There’s no secret to saving money. The only way to save…is to save.
Money-saving articles keep secrets. In the articles I read about saving money, the authors never divulge one key piece of information. The major component that has the largest impact on your ability to save money remains a secret in every article on saving money: the salary of the person offering the money-saving advice. Secret removed: I earned a salary between $68,000 and $74,000 during the two years I saved for my trip. It’s easier to follow these recommendations if you are earning $70,000 rather than $40,000. At $70,000 a year, these recommendations could save you upwards of $10,000 a year. That equates to less than three years’ time to save enough money for an around the world trip.
Money-saving articles also gloss over the reality that there are no shortcuts. There are no easy tricks people who save money could share that leads to financial enlightenment. It’s difficult to save money. It’s difficult to watch co-workers head to Chipotle for lunch on a Thursday while you reheat pasta for the fourth day in a row from a large batch you cooked on Sunday night. It’s difficult watching friends and housemates go out drinking on Fridays and Saturdays…and Sunday afternoons…and Thursdays…and Wednesdays…and sometimes on Tuesdays.
Money-saving articles keep secrets. In the articles I read about saving money, the authors never divulge one key piece of information. The major component that has the largest impact on your ability to save money remains a secret in every article on saving money: the salary of the person offering the money-saving advice. Secret removed: I earned a salary between $68,000 and $74,000 during the two years I saved for my trip. It’s easier to follow these recommendations if you are earning $70,000 rather than $40,000. At $70,000 a year, these recommendations could save you upwards of $10,000 a year. That equates to less than three years’ time to save enough money for an around the world trip.
Money-saving articles also gloss over the reality that there are no shortcuts. There are no easy tricks people who save money could share that leads to financial enlightenment. It’s difficult to save money. It’s difficult to watch co-workers head to Chipotle for lunch on a Thursday while you reheat pasta for the fourth day in a row from a large batch you cooked on Sunday night. It’s difficult watching friends and housemates go out drinking on Fridays and Saturdays…and Sunday afternoons…and Thursdays…and Wednesdays…and sometimes on Tuesdays.
To save money, evaluate your expenses and cut the big-ticket items first.
Lower Your Monthly Rent: $4,000
Rent and housing are expensive. Housing is more of a financial burden if you aren’t honest about your financial situation. If you are trying to increase your savings, there’s no justification for paying $1,800 a month to live in a one-bedroom unit. If you are living alone, find a housemate. If you have one housemate, find another. If you have two housemates, find another. Each additional housemate lowers your monthly rent $300-$400, not including any reduction in fixed utilities like cable and internet. By adding one housemate you’ll be able to save $4,000 a year.
Adding housemates prepares you for life in a hostel. You become accustomed to sharing a bathroom. At least your housemates are only housemates. In a hostel they become roommates. If you can’t handle sharing a house with three other people, you may want to reconsider if you’ll be able to share a room with three or more other people.
If you want to save money quickly on housing and/or you are earning $60,000 a year or less, move back in with your parents, assuming they allow you to move back. I did this to pay off my student loans. I would have done this to save money for an around the world trip if I’d had a lower salary and wanted to leave sooner.
Lower Your Cell Phone Bill: $250 to $600
The iPhone is the most overrated piece of technology in the history of technology. Unlimited data plans keep decreasing in price, but you should still drop the smartphone, which may be costing you $60 per month, $720 per year. An AT&T Prepaid Go Phone costs $25. You can purchase 1,000 minutes of talk time, good for one year, for $100. That’s a $600 a year swing on your cell phone bill.
If you need a smartphone, switch to a low-usage data plan. At a minimum this should save you $20 a month and $240 for the year.
Don’t sell the smartphone. It has apps you’ll want to access while traveling. You may need to fly a drone or take virtual reality photos. It’s a compact camera when you don’t want to carry a larger camera bag and WiFi is ubiquitous outside the U.S. There’s WiFi on the way to Everest Base Camp. There’s WiFi in the middle of the Maasai Mara. Data plans are cheaper outside the U.S. In certain countries signing up for a data plan makes it easier to move around the country and visit remote sights.
