How I Saved Money to Travel the World
The idea of long-term travel had been in our minds for several years, but we didn’t start laying out a plan to fund it until two years ago. Maggie’s plan was straight forward, to continue her job and maintain her current level of involvement as a digital nomad. My plan was to quit my job if I had to and take a break from my career, which I meant I had to save.
After researching other travel bloggers’ budgets and crunching numbers, I found a budget of $60 per day would fit what I wanted to do for at least two years of traveling around the world. Some travelers suggested a slightly higher amount but because I am traveling with somebody and at a slower pace I was able to bring the average down, mostly through savings in lodging.
Update: As it turns out I have the opportunity to continue my job at reduced hours, which means I’ll be able to put in around 10 billable hours per week. This is really the best of both worlds as what I do save is going to last even longer and I’ll still have plenty of time to relax and take a break as I had originally planned. I don’t expect the opportunity to last forever though, so I am definitely not taking it for granted.
How did I come up with the money?
Simply, I saved. I knew we wanted to leave no later than 2017, so if I could save at least $2,000/month that would give me $24,000 per year. This was a savings plan that I could afford while still living comfortably.
Ultimately, I was able to save up one year’s worth of my take home pay which has allowed me to live in the San Francisco Bay area beyond comfortably. With the Bay Area being one of the most expensive areas to live in the world, I could surely make one year’s worth of take home pay last 2-3 years in other parts of the world.
I also wanted to make sure that I saved enough to have something to come home to. This is money that I will not touch during the trip and will only be used to reestablish myself back in the United States or to invest and put down roots somewhere abroad.
Here are a few of the ways that helped me save money and maintain a budget:
1. Make a Goal
There’s no better motivation than having a goal. Saving is a lot harder when you have no purpose to do so. Focusing on short-term goals also helps reach that long-term goal. Thinking I had to save such a large amount all at once made it seem achievable. So I separated it out into smaller amounts such as saving for the first $10,000 and celebrated when we I that goal. I then continued onto the next step, saving the next $10,000.
2. Pay Off Debt
When I decided to seriously save for this trip I looked to eliminate my debt first. I had some personal savings at this time, some of which I used to eliminate the last of my debt. This allowed me to have more money each month to save or live off, instead of it going to bills and interest payments.
After paying off debt in late 2013, I had less than $4,000 in savings. From here, I implemented the $50,000 plan- saving $2,000 a month for the next two years. There were times when I had expenses like car repairs or mini vacations that would put me behind, while other times I had extra overtime work that would put me ahead. I made sure to net out in the end.
3. Earn More
It’s hard to save a lot if you’re not making a lot. If you’re in a job that doesn’t help you reach your goals, you can either supplement with freelance work or find a new job. Don’t be complacent at your workplace if its not helping you get to where you want to be. Change something. Maggie and I have regular full-time jobs and we each earn(ed) high salaries, but also lived in one of the most expensive cost of living areas in the world. However, our salaries combined with our frugal living were still enough to help us reach our travel goals.
4. Move in with Roommates
Since we were in a month to month contract renting our house, we were able to move into a less expensive place with roommates before leaving for our trip. Four months before our departure we moved in with Maggie’s long time friend to help us save even more money and cut down own our monthly living expenses. The move also made it convenient to sell our stuff or put things into storage out of the way early so we could just pack our bags and travel when ready.
5. Prioritize What’s Important
One of the large ways I was able to save money and cut down on my living expenses was to prioritize what was important. I had the money to buy a new car but instead opted to continue driving an old classic. It got me where I needed to go and was a blast to drive, so it hardly felt like a sacrifice. It saved me a ton however, on both the purchase and insurance costs as well as by having no monthly car payments to make. I also quit buying cigarettes. It was something I had been wanting to do, not only for my health but also as a substantial way to save for travel. Drinking out can be expensive as well. Just one cocktail or a couple craft beers could buy you a couple nights of lodging in most part of the world.
6. Cut Down Expenses
Obviously sacrifices had to be made to save that much money each month on my paychecks. I cut back on the cable subscription, eventually getting rid of it completely, we cooked more dinners at home, and I biked or walked more instead of driving everywhere. I also went longer without the vacations I longed for. My costly habit of smoking had to be stopped, old computer was not upgraded to the newer version I wished for, Christmas and birthday gifts were scaled back, but with my ultimate goal in mind I never felt strapped.
7. Take Advantage of Points Programs
If you have a good credit score, you may be able to take take advantage of many points earning opportunities to help offset the costs of travel, saving on lodging or airfare, two of the biggest travel expenses. Through credit card sign-up bonuses you can earn a lot of points quickly. I amassed a large amount of points by opening several credit cards in the years leading up to our trip. It has allowed me to book flights around the world for under $50 per flight, including often flying in first or business class which can cost multiple thousands of dollars.
You want to be careful not to open too many though, just one or two per year, and you don’t want to keep them open for more than a year if they have an annual fee. However, instead of closing the accounts completely after you receieve the points bonus, it is much better to simply downgrade to a no annual fee card, allowing you to maintain your available credit while not negatively effecting your debt ratio, which can lower your credit score. Some annual fees are worth paying though, such as on cards that provide perks on top of sign-up bonuses, like free lounge access at airports, or annual cash credits for travel expenses. You simply need to weigh the costs to benefits for what works best for you.
Of course, look for cards that have no foreign transaction fees if you plan to use them overseas, especially ones that earn 2 or 3 points per dollar on travel expenses that can help you to grow your points while traveling. Most importantly, always pay off your monthly bills in full, or else the points aren’t worth it for what you may end up paying in interest fees.
8. Treat Yourself
Saving is hard work. I couldn’t help but go on mini vacations to treat myself every now and then. During the two years of saving we were able to make trips to Southern California, do a road trip through the Pacific Northwest, and find some outstanding deals on airfare to still travel overseas. I had to dip into my savings for these trips but my extra overtime work helped balance out the travel costs. It was important to have celebratory rewards to help break up the long-term goal into manageable milestones.