Saving for Long-Term Travel, Part Three
Continued from Part Two
Developing My Saving Habit
Since beginning my career as a freelance editor in late 2007, I have religiously directed about 50% of every cheque into my savings account. Now, before you freak out, you must understand that a freelancer’s gross is not her net: I earmarked that 50% into different categories—Income Tax, Savings (long term and slush fund), RRSP Contributions, and Operating Expenses. Then, whenever I used money from my slush fund, or paid my income tax, or bought office supplies, I would subtract it from the designated column on my spreadsheet and withdraw the money from the savings account. (I also keep my collected HST in my savings account and track it in the same spreadsheet).
My first year as a freelancer was a catch-up year. They say you should have three to six months of savings to go freelance—I didn’t have that when I was laid off from my publishing job. While I didn’t plan to go freelance, I did start earning a freelance income around the time my job severance period was up. But even though I started working right away, I still went two months without a pay cheque because the invoices submitted for the work I did in December weren’t paid until the end of January (and those two months are rather expensive).
It took me a year to catch up with myself—every cheque I got paid bills and went on my credit card, so I NEVER had any money. I also took a trip to Egypt, which sucked up my extra pennies and motivated me taking on more and more work. But after a year of working hard, I caught up. And in my second full year as a freelancer, the money started building up. I didn’t need to bleed from my savings to cover my bills or my big trip that year. The balances on my spreadsheet finally started to grow.
Saving for the Big Trip
Financially, 2010 was great; personally, not so much. By the end of it, I knew I had to shake things up. That was when I decided to travel.
During this not-so-good year, I didn’t spend very much money because I didn’t take any trips and I had two months of free room and board in the summer. Then, once I decided that travel was in my future (a decision I made during the fourth quarter of 2010), I started re-directing extra money into savings. For example, the money left over in my income tax and HST columns when those bills were paid for the year became Savings. And, all of a sudden, I had some respectable savings. I didn’t have to start from ZERO in my newly created “RTW Savings” column.
I soon realized it was going to take me about 18 months to extricate myself from my ordinary life—I had a house to deal with, on-going projects to complete, and some season-specific plans for departure. That gave me 18 months to step up my passive saving efforts, and because of the way my plans took shape, it was actually closer to 20 months.
I also started thinking about how I spent my money. My usual frugal approach to life stepped up as I began to shift my consumption from being a home owner with a sweet home office to a traveller with a laptop in my backpack. I stopped buying the things I wasn’t going to need, I cut some of my expenses, and I thought twice about frivolous impulse spending.
It’s also worth noting that I spent a lot of time working in those 18 to 20 months. And when I work a lot, I don’t spend a lot of money. Part of the reason I needed to shake things up was that my social life was drying up—many of my friends had moved away (or were busy with partners and babies), so it turned out that it was easy to let the money pile up, instead of having fun on a regular basis. Despite being a workaholic, my trips to Cuba, the UK, France, and Cuba again helped to break up the monotony in 2011.
I wouldn’t recommend the pace I maintained in the months leading up to my departure date. In the first 6 months of 2012, I earned over 65% of my typical annual income. Add to that the travel prep, house renovations, and moving/packing up my life, I was so wound up by the time I got to Thailand that I had to spend a month doing basically nothing (and I wasn’t even on a beach!).
Stepping Up My Frugality
These are the things I did in the months before I left to ramp up my savings. These measures are all are on top of my usual frugal habits:
- I stopped buying stuff—almost everything I bought was for the trip or the trip preparation; no more new urban living clothes or accessories or books or movies or housewares etc.
- I also told my family and friends that I didn’t want any more stuff as gifts—instead I got lots and lots of gift cards for Christmas and my birthday.
- I became more conscious of disposable income; when choosing between cooking my dinner and ordering in, the dream of my travels often (but not always) influenced my decision.
- I sold things, both in a garage sale and on Craigslist. It wasn’t a ton of stuff (I still own several rooms’ worth of furniture) but many items were converted into cash.
- I stopped paying for cable in May 2011. My housemate and I cancelled it specifically to save money, and had it actually been turned off, it would have been a lifestyle choice worth boasting about, but I ended up living with free cable until my departure in July 2012.
- I moved into our basement apartment and we rented out our house. This was only possible because my co-owner and housemate got a job in a different city and moved out. It was all part of the 18-month life extrication plan.
- We renegotiated our mortgage, which reduced our overall house expenses and allowed me to reduce my living expenses even further for those months I lived in the basement.
- I used one of my two Aeroplan credit cards whenever I could. This didn’t really save me money, but by the time I left in July of 2012, I had 135K points. (This is making it possible to travel around North America this summer without liquidating my retirement fund!)
Continue to Part Four