We’re Changing How We Calculate Our Budget – Here’s Why

Shae and I are about to get a little more money to spend each month!

If you’ve been following our road trip for a while, you’ll know that we publish our stats each month which includes how we did with our budget.

Our road trip budget is $100 per day which has to include everything – accommodation, gas, food, activities, hotel pet fees, phone bills, etc. Some months we’ve stayed on track with our budget, others not so much.

While adding a new expense to the budget the other day, I started reevaluating some of the expenses that we keep track of on our budget. After discussing it with Shae, we’ve decided to amend how we keep track of a few of our expenses which incidentally has the added benefit of giving us more to spend each month 😉

The Purpose Of Our Stats

When starting our stats series last year, my intention for it had been twofold:

1. I thought it’d be interesting for you to read about
2. I thought it’d be helpful to show how affordable it can be to travel full-time in the US

With a budget of $100 per day, I’m well aware that we’re in a fortunate position to be able to spend more than many people earn. At the same time, many people have annual income far in excess of $36,500, so setting that spending limit for ourselves still feels somewhat moderate and achievable for many.

To be as thorough as possible, we’ve included all of our expenses each month, but the other day I realized that’s not giving an entirely realistic picture for all of you.

Business Costs

The reason why I don’t think our budget gives an entirely realistic picture of what’s possible when traveling full-time is that we’ve been including our business costs. That’s something that’s pretty unique to us, so I’ve rethought the usefulness of including those in our budget.

I’ve shared before that the reason we’re able to travel around the US is because all our income is made online, so we just need an internet connection and we’re good to go (see: Here’s How We Can Afford To Travel Full-Time). The majority of that income comes from websites I’ve created over the last 8-9 years which comes with associated costs, most of which relates to the cost of website hosting and domain names.

Most people aren’t going to have to pay for three hosting accounts though, nor for ~40 domain names each year. With those and some other expenses (e.g. Mailchimp for our email subscribers), we’re spending about $1,600 per year. That’s a pretty good return on investment considering the income we earn through our websites, etc., but accounting for this in our road trip budget has a direct effect on our trip.

$1,600 annually is $133 monthly. With a daily budget of $100, we’ve been allocating 1.33 days of our budget each month to our business expenses. Although that’s only 4-4.5% of our budget, it’s still a fairly significant chunk of our budget which has given us less to spend on other things over the past two years.

The Change

As you might’ve guessed, the change we’re making is that we’re going to leave our business expenses out of our budget from now on. Rather than going back and amending each set of monthly stats, we’re going to add just one line entry for December accounting for the “overspend” on business expenses over the past two years.

We won’t be stripping out all of our business expenses though, so some of that we’ll play by ear. For example, we’ve both had to get new laptops this year. We’ve been allocating those as business expenses, but we also use them for personal use. We’ll therefore still add those types of expenses to our budget, except now we’ll attribute them to the household expenses category rather than business expenses.

It’ll be things like website hosting, domain names, email service, etc. that we’ll no longer account for in the budget.

Why I Think This Is A Reasonable Change

Over the past 10 years or so, more and more people have become digital nomads. One way some people make a living online is by selling on Amazon with FBA (Fulfilled By Amazon). They have products created in China, ship them to the US, they’re stored by Amazon, sold by Amazon and shipped by Amazon, so the digital nomad overseeing it all never has to physically touch the product.

If you can find the right niche, this can be incredibly lucrative. Needless to say though, the expenses involved in manufacturing, shipping, Amazon fees, etc. can be astronomical. If we ever decided to do something like that, it would make no sense to add all those expenses to our road trip budget as they’d be completely unrelated to our road trip expenses, other than tangentially in that reselling those items would help fund the trip.

Seeing as we wouldn’t include those type of expenses if we were in that line of work, it makes sense for us to leave out the types of business expenses that we do actually incur in our own lines of work.

The Result

The nice thing about not including these business expenses in our road trip budget is that it’ll give us more money to spend on other things each month. There have been numerous times on the road trip we’ve had to say no to certain activities as we haven’t had it in our budget. Those types of activities might now become a reality. It also means that we’ll be on course to underspend this year, while reducing how much we overspent last year.

While this might seem like cheating to some, I feel like it gives a much better representation of how economically you can travel full-time in the US, while simultaneously having fun.

An Alternative Rejected

In theory we could’ve just increased our monthly budget to account for our business expenses. The thing is, our business expenses can vary from month to month and there’s no guarantee as to what they’ll be at the start of the year. Our expenses increased this year compared to 2018, so there’s no way of knowing for sure what they’ll be in 2020.

We’re heading our west next year and will be in Alaska throughout the summer. We might therefore need to invest in some kind of hotspot to ensure we always have internet connectivity. My GC Galore website is starting to take off, so I’ll likely need to start paying for an email subscription service for that and possibly other services which are costs we don’t have right now.

Our Income

One thing I want to highlight is that this doesn’t mean we’re spending more than we earn. We spent the first 10 years of our marriage with credit card debt and we have no intention of ever returning to that place.

There were a few reasons we initially set our budget at $100 per day:

1. We weren’t entirely sure what our income would be each year
2. It was less than our average daily income, so we’d have some leeway in our budget
3. It was a nice round number!

The first point was my main consideration before we set off on the road trip. Since then though, our income has been fairly healthy and it’s improved in recent months since Shae started teaching on Outschool and for VIPKid. There’s therefore no danger that the unallocated business expenses will push us into any kind of debt.

Final Thoughts

I’m surprised it took me almost two years to come to the realization that including our business expenses in our road trip budget with our regular spending wasn’t the greatest idea! Still, at least making this change from now on means we’ll be under budget for the year and will have more money for fun stuff over the remaining years of our road trip.