Money

BUDGETING – A major pain in the ass but absolutely crucial

Contrary to popular belief, you really don’t need a boatload of cash for a long term trip. You can make it on as little as a few thousand dollars if you are willing to do it on the cheap. Not counting airfare, I only spent $200 in two weeks when I was in Thailand in 2003. I stayed in basic bungalows, ate out every meal and splurged for snorkeling and elephant excursions. Granted, certain things like a booming tourist industry and inflation are adding to travel costs. As such, TD and I are going the more traditional route – staying in hostels or couchsurfing, taking the cheapest buses and trains and eating street food/cooking. We’re also avoiding expensive areas, like Africa, and keeping it short and sweet in Europe.

Creating a budget is the first step and it’s a pretty daunting task.  For an anally detailed view of our costs, click here. We analyzed our itinerary and estimated a cost per day depending on each country, then multiplied that by number of days. Below, we have lumped the countries together into regions, then listed the average cost.

• Europe – $100 per day, per person, 24 days = $2,400 x 2 people = $4,800
  
• Asia – $40 per day, pp, 234 days = $9,360 x 2 people = $18,720
• Oceania – $80 per day, pp, 40 days = $3,200 x 2 people = $6,400
• South America – $40 per day, pp, 140 days = $5,60 x 2 people = $11,200

So our estimated budget for the trip was approximately $41,120. Oh, but we’re not done yet. We still needed to take other travel expenses into account.

• RTW airplane tickets – $3,700 per person x 2 = $7,400
• Passport renewal fees/visas – $54o pp x 2 = $1,080
• Immunizations/prescription medications – $500 pp x 2 = $1,000
• Gear (backpacks, clothes, etc) – $900 pp x 2 = $1,800
• Traveler’s insurance – $500 pp x 2 = $1,000

The grand total = $53,400 ($26,700 per person)

Before you freak out, bear in mind that we gave ourselves an ample cushion for activities, random transportation costs, etc. I’m positive you could live off of way less than our amounts but we err on the cautious side. Don’t want to be stuck in some jungle village in Ecuador with a couple pesos and some lint in our pockets, right?

How the hell am I gonna SAVE for this?!

We both happen to be pretty good savers, myself in particular. Some might call me cheap but I prefer the term frugal. Luckily, we had good jobs which paid well and some stocks. We also got into the habit of putting away 30% of our paychecks every month. Although San Francisco is a very expensive city, we found lots of ways to minimize our costs.

• Not owning a car – HUGE savings and we took public transit, biked or walked around instead
• Cooking meals at home and bringing lunches to work – Those $8 sandwiches and $60 dinners definitely add up
• No more consumerism – We stopped all extraneous spending. Do you really need those snakeskin boots or the latest first-person-shooter game?
• Selling stuff – Since we had to move out anyway, we got rid of everything in our apartment. Furniture, electronics, clothes, housewares, bikes, etc.
• Drinking/partying less – This was probably the hardest thing to do. Before that, we could easily blow $100 bucks a night on club cover, drinks, taxis and 2am tacos. I would say Netflix is now our primary form of entertainment.

By drastically scaling back our lifestyle, we were able to save a significant chunk of money over time. It’s not impossible and not very painful. You can too!

Accessing your dough while abroad

Now that you’ve saved up your money, what’s the best way to get your grubby paws on it while traveling? I’ve never used travelers checks or brought dollars with me to exchange upon arrival. I dunno, it just seems really old school in a Rick Steves/Fodors/fanny pack kind of way.  ATMs offer you the best exchange rates anyway and most will accept your banking card as long as you’ve got the Maestro/Visa Plus logo on it. For emergencies, I also carry a credit card with Visa/Mastercard logo. Lots of places, especially in rural areas, won’t accept credit cards or even have an ATM in town so make sure you’ve got enough cash on you.

The bigger issue is – how are you going to prevent your bank/credit card company from raping you on foreign exchange and transaction fees? Currently, I use Citibank for my domestic checking and saving accounts. I decided to keep this account open just because I’ve been using them forever and so that family can deposit money at a branch easily (in case I need an emergency parental bailout). However, they charge 3% of the cash withdrawal and $1.50 at non-Citi ATMs, similar to many other banks. My credit cards, American Express and Visa, add 2.7 and 3 percent to every overseas transaction. Since these fees definitely add up over the course of your trip, how can you keep more of your precious, hard earned money?

Through research, I discovered a great credit card comparison site called Card Ratings. I decided to open a Capital One credit card, which charges no annual or international fees. Additionally, Capital One offers online direct banking, which charges nothing for account maintenence or ATM fees (they’ll send you a card if you request it). It’s super easy to link my Citibank to my Capital One money market account and transfer funds when necessary. I also looked into opening an E-Trade online banking account too but they only cover ATM fees domestically and require a high minimum monthly balance. Check around to see what works for you but this combo did me right.

How to cut costs while while traveling

• Buddy up with other backpackers – Single travelers end up spending more money on most things, including rooms, transportation and certain activities. Since we are a couple, we’ve been able to share a room and transportation costs (taxis, tuk-tuks, etc). Whenever we can, however, we talk to other people to split things like group treks or private minibuses.
• Volunteer/WWOOOF abroad – Oftentimes you get free room and board in exchange for working a few hours. Plus, you get a deeper perspective on a country.
• Take overnight buses/trains – You save money on a night’s accomodation, aren’t bored out of your skull on a long ass journey and won’t lose a day of sightseeing.
• Eat street food often – Sure, you’ll splurge on a nice dinner once in awhile but street food should be your mainstay. It’s damn cheap and fucking tasty.
• Don’t move around so much – A lot of your overall money will be eaten up by transportation, so stay put sometimes and chillout.
• Drink less – Just because you’re on a perpetual weekend doesn’t mean you have get wasted every night. Booze adds up, even in the cheaper countries. Keep partying like a rockstar and your pockets will be empty in no time.
• Get a job – In some countries, like Australia and New Zealand, you can get a working holiday visa for a year or two. Mind you, you’ll probably be getting jobs picking fruit, cleaning or construction – still it can be plenty enough to fund onward travels.