Want to save a boat load of money for a lavish trip? Maybe
you have the perfect honeymoon planned or want to quit your job and spend the
next 3 months on the Uruguayan Riviera, or maybe even a simple week long trip
to the California coast. Whatever may be your cup of tea, every trip involves saving
money. I am not going to tell you to sell your car, get rid of your phone, stop
eating, or other crazy sacrifices. I believe you have to live your life,
but every little bit helps.
1. Trends
The biggest issue I run across with people is when I
ask, “Well what do you spend your money on?” They have no idea. How do you know
where you can cut budgets if you have no idea where your money is going?! My
credit card company offers me a year in review… but that is not frequent
enough. Mint.com does exactly that. I know that my trend spending year to
date is 40% on my home (loans, improvement cost, home purchases all lumped into
one) while only 12% is spent on food. It has many added benefits also like
tying in all your accounts (401k, loans, funds, checking account, etc) all
while being 100% secure. You can also set budget limits for each category and
get alerted when you get near or surpass this limit. Very helpful reminders!
2. Estimate
It is always dangerous to venture into the unknown
with no expectations. This is how I tackled my first major trip to Germany in
2009. When I visited Italy a year later I was much better prepared. From my
experiences traveling both domestic and abroad a good rule of thumb to use is
take the cost of your sleeping accommodation and multiple it by 3 (hotel cost
$100, your total day cost will be ~$300). This is all subjective to what you do,
for example despite your hostel costing $50, you spend 8 hours on the beach, of
course your daily cost may be lower.
3. Planning
Now that you know your spending habits and how much your
trip will cost, the next logical step is to make a plan. No one wants to be
stuck saving $2000 the week before you leave. I like to set long and short term goals. It
helps break up the time and gives you a sense of accomplishment. Space out costs so they do not seem to rush you at once, like paying for the plane ticket 2
months before leaving.
4. Monitor
Begin to list the items you can cut back on and make
it happen. Some ways I have been able to save is living with basic cable (or
Netflix), limiting your fast food/eating out spending, and removing gym membership. Just
those 3 can save over $150/month. Some major changes we have done is rent out a
room in our house. If these seem unattainable, make it a challenge. If you think you
have to eat out, make it so you have to ride your bike or walk to the
restaurant. My buddy told me about his clause… love drinking booze? For every $1
you spend on booze or booze related items (Mexican food at 2am?) put $2 into
your savings account.
5. Open an account
This is the most fulfilling way in my
opinion. Opening an account purely for traveling allows you to physically watch
your fund grow. Set up automatic transfers to diminish slip ups. Having the
money go straight into the account will sort of make it seem like it was never
an option to spend on anything else… right?
6. Pay off your debt
There is nothing more irritating than your bank
making money off of you. Interest rates can set you back each month. My advice
would be to get out of the red. There is a difference between loans and credit
card debit. Loans can be as low as 3% interest (for homes), but credit cards can
be in the teens or more.
7. Get a credit card
I know this seems counterproductive to tip #6, but
credit cards allow traveling to be realistic. Get a card with great benefits. Let’s say before leaving, plane
tickets and hotels have been purchased. This is a good portion of your trip. A
credit card would be beneficial for all the costs accrued during the trip and
paid off immediately upon returning. This is similar to how I did my trip to Peru after I
graduated… except I put the entire trip on my credit card. :)
Please keep in mind, all of this is pointless if you do not live within your means. We do both own cars, but they are not brand new top of the line, we both do have smart phones, but they are not the latest model, we both own nice clothes (guess who has more) but our closet isn't filled with them.
Do you have any comments or suggestions? Let us know, we are
always open to new ideas!
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