Van Life: The Economics and Trade-0ffs

Now more than ever the parking lots at popular climbing areas across the country are being crowded by big boxy Sprinters and a variety of less-sexy creeper vans. As I’ve touched on before, the allure of climbing and other lifestyle sports is incredibly strong. The power to hit the road is so strong that climbers are increasingly dropping the creature comforts of modern building dwelling to pursue the mobile dream in the back of a van, a pull trailer, or sometimes even a Honda Civic. This, my friends, is Van Life.

At face value, assuming you think you can handle the obvious discomforts of a claustrophobic space in the dead of winter on a snowy day, the economic decision seems like an obvious win. Right?

Rent Ain’t Cheap, So Maybe I’ll Live in a Van

For the sake of example, let’s take a closer look at Boulder, Colorado, a long-time climbing mecca and center of rapid growth in the climbing population in recent years. At the time of writing, the average rent (for a 828 square foot apartment) in Boulder is $1,903/month. That’s a whopping $22,836 per year of living expenses!

Adhering to the old adage that no more than 25% of your take-home pay should be going to rent, those who desire to live solo in a room in Boulder should be raking in at least $91,000 a year in post-tax income, or look for some roommates. Whoa daddy!

With living costs like this, and the constant taunting of Instagram hashtags (stunning landscapes framed by van doors and Himalayan prayer flags, beautiful people in roof-deck downward dog, so much sunshine), it’s easy to suppose that the better and cheaper life exists on the road and that the rest will come together in time. Let’s get behind the driver seat, eh (PUNS!)?

So, is it cheaper to live in a van? Intangible pro vs con arguments aside, let’s run the numbers on the economics of van life. Although the cost structure will vary wildly by the individual and geographic location, I’ve laid out a few basic assumptions that should form a conservative comparison case for most folks:

Model Assumptions of Van Life

Individual Rental Cost: $700/month. This is the price you would pay in living expenses if you did not live in a van. As such, by choosing to live in a van you will not be paying rent or utilities.

Dwelling Utility/Bills Cost: $250/month. Heating/air conditioning, electric, gas, internet, etc.

Van Purchase Price: $8000. This is not the price of a brand new, or probably even decent Sprinter. It goes without saying that this knob is a fatty. This variable can run from the low thousands to even $100,000, but I’ll be conservative here and assume that most are looking for a deal.

Upgrades: $5000. This includes anything and everything to make the van livable. Shelves, fridge, cooking appliances, solar, electric, heating, furnishings, etc. Again, this is a highly variable figure.

Fuel Costs, Yearly: $1000. This cost assumes that the van dweller will drive more than the building dweller. As such, $1000 is the calculated difference from the building dweller base case.

Additional Maintenance Costs, Yearly: $500. Again, assuming the van dweller is going to be putting more miles on their vehicle than the building dweller, I’ve added an additional $500 of maintenance costs per year to consider. This is a conservative estimate.

Other Costs Not Captured

This simplistic model assumes that the van dweller does indeed dwell in said van every single night, with no additional lodging expenses. This model also assumes that the van dweller is operating in stealth mode, and never pays a dime for camping or parking fees (very unlikely).

All other major life expenses (food, entertainment, etc.) are equal between the building and van dweller, save for those mentioned above. We can certainly argue this in the margins, but this model captures no additional differences in expenses. Inflation is not captured in any estimates and all costs are assumed to be fixed for the duration.

Guys, this is a climber’s economic model. It’s probably not Big ERN-approved.

Van Life Economic Results

Year 1:

Van Dweller: $14,500

Renter (Building Dweller): $11,400

Clearly the up-front costs of re-tooling for van life are costly in the first year. An important consideration here is that the sale of a former vehicle is not captured. One could certainly subtract an estimated sale figure of their current vehicle from the estimate above.

Again, these figures can vary widely, but for instance, are within reason from what this writer paid. Hardly a Sprinter either.

After 365 days on the road, the van dweller has at this point paid an additional $3,100 for this lifestyle. Worth it?

