Ditching the flat for van life: What would you do?

Reaper

Alexland said:

On most conventional scales Fidelity Index World would not be described as 'Low Risk' but "High Risk". A global index tracker has the potential to drop around 50% and take years to recover. Although I accept it's lower risk than crypto which I would consider Ultra High Risk. Short dated bonds are Low Risk.

The KIID puts it at 5 out of 7 risk. Personally I would have said 4 as the world wide diversification should remove some volatility and smooth out gains or losses.

I don't see a problem with it if you accept that risk, particularly if you are not taking much risk with your pension.

Since you already own the van (a fact a few posters missed) I say go for it. In a year's time you will know if it is the life for you or not and little has been lost if not. The only real risk I can see is nightmare tenants so do check references.

Presumably you have a plan for what to do if the flat has problems requiring maintenance and you have thought whether going off grid will still allow you to work remotely.

Tucosalamanca

I currently do around 100 nights per year in my van (and have been around vans for most of my adult life).
I have my own businesses and do work remotely to some extent.
No mortgage, healthy pension and other assets, basically I don't need to worry much (after much planning, making the plans happen and a degree of good fortune).

You have a good plan and are in a better position than many van dwellers.

Keeping a property is essential imo. If it all goes wrong, you always have something to fall back on, you also won't ever be excluded from property ownership due to inflation.

Always keep an emergency fund, vehicle repairs, potential accommodation costs, illness, injury, accident, pandemic, anything can happen... 

I would allow £1,000 per month minimum for living and travelling. If you want an enjoyable life travelling, rather than just 'existing' in one place, you'll need money for fuel and to pay for stopovers (free is only good to a point).
If I'm travelling on the motorway at 70mph, I'll burn a tank of fuel in less than five hours. 
That's about £20ph for my 3,500kg van.

Winter in the UK can be miserable. With planning, it's not difficult to stay warm but avoiding damp and keeping things dry takes some effort.
I would always suggest heading as far south as possible (Spain, Portugal, Turkey, Morocco) for the best of it.
Or alternatively look at a few months further afield without the van for some winter sun.

Personally, I would spend as much time as possible abroad.
It's far better set up for van-life, better tolerated and will almost certainly be cheaper (among many other reasons).

You appear to have a good handle on finances and would encourage you to keep that mindset.
Be mindful of the future, plan and save for it. Keep the money coming in.

Also bear in mind that vans can wear out quickly, particularly if living in full time.
At some point, the van will need replacing, possibly at significant cost.
This is an important consideration and needs to be budgeted for. 

Ending up with no van, no money and no firm roots can be a difficult situation to end up in (I've seen it happen).
This brings us back to the importance of retaining a property.

Give it a go, full-timing isn't for everyone and certainly isn't how most Youtubers would have you believe but it can be very rewarding. I think it could be a great decision for you...

saajan_12

CCG___87 said:

Hi everyone,

I’m considering a big lifestyle change and would love to hear your thoughts and perspectives. I'm in a fortunate position, I work remotely, own my flat (mortgage), and currently live and work from home. However, I’m starting to feel stagnant and want to make the most of my position by traveling and living in a camper van. I already have the van, so going to start testing it out for a few weeks at a time first and see how it goes. My plan would be to go off-grid for a bit, stay at a campsite now and again, stay with family now and then and repeat. Anyway... 

Here’s my plan for the van (excuse the 

1. Financial Situation:

   • Age: 37
   • Income: £4,700/month after tax
   • Outgoings: Estimated £700/month for essentials while living in the van. Fuel, food, insurance, etc.  - also need to budget for repairs etc, since all your eggs are in the one basket for home and transport, as well as camp ground fees. How far would you be looking to travel? Admittedly i'm not an expert here but on the face of it £700 feels low, as you might need fuel for heating in winter, plus its a heavier vehicle to drive around plus bills for phone plans, potentially a gym chain if your camp shower isn't great.. 
   • Savings Plan: Save £3,000/month and allocate £1,000/month for fun or emergencies. (occasional Airbnb stays, travel activities, etc.).

2. Current Finances:

   • Emergency Fund: £8,000.
   • Stocks & Shares ISA: £10,000 in Fidelity Index World (low-risk).
   • Pension Contributions: 10% of my salary plus 4% employer contributions - about £1,200/month total). - are you sure? 14% x 4700 = 600 not 1200. 
   • Mortgage: £210,000 remaining. - whats your interest rate and your monthly payment?

