Streamlining and Dreamlining

Or: Why I’m Car-less for the First Time Since High School

Tim Ferriss popularized the idea of Dreamlining in his book, The 4-Hour Work Week. Simply stated, Dreamlining is the process of outlining your ideal lifestyle and calculating the monthly income required to maintain it. That TMI (target monthly income) is the mark your passive income vehicles must hit in order to join the ranks of the “New Rich”—those liberated from the 9-5 grind who use their new-found freedom to go and do… whatever.

My partner and I have been doing some financial soul-searching for the past week or so. While we’re not yet ready to make a second attempt at selling everything we own and moving abroad for the foreseeable future, looking back at some of the mistakes we made the first time around has served as a harsh reminder that money not watched is money easily spent. This spawned a wonderful theoretical question: “If we wanted to take a vacation to Thailand next year, when could we go, and how long could we stay?” When rephrased in the context of Dreamlining a potential long-term lifestyle change, the question became, “If we wanted to move to Thailand next year, when could we go, and what would it take to stay there indefinitely?”

While the latter question remains strictly in the realm of unicorns, friendly lawyers, and other mythological creatures, forcing ourselves to answer it has given us an excuse to examine our monthly budget and trim the fat. Three things were necessary:

  1. Establish an “escape velocity” number. This includes the money it would take to pay for one-time expenses, such as plane tickets, up-front rental payments, etc.
  2. Establish a TMI based on the living expenses of our target country.
  3. Balance our TMI against our current and projected monthly income brought in by passive income vehicles, of which we currently have but one.

Escape Velocity

Tickets to Thailand are currently priced between 1100-1400 USD per person, for a total of around 2500 USD. This is arguably the most expensive item for a short trip abroad.

Some quick searches revealed monthly rents in Chiang Mai, Thailand (one of our candidate cities) to be between 125-1200 USD, depending on the level of comfort desired. In the interest of not repeating past mistakes, we’re shooting for something around 450 USD per month. Monthly rentals are relatively common in Chiang Mai, so we’re running with the assumption that we’ll only need the first month’s rent in hand to move in.

Total so far: 2950 USD.

Target Monthly Income

A breakdown of our foreign expenses:

  1. Housing. We have assumed 450 USD per month.
  2. Food. Assuming we don’t get a kitchen and instead eat out every day, the Internet tells me we can reasonably get by on 450 USD per month, provided we stick mainly to street food and otherwise “local” cuisine.
  3. Transportation. Bike rentals are apparently around 90 USD per month.
  4. Entertainment. We aren’t exactly party animals. Since much of what Chiang Mai has to offer in terms of tourist activities appears to be free or very cheap, we’re budgeting 40 USD. This might be low, but it’s a good starting point.
  5. Phone/Internet. I’ll need steady Internet access to keep up with work. Worst case, I can pop a pre-paid SIM in my Nexus or Lumia and tether it. We’ve pegged this number at 35 USD, assuming we don’t both need separate Internet access.
  6. Utilities. 60 USD, based on some quick searches.
  7. Other. My favorite category! I’m often a victim of hubris, so we want to give ourselves a good safety cushion in case any of the above numbers are wildly inaccurate. 375 USD per month.

Total monthly recurring expenses abroad: 1500 USD.

We’d still have some Stateside expenses which would need to be paid while we’re away:

  1. Storage. We sold everything we owned last time we were abroad, and regretted it when we returned. Turns out beds are expensive. Assuming we store things somewhere out of the Seattle Center, we’re looking at 120 USD per month.
  2. Renter’s Insurance. Just in case our storage unit burns to the ground. 20 USD.
  3. International Health Insurance. Last time we were out of the country, we received quotes between 120-250 USD. We’ll assume the higher number: 250 USD per month. We decided to use the number for health insurance rather than travel insurance since this whole “dreamline” assumes long-term travel, and travel insurance will be much cheaper should we stick to our short-term travel plans.
  4. Other. We have about 500 USD in monthly obligations which will need to be kept up. (I’m looking at you, Uncle Sam.)

“Wait, wasn’t this post about selling your car?”

How astute. Yes! Earlier today, I was paying 430 USD for car payments, 130 USD for insurance, 150 USD for parking, and 100 USD for gas. That’s over 800 bucks a month for something we use maybe once a week. Had we decided to keep the car, our insurance would have dropped to under 100 USD, gas would have disappeared, and instead of paying 150 USD for parking, we’d be spending 120 USD for storage, which would have still contributed around 700 to our Stateside obligations. But guess what? I sold that sucker.

We also cancelled our cleaning service (210 USD per month) and will abstain from making weekly meat purchases (~300 USD per month), instead preferring to chip away at the frozen half-cow we have stowed away in our freezer.

Total monthly recurring expenses Stateside: 890 USD.

Total monthly recurring expenses: 2390 USD.

Paying For It All

2390 USD. Look at that number. Look at it. It’s pitifully small. I think Tim put it best when he said, “ Fun things happen when you earn dollars, live on pesos, and compensate in rupees.

I have a side project with two partners. After paying our workers and server costs and dividing the spoils, my share is very close to that number. With a little dedication between now and our departure time, I’m sure we can get that it up to the point where we’d have a comfortable margin.

Finally, the Answer

Using some very fuzzy maths based on current and projected income and financial obligations, we estimate that we could move abroad as early as March 2014, and stay there indefinitely.

“Mason, what does it all mean? Should I be worried? Are you leaving the country again?”

At this stage, we’re simply going through the motions and eliminating unnecessary expenses. While this began as a thought exercise, seeing the numbers laid out has spurred a certain amount of excitement. The goal is very attainable—so much so that we’ll probably repurpose it for going on our much-belated honeymoon.

So no—no sudden moves are currently planned, but there is some assurance in knowing that we could quit our jobs, sell (almost) everything we own, move halfway around the world, and stay there indefinitely. It certainly provides a sense of freedom on days when work seems daunting.

What’s in your Dreamline?