Overview Owning and operating a motorhome is an expensive proposition. If you have the wanderlust and will use it for a significant part of the year and you’re smart when you make the purchase, it’s a bargain—how else can a middle-class couple possibly afford to travel full or near-full time? But before you make the plunge, you need to carefully consider the impact on your finances and make some smart decisions. I hope the following helps. I’ve broken the cost into time-based costs that you incur whether you use the motorhome or not, mileage-based costs that you incur as you travel down the road, usage-based costs that you incur to live in the motorhome, and other costs, which I pretty much ignore. I then total it all up and offer a few observations. But before we plunge into the numbers, let’s get something else out of the way: Disclaimer The following makes numerous assumptions and cuts quite a few corners to arrive at representative costs without having to fill a book. Use the numbers presented as a rough guide and then craft them to fit your situation. If I’ve missed something or you disagree with my estimates, change them (although you’ll probably change the bottom line only a few percentage points). In any case, I’m not a financial advisor so please do not bet your financial future on these numbers without spending a lot of time in research and building your own spreadsheets. Okay, that should keep the lawyers happy. Now here we go. Time-Based Costs If you buy a motorhome and park it in the barn behind your house and never use it, it still costs money. And you may be surprised how much! Depreciation is the 800 pound gorilla. Based on what I’ve learned from others and verified by surfing NADA and the online sales sites, depreciation runs about 18% the first year, 10% the second, 8% the third, 6% the fourth and fifth, and then slowly declines to 2% around year twelve. The second largest cost is the cost of money. “But my coach is paid for,” you say. Sorry, this is the cost of money, not just interest. If you financed some or all of the purchase, you’ll pay interest, probably in the neighborhood of 7.5%. If you own nothing, the equity that’s tied up in the motorhome could be invested somewhere earning around 7.5% in a conservative balanced portfolio. So let’s assume that we’ll pay about 7.5% for the money we or someone else has tied up in the coach. Whether you ever turn a wheel or not, you need insurance. Insurance costs vary, being based on the cost to replace the motorhome and to some extent on intended use (storage, recreational use, or full time use). I’m going to use $900 per year. Yours may vary. Your manufacturer’s warranty should cover major repairs during the warranty period (typically one to three years) but after that you need a service contract. I know, the insurers make money on these contracts so on the average you spend more for a service contract than for paying out of pocket, but the cost of a service contract is predictable. Make your own decision, but I recommend them. Costs vary but Jason at Warranty Experts (www.warrantyexperts.com) offered rough quotes. A seven year contract on the one year old example coach would run approximately $3,400 ($485.71 per year or $1.33 per day) while a four year contract on the four year old would be about $3,827 ($956.75 per year or $2.62 per day). So how much does it cost to have a motorhome sitting your driveway? It will vary, but should be something like this: Mileage-Based Costs Some costs (fuel, oil, tires, and so on) accrue only while we’re moving. Let’s assume you drive a diesel coach that gets 9 mpg and that diesel costs $3.25 per gallon. That’s $0.36 per mile just for fuel. Oil changes, replacement of worn parts not covered by your service contract (tires, brakes, belts, hoses, wiper blades, and so on) and routine maintenance labor costs will easily add another $0.14 per mile bringing the per-mile cost to about $0.50 per mile. If you drive 12,000 miles per year, that’s $6,000, or $16.43 per day. Drive fewer miles and your cost goes down proportionately. If you’re driving a newer coach your costs may be lower while an ancient one will cost more, but the difference isn’t as significant as you might think. It’s a simple fact: You will never save money by replacing your old motorhome with a new one. Usage-Based Costs Some costs are associated with living in the coach. The number one use-based cost is parking. The cost of a spot in an RV park or campground is all over the map and boondocking is free, but I’m going to use $15 per day, or $5,475 per year for a fulltimer. Sometimes that includes electricity and sometimes not, so I’ll toss in a little for juice and round it up to $6,000 per year, or $16.44 per day. This number will vary a lot, but the good part is that the variability means it’s one cost you can control. If you like to watch TV you’ll probably use satellite TV. Costs vary, depending mostly on the package you order, but I’ll use $40 per month ($480 per year or $1.32 per day). Likewise, most of us are hooked on the Internet. I’ll assume Sprint/Verizon/AT&T air card service for $60 per month ($720 per year or $1.97 per day). There are other costs but most are relatively small so I’ll stop there. Our total is $7,200 per year, or $19.73 per day. Other Costs I won’t include personal costs like food, clothing, cell phones, health care, and so on. You can’t ignore those costs, but you’ll incur them whether you’re living in a motorhome or a stick-and-brick so they’re not pertinent to this discussion. But there are other motorhome-related expenses that you should consider. Maybe you store your motorhome part of the year at a storage lot. Furnishings need replacement. Washing, waxing, and paint retouching cost money. Maybe you like to make “little” improvements to your home. These costs add up and have to be considered, but they’re too variable to include here. Just don’t overlook them when building your overall budget. The Bottom Line Let me begin by reiterating that the numbers presented here are representative but far from exact. Your numbers will vary. There are costs I haven’t considered. Despite all of that, I believe they’re in the ballpark. Ready for the bad news? Read’em and weep: Summary I hope it didn’t come as a surprise that a motorhome is expensive to own and operate. That’s particularly true if you buy a new up-scale coach. $91K per year will buy, maintain, and operate a very nice stick-and-brick home. If you’re willing to settle for a used motorhome, the cost becomes much more reasonable. $28.5K per year is a much more comfortable number, an amount that would get you a stick-and-brick out of the slums in most locales (hard for people from certain parts of either coast to believe, I’m sure). We bought a like-new three year old 39’ Newmar diesel motorhome with 28K miles on it for a little more than $100K and are very happy with it. If you can afford new, go for it and enjoy it; we and others like us will be waiting in line to buy your next hand-me-down! There are other ways to save too. Travel fewer miles each year. Boondock or work-camp to cut or eliminate your parking costs. Do your own maintenance. Watch local TV stations and use free wireless Internet connections. You can also save a lot in the “Other Costs” category that we didn’t include by eating out less, buying from discount warehouses, doing more free recreational activities, and so on. All of these together will cut several thousand dollars off the total. I hope this article has been helpful. Constructive comments to feedback@twobyroad.com are welcome. Keep the shiny side up and don’t forget to put a rock on the sewer adapter before you pull the dump handle. See’ya on the road! Alan