Cut Your Cable Subscription…and Do NOT Replace It With Netflix, Hulu or Amazon Prime: $500
I’m assuming you have cable and aren’t pirating content online. Many cable and internet providers bundle the two services, which places the combined monthly subscription at a price point competitive with the over-the-top services. Thus, if you cut cable but add Netflix and/or Hulu and/or Amazon Prime you may not save any money. The only way to save money…is to save money. Cable companies also charge $15/month for a set-top box rental which is outright theft on their part. Cutting cable and returning the cable set-top box will save more than $500 per year.
Cutting Amazon Prime will also help end your Amazon shopping altogether (or at least reduce your Amazon spend).
Join a No-Frills Gym: $400
Planet Fitness charges $10 a month with a $10 initiation fee (waived at various times throughout the year) and an annual $30 fee. A gym that has a pool is nice, a gym with a sauna and a steam room is nice, a gym that offers cycling and yoga classes is nice—it’s not about nice. It’s about saving money. Ditch the pricey gym and save more than $400 a year.
Lifestyle Choices: $500 to $5,000
The remaining suggestions are individually immaterial, however, the aggregate savings add up. These suggestions fall into the “Living Like It’s a Recession” lifestyle category. These are savings tips I developed after graduating college in 2004 with $100,000 in debt. Then the 2008 Recession hit and money-saving articles appeared on how to live frugally during a recession. The recommendations showed that I was “Living Like It’s a Recession” during the 2004 through 2007 boom years. Good times. I still live like it’s a recession today.
The “Live Like It’s a Recession” money-saving tips:
Pack Your Lunch
Pasta. Tuna fish. Peanut butter and jelly sandwiches. Salads. Rinse. Wash. Repeat. There are certain, common habits that people who save money adopt, like packing your lunch, that distinguishes those that can save and those that are looser with their money. If you struggle with packing your lunch, you will struggle to save money.
You could potentially save $5 each time you pack your lunch, which is $25 a week or $1,250 a year. It’s an expense area that allows you to become more conscious of how much you spend and what you purchase. If you are a single person, you should be able to eat quality and healthy meals spending $75 or less per week at the supermarket, Whole Foods partially included. That’s $50 for the basic items (packing a daily lunch and light dinners at home) plus $25 for the steak or fish and a six-pack of beer on the weekend. If you spend more than $75 a week at the supermarket, you are not taking saving seriously.
When preparing your own meals, target spending $3 to $4 per meal (21 meals x $3.50 = $73.50). I chose this number because you could purchase microwavable meals for $3 to $4 each. It shouldn’t cost you more to prepare a meal for yourself than having a company prepare the meal for you. Cheap meals aren’t limited to the pasta, tuna fish, peanut butter and jelly basics—meatloaf, pork tenderloin, and chicken when portioned out, all break down to under $4 per meal including a vegetable side dish.
And avoid the vending machines. Saving $2 a day at the work vending machine adds up to $500 a year.
Avoid the Discount Oasis
Don’t overload your shopping at Costco. Buy in bulk the items you already consume. Pasta. Tuna fish. Peanut butter. Paper products. Don’t buy items you never purchased before in bulk. Skip the sale items that you’d never purchase if they weren’t on sale. It’s easy to enter Costco with a list totaling $100 of items you need and leave with a receipt for $200 that includes $100 of impulse buys. Costco always has tempting seasonal deals at the store’s entrance. Those aren’t deals. The savings aren’t true savings. To eliminate the spending temptation, load up on household goods like paper towels, toilet paper, laundry detergent, and fabric softener over a couple of visits in the span of a week. Then return your Costco card and receive a refund for the $60 membership fee.
