House Hacking to Reduce Expenses as a Healthcare Traveler

If you’ve followed this website or our blog Fifth Wheel PT for any length of time, you probably know that I have spent a lot of time learning and writing about personal finance and investing since graduating from physical therapy school in 2015. This focus on maximizing my finances led to me reaching financial independence at age 30 and retiring from full time work as a PT.

Pursuing Travel PT as a new grad to earn significantly more than at a normal permanent job was a huge part of achieving that milestone as such a young age, but even more important than that was keeping my expenses as low as reasonably possible while traveling. As a travel therapist or other travel healthcare provider, you have to look at your savings rate, which takes into account not only your income but also your expenses, to see the big picture on how to come out ahead financially.

As a traditional travel healthcare provider, traveling with a tax home in order to receive tax free stipends, often the biggest monthly expense is housing, and this was no different for me. This is because having to pay for short term housing at the travel assignment location in addition to paying for housing expenses back home can really add up quickly.

There are some ways to reduce the expense of short term housing at your travel assignment location, but for the most part options are usually pretty limited depending on the area of your travel job. On the other hand, there are a variety of ways to reduce the total cost of maintaining your permanent tax home while on assignment by house hacking. Using some of these techniques allowed me to save a lot of money over the years, so I want to share some insights with you to help you better reduce your expenses and make travel healthcare more lucrative.

What is House Hacking?

House hacking is basically utilizing a portion or all of your house to earn income or offset expenses. Chad Carson does a great job of explaining all of the various ways of house hacking in this article. Anyone that has ever lived with a roommate has done a version of house hacking in the past. Having a two bedroom house or apartment split between two people is always going to be cheaper than having a one bedroom house or apartment to yourself, due to not only being able to split the cost of the rent or mortgage, but also utilities and any additional costs/fees.

Personally, I’ve been learning about ways to “hack” my housing costs since high school. I can remember looking at duplexes for sale when I was 18 and doing calculations on how much I could reduce my expenses by buying one, living in one side and renting the other, while also having a roommate in my side. I determined that not only could I reduce my housing costs, but I could actually live for free while simultaneously paying down the mortgage on the property by doing this in my hometown. Although I never ended up doing this after graduating high school due to going away for college, followed by PT school and then travel therapy, it’s something I still think about doing in the future.

House Hacking for Travelers

There are a few different ways that a travel healthcare provider might choose to house hack their tax home to reduce costs.

The first and most simple way is by simply renting a room in a house as their tax home, instead of having an entire house or apartment. Realistically, most travelers spend very little time throughout the year at their tax home due to spending most of the year working travel assignments or traveling for fun domestically or internationally. For my and Whitney’s entire travel careers prior to COVID, we never spent more than 6 weeks at home in any given year. Having a house or apartment sit empty for most of the year seemed wasteful to us, so for the majority of that time we each chose to rent a room in our family’s house as our tax home instead. We still had a place to keep all of our stuff and stay for the short periods while we were home, but it cost much less. We also had someone to collect our mail and keep an eye on things while we were gone.

Another way to house hack as a traveler is to buy or rent a place bigger than you’d need, and rent out rooms or get roommates to help subsidize costs. This is exactly what I had in mind when we were looking at townhouses to buy in our hometown when COVID hit and we realized we would be at home much more. We purposely bought a place with a couple of extra bedrooms so that we could have roommates or short term renters while we were out of town. By buying (or renting) an affordable place and renting out extra rooms for part or all of the year, it’s easy to make a big dent in the monthly cost of your tax home.

The last main way to house hack as a travel healthcare provider is by renting out your entire house or apartment on Airbnb, VRBO, or Furnished Finder while you’re away on assignment. This will undoubtedly offset tax home costs the most, assuming you’re able to keep occupancy relatively high, but will also lead to the most hassle. Managing a short term rental can be very lucrative but hard to manage from a distance while working. But, with a good property manager in your area that you trust, it’s certainly possible to make it work. We considered doing this when we were looking at places to buy, but ultimately decided against it due to the potential headache and issues that could arise. We also didn’t really like the idea of renting out our whole place with other people having access to our stuff. I do know a couple of travelers that have done this in the past and had a good experience along with making a decent profit though.

What About Maintaining Your Tax Home Requirements?

You may be wondering how house hacking impacts your tax home status and eligibility for tax free stipends as a travel therapist/travel healthcare provider. This is an important question to consider, and the answer depends on which of the strategies above that you choose and how you structure it.

**I do want to put the disclaimer here that I am by no means a CPA or tax professional. It’s always worth consulting a tax professional before making any decisions on your personal tax home situation. Below is my current understanding of how this works based on research I’ve done and CPAs I’ve talked to in the past. We interviewed Joe Smith from Travel Tax a couple of years ago and asked him for his advice on this as well which you can find here starting at 1:05:30 in the video.