3. My Goals:

   • Save aggressively to become mortgage-free as soon as possible. Renting my flat out so someone else can pay the mortgage for me, until I have enough to pay it off. - well the rent may not entirely cover the mortgage as the rent is taxed, can have voids, agent and repair costs. Also the capital repayment part of the mortgage often takes it above a typical BTL mortgage rate. 
   • Invest wisely to make the most of my savings (~£30,000/year).
   • Balance saving and investing with enjoying life while I can. 

My Questions:

1. Investment Strategy:

   • I can save ~£30,000/year, but only £20,000 of this can go into my Stocks & Shares ISA tax-free.
     • Should I continue investing the full £20,000 in my index tracker (Fidelity Index World)?
     • Should I risk a portion (e.g., on crypto or high-growth stocks)? If so, what would you do?
   • What would you do with the additional £10,000 that isn’t tax-free? Keep it in a savings account, or invest elsewhere? If so, where? 
     - depends on what you might need it for.. if you plan to leave it there for 5+ years then I'd put it in an investment account - basically the same as an S&S ISA but just taxable. If shorter as you'd want to use it to pay off the mortgage then high interest savings account. 
     

2. Mortgage vs. Investments:

   • Would it be smarter to focus on paying down my mortgage faster instead of investing all my savings? Bearing in mind, my plan is to rent my flat out, so someone else will be covering the mortgage payments. - Depends on what rate your mortgage is at and what your future plans are. I wouldn't think of it as someone paying your mortgage, since you could just stock up the rent and invest that. 
   • The other option is selling up entirely and investing the . you may not be able to rent out the property on the current residential mortgage forever meaning your interest would increase, and in general its an investment that can work well if you're local and can do some of the call outs rather than paying your profits to an agent. 

3. Lifestyle Change:

   • Has anyone here lived or worked from a van long-term? Any tips or things to consider that I might be overlooking?

I’d really appreciate your insights on how to structure my finances and make the most of this opportunity to save, invest, and live a more adventurous life. 

Thanks in advance!

Comments in line on the more financial bits. Sounds like a great adventure and would love to try it! 

Albermarle

1. • What would you do with the additional £10,000 that isn’t tax-free? Keep it in a savings account, or invest elsewhere? If so, where?
   • More in your pension seems the obvious route to gain from the 40% tax relief.
2. • Has anyone here lived or worked from a van long-term? Any tips or things to consider that I might be overlooking?
   • Not sure what the position is when dealing with financial institutions when you are of no fixed abode?

DjangoUnchained

definately keep your property if you do vanlife. I know a few vanlifers and the only ones who stick at it fulltime are the ones that have no other choice. Its something i would love to do a few months at a time but need to know i have a property i can return to at some stage.

Alexland

Reaper said:

The KIID puts it at 5 out of 7 risk. Personally I would have said 4 as the world wide diversification should remove some volatility and smooth out gains or losses.

I don't see a problem with it if you accept that risk, particularly if you are not taking much risk with your pension.

I don't see a problem with owning the fund either (and my kids have it in their accounts) if the risk is understood but there's no point kidding yourself that the global tracker is low risk. It's a 5/7 for good reason - without the worldwide diversification it would be a 6/7 as are the Fidelity Index UK and Fidelity Index US funds. It's certainly not a 4/7 medium risk or anything less.

Of course an investor can take steps to dilute it's high risk properties by incorporating it into their investment strategy such as being willing to accept crashes and hold for a long time for a more average result or hold it in a multi asset portfolio and derisk further into other assets approaching withdrawal etc. All good sensible ways of dealing with the risky fund.

CCG___87

Thanks for all the responses so far - all really useful insights!

To clarify, I already own the van and I'm in the process of converting it at the moment. My plan is to spend the spring and summer exploring the UK, working remotely, holidaying etcand see if I enjoy it or not. For anyone interested in how this is possible, you just need a good electrical set-up in the van and use Starlink for internet (Satellite). Work wise, I'm on a remote contract, been in this position for 2.5 years now and never get asked to go to the office. Job is secure (touch wood) but if I was to get made redundant or anything, I'd arguably be in a better position in this van life. Wouldn't have to worry about mortgage payments, paying bills (to a degree) and I'd probably have a lot of savings by that point.