Cut Your Vice
We all have vices. We all have activities or products that we repeatedly spend money on that can be reduced or eliminated. At one point I was drinking two individual Lipton Pure Leaf unsweetened iced teas a day at $2.50. Ten a week at $25. Forty a month at $100. I started purchasing a 64-oz. jug once a month, which I then refilled at home by brewing my own Lipton iced tea. My iced tea vice went from a $100 to $5 a month habit.
Skip the Starbucks Runs
Drink the free coffee at work or buy a Yeti and bring better coffee from home.
Assuming two Starbucks runs a week, which is what I averaged, you will save $500 a year. If Starbucks and coffee shops are your vice, if it’s part of your morning routine, if it’s also part of your afternoon routine, the savings will add up even quicker. This was a difficult vice for me to drop. The compromise I reached with myself was that I wouldn’t order coffee to go. I stayed in the coffee shop and read a book, worked on a report, or performed some other activity so that the coffee became an experience. If I spent an hour drinking coffee and being productive, that felt like a better value than grabbing a coffee to go and drinking it in my car or at work.
I enjoy finding coffee shops in new neighborhoods. In this way I take mini-vacations to new areas of Los Angeles, Philadelphia, Hong Kong, or wherever I am living, and see new parts of a city. This strategy also works well with microbreweries. Although…
Skip the Alcohol, Appetizers, and Desserts at Dinner; Cut the Weekend Drinking
I’m not saying to cut dining out completely, I’m saying we all know the little costs of dining out that add up to a larger bill. Cut those little costs out. Instead of half your bill being the main course, make 80% of your bill the main course; the other 20% is the tip. Cutting alcohol, appetizers, and desserts may be the second obvious habit that distinguishes a saver from a non-saver. If you struggle with these expenses, you will struggle with saving. Reducing the amount of alcohol you drink has two benefits. First, it lowers your expenses. Second, it lowers your tolerance, which means when you start drinking again during your travels it will cost less to get a buzz.
These lifestyle expenses vary by the individual, but everyone is spending at least $1,000 a year on unnecessary items. If cutting your lifestyle expenses feels like a burden, reconsider whether an around the world trip is something you still want to do.
Ditch Your Car for Public Transportation: $1,000 or more
This recommendation is specific to everyone’s unique situation. A car is a nuisance but you may need one to commute to and from work. Thus, I did not include this potential savings in the $10,000 a year total. However, if you are looking to change apartments and add housemates, paying a little more for a location near public transit makes sense…if you are then willing to ditch your car. If you need to purchase or lease a new car, a Corolla runs as well as a Camry which runs as well as a Lexus.
Evaluating your auto insurance coverage and pricing every two to three years is a good habit, whether you are saving money or not. Comparison shop and you may be able to save $20 a month / $240 a year for the same coverage with another reputable, nationwide insurance carrier. Don’t cut your insurance coverage to save money; saving $250 a year to lower your coverage isn’t worth the risk of higher costs if you have an accident. If you are trying to save money, evaluate your deductible and calculate how much cash you have on hand to verify you can cover the deductible amount in the event of an accident.
The physical ditching of your car requires careful calculations. At some point, before you leave, you should sell your car. It’s possible the sales price of your car does not cover the outstanding debt and you’ll need to cover the difference from your savings. If your car is paid in full, selling your car before leaving provides a nice cash windfall on top of your savings.
Lower Your Monthly Rent: $4,000
Rent and housing are expensive. Housing is more of a financial burden if you aren’t honest about your financial situation. If you are trying to increase your savings, there’s no justification for paying $1,800 a month to live in a one-bedroom unit. If you are living alone, find a housemate. If you have one housemate, find another. If you have two housemates, find another. Each additional housemate lowers your monthly rent $300-$400, not including any reduction in fixed utilities like cable and internet. By adding one housemate you’ll be able to save $4,000 a year.
Adding housemates prepares you for life in a hostel. You become accustomed to sharing a bathroom. At least your housemates are only housemates. In a hostel they become roommates. If you can’t handle sharing a house with three other people, you may want to reconsider if you’ll be able to share a room with three or more other people.