Overview

Owning and operating a motorhome is an expensive proposition. If you have the wanderlust and will use it for a significant part of the year and you’re smart when you make the purchase, it’s a bargain—how else can a middle-class couple possibly afford to travel full or near-full time? But before you make the plunge, you need to carefully consider the impact on your finances and make some smart decisions. I hope the following helps.

I’ve broken the cost into time-based costs that you incur whether you use the motorhome or not, mileage-based costs that you incur as you travel down the road, usage-based costs that you incur to live in the motorhome, and other costs, which I pretty much ignore. I then total it all up and offer a few observations. But before we plunge into the numbers, let’s get something else out of the way:

Disclaimer

The following makes numerous assumptions and cuts quite a few corners to arrive at representative costs without having to fill a book. Use the numbers presented as a rough guide and then craft them to fit your situation. If I’ve missed something or you disagree with my estimates, change them (although you’ll probably change the bottom line only a few percentage points). In any case, I’m not a financial advisor so please do not bet your financial future on these numbers without spending a lot of time in research and building your own spreadsheets.

Okay, that should keep the lawyers happy. Now here we go.

Time-Based Costs

If you buy a motorhome and park it in the barn behind your house and never use it, it still costs money. And you may be surprised how much!

Depreciation is the 800 pound gorilla. Based on what I’ve learned from others and verified by surfing NADA and the online sales sites, depreciation runs about 18% the first year, 10% the second, 8% the third, 6% the fourth and fifth, and then slowly declines to 2% around year twelve.

The second largest cost is the cost of money. “But my coach is paid for,” you say. Sorry, this is the cost of money, not just interest. If you financed some or all of the purchase, you’ll pay interest, probably in the neighborhood of 7.5%. If you own nothing, the equity that’s tied up in the motorhome could be invested somewhere earning around 7.5% in a conservative balanced portfolio. So let’s assume that we’ll pay about 7.5% for the money we or someone else has tied up in the coach.

Whether you ever turn a wheel or not, you need insurance. Insurance costs vary, being based on the cost to replace the motorhome and to some extent on intended use (storage, recreational use, or full time use). I’m going to use $900 per year. Yours may vary.

