Let’s say you’ve decided that you want to be an RV owner and live the RV lifestyle, whether that’s full-time or part of the year. You’ll need to more than “test drive” or find your “dream RV.” There are a lot of financial considerations to take into account as you make your way to achieving your goal, otherwise known as financial planning.
Sound like something only retirees would think about? By the time retirement comes along, it may be too late. Financial planning should begin early, upon joining the work force, and it should evolve as life goes on. In fact, more and more RVers are on the younger side: Research for the RVIA in 2016 conducted by the University of Massachusetts Amherst shows that the 35-54 age group has surpassed the 55+ age group for the highest rate of ownership. The average age of an RV owner is 48 years old. Take a look at social media and you’ll see plenty of Millenials and Generation Zers leaving traditional living behind and hitting the road with an RV. But with RVs costing potentially thousands of dollars (depending on the type of RV you want and whether it’s used or new), a dream to own one can become reality with a little strategic planning, regardless of your age.
- Look at your budget. Will owning an RV allow you to reduce your current annual budget? This depends on your intended use. Do you want to continue to own or rent a house during certain parts of the year? If you don’t own your home, and most of us don’t, can you afford basically a “second mortgage”? Can you work the same from your RV to bring in the same amount of income, provided you want to continue to work as you are now? Living in an RV has a lot of pluses when it comes to the monthly utility bills.
- Take a gander at insurance and financing. Speak with RV clubs about their affiliations with insurance providers; becoming a member may get you a discount. Speak with experts as well as the dealers about financing options for an RV, whether it’s used or new. If you have a financial advisor, ask him or her where you can take risks so that you can grow your investments or whether you can remove cash early. For younger individuals, ages 18-35, begin with the end goal in mind and then make sure that’s reflected in your financial planning conversations over the years. If you’re currently working and paying a mortgage and sending kids to school and traveling to exotic locations, etc., how much do you need to be saving in retirement to be able to purchase an RV and have a sustainable annual income in retirement? The questions and the responses change based on your age and where you are financially when you begin to embark toward RV ownership.
- Think about how much you want to travel. Motorized RVs and large tow vehicles such as trucks and large SUVs can make you look twice at your gas mileage. Gas prices fluctuate, and we’ve all seen the per gallon price be above $4.00 (ouch!). Factor this into your financial planning for the future as well as your monthly budgeting once you are the proud owner of an RV.
- Factor in the tow vehicle or toad. If you want a towable RV, such as a travel trailer or a fifth wheel, do you have the right vehicle to tow it? If you need to purchase a new vehicle, will you need to take out a loan? If you have a Class A motorhome, do you want a smaller vehicle to be able to take day trips and to travel into town? Now you don’t just have an RV, but another asset as well that needs maintenance. Financially, this can all add up quickly, and what you thought would be a $25,000 investment just turned into $50,000 investment, depending on how you choose your vehicles and other lifestyle choices.
- Plan for the unexpected. RVs need maintenance, both routine and in the event of the unexpected happening. RVs also tend to be quite large, thus the parts can get expensive or hard to find. Remember, RVs are just homes on wheels, which means they can come equipped with a full kitchen, bathroom, and outdoor entertainment area – the components of which can break, and will break, at some point. Additional luxuries can also cost you if they malfunction or wear out. And, before you purchase an RV, make sure the dealer has a service department with RV-certificated mechanics. A dealer that’s associated with a network of certified dealers would give you the best resource.
- Build a grid. Map out a five-year financial plan if you’ll be taking the plunge. Year 1 will be significant because it will have the purchase price of the RV. Then add in fixed costs such as insurance, storage fees, and maintenance. Then try to factor in variable costs you would expect to incur over the days (time) you plan to use your RV in the course of a year, taking inflation into account: fuel, campground fees, groceries, etc. This business-oriented example from Don Cohen was particularly helpful.