As a quick refresher, according to the IRS, these are the rules for maintaining a tax home:

  1. You must maintain a place of permanent residence and pay expenses there (i.e. rent, own/mortgage, pay bills, pay taxes, etc.) while ALSO paying expenses at your travel location. This is called “duplicating expenses.”
  2. You must not abandon your tax home. Generally speaking, you should return there at least 30 days per year but these days don’t have to be consecutive.
  3. You must still conduct business in the area of your tax home. For example, you have a PRN job there or maintain some type of other business there.

Ideally you’d want to meet all three of these criteria but at the very least 2/3.

If you’re renting a room in a house as your tax home to house hack and save money, there should be absolutely no issue with that from a tax home perspective. Many travelers rent a room in a house or apartment from a friend or family member in their home area, keep records of payment and a lease, return to the area at least 30 days per year, and keep all of their stuff there.

If you’re renting out rooms to short term renters or roommates in a house or apartment that you own/lease, there should be no issue with this either as long as you’re keeping at least one bedroom in the house as your own. Obviously if you’re renting all of the bedrooms out in your house for the full year then this would no longer count as your tax home because you aren’t personally meeting the tax home rules above.

If you’re renting out your entire house or apartment on Airbnb, VRBO, Furnished Finder, or something similar, then that’s fine as long as you aren’t renting it out for the full year. You need to leave open time in the year for you to return home without it being rented. Something like renting out the full place for 9 months of the year while leaving a month between each assignment where you go back home and stay for a while would be ideal. Even renting a place 9 months a year on a short term basis will likely be enough to cover nearly all of the expenses of the tax home depending on your area.

Should You House Hack Your Tax Home?

House hacking your tax home is a great way to reduce your expenses while traveling to improve your financial situation more quickly. This was a key part in my own journey to achieving financial independence. With that being said, there’s undoubtedly more hassle and potential issues that go along with sharing or renting out your tax home. For that reason, it’s definitely not for all travelers. If you’re the type of traveler that gets stressed and overwhelmed easily while on assignment, then adding in extra worry back home may not be worth it. On the other hand, if you’re the type of traveler that handles potential issues well and is looking to minimize your expenses as much as possible, then house hacking could be perfect for you.

Have you ever done some version of house hacking with your tax home as a healthcare traveler? If so let me know what you did and how it went in the comments below or in an email!

As always, if you have questions about your travel healthcare journey, you can send us a message. If you’re new to travel healthcare and want to get connected with travel therapy recruiters and companies we recommend, you can fill out this form as well.

Jared Casazza
Written by Jared Casazza, PT, DPT

Jared has been a traveling physical therapist since 2015 and has helped thousands of current and aspiring travelers along their own journeys. He is also a personal finance enthusiast and has used his career as a Travel PT combined with strategic financial choices to pursue financial independence and semi-retirement early in his career.

Focusing on Savings Rate instead of Only the Highest Pay as a Travel Therapist

With rising student loan debt and stagnant or even declining reimbursement for therapy services, finances are often at the top of therapists’ minds. This is no different for travel therapists. Over the past few years while mentoring thousands of current and aspiring travel therapists, we’ve found that the primary reason most therapists choose to travel is to earn more money than they would at a permanent job. The therapists, especially new grads, who we have mentored are often able to earn twice as much, or even more, as the offers they received for permanent positions in their home areas. That extra money can go a long way toward paying down student debt or toward reaching a position of financial independence earlier than traditional retirement age. In fact, Whitney and I were able to leverage our higher pay as travel therapists to achieve what we refer to as semi-retirement in our 20s after only three years of working full time. As we dive deeper into this topic, if you’re unfamiliar with how pay works as a travel therapist, this article is a great place to start.

While therapists often focus on how much they can make as a travel therapist, what is often neglected in discussions about finances between travel therapists though is the expense side of the equation, which is very important as a traveler. After all, if your primary goal with travel therapy is to improve your financial situation, then earning a lot of money and subsequently spending almost all of it doesn’t really lead to the desired result. While all travel therapists want to earn as much as possible on each contract, we believe that a much more important metric is your savings rate while traveling, which takes into account both income and expenses. This is the primary metric that we focused on early in our careers as travel physical therapists and is the main reason why we were able to achieve so many of our financial goals in such a short period of time.

Savings Rate

Calculating your savings rate is pretty straightforward and easy. You simply subtract your expenses from your income, and then divide by your income for any desired time period (usually monthly). The equation looks like this:

(Income – expenses) / Income

If you aren’t keeping track of your exact spending every month and you want to keep it simple without having to track every single purchase, you can at least take a look at the big expenses that don’t change much, such as your rent/mortgage costs for your tax home, your cell phone bill and any other monthly utilities you pay, a car payment if you have one, health insurance, and your rent for your travel location (which will vary but you can look at for each individual contract). You will get the bulk of your expenses from these “big ticket items.” Then you can estimate about how much you’re spending each month on things like groceries, gas, activities, eating out, and miscellaneous purchases, to get a rough idea of your monthly expenses.