Also, probably worth noting that if I did decide to give this a go, it wouldn't be the typical 'vanlife' living in a van 100% of the time, and it would be a case of just giving it a go and see what works for me. I'd probably do it for a few weeks at a time, driving to places like the Lake District, Snowdonia, The Highlands etc, working next to amazing scenery and generally exploring beautiful places (Starlink would allow me to work remotely from anywhere). I don't envision myself living in a Tesco carpark in Wigan for two weeks  Then after doing that for a week or two, if I really want some home comforts, I could rent a cheap airbnb for a week, stay with various family member (who are more than welcoming, thankfully), check into a hotel for a night or two etc. I'd factor these things into my budget. I definitely wouldn't be giving up my flat either, I'd rent it out and then if I decide this life isn't for me I'd just move back in. So it seems like a no brainer really, do it for a year, if I hate it I'll just move back into my flat and will have saved around 30k in the process. 

The one thing I admittedly haven't given much thought to at all is renting my flat out. If i decide to go ahead later down the line I'd need to do a lot of research into it because of tax implications, insurance etc etc. Mortgage wise I'm on 4.7% two year fixed, which ends this November. If anything did go wrong with maintenance etc, I'd make sure I had an emergency fund to cover this, and missing rent payments etc. Because at the end of the day, I won't have any mortgage payments or rent myself, so I could easily cover it if i needed to.

^^ If anyone has any experience letting out their flat/house, I'd love to hear your thoughts.

I'm fortunate enough to be in a good position in life at the moment. Earning a decent wage, being able to invest good amounts, and have very few responsibilities. No kids etc and no plans for any kids either. I'm very much an outdoors person, enjoy an adventure and travelling about. I have no interest at the moment in buying a 4 bedroom detached house, or a fancy car, for me it's much more important to have great experiences. Travel, explore and go on adventures whilst I'm young enough to do so. If I can do this now, whilst saving a lot of money in the process for when I am old and decrepit, it seems like a no brainer  Plus like I said, the worst outcome is that I don't like it, move back into my flat and I've got more savings.

On the financial side of things, I personally see the Index fund as low/medium risk for my situation, as I'm in it for the long run, 25 years at least and don't plan on touching it. I'm no expert, in fact the exact opposite, but I think it's quite safe to bet that I'm not going to lose all my money. I'm paying a substantial amount into my pension too, so if the worst come to the worst I could still live a happy life with that (If everything goes to plan). Or maybe I'll just end up with £3 in the bank, living in a van at the back of a scrap yard - Only one way to find out! 

In terms of increasing my pension contributions to take me to the lower tax bracket, I think that would mean increasing my annual contribution to about 38k or something, which i don't want to do. I don't really want ALL my money tied up in a pension that I might not ever see. So maybe a compromise would be to just increase the contributions slightly.

Crypto wise, I know absolutely nothing about this, other than it's extremely volatile and I wouldn't invest anything I couldn't afford. But with the disposable income I would have, I don't want to regret not putting something into it in 20 years time. So would probably just buy a little bit of Bitcoin or ETH and then forget about it.

Thanks again for all your perspectives and insights!

CCG___87

Tucosalamanca said:

I currently do around 100 nights per year in my van (and have been around vans for most of my adult life).
I have my own businesses and do work remotely to some extent.
No mortgage, healthy pension and other assets, basically I don't need to worry much (after much planning, making the plans happen and a degree of good fortune).

You have a good plan and are in a better position than many van dwellers.

Keeping a property is essential imo. If it all goes wrong, you always have something to fall back on, you also won't ever be excluded from property ownership due to inflation.

Always keep an emergency fund, vehicle repairs, potential accommodation costs, illness, injury, accident, pandemic, anything can happen... 

I would allow £1,000 per month minimum for living and travelling. If you want an enjoyable life travelling, rather than just 'existing' in one place, you'll need money for fuel and to pay for stopovers (free is only good to a point).
If I'm travelling on the motorway at 70mph, I'll burn a tank of fuel in less than five hours. 
That's about £20ph for my 3,500kg van.

Winter in the UK can be miserable. With planning, it's not difficult to stay warm but avoiding damp and keeping things dry takes some effort.
I would always suggest heading as far south as possible (Spain, Portugal, Turkey, Morocco) for the best of it.
Or alternatively look at a few months further afield without the van for some winter sun.

