July is our first full month of travel and is our first chance to see if the financial aspects of this trip are going according to plan. We projected expenses for the places we are traveling using numbeo, but the accuracy of that in practice is a complete unknown to us. Being in Costa Rica for all of July makes it one of the cheaper months on our agenda. There is some good data to dive into, both positive and negative. It provides the first brush strokes of the financial picture for this year.

Initial Projections

Income

For income we already knew before we left what we would have available to us. It will vary a bit from month to month, but not a lot. This is what July looked like:

• Grand Total: 7,362.44
  • Rental Income: $2,150
    • While we rent our house for a gross rent of $3500, the first month is where we are absorbing some one time costs. Our property management company charges a one-time fee of $500 to find a tenant, and establishes a $500 house maintenance fund. That takes us down to $2500, and then the $350 (10%) management fee gets us to $2150. We could prorate the $500s across the year, but we chose to absorb that cost now at Costa Rica where our expenses are lower.
  • Investment Income: $3,803.13
    • This is our monthly 4% allowance based on the investment total at the start of travel. We may lower this number if and when the stock market tanks, but most likely we’ll just leave it alone through the year. We need to strike a balance somewhere between high financial caution (i.e. reducing our draw amount with the market) and living to take advantage of the year. Following the 4% rule as it was intended, by not reducing our draw when the market falls, is that balance and is still quite conservative.
  • Interest Earned: $59.31
    • This amount is just the earned interest from our emergency fund. We consider it income for budget purposes because we don’t want the emergency fund to grow any larger. We have interest from other accounts as well that we don’t consider income in the budget. For example we have a discretionary spending account, which is separate from our monthly discretionary spending allocation and is also not calculated into our investments. It is truly extra money we set aside through the years to spend on anything we choose. That account earns about $107/month in interest, and that interest just adds to the discretionary account total.

Expenses

The expenses of Costa Rica were more of an unknown. We had to project numbers to assess the affordability of Costa Rica itself, and the year of travel as a whole. The following are the location-specific expenses calculated for Costa Rica:

• Grocery Store: $692.10
• Accommodation: $1,500
• Ground Transportation: $300
• Discretionary: $369

In addition to these variable location-specific costs, each month we will typically have flight related costs. To simplify the budget we choose to just absorb the flight costs whenever they happen. Take the Japan flight for example. That was purchased back in June, but we won’t be staying a full month in Japan until September. Rather than moving that flight cost to September and/or attempting to prorate it across the Japan months, we’re just keeping it simple. It will be placed in the budget-month in which we bought the flight. Therefore the Tokyo flight was in June’s budget, and the upcoming Guam flight will be in the August budget.

Accommodations on the other hand we do prorate and put in the month that we used the lodging. For example August will have 19 lodging days for Jaco Costa Rica and 12 lodging days for Tokyo.

Actual Budget Numbers

The planned income and expenses are just a projection. What really matters are the actual numbers. Here is a full breakdown of our July budget, and I’ll go over what went right and wrong below.

Cost Overruns

We had some categories that ran higher than expected:

• Accommodation: This was about $200 higher than anticipated.
• Grocery Store: This was ~$337 higher than we projected. That’s not great because our projected number was off by almost half. A couple factors lead to the overrun. One factor is that at each location we have to establish groceries from scratch. For example condiments that last a long time have to be purchased upon arrival. Another factor is not being able to buy in bulk since we can’t eat through a large amount of food before we leave. We probably need to add 30% or so to the numbeo projections because of that.
• Transportation: We went about $50 over on this category. We took a private shuttle from La Fortuna to Jaco because it was only about $50 more than a shared shuttle. The private shuttle is really nice because they pick you up wherever you are, you have your pick of any seats, you control the HVAC and the stops made. Even with all that AC still puked twice, and who wants to do that in front of other passengers?

Unexpected Costs

We did have some unexpected costs as we do in every budget month, even back at home. Some of these are things we just didn’t think of but maybe should have. Others were just truly unexpected:

• Japan Flight Changes: $220.12
  • Our bags weigh over the 15 lb limit, so we had to buy the increased weight on all of our tickets. We also decided to get the in-flight meal even though it’s a bit of a ripoff.
• Final Utilities + Non-Water HOA: $327.10
  • This one we should have expected. It’s the utilities from the trailing month that we lived in our house. The HOA fee was $100 and we don’t have a good gauge on how much or how often that fee arrives (it changed recently) to make a sinking fund, so we decided to instead absorb the whole charge this month.

Grading Our Month

With this being the first month ever that we have traveled and lived internationally, I’m grading this on a curve. I feel positive about how our spending turned out overall.

Groceries were much higher than anticipated, but we know why. If we had another full month in Costa Rica we would pull groceries in closer to the projection. Between buying our food at the bigger stores and having some carry-over items from La Fortuna, this month would probably come in at $800 if we were in Jaco all month.

The accommodation overage is a purposeful choice. We absolutely could have ducked under the $1500 projection. We chose not to because of comfort and amenities, and we have found that to be a great choice. The more spacious place in Jaco with a pool and easy access to the beach has been worth every extra dollar.

The withdrawal rate of 4.24% is open for interpretation as to whether that’s a failure. It’s over 4% so there’s a valid argument to be made that it’s a failure. Maybe even more so if you consider we were trying to hit 3.4% in Costa Rica. However, we absorbed some things into this month that we didn’t have to. If you remove those we are right at 3.4%.

Considering all of that, the July budget is a win.