If you want to save money quickly on housing and/or you are earning $60,000 a year or less, move back in with your parents, assuming they allow you to move back. I did this to pay off my student loans. I would have done this to save money for an around the world trip if I’d had a lower salary and wanted to leave sooner.
Lower Your Cell Phone Bill: $250 to $600
The iPhone is the most overrated piece of technology in the history of technology. Unlimited data plans keep decreasing in price, but you should still drop the smartphone, which may be costing you $60 per month, $720 per year. An AT&T Prepaid Go Phone costs $25. You can purchase 1,000 minutes of talk time, good for one year, for $100. That’s a $600 a year swing on your cell phone bill.
If you need a smartphone, switch to a low-usage data plan. At a minimum this should save you $20 a month and $240 for the year.
Don’t sell the smartphone. It has apps you’ll want to access while traveling. You may need to fly a drone or take virtual reality photos. It’s a compact camera when you don’t want to carry a larger camera bag and WiFi is ubiquitous outside the U.S. There’s WiFi on the way to Everest Base Camp. There’s WiFi in the middle of the Maasai Mara. Data plans are cheaper outside the U.S. In certain countries signing up for a data plan makes it easier to move around the country and visit remote sights.
Cut Your Cable Subscription…and Do NOT Replace It With Netflix, Hulu or Amazon Prime: $500
I’m assuming you have cable and aren’t pirating content online. Many cable and internet providers bundle the two services, which places the combined monthly subscription at a price point competitive with the over-the-top services. Thus, if you cut cable but add Netflix and/or Hulu and/or Amazon Prime you may not save any money. The only way to save money…is to save money. Cable companies also charge $15/month for a set-top box rental which is outright theft on their part. Cutting cable and returning the cable set-top box will save more than $500 per year.
Cutting Amazon Prime will also help end your Amazon shopping altogether (or at least reduce your Amazon spend).
Join a No-Frills Gym: $400
Planet Fitness charges $10 a month with a $10 initiation fee (waived at various times throughout the year) and an annual $30 fee. A gym that has a pool is nice, a gym with a sauna and a steam room is nice, a gym that offers cycling and yoga classes is nice—it’s not about nice. It’s about saving money. Ditch the pricey gym and save more than $400 a year.
Lifestyle Choices: $500 to $5,000
The remaining suggestions are individually immaterial, however, the aggregate savings add up. These suggestions fall into the “Living Like It’s a Recession” lifestyle category. These are savings tips I developed after graduating college in 2004 with $100,000 in debt. Then the 2008 Recession hit and money-saving articles appeared on how to live frugally during a recession. The recommendations showed that I was “Living Like It’s a Recession” during the 2004 through 2007 boom years. Good times. I still live like it’s a recession today.
The “Live Like It’s a Recession” money-saving tips:
Pack Your Lunch
Pasta. Tuna fish. Peanut butter and jelly sandwiches. Salads. Rinse. Wash. Repeat. There are certain, common habits that people who save money adopt, like packing your lunch, that distinguishes those that can save and those that are looser with their money. If you struggle with packing your lunch, you will struggle to save money.
You could potentially save $5 each time you pack your lunch, which is $25 a week or $1,250 a year. It’s an expense area that allows you to become more conscious of how much you spend and what you purchase. If you are a single person, you should be able to eat quality and healthy meals spending $75 or less per week at the supermarket, Whole Foods partially included. That’s $50 for the basic items (packing a daily lunch and light dinners at home) plus $25 for the steak or fish and a six-pack of beer on the weekend. If you spend more than $75 a week at the supermarket, you are not taking saving seriously.
When preparing your own meals, target spending $3 to $4 per meal (21 meals x $3.50 = $73.50). I chose this number because you could purchase microwavable meals for $3 to $4 each. It shouldn’t cost you more to prepare a meal for yourself than having a company prepare the meal for you. Cheap meals aren’t limited to the pasta, tuna fish, peanut butter and jelly basics—meatloaf, pork tenderloin, and chicken when portioned out, all break down to under $4 per meal including a vegetable side dish.