We always use after tax numbers when calculating savings rate, as we’ve found this to be more useful as travel therapists. For example: let’s say you’re a Travel PT making $1,800/week after taxes on a travel contract. All of your expenses, including your tax home costs, equal about $4,000/month. To determine your savings rate for the month, first you’d take your weekly take home pay of $1,800/week and multiply by 4.33 (the average number of weeks per month) to get your monthly income. Then you’d subtract your $4,000 in expenses. Finally you’d divide this by your monthly income calculated above and convert into a percentage. For this example the math would look like this:

((1,800*4.33)-4,000)/(1,800*4.33)= .487 = 48.7% savings rate

The higher your savings rate from month to month, the more quickly you can achieve your financial goals. A savings rate of 48.7% in the example above would be really good and nearly 7x higher than the normal US average. But with some optimization and by trying to keep our “big ticket item” expenses pretty low, Whitney and I were regularly able to reach a saving rate of 70% or higher while traveling full time. We funneled all of that savings into smart investments that have grown significantly over time, which has helped us achieve financial freedom.

Optimizing Savings Rate

A common mistake we see new travel therapists who are traveling to improve their financial position make is always chasing the highest pay packages, without paying attention to the cost of living in the area of those high paying jobs. In the search for high pay, many travelers will be enticed by a travel job paying $2,000/week after taxes on the west coast in a high cost of living city, over a job paying $1,800/week after taxes in a much lower cost of living area on the east coast or in the Midwest. The higher paying job in this situation will lead to about $900/month in additional income, but that extra income will often be more than negated by the higher expenses. Not only is housing more expensive in the higher cost of living areas, but so are food, gas, activities, and other small expenses like parking. We’ve talked to many travel therapists regularly paying $2,500/month or more just for short term housing in high paying, high cost of living areas, and we can only imagine what their total expenses look like after taking into account all of the additional costs besides just rent.

If optimizing your savings rate is the goal, then often taking moderately paying travel therapy contracts in lower cost of living areas is a very smart move. We took all of our contracts on the east coast for our first few years of travel therapy largely for this reason. Our pay packages back then averaged about $1,750/week after taxes, but we were able to keep our expenses low and subsequently save a much larger percentage of our income than we would have been able to making $2,000/week after taxes in high cost of living areas

Minimizing Expenses

Since keeping expenses relatively low is vital for having a high savings rate, for a traveler focused on finances, minimizing them should be a priority. Of course, taking travel jobs in lower cost of living areas is the primary way to do this, but another big way to decrease overall expenses is by looking at your tax home expenses. As a traveler spending most of your time in other areas for work, it’s often possible to get by with downsizing your place back home or even choosing to rent a room as your tax home, instead of an entire house or apartment. Some travelers have big, expensive houses back home with fixed costs, which significantly increases their expenses each month. Meanwhile, Whitney and I rented a room in a house at the beginning of our travel careers to cut down on our tax home expenses, and later on we bought our own townhouse but had a housemate move in to our place to split costs and reduce how much we had to pay out of pocket each month while traveling.

Another great way to minimize your expenses on the “big ticket items” of your budget is to drive a slightly used car instead of a brand new one. Although we could certainly afford to get new cars regularly with our income as travel therapists, since our primary goal has always been to have enough saved and invested so that work is optional for us, we’ve never actually bought a new car. Both Whitney and I have always driven cars that are reliable but at least a few years old in order to avoid the massive depreciation that comes with buying new cars.

Focus on What Matters

Getting the absolute highest paying travel job as a travel therapist can be wonderful, but if it means actually saving less each month due to being in a very expensive area, then this is counterproductive to your financial goals. It’s important for travel therapists to focus on not only the income side of the equation, but also on the expenses, to maximize their savings rate while traveling– which is what really matters. When scouting out your next travel job, be sure to consider the costs of that area and not just the pay for the contract. After all, when it comes to your financial security, it’s not just what you earn, but what you’re able to save!

If you have any questions about traveling or finances as a travel therapist, feel free to send us a message. You can also check out additional financial related articles on our blog. If you’re considering getting started with travel therapy and need to get connected with trustworthy travel therapy recruiters, fill out our recruiter recommendations form and we’ll help you!

Jared Casazza
Written by Jared Casazza, PT, DPT

Jared is a Doctor of Physical Therapy who has been a Travel PT since 2015. He is also a finance enthusiast and has spent thousands of hours learning about personal finance. He used his career as a Travel PT combined with strategic financial choices to achieve financial independence by the age of 30.