (thank goodness!), they are particularly subject to exploitation by early retirement types.
I enjoyed your calculations on the implicit 13% tax on Obamacare during the phase out of subsides and the astute observation that the Obamacare penalty is not valid for those with exactly $0 in federal tax liability.
Isn’t it a shame that we live in a society where smart people like you (and to a lesser extent me) have dedicated a bunch of time to avoid taxes? (I spent about 20 hours over the past 2 weeks modelling phase-ins and phase-outs of various tax credits to understand effective marginal tax rates and thus optimize my 401k / Roth / Traditional IRA contributions for 2014. It was a hopelessly complicated task, and one that I relied heavily on Turbotax’s Taxcaster tool for). You and I are smart to think about it, since it has a direct, and profound, impact on our financial well-being. It’s one of the unintended consequences of our complicated tax system, which has caused you to leave the labor market early since the math says it doesn’t make sense to work any more. The math also says that your time is better spent analyzing tax loopholes than curing cancer or designing flying cars, for example.
I feel bad for those who spend their days rotting away in a cubicle because they are too nearsighted to realize that, despite the mess of a tax system that we have, we can chose the amount of taxes we pay, largely due to our choice of labor income. These types work for 50 years and die, having never fully enjoyed the fruits of their labors.
Anyway, sorry for the long-winded comment. Please keep up the good work and enjoying a tax-free life!
Hi baughman,
Thank you, I’m glad to have been able to write a good road map. For sure, somebody could follow the same process we did, retire early, and pay no tax throughout their retirement. The US tax system is kind to retirees (early and not so early.)
To be clear though, we DID NOT leave the labor market due to taxes. We left because we have limited time in our lives and we were not passionate about our careers. Since we had saved well, it was time to do other things.
In life, I’ve probably spent less time on taxes than just watching Seinfeld reruns. It is a really small amount of time. Certainly the system could be simplified, but for most people they could learn enough in just a few hours of study. Just point them to this blog! :)
I personally don’t think time spent studying loopholes has higher return than curing cancer. I’m not particularly interested in solving cancer or building flying cars (a bicycle maybe, a car, no :) ), but I am interested in finances and system optimization, so I’ve spent some time thinking about tax optimization.
Were I to reenter the workplace at some point in the future (highly unlikely), we might pay something in the range of 30% effective tax rates. I don’t see why this would prevent anybody from working on many of the world’s opportunities for improvement.
Thank you for the comment and your kind words! Much appreciated
Jeremy
Fair enough comments. Point taken that you did not leave the labor market due to taxes. Perhaps said another way is that your understanding and strategic optimization of the tax code has allowed you to enjoy a standard of living that is higher than it would be if you failed to optimize your taxes post-retirement. In my case, strategic optimization of post-retirement taxes will allow me to retire earlier than I would otherwise, holding my standard of living constant across the two scenarios.
I agree that it doesn’t take much to “exploit” the tax code. Certainly not hours of devoted study. You summarized the two most important strategies perfectly in your “Never Pay Taxes Again” post: Choose leisure over work, and Live well for less. It’s certainly not rocket science; simply responding to the incentives placed before us.
Keep on rocking on, my friend. You are an inspiration, and your tax insights are very much appreciated.
It’s interesting to see how excluding the misc and other categories brings your total yearly spending to around 25k which is what MMM family of 3 spends living their badass mustachian life in Colorado.
Or if you added in the MMM family cost of housing it might be similar to what we spend ;)
In either case, it is possible to retire well on a lot less than the many millions many people think is necessary
Right, I meant to say your spending is similar if you factor in they have 3 people vs 2 of you. They are in Colorado and you are all over the world and it costs about the same.
Hi! I was thinking the same thing – that you spend about the same as MMM when you factor in that he doesn’t include the principal payments on his house (when he had them) or the opportunity cost of owning his house vs. renting.
BUT, what he does include in his spending that you do not is the free travel he gets from reward points. He looks at points he earns from CC’s as income and subsequently counts the flights he takes using those reward points as an expense. I don’t believe you do that and that could change your equations by at least $2k.
I used to not count reward flights as spending, but instead have. This way, when I reflect back on my finances, I can see what the real cost of my living was. It gets tricky though, because there is some percentage of the reward flights taken that I may not have taken had I not had the reward flights…
Love hearing the financial details, thanks!
One question: your “transportation” seems low (I’m assuming airfare is included in that category). I’m assuming you used some frequent flyer miles for some of that travel? It’d be awesome if you could estimate how much (approximately) you saved from using miles versus if you had paid for those tickets. (So someone looking to replicate something similar knows the total cost if they didn’t have miles).