And avoid the vending machines. Saving $2 a day at the work vending machine adds up to $500 a year.
Avoid the Discount Oasis
Don’t overload your shopping at Costco. Buy in bulk the items you already consume. Pasta. Tuna fish. Peanut butter. Paper products. Don’t buy items you never purchased before in bulk. Skip the sale items that you’d never purchase if they weren’t on sale. It’s easy to enter Costco with a list totaling $100 of items you need and leave with a receipt for $200 that includes $100 of impulse buys. Costco always has tempting seasonal deals at the store’s entrance. Those aren’t deals. The savings aren’t true savings. To eliminate the spending temptation, load up on household goods like paper towels, toilet paper, laundry detergent, and fabric softener over a couple of visits in the span of a week. Then return your Costco card and receive a refund for the $60 membership fee.
Cut Your Vice
We all have vices. We all have activities or products that we repeatedly spend money on that can be reduced or eliminated. At one point I was drinking two individual Lipton Pure Leaf unsweetened iced teas a day at $2.50. Ten a week at $25. Forty a month at $100. I started purchasing a 64-oz. jug once a month, which I then refilled at home by brewing my own Lipton iced tea. My iced tea vice went from a $100 to $5 a month habit.
Skip the Starbucks Runs
Drink the free coffee at work or buy a Yeti and bring better coffee from home.
Assuming two Starbucks runs a week, which is what I averaged, you will save $500 a year. If Starbucks and coffee shops are your vice, if it’s part of your morning routine, if it’s also part of your afternoon routine, the savings will add up even quicker. This was a difficult vice for me to drop. The compromise I reached with myself was that I wouldn’t order coffee to go. I stayed in the coffee shop and read a book, worked on a report, or performed some other activity so that the coffee became an experience. If I spent an hour drinking coffee and being productive, that felt like a better value than grabbing a coffee to go and drinking it in my car or at work.
I enjoy finding coffee shops in new neighborhoods. In this way I take mini-vacations to new areas of Los Angeles, Philadelphia, Hong Kong, or wherever I am living, and see new parts of a city. This strategy also works well with microbreweries. Although…
Skip the Alcohol, Appetizers, and Desserts at Dinner; Cut the Weekend Drinking
I’m not saying to cut dining out completely, I’m saying we all know the little costs of dining out that add up to a larger bill. Cut those little costs out. Instead of half your bill being the main course, make 80% of your bill the main course; the other 20% is the tip. Cutting alcohol, appetizers, and desserts may be the second obvious habit that distinguishes a saver from a non-saver. If you struggle with these expenses, you will struggle with saving. Reducing the amount of alcohol you drink has two benefits. First, it lowers your expenses. Second, it lowers your tolerance, which means when you start drinking again during your travels it will cost less to get a buzz.
These lifestyle expenses vary by the individual, but everyone is spending at least $1,000 a year on unnecessary items. If cutting your lifestyle expenses feels like a burden, reconsider whether an around the world trip is something you still want to do.
Ditch Your Car for Public Transportation: $1,000 or more
This recommendation is specific to everyone’s unique situation. A car is a nuisance but you may need one to commute to and from work. Thus, I did not include this potential savings in the $10,000 a year total. However, if you are looking to change apartments and add housemates, paying a little more for a location near public transit makes sense…if you are then willing to ditch your car. If you need to purchase or lease a new car, a Corolla runs as well as a Camry which runs as well as a Lexus.
Evaluating your auto insurance coverage and pricing every two to three years is a good habit, whether you are saving money or not. Comparison shop and you may be able to save $20 a month / $240 a year for the same coverage with another reputable, nationwide insurance carrier. Don’t cut your insurance coverage to save money; saving $250 a year to lower your coverage isn’t worth the risk of higher costs if you have an accident. If you are trying to save money, evaluate your deductible and calculate how much cash you have on hand to verify you can cover the deductible amount in the event of an accident.