Year 2:

Van Dweller: $1,500

Renter (Building Dweller): $11,400

After the up-front costs are paid, the van dweller begins to enjoy the lower cost of living. Of course, we’re assuming the van continues to operate as normal and maintenance costs don’t get out of hand. Because we are assuming fixed rates, the renter still pays the same $11,400.

After 5 Years (cumulative)

Van Dweller: $20,500

Renter (Building Dweller): $57,000

After 5 years, assuming life on the road is still sustainable, the van dweller has realized some serious cost savings. Van guy/gal has only 36% of the living expenses incurred by the renter. We’re still assuming that the additional wear-and-tear on the van hasn’t rendered the vehicle inoperable or a financial burden in any other way.

Opportunity Costs of Van Life

Now let’s suppose you have your initial investment of $13,000 (van price + upgrades). For whatever reason, you instead decide to forego the endless life on the road. Instead, you invest those funds in a broad-based index fund, like VTSAX.

Furthermore, we’ll assume you continue to invest the additional fuel and maintenance costs monthly that you otherwise would have paid ($125). Assuming a year-over-year return of 7% in the market*, the money spent on van life will generate $26,859 in five years if you invest in the market instead.

Interestingly though, let’s go the other way and assume you say, “F-it dude, I’m hitting the road.” Now you might have income to save and can invest the yearly savings of van life (Renter Life – Van Life).

The van dweller will save $9,900/year from Year Two through Year Five. Let’s suppose that the savvy van dweller is investing those savings in monthly allotments of $825 over four years. He or she will log in to find that those monthly investments have returned $43,955 over the same time. That’s nearly $20,000 more than the renter’s investment plan over the same period of time.

*One could correctly point out that a 7% return is not an accurate figure over a five-year window, and one would be correct. A 7% return is more indicative of long-term performance, but hey, any other figure would be purely speculative.

Van Life: Putting it All Together

With the cost assumptions built into the model above, it’s clear to see that over the long-term van life can make good economic sense. Interested in a brand-new Sprinter though? You’d better be prepared for many more nights on the road for the economics to pan out on that investment.

Even with a the relatively cheap van I’ve proposed, you aren’t going to reach a break-even point until sometime in year two. That’s certainly a factor to consider if you are weighing more luxurious options.

But how many of you folks out there are really, truly willing to put multiple years of life on the road? If you are the type, and I no doubt understand that there are many of you out there, then this life can save you some serious money. Hey, Chuck and Maggie Odette are making it look good!

Furthermore, if you invest those savings, there are additional financial opportunities for which to capitalize. That being said, this model assumes you are living year-round rent and lodging free, which is likely a hefty (and probably unrealistic) assumption.

What if I Want a Roof and a Van?

What if you want a van just for weekends out and aren’t realizing the savings of foregoing building dwelling? Well, we’re talking about pure expense at this point. You could spend any number of nights in a nice hotel, especially if you can get them essentially for free using rewards cards. It’s safe to assume that expenses on a van only for weekends and the occasional vacations are just that: Expenses.

Sure, a van might be your only vehicle, but it’s still not a very affordable vehicle in most cases. Again, look at your specific situation and see if the numbers check out.

The CC-Family Solution

So, what’s the CC take on this? I travel for climbing a reasonable amount, and often climb at crags that are high on the road-trip circuit (e.g., Rifle, Wild Iris, Tensleep, Utah Hills). There’s no sense in denying that van envy is strong within me. I also won’t shy from the fact that Google can finish my search when I begin with the letters “Spri…”.

I have a lovely wife who doesn’t share the obsession and a full-time office job, so my time climbing in these locations is minimal. As such, a tent and/or the occasional hotel room or Airbnb seems to fit my budget just fine.

We’re far more interested in buying our freedom. There may be a time when we consider a van or some other less-traditional living arrangement, but it needs to be for the long haul. Putting that kind of cash into a handful of weekends just won’t cut it, and I’d rather see that money making us more money instead. The ability to buy freedom is an easy trade-off for sleeping in the back of our Subaru or in a tent for the equivalent of a few weeks a year.