Balancing a Safety Net with Wanderlust

“For my part, I travel not to go anywhere, but to go. I travel for travel’s sake. The great affair is to move.”
– Robert Louis Stevenson

When I lived in Germany, I had friends who got married and decided to spend a very extended honeymoon in Australia. They got there, bought a second-hand (or maybe it was a fourth-hand) beater car, and started driving around the country. She was a dental hygienist, so whenever they ran out of money, they’d stop for a couple of weeks and she would pick up contract work, as, apparently, everywhere but the United States has a shortage of dental hygienists. Once they saved up some more money, they’d get back on the road and keep going.

That image of a traveler’s lifestyle has always stuck with me and appealed to me. Whenever our vacation friends get together, we buy one lottery ticket and spend the evening before the big drawing talking about all of the places where we’ll buy chalets to go world hopping. We’ve come to the agreement that we’ll split the winnings amongst everyone, but that each couple/family has to buy and maintain one vacation chalet that any of us can visit whenever we want. The fun in the discussion is figuring out where all in the world we want our vacation chalets.

Unfortunately, the Fates have failed to smile upon us as of yet, so we are not jet-hopping dilettantes. Instead, we have to fit in our desires to travel within the constraints of our existing lifestyles.

I do read of others who have cut the strings and given in to their desires to travel. It’s motivational for me to read of these stories, but the risk-averse part of me (yes…a risk-averse entrepreneur!) cringes at some of the truly in-the-moment attitudes that some of the storytellers have.

The typical story goes something like this:

I sold everything that I couldn’t fit into my travel rucksack. Armed with 8 changes of clothes, two books, a laptop, and $20,000 in the bank, I decided to head out and see the world. I’ve been traveling now for 4 months and I hope to keep doing this for the rest of my life.

Hey, I admire the person who can truly be living in the present and who can suck every ounce of joy out of the marrow of life. However, when I read those stories, I wonder just how much hyperbolic discounting is happening with these people. Do they truly have the attitude that the future will take care of itself and to enjoy the day, or do they have a plan and knowledge that I do not know?

Perhaps there is some of both. It depends on the situation.

What are some of the things that you need to consider if you’re going to visit your inner Jack Kerouac and live a life on the road and you haven’t yet reached retirement age?

Visas. If you think that the border controls in the United States are bad, try going to some places without the proper documentation. Usually, it’s not too much of a hassle to obtain a tourist visa to stay for a limited amount of time in a given country, but if you want to stay for the intermediate or long term, then you’re going to have to get a different type of residency permit. In almost all cases that I’ve seen, the requirements are going to include both insurance to ensure that you do not become a burden on the host country’s national healthcare system and a source of income – either through a job, passive income, or sufficient assets to support yourself. Furthermore, you don’t want to work a job on a tourist visa. Chances are that you won’t get caught, but if you do, you’ll probably be deported and your employer will get into a lot of trouble.
Insurance. Not only is it a requirement for a long-term stay in a lot of countries, but you also usually require a special type of travelers’ insurance to receive medical care in foreign countries. If you find yourself in a situation where you require specialized medical care or evacuation back to your home country, you’re going to be glad that you got the travelers’ insurance. Yes, private healthcare in many countries is often cheap and high quality; however, you’re probably going to want the safety net in case extenuating circumstances arise. Furthermore, if you go without insurance, it might be harder to get when you come back home, as you’re going to have had a break in insurance coverage.
Work. Travel. Stop. Work. Travel. Stop. Work. A lot of travelers think that they can maintain an indefinite cycle of working, traveling, working, traveling, working. By this I don’t mean work for a few years and take a sabbatical, but, rather, stopping in place and working for a few weeks or months until you save up the funds to travel again. Few are truly able to make that cycle last for an extended amount of time. Additionally, the reality is that many of us won’t be able to work indefinitely. The U.S. Administration on Aging reports that 22.5% of Americans between the ages of 60-84 report employment disability, meaning that they physically cannot work. Regardless of whether or not you live in one place or are a permanent traveler, relying on the “work until I drop” strategy increases your likelihood of becoming the bag lady (to read more about the “bag lady” syndrome, subscribe to my 52 week personal finance game plan and receive a free e-book).