The physical ditching of your car requires careful calculations. At some point, before you leave, you should sell your car. It’s possible the sales price of your car does not cover the outstanding debt and you’ll need to cover the difference from your savings. If your car is paid in full, selling your car before leaving provides a nice cash windfall on top of your savings.
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Earn Money from the Gig Economy: $10,000
It takes money to make money. For that reason, this figure is not included in the total savings estimate. The gig economy has opened an avenue to earn money on your underutilized assets. That spare bedroom? Post a listing on Airbnb. That car sitting in the driveway after work? Start chauffeuring for Uber. Uber and delivery services like Grubhub, Uber Eats, and Amazon Flex look seem to generate cash on the surface but are difficult to measure financially in practice. The rates earned from driving may not cover your driving expenses. Maybe you clear (revenue less expenses) $5 an hour. Maybe you clear $10 an hour. What’s for certain is that since your costs are variable they increase with your revenue—you need to pay for gas you wouldn’t otherwise have burned. There’s the wear and tear on your car that’s difficult to quantify as an expense. There’s increased potential for an accident because you are constantly looking at your phone while driving in unfamiliar neighborhoods. |
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I believe the only gig in the gig economy that is worth the time and effort is Airbnb. You’ll earn the highest amount of money from an Airbnb rental for the least amount of effort. A spare bedroom on Airbnb can earn $50 a night and be occupied 25 nights a month. Your mortgage, home insurance, cable, and internet expenses are all fixed costs, meaning those costs are the same whether or not you rent the spare room. Your variable cost utilities like electric, gas, and water will slightly increase with a guest. You are adding income without adding significant expenses, which makes this the best option in the gig economy.
Don't let the gig economy distract you from your primary job. A promotion at your primary job will pay more over the long-term than part-time participation in the gig economy.
Don't let the gig economy distract you from your primary job. A promotion at your primary job will pay more over the long-term than part-time participation in the gig economy.
The Bottom-Up Budget
The money-saving techniques detailed above follow a top-down approach which considers an individual’s major expense categories and how to create savings within those categories. Once your budget parameters and fixed costs are set, the best way to save money is to create a bottom-up budget that tracks expenses are a more granular, activity-based level. Determine upcoming monthly expenses that will be charged to your credit card: food, $250; gas, $120; internet and cell phone, $60; oil change, $35; weekend activities, $200; etc. Identify the specific expenses that will be incurred in the upcoming month—then stick to that budget. Track your actual expenses to determine if you are running over budget in a certain area or if there are previously unaccounted for expenses—then cut your budget in other areas to reach the overall savings goal. Learning how to budget and save money won’t result in savings, unless you track and limit your expenses. You need to bridge the concept of budgeting with the reality of saving money.
401(k) Considerations
If you have a 401(k) account, do NOT reduce your retirement contributions. Reducing your 401(k) contribution percentage is a tempting way to increase saving for an around the world trip. I strongly discourage altering your 401(k) contributions. If you decide lower your contributions, don’t reduce the savings rate below your company’s match percentage. Any rate reduction beyond the company match is a loss of income. Don’t sacrifice long-term financial wealth for short-term activities when there are other areas for savings. If you are cutting your earnings to save in another area, then you aren’t saving. For example, even if your employer only matches 25% on your 6% contribution, that’s 1.5% of your salary. If you earn $75,000 a year, you’d be losing $1,125 in retirement income. It’s better to delay your trip two months and save extra money during that time period.
I’ve not discussed opening an investment account and placing your money in the stock marketing or the benefits of compounded interest. There are risk/reward options to increase your savings at a faster rate, but those options are beyond the scope of my expertise.
The Student Loan Dilemma
It’s possible but I don’t recommend traveling around the world with significant student loans. I learned these money-saving strategies because I graduated with $100,000 in student loans with monthly payments of $800-$900 depending upon interest rates. If your monthly payments are in the $200-$300 range, I think you could travel around the world with student loans, but you would need to save additional funds to cover those payments while you traveled. It’s possible to live and work internationally with student loans but it’s more difficult to cover the student loans when you are traveling around the world for a year and not working.
