Talking about a budget for Hawaii is really talking about two budgets. There is the initial “start-up” budget and then there is the “monthly” budget. Our realistic goal for the “start-up” budget is $200,000. For this amount, we should be able to buy vacant land, build some sort of home (possibly a tiny house, kit house, bamboo house, or yurt), install all off-grid utilities (water catchment, waste system, electric and gas), and plant a garden/orchard/farm. I’m hoping to keep the land purchase around $100,000 which leaves half of the budget for the structure/infrastructure. If we really needed to, we could come up with this much cash without selling any of our real estate, but it would require cleaning out everything except retirement accounts which doesn’t seem like the best idea. We are attempting to increase the HELOC on our current house, which could then finance most of these plans. If we sell our house, then it would be paid off (theoretically, at least).
Which takes us to our monthly budget. After crunching some numbers, assuming we are ready to head to Hawaii about a year from now, and assuming we sell our current home, and after making all of our minimum debt payments (for example: property taxes on our rental properties, mortgage on the Condo, my student loans) we should have somewhere in the range of $30,000 to $40,000 in income per year (before taxes) to live on from our rental income. Once the Condo is paid-off (in about seven or so years), this should increase by about another $8,000 to $10,000 a year or so. While Hawaii is expensive, living off-grid will eliminate most utility bills; property taxes are very low (around $1,000 for the year); and we are hoping to grow a lot of our own food. We will need to buy health insurance, but, thankfully, neither of us has any chronic medical problems or take daily medication. We will also likely have additional income from other sources (part-time jobs, my travel agency, coffee farming). Also, this budget assumes that we do NOT touch any of our current assets (our net worth is over $1 million). I believe that at least $2,500/month goes a long way when total monthly expenses should be less than $1,000/month (health and car insurance, utilities, property taxes, groceries). That leaves more than $1,500/month for discretionary spending or almost $20,000/year. That is more than plenty for us. That’s a lot of money.