Financing a career break or other long term travel is not easy. For me, it required a combination of cutting back on spending and saving more, earning extra money, and dealing with at-home expenses that would remain while I am on the road. I own my condominium and still have student loan debt, but I have still been able to make it work.
I know it’s not always cool to talk a lot about money publicly, but in an attempt to help others who may be similarly situated, I want to be as open as possible about how I have financed my trip and share my tips on how to save money to travel.
How I reduced my spending and saved more
Eliminating my land line. I got rid of my land line after realizing I hadn’t had an actual phone plugged into for 3 years and I didn’t even know the phone number anymore.
Cutting back on cable. When it came to cable, I realized that almost everything I watched on a regular basis is available for free online (particularly sports). I called my cable company planning to cancel altogether but ending up telling them I was willing to spend $15 a month and asking what I could get for that. I ended up with all the major networks plus some random cable channels that I like – TLC, HGTV and Comedy Central.
Eating better. I often hear people say eating healthier is more expensive. Well, no, not really. All that packaging for processed food costs a lot and grabbing fast food every day costs more than just buying fresh ingredients and preparing your meals at home. Given that I already had to eat gluten-free, I tried to cut out most processed foods, sticking to fruit, nuts, veggies, eggs, yogurt and fresh chicken and pork. In addition to the obvious health benefits, this proved to be a boon to my bank account, cutting my monthly grocery bill nearly in half.
Repairing my shoes. If you have never taken your shoes to a shoe repair place, start now! Instead of buying 4-5 new pairs of shoes last year as I normally would have, I simply repaired the ones I had as the heels wore down or the toes became scuffed.
Re-evaluating my bank account. I switched to Capital One from US Bank over a year before leaving on my trip. The interest rate on my savings is nearly double what I had before and, just as important, Capital One does not charge ATM fees and even refunds the fees paid to other institutions up to $10 per month. This adds up over time.
Changing up my social life. I’ve read blog posts that suggest saving money by not going out and instead hosting people at home. Well, if you’re young, single and live in a big city like Chicago, that’s not really appealing (and hosting people can get expensive!). I did scale back my social life, but I also saved money by meeting friends for lunch or drinks (instead of dinner), and by limiting myself to 1 or 2 drinks when I did go out. I have no idea how much I saved by doing this, but I tried to stick to a “going out” budget of just $125 a month – which was less than half of what I spent before I started tracking my spending.
Giving myself a pay cut: I set up direct deposit into my savings account every month – in a sense giving myself a pay cut. While it took a while to adjust, eventually I got used to it and kind of forgot about it.
How I earned some extra cash
Selling stuff. I brought in over $4,200 by selling all of my furniture, books, DVDs, and random household stuff. I did this mostly through Craigslist, but also sold a few things on Ebay and held 4 “moving” sales over the course of a year. I sold books online through sellbackyourbook.com and DVDs through selldvdsonline.com, which was incredibly easy. I entered the ISBN codes and they provided an online quote and a pre-paid shipping label. Then I just packaged everything up and shipped it to them and within a couple weeks, I received payment via PayPal.
I started by selling things I didn’t use on a regular basis over a year before I left and saved the bigger stuff (bed, couch, etc.) until just a couple weeks before my departure. As a general rule, I priced things at around 25-33% of what I paid and found that worked pretty well.
Freelance work. I am not a writer or designer or techie person by trade, so there are not as many freelance opportunities out there for me. But, I did manage to find a few projects through Elance.com, capitalizing on past experience in data entry and research. Three projects brought in about $700. I probably could have done more with this if I had more free time and I am hoping to use it while I am on the road to make a little extra cash.
Getting a roommate. With a 2 bedroom condo, I had a room to spare. When a friend of a friend approached me in the spring that she was looking for a place to stay for a few months, it seemed like an ideal opportunity. This was an easy $1,300.
Saving vacation days. My employer had a policy of paying out for unused vacation days upon termination of employment. So for a year before leaving, I planned any trips around holidays and managed to accrue over 3 weeks of vacation time, which I received in one nice big check the week after I left.
Tax refund. I know, getting a tax refund means you have actually been loaning the government money without interest – technically it is better to adjust your withholding so you end up even at the end of the year. However, in my mind, getting a tax refund was a welcome boost to my savings account when it was direct deposited.
How I am dealing with lingering at-home expenses
Home: I was unable to sell my condo before I left, so I found tenants and am bringing in almost enough in rent to cover my mortgage payment. I lined up a friend with experience in managing property to serve as an emergency maintenance contact – I will pay her on an hourly basis only if the tenants ever need her to do anything. I also set up online rent payment through erentpayment.com – my tenants pay online each month and it is deposited directly into my bank account for a very small monthly fee ($3). I do still have to cover my condo association fees ($225 per month), but I worked those into my budget.
Student loans. Between college and law school, I had over $60,000 in student loan debt when I started planning for this trip (down from a high of over $90,000!). Waiting until I paid it all off just wasn’t an option. At first, I planned to work the $456 monthly payment into my budget for the trip and for re-entry. But ultimately, I decided to cash out my 401(k) from the job I was leaving and use that to pay down nearly half of my loan balance.
I know many people would advise against this, but hear me out. First, I have another 401(k) from my days as a lawyer that still has a pretty decent balance – probably more than most people my age. I probably would not have done this if I didn’t have that other account. Second, when I calculated the penalties and taxes I would incur, they ended up being less than the interest I would accumulate if I continued to pay down my loans at the current rate. Finally, by paying down such a large amount, I pushed ahead the due date for my next required payment to about 2017 – this gives me much more freedom and flexibility when I return. I am not saying it would make sense for everyone, but it made sense for me.
How it all adds up
I started with about $18,000 in savings – mostly proceeds from selling a previous condominium in 2006 – and zero credit card debt. Over the course of 14 months, I managed to add about $14,000, exceeding my total savings goal of $30,000. My actual trip budget is only $18,000 – the rest is a cushion for re-entry.
Note that the links above are affiliate links – a portion of any proceeds will help fund my travels!
Photo by epSos.de