Trausti was born and raised in Neskaupstaður, but like many Icelanders, spent the summers at his grandparents’ farm when he was a child. After completing secondary school, Trausti studied electrical engineering at the University of Iceland, graduating in 1982. He taught and conducted research at the university until 1986, then spent a couple years working for Póstur og sími, the Icelandic postal service and national telephone company, which were a single entity at the time. He primarily did programming and technical work. Later on, Trausti founded a tour company centered around river rafting, which he operated until 2002. After that, he worked various jobs until his health forced him to retire. He now lives in Egilsstaðir, where he has been doing genealogy research for several years. Previously married, Trausti has one son, Björn, and one daughter, Erna Freydís.