Spending Categories in the AOC 60/40 Budget

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In a previous Money Crush post, “The AOC Budget and Our Daily Living Expenses” I wrote about building our budget for our new life on the road and very importantly, tracking all of our daily living expenses. Our current budget is really a set of Money Jobs that includes the fixed recurring expenses we have committed to, such as our Traveling Mailbox and our little storage unit back in Seattle and it also includes variable location-dependent items such as food, transportation, and fun activities.

I set the dollar amounts for our original 2019 budget using Money Jobs instead of standard expense categories while we were still in Seattle. It’s hard to set a realistic budget for a future while you are still living in a very different lifestyle, but at least we have a good first budget to work with and improve upon. In building this nomadic budget I realized how many expenses fit our previous life in Seattle that are completely irrelevant for our new nomadic life. And vice versa, since we also have some one-time expenses for things we chose to buy for our new life on the road such as different luggage more suitable for full-time travel, new walking shoes, and a camera. These are all things we hope not to replace very often.

What Are Other Travelers Doing?

There are a few nomad bloggers we follow who talk a lot about budgeting, including Mr & Mrs Nomad Numbers. They do a really good job of describing which expenses they include or exclude in their travel budget, which gives clarity and context to the budget story they are telling. I really appreciated the big picture they presented for their 2018 budget and think that’s helpful for us for comparison. Check out Mr & Mrs Nomad Numbers’ 2018 Year End Spending Report for more detail on their budget.

Additionally, every time I read back through Billy and Akaisha Kaderli’s budget from Retire Early Lifestyle (www.retireearlylifestyle.com), I see how relevant their budgeting categories are for us. Billy and Akaisha track a lot of the same types of categories I am interested in tracking, in a way that feels familiar. They even track all of those pesky fixed expenses like medical and taxes that don’t always get covered in detail in the typical stories I find on the internet. You can find out more about Billy and Akaisha’s budgeting methods and how they track their data on their website.

From our perspective, we wouldn’t do ourselves any favors if we set a budget that ignored or skipped anything we spend money on.

Our budget includes everything we have thought of or paid for so far. We are careful not to ignore or drop any items or categories. Making sure ALL of our expenses in all their gory detail are included helps us acknowledge the reality of what we are spending as well as what we can expect to spend down the road.

Another budget structure I explored was the classic model that categorizes spending into either “needs” or “wants.” These models are designed to help you target areas that can be reduced or dropped when you have to cut your spending. That approach was more useful for us before we left Seattle but not as useful for us now.

AOC Nomad Budget Numbers

Our approach to budgeting always starts with asking ourselves: what are our main goals right now? The answers used to be focused on saving, investing, and spending. Now our answers are all about spending, with one eye always focused on portfolio longevity and avoiding lifestyle inflation. 

I have separated our spending into three primary categories: shelter, safety (medical), and food. In addition to these three basic categories, our “extra” money fits into a fourth category for our general spending. And there is also a fifth category for taxes, but that’s something I will cover in detail in another post.

The Housing Category in our Budget

Housing is something that’s typically categorized as a baseline requirement. My dad used to tell me to allocate 25% of my total budget to housing when considering locations I could move to. He also said it’s important to consider the different costs associated with living alone or with partners or roommates.

That’s my dad, Dave Walker. I wish I could talk to him about our budget today, I wonder what he would say.

The cost for housing can sometimes be very high. I’ve seen examples where housing is as high as 40% of a budget for people who live in a high cost of living area, and sometimes people choose to do that due to a job, proximity to family, or other quality of life factors that justify the increased cost. Since we retired early and want to travel full time, we will move from one location to another as we see fit. We will spend some of our time in high cost of living areas like Paris or London, and balance that by also spending time in lower cost of living areas like Chiang Mai or Ho Chi Minh City, which is the concept of geoarbitrage. With all of these housing related factors combined our goal is to spend an average of 26% of our budget on housing during a year.

Shelter, check!

The Safety Category in our Budget

The safety category in our budget is all about medical insurance. Since we are traveling outside of the U.S. so much (all but around 45 days for the entire year) our 2019 budget includes a comprehensive global health insurance plan since the ACA health insurance market doesn’t include options for overseas coverage. Our current plan covers the globe, including the U.S., for the entire year. Amazingly, having the additional American coverage is the most expensive part of this plan. We thought it was better to be safe rather than sorry for our first year of travel, because we know plans can change and life is full of surprises. Maybe next year we’ll be comfortable with a plan that covers the world without year-round coverage in America. Or maybe we’ll choose a plan that doesn’t include America at all, since we could add additional traveler’s insurance policies for the specific times we are actually in America. The bottom line is that medical insurance is costing us 15% of our 2019 budget.

Safety, check!

That’s us and my mom after getting our flu shots back in Seattle one summer

The Food Category in our Budget

Our third baseline category is food. We have a lot of wiggle room in the food category. We really enjoy street food for lunch and some dinners. And since we love to cook and eat at home, we typically have breakfast (Alison is the breakfast cook) and dinner (Ali is the dinner cook) at home.

We love cooking and eating dinner – it makes us feel like we are at home no matter where we happen to be at the moment!

But we also love to go out to a fabulous French restaurant now and then, no matter what country we are in! And we want to keep trying the local cuisine and adding new things to our cooking options. So we “need” to have room in our budget to splurge on fun dinners every once in a while.

