Developing an RV Budget

RVs should bring pleasure, not stress. But not surprisingly, the greatest stress associated with RVs usually has to do with money. Rather than bringing pleasure, that pleasure vehicle brings financial stress. Why? You didn’t plan and budget in advance. That’s why we recommend you start your RV research with a look at your budget.

Here’s how to develop a realistic budget:

1. Determine how much money you can afford to spend in total each month on an RV.This amount will cover both your RV payment and all other RV-related expenses.
   
   
   1. A tip: You may be needing this money for a number of years. Many loans for larger motorized RVs are for at least ten years. Make sure your long-range budget incorporates this expense.
   2. Write down the actual amount you’re willing to commit to your RV project each month.
   3. Let’s say, as an example, that you decide you can afford to spend $600 per month in total for all your RV expenses.
2. Determine how much money you will pay each month on the RV payment itself. Your RV payment should be lower than the total amount you budgeted for overall RV expenses.
   
   
   1. A tip: A conservative RV payment would be 60 percent of your total monthly RV budget. You decide the amount that’s right for you.
   2. Determine the amount of your total monthly expense you want to dedicate to a payment. Write the figure down.
   3. In our example, the actual RV payment you could afford is 60 percent of $600, or $360 per month.
3. Determine the amount of cash you have available to buy an RV. We call that “Available Cash.” Available cash is made up of two things:
   
   
   1. The cash your RV payment will buy you. A tip: Your credit union may finance 100% of your RV purchase price, and may not require a down payment, either. But because RVs depreciate as fast or faster than cars, we hope you’ll consider making a down payment to protect you from future liability when you decide to sell the RV.
   2. Any money you contribute to a down payment. “Available Cash” also includes any cash from savings or the sale of an old RV you plan to use as a down payment. (If you plan to trade in an old RV or sell it yourself, you will need to know the approximate equity you have in the old RV—its wholesale value minus your loan payoff if any. To determine an approximate wholesale value, use one of the pricing guides under “New or Used?”.)
   3. Use the calculator on the right to help you determine your Available Cash figure. Just fill in the blanks and click “calculate.”
   4. Write down your Available Cash amount. This is all the money you have to spend on an RV, including options and accessories. Let this amount determine how much RV you buy. You may decide to get a 44-foot diesel-powered behemoth with its own self-contained garage (a new option on one fancy motor home), or you may be able to afford only a single-wheeled mini tent. Who cares? If you don’t spend more than your “Available Cash” limit, you’ll be on budget, and be a happier RVer!
4. Insurance costs as part of your budget. Many companies specialize in insuring RVs, but you will do best to compare all RV insurance rates and coverage to that sold by your primary insurance provider. Your monthly insurance costs should become part of your overall RV budget.

Prepared for Corning Credit Union by Remar Sutton & Associates, April 2003. Reviewed and updated May 2007. All rights reserved.