And then followup request: Can you do a post on travel hacking? OR, if you didn’t use miles, a post on finding cheap flights. :)
Keep up the great work, both of you. Love reading about your travels, and the specifics (nuts and bolts) of how you do everything. Many blogs are just “here’s a photo of a cool place” – I like those, but then the “here’s how to financially optimize so you can do it” posts on top of it are awesome.
Hi arebelspy, thank you
This might be what you are looking for:
https://gocurrycracker.com/a-free-trip-to-mexico/
We used miles twice in 2013, each time to fly from the US to Mexico. Total savings was probably in the range of $1,400. Even with that added in, I think the total transportation cost still seems like a fairly low number, part of the benefit of not moving very far very fast
Just what I was looking for. Thanks!
“This is a pretty reasonable sum for some rock star living.”
Couldn’t agree more. This post is a great retort to the “I’m not interested in barely getting by, scrimping and saving, and starving on rice and beans all the time just to cut spending to $40k/yr and retire early”.
No rice and beans. No peanut butter sandwiches. That is the policy here at Go Curry Cracker! (Except on special occasions :) )
This is exactly why we share our detailed spending. $40k can seem like either a high or low amount, depending on your perspective, but it can be hard to argue that we aren’t living well for that sum. Others can make adjustments from there to how they would like to live
Sometimes I like rice and beans and PBJ sandwiches. It’s just that I usually have something more delicious to eat so there’s no time for the simple stuff.
I bet some look at your lifestyle and say “yeah but you can’t have all this awesome stuff I have because you can’t carry it from place to place. And my house is bigger than yours so I win!” For some reason I was thinking that thought in a Texan accent. I doubt you miss having tons of “stuff” surrounding you at all times. :)
Thank you for the thorough post, this is incredibly inspiring.
I just can’t get enough of how incredibly inexpensive healthcare expenses can be in other countries. That $60 you spent in Taiwan could have easily been $1200-1500 in the US (after hangling and negotiating with the provider and insurance company, otherwise it could be even higher than that).
It’s amazing how one can live a badass life on less than $40k/yr. As Justin points out, the average Joe out there thinks such a lifestyle implies horrible sacrifices. But from our community’s perspective, your annual budget is quite generous!
Hi Spoonman, indeed, the medical bills we’ve seen in Mexico and Taiwan won’t even get you in the door in the US, and the quality is no lower. Clearly the US has some catching up to do
These are the cash prices too. Taiwan has a single-payer national healthcare system and the insured rates are substantially lower
I first encountered your blog due to your post on your remarkably cheap living arrangements in Guatemala. I’ve noticed you haven’t tried to replicate that experience since then. Is that solely due to wanting extra rooms for visiting friends, or did you decide it’s worth it to you to spend a bit more to live more comfortably?
I’m guessing the latter, but I thought I’d ask. While I’d be fine staying in a place like your Guatemala apartment, my wife would much prefer slightly nicer accommodations. :)
Hi Rich
Believe it or not, the place we had in San Pedro, Guatemala was the nicest place we could find. Had something nicer been available, we would have taken it.
We both definitely prefer a place with a nice shower and a comfortable bed.
I really love a good peanut butter and banana sandwich sometimes! :)
That’s a southern thing, right? I got into a debate with a friend from NJ who said it was from the north. And that mayo on PB and banana is the southern variation.
I’m not really sure where it originated, but my family is all southern and we love them. Elvis is probably the most famous PBnB eater so I’d say that means southern. Never heard of Mayo and PB – sounds vile.
Sorry for the diversion J… but as you know food is one of those things that can make or break you when traveling. If you can be happy with a peanut butter sandwich then you can be happy almost anywhere :)
My family is all southern, too and we grew up eating the occasional PB+B sandwich.
And nothing wrong with a PB sandwich. I made one yesterday to take on a field trip with the kids. I didn’t eat it since the field trip ended early. I brought it back for a snack for the kids. I ended up fighting my 2 year old for the last bite of PB+J. When you are used to eating good food frequently, you forget how good the simple things are. :)
Oh, and yes, mayo+PB+anything is gross.
I had a peanut butter bacon burger yesterday. Eat your heart out Elvis
(Sin mayo)
That sounds mildly disturbing. And delicious.
@RoG – This is so true! We regularly eat scrambled eggs for a quick evening meal now, and it’s one of my favourite meals. Love it!
@GCC – Sounds like a fantastic year, looking forward to hearing about future adventures!
Some may be disappointed in parts of Europe then as PB is not nearly as popular in some countries. My wife is German and PB has only been available in select grocery stores for just a few years. Hard to believe civilization could thrive so long long without it!