How We’re Saving for Our RTW

by design on December 8, 2010 · 21 comments

Brian and I aren’t rich.  We don’t have trust funds, inheritances, settlements or any other secret stash of money that would enable us to quit our jobs and gallivant around the world.  Nope, we saved for this the old-fashioned way: penny by penny for years and years.  By the time we leave for our trip in early 2012, we’ll have been saving for over two and a half years. 

How we save

Everyone has their own system, and what works for us won’t necessarily work for you.  We split our money into five different accounts and then automatically dole out money into those five accounts as soon as we get paid. 

Account #1 Retirement

We both have retirement funds set up through our employers and we also have individual money market accounts that we invest in.  The money goes to our investments pre-tax, so we don’t even miss it.  Granted, when we quit our jobs our investment in these accounts will be zilch, but at least we are saving for the future now while we can.

Account #2- Spending Money

Brian and I each have our own checking account for personal spending money.  We each put 27% of our paycheck into our personal accounts (this isn’t 27% of our combined income, but 27% of our individual take-home pay) .  We use this money on groceries, entertainment, and new purchases like running shoes.  

Account #3- Joint Checking (aka Bill Money)

Brian and I contribute 36% of our combined income to our joint checking account.  Our joint account pays the mortgage and all of our utilities as well as our sporting team fees (we both play soccer) and other large-ish expenditures like vet bills and doctor deductibles.  If we have money left over in this account when the next paycheck hits, we transfer it to our world travel fund.

Account # 4- Vacation Fund

Each month we contribute 6% of our combined income to our vacation fund.  This fund is different from our world travel fund and we use it to go on vacation right now!  Life is short, and we don’t want to miss out on all of the exciting adventures we can go on now with friends.  Plus, our families are in Ohio so we fly back fairly regularly and this fund pays for those trips.  Generally we use this money for small-ish trips like cabin rentals, ski lessons, or weekend adventures to the Oregon coast.  If we’re paying for a hotel or plane ticket it comes out of this account.  As we get closer to our RTW launch date, any leftover money in this account will go to our world travel fund. 

Account # 5- World Travel Fund

Finally (and this is the fun part) we contribute 32% of our take-home combined pay to our world travel fund.  Likewise, any extra money that comes in (Kim’s freelance writing gigs, birthday money, change we find on the street) all goes towards the world travel fund.  We save hundreds of dollars a year just collecting our loose change and depositing it in the bank. 

Cutting back and spending less

We’ve cancelled all of our magazine subscriptions, quit the gym and hike or run for exercise, sold our car (and the subsequent insurance), and cancelled the cable.  We pack our lunches, and bought a 750 square-foot house with a mortgage we could easily afford.  We buy everything in cash.  If we don’t have the cash we don’t spend the money, period.  We bike to work and drive only on the weekends.  Brian changes the oil in our car.  We fix or mend things whenever possible and we browse thrift stores and vintage shops for clothes.  Our TV antenna is made out of aluminum foil and a metal clothes hanger.  You get the point.  While many people have iphones and ipads and i-whatevers, we’ve stuck with the trusty laptop and ancient flip-phones.  We drive a 1995 Nissan Altima.  It was totaled in a rear-end collision, but Brian banged the bumper out and it’s good as new… almost.   

 Where we could do better

Our weaknesses are eating out and buying beer.  Bad, bad, bad!  But the beer in Oregon is so delicious and the food in Portland is amazing. 

We rarely use our credit cards and so we miss out on accumulating air miles, something we could obviously use.  We also aren’t currently enrolled in any frequent flyer programs.  We don’t have any of our money in high-yield savings accounts (do those even exist anymore?)

We still buy organic food.  And I still try to buy products like shampoo and conditioner that aren’t laden with evilness.  I just can’t let myself rub those chemicals into my scalp. 

We should probably ditch the vacation fund and just put that money towards our trip.  But I have such strong wanderlust that I fear I would sink into depression without even the possibility of mini-adventures while we are in planning and saving mode.