Your manufacturer’s warranty should cover major repairs during the warranty period (typically one to three years) but after that you need a service contract. I know, the insurers make money on these contracts so on the average you spend more for a service contract than for paying out of pocket, but the cost of a service contract is predictable. Make your own decision, but I recommend them. Costs vary but Jason at Warranty Experts (www.warrantyexperts.com) offered rough quotes. A seven year contract on the one year old example coach would run approximately $3,400 ($485.71 per year or $1.33 per day) while a four year contract on the four year old would be about $3,827 ($956.75 per year or $2.62 per day).

So how much does it cost to have a motorhome sitting your driveway? It will vary, but should be something like this:

Mileage-Based Costs

Some costs (fuel, oil, tires, and so on) accrue only while we’re moving. Let’s assume you drive a diesel coach that gets 9 mpg and that diesel costs $3.25 per gallon. That’s $0.36 per mile just for fuel. Oil changes, replacement of worn parts not covered by your service contract (tires, brakes, belts, hoses, wiper blades, and so on) and routine maintenance labor costs will easily add another $0.14 per mile bringing the per-mile cost to about $0.50 per mile. If you drive 12,000 miles per year, that’s $6,000, or $16.43 per day. Drive fewer miles and your cost goes down proportionately. If you’re driving a newer coach your costs may be lower while an ancient one will cost more, but the difference isn’t as significant as you might think. It’s a simple fact: You will never save money by replacing your old motorhome with a new one.

Usage-Based Costs

Some costs are associated with living in the coach. The number one use-based cost is parking. The cost of a spot in an RV park or campground is all over the map and boondocking is free, but I’m going to use $15 per day, or $5,475 per year for a fulltimer. Sometimes that includes electricity and sometimes not, so I’ll toss in a little for juice and round it up to $6,000 per year, or $16.44 per day. This number will vary a lot, but the good part is that the variability means it’s one cost you can control.

If you like to watch TV you’ll probably use satellite TV. Costs vary, depending mostly on the package you order, but I’ll use $40 per month ($480 per year or $1.32 per day). Likewise, most of us are hooked on the Internet. I’ll assume Sprint/Verizon/AT&T air card service for $60 per month ($720 per year or $1.97 per day).

There are other costs but most are relatively small so I’ll stop there. Our total is $7,200 per year, or $19.73 per day.

Other Costs

I won’t include personal costs like food, clothing, cell phones, health care, and so on. You can’t ignore those costs, but you’ll incur them whether you’re living in a motorhome or a stick-and-brick so they’re not pertinent to this discussion. But there are other motorhome-related expenses that you should consider. Maybe you store your motorhome part of the year at a storage lot. Furnishings need replacement. Washing, waxing, and paint retouching cost money. Maybe you like to make “little” improvements to your home. These costs add up and have to be considered, but they’re too variable to include here. Just don’t overlook them when building your overall budget.

The Bottom Line

Let me begin by reiterating that the numbers presented here are representative but far from exact. Your numbers will vary. There are costs I haven’t considered. Despite all of that, I believe they’re in the ballpark. Ready for the bad news? Read’em and weep:

Summary

I hope it didn’t come as a surprise that a motorhome is expensive to own and operate. That’s particularly true if you buy a new up-scale coach. $91K per year will buy, maintain, and operate a very nice stick-and-brick home.

If you’re willing to settle for a used motorhome, the cost becomes much more reasonable. $28.5K per year is a much more comfortable number, an amount that would get you a stick-and-brick out of the slums in most locales (hard for people from certain parts of either coast to believe, I’m sure). We bought a like-new three year old 39’ Newmar diesel motorhome with 28K miles on it for a little more than $100K and are very happy with it. If you can afford new, go for it and enjoy it; we and others like us will be waiting in line to buy your next hand-me-down!

There are other ways to save too. Travel fewer miles each year. Boondock or work-camp to cut or eliminate your parking costs. Do your own maintenance. Watch local TV stations and use free wireless Internet connections. You can also save a lot in the “Other Costs” category that we didn’t include by eating out less, buying from discount warehouses, doing more free recreational activities, and so on. All of these together will cut several thousand dollars off the total.

I hope this article has been helpful. Constructive comments to feedback@twobyroad.com are welcome. Keep the shiny side up and don’t forget to put a rock on the sewer adapter before you pull the dump handle. See’ya on the road!

Alan