Money Matters

If you’ve been following along for a while, you know that we’ve been saving like crazy for over a year to pay upfront for most of our big travel adventure. We set up and have been feeding our dedicated savings account with a regular monthly allotment along with every extra spare penny we’ve gotten along the way.

We’re at a stage right now though where, for the first time in a long, long while, we are carrying a balance on our credit card; that is, we’ve overspent our savings in order to make upfront reservations for the trip. We knew this was going to be the situation for a few months, but it’s still a bit uncomfortable for us, to put it mildly. We could take funds out of our regular savings and pay it off, but the plan has always been to pay for our travels using only dedicated travel savings and proceeds from the sale of our household goods and car. We’ll chip away at the balance for the next couple of months and have it gone by the time we depart in August, if not before.

While we travel we’ll live on our regular monthly income, and plan to put the amount we’re currently paying for rent into a separate savings account to build a sort of secondary emergency fund, if you will. This savings should also give us a nice cushion to land on when our adventure ends. When we leave Kaua’i we’ll have just two monthly payments – my student loan and our phone bill – and they’re already set up on auto-pay. Otherwise we’ll have no other bills – no rent, no utilities, no gas, no cable, no car or rental insurance, etc. – our income after putting away savings should be more than enough to cover food, inter-country transportation, side trips and other daily expenses each month.

We plan to travel and live as frugally as possible along the way. The Senior Nomads recently said they shoot for two no-spend days each week and we think that’s a worthy goal for us too. Not only will this help us to stay within our budget, but also require us to get out more and explore our surroundings rather than depend on tours, tickets, etc. to entertain us. I’m not sure yet whether we’ll be able to go without gelato for two days when we’re in Italy, or avoid stopping into the patisseries or boulangeries for two days when we’re in France – we’ll have to see about that. We may need to set up a separate gelato or bakery fund that we can dip into.

I’ve always been a firm believer that by setting realistic goals, financial or otherwise, and supporting them with careful, well-thought out, long-term plans dreams really can come true and be sustainable. We’re about to once again test those beliefs in a big way!

12 thoughts on “Money Matters

  1. Laurel Hill says:

    LOL re: going without gelato in Italy for two days. That sure wouldn’t have happened traveling with my DH. It was one of the highlights of his trip.

    I know how creepy it can feel to put something on a CC, even if you know it will be paid off soon. When you’re not used to CC debt, it feels odd, but they can be worthy tools in attaining a goal. And I’m sure you’re not going to fall off a cliff with it. You’re too diligent with your budgets.

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    • Laura says:

      I’m pretty sure daily a daily gelato fix is going to be one of the highlights of our time in Italy!

      The positive with the CC is the rewards – we have earned quite a bit, and they can be used to pay down our bill (which we will do in a couple of months when everything clears). The biggest issue, if you can call it that, is that we have found some amazing deals, both with Airbnb and with airfares, now instead of later, and those have added to the card’s total. For example, just today we found and booked a wonderful rental in Portland for next summer. We will need a place for 3 1/2 months, so I knew I needed to start looking now, and at least start a conversation with the owners. But one of our favorite places came though and said “let’s do it now” so here we are with another charge on the card. We knew ahead of time that charges would get ahead of savings for a couple of months, but it’s still a bit disconcerting.

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  2. Chris N says:

    Sometime sh#t happens. We had to put my sons spring tuition on a CC. He’s going to CSU Sacramento. Next fall he gets the Cal grants but this semester it was too late. I’m okay with it, we’ll pay as soon as we can but sometimes you gotta do what you gotta due.

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    • Laura says:

      Our credit card has terrific rewards, and we will use them to pay down our bill. We knew this was going to happen though, that spending would outpace savings for a couple of months, but it’s still hard seeing that balance. It will be gone before we leave though. You’re right though – sometimes you gotta do what you gotta do, and there were some airfares and rentals we were not going to let go – they were that good!