To wipe out my student loans, I moved back in with my parents and took what would have been my rent expense and applied that money to double and triple up on my student loan payments. It could be argued that I should have invested those funds instead, taken the higher percentage return on stocks, etc., etc., etc. but then who knows where the 2008 financial collapse would have left my savings. Following these recommendations enabled me to pay off my 15-year loan in five years, which included three years of living with my parents.
Debt delaying you from travel is not necessarily a bad thing. I think the student loan situation worked out well for me in the end. I would have loved to have graduated with no debt and started traveling around the world when I was younger. I think the delay made me more appreciative of the trip. I am more thankful that I traveled around the world when I was 33 instead of 23. I had more life experiences, more ups and downs, and a greater appreciation for the moment. When I returned, I was ready to move on with the rest of my life.
The money-saving techniques detailed above follow a top-down approach which considers an individual’s major expense categories and how to create savings within those categories. Once your budget parameters and fixed costs are set, the best way to save money is to create a bottom-up budget that tracks expenses are a more granular, activity-based level. Determine upcoming monthly expenses that will be charged to your credit card: food, $250; gas, $120; internet and cell phone, $60; oil change, $35; weekend activities, $200; etc. Identify the specific expenses that will be incurred in the upcoming month—then stick to that budget. Track your actual expenses to determine if you are running over budget in a certain area or if there are previously unaccounted for expenses—then cut your budget in other areas to reach the overall savings goal. Learning how to budget and save money won’t result in savings, unless you track and limit your expenses. You need to bridge the concept of budgeting with the reality of saving money.
401(k) Considerations
If you have a 401(k) account, do NOT reduce your retirement contributions. Reducing your 401(k) contribution percentage is a tempting way to increase saving for an around the world trip. I strongly discourage altering your 401(k) contributions. If you decide lower your contributions, don’t reduce the savings rate below your company’s match percentage. Any rate reduction beyond the company match is a loss of income. Don’t sacrifice long-term financial wealth for short-term activities when there are other areas for savings. If you are cutting your earnings to save in another area, then you aren’t saving. For example, even if your employer only matches 25% on your 6% contribution, that’s 1.5% of your salary. If you earn $75,000 a year, you’d be losing $1,125 in retirement income. It’s better to delay your trip two months and save extra money during that time period.
I’ve not discussed opening an investment account and placing your money in the stock marketing or the benefits of compounded interest. There are risk/reward options to increase your savings at a faster rate, but those options are beyond the scope of my expertise.
The Student Loan Dilemma
It’s possible but I don’t recommend traveling around the world with significant student loans. I learned these money-saving strategies because I graduated with $100,000 in student loans with monthly payments of $800-$900 depending upon interest rates. If your monthly payments are in the $200-$300 range, I think you could travel around the world with student loans, but you would need to save additional funds to cover those payments while you traveled. It’s possible to live and work internationally with student loans but it’s more difficult to cover the student loans when you are traveling around the world for a year and not working.
To wipe out my student loans, I moved back in with my parents and took what would have been my rent expense and applied that money to double and triple up on my student loan payments. It could be argued that I should have invested those funds instead, taken the higher percentage return on stocks, etc., etc., etc. but then who knows where the 2008 financial collapse would have left my savings. Following these recommendations enabled me to pay off my 15-year loan in five years, which included three years of living with my parents.
Debt delaying you from travel is not necessarily a bad thing. I think the student loan situation worked out well for me in the end. I would have loved to have graduated with no debt and started traveling around the world when I was younger. I think the delay made me more appreciative of the trip. I am more thankful that I traveled around the world when I was 33 instead of 23. I had more life experiences, more ups and downs, and a greater appreciation for the moment. When I returned, I was ready to move on with the rest of my life.