I’m not against a “gap year” in the middle of your career, at the beginning of the year, or traveling a ton when you’re retired is a bad thing at all. I’m a huge fan of travel, but I am an even bigger fan of doing it sustainably. I see three approaches to balancing wanderlust with a safety net:

Keep your day job and use your vacation time to travel. This is the most conventional of the approaches; yet, most people don’t go this route. Half of working Americans don’t use all of their allotted vacation time, essentially performing unpaid work. Don’t take a victim mentality and think that you can’t take off because of [FILL IN THE BLANK EXCUSE HERE]. Look, I owned a company. I had employees. We had a pretty generous vacation policy, and we expected people to take vacation because we didn’t want them to burn out. Failure to take the allotted amount of vacation was actually a ding on the annual review, as it showed an inability to manage time and expectations. The world will not fall apart if you take all of your vacation. Otherwise, your employer wouldn’t make it a part of your package. Stop being a victim and take your vacation.
This is, as I mentioned, the safest route because you keep your job, your salary, and your insurance while scratching the travel itch. You get to keep saving up for retirement (you are saving for retirement, right?).
Earn and save enough so that you can retire and travel as you see fit. This, obviously, won’t make Monkey Brain happy because you are delaying gratification, and he wants gratification NOW (darnit)! However, it’s the most realistic endgame if that’s what is truly important to you. The planning for getting there will probably take some recursion, though.
First, work backwards. What sort of retirement travel lifestyle would you like to have? Nice hotels? Nice restaurants? Fly to a different place every month? Figure out the costs of all of this, as well as the cost to maintain anything back home (like your home and your stuff). That’s your annual expense requirement.
Then, figure out your safe withdrawal rate, and divide the expense requirement by the withdrawal rate. That’s how much you need to save up. Are you there yet? Retire and travel. Not there yet? Figure out how much you have to save every month until you get there.
Can’t do that within your expected lifespan? Then you’ll have to scale back your expectations. Revise the retirement assumptions and start again. Keep iterating until you have an answer that you can live with or do something to change some of the assumptions along the way, such as how much you’ll earn.
Have a steady source of income which you can earn anywhere. This is a different take on the previous approach, in that you are still working; however, you’re not tied to one location. Even though we’re not currently doing it, theoretically, my wife and I could fit into this category. She has a job where she works from home and only needs an Internet connection and a printer/scanner, and I can service clients from anywhere with an Internet connection because of my use of technology, so if we chose to do so, we could be anywhere at any given time and able to earn an income. A few people that I know of have turned travel into that source of income – Matt Kepnes and Sean Ogle are two who come to mind, but I think they’re the exceptions rather than the rule.
With this approach, I’m not advocating a Four Hour Workweek outcome with the occasional check-in while your virtual assistants make your world go around. If you can do that, great, but I think that the aspirations of many exceed the realities of the few. I am saying that if you can do your job with only an Internet connection and a laptop, then you truly could make a go of a location independent (and somewhat itinerant) lifestyle if you committed yourself to it.

Unfortunately, the approach of many of the travelers that I met when I lived in Europe and whom I’ve read about online simply does not incorporate the balance necessary to make long-term travel sustainable. A recent survey of 71 travel experts showed that 53 of them saw money as the biggest impediment to a life of travel. It’s true. Money is the biggest barrier. However, taking the mindset of selling everything and just doing it probably won’t allow you to make it sustainable.

Do you dream of a lifestyle of travel? Have you been able to make it happen? What has been the biggest barrier to reaching that goal? Tell us about it in the comments below!

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John Davis

John Davis is a nationally recognized expert on credit reporting, credit scoring, and identity theft. He has written four books about his expertise in the field and has been featured extensively in numerous media outlets such as The Wall Street Journal, The Washington Post, CNN, CBS News, CNBC, Fox Business, and many more. With over 20 years of experience helping consumers understand their credit and identity protection rights, John is passionate about empowering people to take control of their finances. He works with financial institutions to develop consumer-friendly policies that promote financial literacy and responsible borrowing habits.