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  3. tpol1 says:

    I am sure you will be just fine with money matters. As a long time reader, I think you have all your bases covered when it comes to finances.

    I was just wondering when you took out the student loan and how long you have been paying for it. The Student Loan issue in the US is just so weird. In here there is no such thing. One either goes to a Public College or a Private College. If one does not have the funds made available by her/his parents, she/he has to go to a Public School where fees are very small. Some Public Schools are the top ones in Turkey and getting into them is difficult. There is a nationwide exam and one has to be within maximum 1% to get into the top Public Colleges (Universities). So, unless your parents step up, there is no student loans available to young people.

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  4. Laura says:

    I graduated in 2000, but didn’t have to start paying the loan back immediately because I continued on and got a certificate in conflict management (which was paid through my job), so I’ve been paying on the loan for about 15 years. I had to borrow to pay for both my undergraduate and graduate degrees, and the graduate degree was especially expensive (even as a resident at a public university), and I couldn’t have paid for it without taking out loans. Brett and our son were also going to college, but my loans meant they only had to borrow a very little (both of their loans have been paid in full). So, I’m the one still stuck with loan payment. Still, I am “lucky” that my interest rate is very, very low because of when I borrowed – today’s interest rates are much. much higher. The cost of education in the U.S. is scandalous, in my opinion, and so many people graduate owing huge amounts of money. I don’t regret getting my degree, but I wish that it hadn’t cost so much, and I regret borrowing as much as I did. We are fortunate that we can afford the payment each month without it impacting our standard of living.

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  5. Ja Bow says:

    Have you thought about “borrowing” money from your savings and repay g at the same rate as you would your credit card? We do that occasionally with our non IRA money. We even pay ourselves interest!
    I am very interected to know how you find great air bnb deals. Do you log on daily and just check?

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    • Laura says:

      We have thought about “borrowing” from our savings, but decided against it because it’s just too easy not to pay back the savings versus having to pay off the credit card. Does that make sense? Yes, we’ll get charged some interest, but that only makes us more determined to get it paid off sooner rather than later.

      I don’t check Airbnb daily, but now and again I go in to look at what’s available and what prices are like. We have a list of amenities we’re looking for, location, and of course what we’re willing to pay. If you’re going to stay in someplace long term, like we are in Japan, or in Portland next summer, it’s important to start looking early, and begin communicating with the owner about how early they would be willing to make a reservation. Maybe I should write a post about it, but the Senior Nomads are the experts, and have excellent advice about looking for and booking Airbnb rentals. Their travels are a little bit different from the one we’ll be making, but I think they wait and book only around 5-6 weeks in advance, maybe less.

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  6. JJ says:

    I’m taking a two week trip through Europe in early July. It won’t be nearly as adventurous as what you’re doing since my trip is much shorter and it’s a guided tour, but we’ll be visiting some of the same places you’ll be going to. I’ve actually never been away for that length of time (due to work–it’s tough to take more than two weeks off at a time), so I was wondering how do you keep your clothes clean when you travel for a longer period of time? I’m trying to pack light, but since it’s during the summer, I don’t think I’d want to wear things more than once without washing. There won’t be any time for visiting laundromats since it’s one of those trips where you’re on the tour company’s schedule and you’re not in one place for too long.

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    • Laura says:

      We’ve always been able to get our laundry done at the hotels where we’ve stayed for a very reasonable price, but that’s in Asia. When we stayed at the New Sanno last year, they gave us a big bag, and they would wash and fold as much as we could stuff into the bag (which was a lot!) for just $10. In China laundry cost even less. I would think you could hand wash some things over night in your room, but otherwise use the hotel laundry judiciously for bigger items. Hopefully your tour will give you some time along the way to do laundry, or at least get it done somewhere (i.e. at the hotel).

      We’ve tried to make sure there’s at least a washing machine in each place we’re staying on our trip – just one place so far doesn’t have one, so we’ll have to find a nearby laundromat there (Strasbourg, France).

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