Reader Case Study: Becoming a Travel Nurse and Stay-at-Home Dad During a Pandemic

Mrs. Frugalwoods’ Recommendations

First off, I want to congratulate Emily and Chase for their excellent financial decisions over the years. They’ve put themselves in an enviable position with no debt, several rental properties, retirement investments, taxable investments, a manageable mortgage, and low expenses. They’re a great example of what’s possible when you get your financial life in order. Before we delve into today’s topics, they should feel proud of the choices they’ve made.

The Pandemic Changes Everything

Unfortunately, and with regret, I have to tell Emily and Chase that despite all their planning, despite all their savings, and despite all their diversified revenue, the time for this change is not now. The top line (or the bottom line?) in my opinion is that now is not the time to quit their jobs, try to sell their house, and travel the country.

Not only are we in the midst of a global pandemic, the economy is in a state of high uncertainty. I’d characterize this as basically the worst time in the last, oh, 100 years or so for making this kind of change. Under normal, non-pandemic circumstances, I’d be cheering Emily and Chase on. My recommendations would be devoted to their questions about which vehicle to travel in, whether to sell or store their stuff, and so on. But right now, there are just too many uncertainties in the world.

The Double-Edged Sword

The issue right now is that this isn’t just an economic downturn (such as the 2008 recession) and this isn’t just a health crisis–it’s both at the same time. Since we’re in a period of economic uncertainty, I can’t see how this is a good time for anyone to quit their job (unless they’re fully financially independent). If it were me, I would have Chase sign another year-long contract for his position. I totally get that this is not what he wants to hear. I completely understand that he was done with this job years ago and that he and Emily have carefully planned this life change for months now. Unfortunately, this plan is not compatible with a pandemic (I mean, few things are).

Here Are My Concerns About Chase Quitting His Job And Emily Becoming a Travel Nurse:

1) Rental properties are not recession (or pandemic)-proof.

Kid day— thank you zoo pass!

It’s possible their tenants will stop paying rent. At present, Emily and Chase have a carefully tended portfolio of rental properties. However, if one (or more) of their tenants were to lose their jobs–and not qualify for an adequate amount of unemployment insurance)–they very well might stop paying their rent. Without rental income–but still with mortgages, taxes, and insurance to pay–Emily and Chase would dearly need his income. Additionally, Chase and Emily manage their rentals themselves, and they’d need to hire a property manager for the time that they’re traveling, which would further eat into their profits.

2) The AirBnb probably isn’t coming back for quite some time.

I love Emily and Chase’s ingenuity in creating an AirBnB property in their home and it’s this type of creative diversification that makes financial independence possible. However. It’s very hard to predict when services like AirBnb will ramp back up. At this point, it’s a demand-side issue: no one wants to stay in an AirBnB right now because no one is traveling or leaving their homes.

Even if the country were to re-open tomorrow, it’s unlikely Chase and Emily would see sustained occupancy throughout the summer because:

1. People are scared and still might not be willing to leave their homes except when absolutely necessary;
2. Most people have incurred a financial hit and won’t be going on vacations (or business travel) for awhile;
3. Epidemiological models indicate it’s possible (if not likely) that another round of coronavirus will ravage the country after things re-open (and hence more people have the chance to get infected).

All in all, this is just an awful confluence of factors–none of which are Emily and Chase’s fault, but all of which make their plan seem particularly un-viable right now.

3) Emily and Chase don’t have enough in savings for Chase to quit his job right now.

Emily and Chase have a TON of money in savings and they’ve done a fantastic job building up their investments. However. They’re not financially independent yet and without Chase’s job, they stand to run a pretty significant deficit every month, as outlined below:

Their current monthly spending is $4,445. Given that, if Chase were to quit his job on May 1st as planned, they’d be looking at a $2,032 deficit every month (the difference between their new monthly income and their expenses). They noted that Emily can pick-up additional shifts at her current job and so, if that could make up the $2,032 difference, that’d be ideal. I’m not clear on why Chase would want to pick-up gig work at this time since it seems that would unnecessarily expose him to the virus and would earn significantly less than he currently makes.

4) This is a terrible time to try and sell a house.

DIY kitchen cabinet transformation (light —> dark)

Very few people are moving right now. This is, again, a victim of the double-edged sword: because of coronavirus, real estate agents can’t offer open houses or in-person home tours. And because of the spiraling economy, few people are interested in incurring the expenses of buying a home. It’s hard to see how Emily and Chase would be able to sell their house right now and it seems they’d lose a lot of money if they had to reduce the price by or try to rent it out.

From Emily and Chase’s garden