Personally, I would spend as much time as possible abroad.
It's far better set up for van-life, better tolerated and will almost certainly be cheaper (among many other reasons).

You appear to have a good handle on finances and would encourage you to keep that mindset.
Be mindful of the future, plan and save for it. Keep the money coming in.

Also bear in mind that vans can wear out quickly, particularly if living in full time.
At some point, the van will need replacing, possibly at significant cost.
This is an important consideration and needs to be budgeted for. 

Ending up with no van, no money and no firm roots can be a difficult situation to end up in (I've seen it happen).
This brings us back to the importance of retaining a property.

Give it a go, full-timing isn't for everyone and certainly isn't how most Youtubers would have you believe but it can be very rewarding. I think it could be a great decision for you...

This is all really useful thanks! I did think that the £700 a month may be a bit short, but I guess it's a trial and error thing isn't it, do it for a bit and see what you spend.

I haven't even considered going abroad or anything yet but the thought is exciting. I'll probably spend this summer exploring the UK and then if I enjoy it, broaden my horizons! Where abouts have you been? 

Alexland

CCG___87 said:

In terms of increasing my pension contributions to take me to the lower tax bracket, I think that would mean increasing my annual contribution to about 38k or something, which i don't want to do. I don't really want ALL my money tied up in a pension that I might not ever see. So maybe a compromise would be to just increase the contributions slightly.

Thanks for the comprehensive update.

Putting that sort of money into the pension each year is something that some of us do as the wealth has to build up somewhere and on average people tend to live into retirement. Even at age 37 if you build up a big enough pot to retire early you might get more of you future monthly payslips from a pension scheme than any employer. Pension commencement lump sums can also be a tax efficient way of clearing mortgage balances. It sounds like you would would still be in a position to build up ISAs anyway.

On the van thing maybe try renting you place out for short durations to see how it goes before offering anyone a tenancy agreement for a longer term rent. Now might be a good time to start getting experience as it's very cold outside although it might get baking hot in the summer.

Tucosalamanca

I think it's a good plan overall.

Generally, I would encourage pension contributions but in your situation having a pot elsewhere might be useful.

Travelling around (and not just to tourist destinations) will give you a far broader perspective of the world.
You might find opportunities elsewhere or life might take you on an unexpected path, having savings will help you do what you want...

The only thing I would question is the 'self build'.
I know it's extremely popular, with an almost overwhelming number of channels, vloggers, digital nomads, #vanlife etc etc but I would think long and hard about it as a long-term live-in vehicle.
You have limited space (both living and storage), a vehicle that's harder to insulate and keep warm and limited scope for toilet/shower and other home comforts.
I have a self build van, which is great for summer festivals, weekends away, day trips and so on but I wouldn't dream of living in it. 
I know that many people do, but that's mostly out of necessity (limited budget) rather than choice.

For most situations, I find that a motorhome is better suited as a live-in vehicle.
It has more space, more storage and is insulated better than my house.
I have a hot water boiler, gas/electric heating, toilet and shower, water and waste tanks that will last for days.
Three ring hob, gas oven, room for coffee machine, air-fryer, large fridge, comfortable seating and beds, a wardrobe, a large table for working.
Other than for changing water and emptying the toilet cassette, I never need to visit a campsite.
It's 7m long, so around 1m longer than a MWB Sprinter (or similar) and less than 50cm wider.
Motorhomes appear big, in reality they're not much bigger at all...

I'm sure that you're committed to the self-build.
If it turns out that you like the lifestyle, consider changing to a motorhome.
Good motorhomes don't have to cost £100,000 plus. You could argue a good case for older, more affordable vans being the best buy for fulltimers.

Good luck with it, youth is on your side, you have assets and an income, that's a great basis for van life.

Edit.

I haven't even considered going abroad or anything yet but the thought is exciting. I'll probably spend this summer exploring the UK and then if I enjoy it, broaden my horizons! Where abouts have you been? 

France, Spain, Portugal, Andorra, Italy, Austria, Slovenia, Croatia, Czech republic, Liechtenstein, Switzerland, Germany, Luxembourg, Belgium, Netherlands.

We're thinking of Denmark/Sweden in the summer but will likely decide last minute, depending on the weather.
We're sun lovers and generally head south, we do have a concert booking in Amsterdam, so this might influence plans...
That's the beauty of van life, no need to plan ahead. Other than Eurotunnel booking, everything else is flexible...