Your budget is absolutely the most important consideration when you’re planning to become location independent – excepting the desire and freedom to do so. I would highly recommend writing up your budget and working toward that being your magic number where you would feel confident that you won’t need to call in favors to return to your home country penniless and homeless. A budget will also allow you to analyze where your rent will need to be and what impact certain purchases will make on your GO date or, if you’re already there, on the rest of your trip.
For us, we wrote out our current expenses so that we could analyze which ones will go away and which ones will need to remain in our future budget. It will also help you identify which items you can maybe reduce. Here’s ours:
Current Expense Per Month
Rent + Utility: $1,250.00
Phone: $175.00
Electricity: $100.00
Car Insurance: $70.34
Rent Insurance: $18.17
Internet: $55.00
Hulu: $11.99
Food: $992.00
LLC Agent: $13.25
Insurance: $250.00
401K: $686.68
Social Security: $410.00
Taxes: $1,163.67
It’s important to include Taxes, Insurance & Savings into your budget considerations. You’ll still need to pay them. Insurance in particular will need to be updated. Your employers national coverage will likely not work outside of your home country. Companies like http://worldnomads.com will customize their insurance coverage to work based on the countries you’ll be visiting and your age. I had a coworker who just had his appendix burst in Peru and he would’ve been entirely responsible for that expense had he not purchased travel insurance.
We realized a savings that could be made if we switched our phone from Verizon to Google Fi. For one, using Verizon would’ve cost us significantly ($10/day) to use our phones overseas on top of the already exorbitant $175/month we were paying. Google Fi uses a combined T-Mobile/Sprint/US Cellular/Three network to extend it’s coverage world-wide. It costs $20/month + $10/GB data, max $60 per month per
phone. And there’s no additional charge to use your phone internationally as you would at home.
Another new expense is our Virtual Mailbox. Having an LLC, we needed a permanent mailing address in-country for while we’re living with no fixed address. We used https://ipostal1.com to setup a mailing address in Tennessee while we’re gone. Our plan is about $10/month for 30 items. They digitize the received envelopes and send the images to you. If you choose, it costs about $2.25 for them to open any items you specify and send you a digital copy of the contents (> 10 pages costs more).
On a side note, we also switched to Charles Schwab as our primary banking establishment because they offer a No-Fee account and refund your ATM charges for any ATM world-wide.
Current Location Independent budget per
month (for 2 people):
Rent: $1,200
Transportation: $300
Fees (visas, etc.): $100
Phone: $160 (max is what we budget, $80 is more realistic)
Insurance: $309
Food: $992
LLC Agent (for our business): $13.25
Miscellaneous sight-seeing/spend: $400
Domain Registration: $3
Domain Hosting: $4
Virtual Mailbox in the US: $10
Google Drive: $8.34
Taxes: $1,163.67
Social Security: $410
401K: $687
+10% contingency: $575
Total Location Independent Budget: $6336
If you multiply that amount by 12, it comes to $76,032. This is the amount that I would need to earn in a year to feel comfortable becoming location independent.
Seeing these numbers, I know that some countries we visit will cost more, some will cost less. If I can cut back in the cheaper countries, the expenses even out in the more expensive ones.
We also realize right now that this isn’t a vacation. This is a lifestyle. We won’t be doing touristy things every day. We want to live in these places for 1+ months and live like the locals do; be social, absorb the culture. We’ll use http://atlasobscura.com to visit the interesting & odd sites that are often free. We’ll eat out of our refrigerator and live out of our backpacks.
So, that’s our budget. Here’s a couple tips about yours:
- Your budget is CRUCIAL – don’t leave home without it.
- Don’t forget to budget taxes, insurance and retirement.
- Use your budget as your guide to estimate how much you can legitimately pay for rent, travel & sight-seeing.
- Look at what you’re currently spending and consider where you can cut costs. Think about the implications of keeping your current utilities (particularly your phone) internationally.