As long as we are averaging out at a reasonable number for all of these different types of food experiences and tracking them on a daily basis, we will continue to be able to “afford anything, but not everything” – thank you Paula Pant for that bit of wisdom! Right now I am allocating about 26.5% of our budget for food. I imagine this could go down as we find our new normal.

Food, check!

What Else is in Our Budget?

  • Shelter = 26%
  • Safety (medical) = 15%
  • Food = 26.5%
  • What else?

Shelter, Safety, and Food are the basics in the budget, and they get us to 67.5%. What’s missing that gets us to 100%? There’s a lot that fits in my “What’s Left” category. For 2019 this includes things like taxes, Netflix, our storage unit, city tours, a retreat, and some cooking classes. 

That’s Ali enjoying the amazing cooking class we took in Beaune, France!

Our 2019 budget also includes room for two opportunities that might be a bit outside of our new “standard” slow travel budget boundaries (if any standard exists). We have decided these two opportunities are important to us, and that means they fit in our budget! The first fabulous opportunity this year is spending three months traveling with my mom in France and Scotland over the summer. We could not be more excited about that! We have been spending summers with my mom for a long time so we will continue to do that in our home-free lifestyle.

That’s us and my mom at a Seattle Mariner’s baseball game. That was one of our annual family outings every summer.

And the second big opportunity this year is something we literally just decided to add to our budget within the last couple weeks — attending the FIRE (financial independence/retire early) Chautauqua event in Ecuador in November. The focus at this retreat is life after FIRE, which could not be more perfect for us right now!

The Conclusion, For Now

We left the U.S. on January 3, 2019, which makes it easy to track our new nomad budget over the full 2019 calendar year and include every penny spent in 2019. We have a simple goal, to spend less as nomads in 2019 than we spent as frugal people living in Seattle in 2018.

Most importantly, I believe no budget category is sacred and all portions of our budget should be open for reexamination at any given time. I’m taking the stance that if it doesn’t feed our souls or make us safe, it probably doesn’t matter that much and we might decide to ditch it the next time we talk about it. For instance, Netflix is one of the fun things in our budget. We are still paying for that right now partly because I inherited a love for Star Trek from my dad, so Ali and I have been watching the new Star Trek Discovery show. And Ali is a big romantic and a fan of anything related to Scotland so she loves the Outlander series and we are having fun watching that together. But eventually I think we’ll realize we don’t want or need our Netflix account anymore (I wonder if Ali will disagree with me on that). 

Below I have included a snapshot of our 2019 budget with 11 categories, and I’ve also included Billy and Akaisha’s budget for comparison. I’m quite pleased to see how we compare to their budget percentages. I’m thrilled to have set this reference point for our budget before the end of January, and I look forward to tracking our spending as we continue our travels.



  1. Your dad would be very proud of you and the way you utilize and expand on all he taught you, Alison; I know your mom admires and appreciates your financial expertise.

    Liked by 1 person

  2. For housing as a percent of budget, is the denominator gross income or (post tax + 401k contribution)?

    Star Trek is the best! Sounds like you and your father bonded while watching the show too. To this day when brewing Earl Grey tea, I think, “Early Grey, hot.”


    • Good question! For starters, in our case, our target of 26% on housing is based on our all-in budget. That includes what we spend on taxes, health care, gifts, food, travel. Everything. In the case of a pre-retirement budget, the guidance of 25% is meant to be a guide to compare what you are actually spending on housing. To be honest, I’m not a big fan of applying percentages as a hard and fast rule. I would rather like to use it as a starting point then see what 25% is when compared to your grows income. Then ask your self “how does that feel” in reality? In other words, it you are a high earner, does that 25% really seam reasonable given your goals. Or should you shift gears and reallocate some of those funds to a more productive category like saving. If you have a lower wage, 25% of your income as compared to the COL in your area might tell you that you need a room mate. Or it’s time to increase your income if possible. But no mater what, I move from percentages to dollar amounts quickly and then compare that to our goals.

      It’s really up to you when you think it most logical to apply the 25%. If you apply it to gross wages, your housing budget will seam larger. If you apply it to take home pay, less so. But no matter what it’s a guide. And for sure, I would not be spending half my take-home pay on a mortgage. I do know there are places in the world like New York and London where housing is very expensive and one really needs to live in those places. At that point, looking at rent vs buy calculations becomes important as well as considering co-living situations. And as Paula Pant likes to say, you can afford anything just not everything. And that includes housing.

      We’ve been watching the second season of Discovery, that latest version of the Star Trek franchise. What has been really interesting is that all the main characters are women, women of color, gay or really swishy in the case of Suru. This seams like the story line that has finally normalized humans as we really are. A rainbow. Cheers!


      • Thank you so much for going into detail about how your decision making regarding the prercentage works!

        My current calculations are as a percentage of after tax earnings since I figure taxes are non-negotiable. When deciding to purchase, I wanted to minimize that percentage and prioritized location as the top priority. I also needed to have my own place to feel free to make my own decisions in regards to relationships. The area is HCOL, but it’s where my family and closest friends are. Thus, the fairly high percentage initially was justified due to the needs at the time. Luckily raises came quickly and it is more manageable.

        Haven’t watched many episodes since Voyager, but I’m planning to binge them during this holiday season. Planning to cheat and start with Discovery after this great description of it! 🥳

        Liked by 1 person

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