Most travel blogs have an article or two on this topic, because it’s one of the most common questions we hear. “How can you afford to travel for so long?” “Where did you get the money?” “How can I save money to travel like that?” It’s always interesting to see how we all have a different spin on the answer!
We are not rich by any stretch of the imagination. Our lives now hover in the great unknown of periodic contract work and more and more travel. We’re still trying to find a way to make that leap to total location independence, and being able to support ourselves while traveling. But how did we get here?
After university, I followed a pretty traditional path, living in New York and working for a non-profit organization. Being in NYC, my expenses were high, but I was earning enough to be relatively comfortable. I’ve always been a pretty good saver, so I was able to pay off my student loans during that time and put a bit aside each month. When Donny and I started working together in the field of mobile marketing, we had some additional advantages. When we are on a contract, most of our expenses are paid. That includes lodging and food, and sometimes a cellphone stipend. We also use a company vehicle. We don’t keep an apartment, and stay in hotels when on contract, so we don’t even have to buy things like toilet paper! This lack of expenses adds up to big savings!
Everyone’s life situation is different. We’ve made some choices that made it easier than usual to pick up and take off, but that doesn’t mean there aren’t things anyone can do to begin to save money for travel. Before our first RTW, we saved about $15,000 each. This was enough to be gone about a year, and included some more expensive destinations and activities like diving the Great Barrier Reef from a live-aboard in Australia and an overland safari through Southern Africa. Less than two years later we left on a longer trip through Asia.
1. Cut spending
Common sense and oh, so basic, but many don’t realize how a little change goes a LONG way in this category. How to find areas to cut? We use Quicken to both track expenses and budget. There are some built-in categories, but you can customize to fit your own lifestyle. (I’m told I take it to the extreme, tracking even the cash in my pocket down to the dollar, but it helps to see the big picture. I promise!) Once you’ve got a couple of months logged, it’s easy to see where your money is going. You’ll probably be surprised! Back when I worked in an office, I was shocked to see how much I was spending on lunches. Making lunch at home, bringing leftovers, etc. made a big difference in spending. Many people mention dropping that latte. At $4 a pop, a couple of coffees a week adds up to $416 in a year.
2. Think about what you could be spending your money on
After seeing how little things cost in many places we’ve traveled, we find ourselves making comparisons. We look at a package of socks and say, “That’s a night’s lodging in Cambodia or Vietnam!” It’s incentive to take out a needle and thread and fix up what you’ve got. A single night out at the movies with popcorn would cover a full day of expenses for two people in most of Southeast Asia.
Make travel your #1 priority. Obviously, you have to eat, but beyond the necessities, learn to put your travel fund first. There will be sacrifices, including meals out, concerts, parties, even just going out with friends, but we have never, not even once, regretted our decision to travel.
4. Identify WANTS vs. NEEDS
In reality, there’s not much people really need. We need food, water, shelter and love. With each purchase, we should be asking, “Is this something I really need, or just something I want to possess?” It may be difficult at first, but developing this mentality will help in all areas of life. Teaching this concept to kids, if you have them, is a wonderful gift too!
5. Pay yourself first
This goes for saving for any purpose, and is one of the first rules of personal finance. When you get paid, put a percentage aside for you. It should go to a fund or place you won’t touch or even think about. Here’s another way to look at it: rather than have a paycheck go into a checking account (from which you pay all your bills and do all your spending) THEN transferring what’s left at the end of the month into savings, try having the income go into SAVINGS account first. When you have to take money out of savings to pay for things, it’s much more likely you’ll stop to consider whether the expenditure is absolutely necessary.
Before we started traveling long-term, I owned an apartment. I remember how easy it is for “stuff” to accumulate. People tend to hide things on themselves, not wanting to give them up. Out of sight, out of mind. Selling unused/unwanted items on Ebay, Craigslist, to friends/family can add to your travel fund. Even if you don’t sell, giving things away is good for the soul. At this point, everything we own fits in a few storage bins, and we keep whittling those down. Storage is often a bill you can completely eliminate. For me, blogs like Becoming Minimalist have been inspirational.
7. Reduce debt
We’ve both been lucky (and diligent) enough to stay out of debt. Credit cards are paid in full monthly, and student loans are long paid off. We have a used car which we bought outright, and which will be sold before we set out fulltime again. For those with mortgages, loans and other debt, it can feel overwhelming. Even so, small changes can make a big difference. Formulate a plan, and stick to it. Keep focusing on your goal to save money, and you will.
8. Reduce bills
Many people can reduce utility and cable bills, etc. For us, it’s been the cellphone bill. My phone limps along, not the newest or flashiest, but only $50 a month on T-mobile, prepaid and no contract. It’s unlocked, so I can take it for use out of the country, inserting a local SIM card along the way. Not having a contract means when we leave to travel the cellphone bill disappears entirely. Big business may not want you to save money at their expense, but learn to play the game and you can beat them.
9. Supplement Income
Working a second job isn’t always possible, but most people have a skill that can earn them extra pennies. I do translating jobs whenever I can for a little extra money. I also participate in online surveys and forums, earning an extra $20 a month or so on average. Mystery Shopping has saved us money on everything from meals to fuel. (Free pizza, anyone?) If you live somewhere with Focus Groups, sign up and see if you can participate. The last one I did paid $85 in the form of a VISA gift card. Shen you do have to make purchases, online shopping portals like Ebates have specials and coupons, PLUS they pay you cash back percentage just for clicking through their site. No strings attached. We’ve had a good experience with several of these sites. Even the old advice to save your change in a big jar pays off: $36 last time we cashed in!
10. Use Credit Card Rewards to their Full Potential
You have to learn to play the game. There are lots of cards out there offering cash back, points, miles, etc. Travel rewards are the most common. Using travel rewards credit cards doesn’t help save money in the short-term, but it does reduce the cost of travel, helping you get there that much quicker! We were able to get a 7-leg ticket on American and its partners using 100,000 miles, paying only the taxes. We estimate the cost of those tickets would have been close to $5000. (Most of the money spent on cards to earn those miles was for work, therefore reimbursed: double bonus.) In addition, while we are working, we have had up to 300 hotels nights in a year. Sticking with one brand (we are loyal to Marriott) earns not only points, but Elite status with extra perks. When you use a hotel reward credit card at one of their own properties, you earn even more points. Points seem to go further outside the US, and staying in a nice hotel from time to time was a welcome treat from the hostels we primarily used on our two long journeys.
Some of these tips may sound too hard. Others may just sound silly. The bottom line is that small changes make a big difference. Once you make a firm commitment to your travel goal, it does get easier. When you start to see your savings grow, it’s inspirational. You’ll soon be on your way!