One Year of Saving Like Maniacs

by Kim on January 5, 2011 · 24 comments

One Year of Saving Money

Warning!  The alternative title of this post is More Than You Ever Wanted to Know About Our Money.  If you are currently driving, performing surgery, or otherwise in a situation where you must stay awake for the next five minutes, I suggest reading some other time. 

As of January 1, 2011 Brian and I have saved 55.94% of the money we need to reach our savings goal of $60,000.  We’re getting closer, but some days it feels as though reaching that $60,000 mark is a million miles away.  One of the biggest thrills I have these days is transferring money into our savings account on payday.  When I do that, it feels as if I’m making a concentrated effort towards our goal, instead of just obsessively reading travel blogs and purchasing the occasional pair of quick drying underwear.

Another cheap thrill of mine is creating different savings scenarios in my head and then calculating how much additional savings those scenarios could add up to over time.  I was a straight C student in math, but apparently I did inherit something from my accountant father.  Because of my crazed calculating, I know that Brian and I need to save $2,203 each month in 2011 to reach our goal by the end of the year. 

As I’ve said before, our goal is to travel with $50,000 and save $10,000 for re-entry back into the-land-of-people-that-wear-khakis-and-pay-bills.  While I’m hoping that we will never have to return to that land, right now we have to plan as though we will. I was feeling good about our $60K goal until it dawned on me that there are going to be a few costs associated with maintaining life back home while we’re on the road, such as:

  • Brian’s student loan at $105 per month ($1,260 per year)
  • Kim’s student loan at $85 per month (but will be prepaid for most, if not all, of the year we travel.  $510 for six months, worst case scenario)
  • Vet and food costs for our doggers ($1000)
  • Travel insurance ($1000, estimated)
  • Federal and state taxes for 2011 (based on 2009 taxes, we should expect to pay about $600)

So, taking these additional expenses into account our new savings goal is $64,370 or $2567.25 per month for the next twelve months.  Yikes. 

In the past two months (November and December of 2010) we managed to save $2,197 in November and $3,132 in December, an average of $2,664 per month.  This means we are on track to reach our $2,567 per month goal.  Of course, I was paid three times in December (a phenomenon that happens only twice a year like Mathew McConaughey wearing a shirt or the Bengals winning a football game) which artificially increased our December savings.  Another thing to note, and I don’t even want to go there right now, is the reality that we have to sell our house.  And we might not be able to sell our house. Please, please powers-that-be let us sell our house. 

So, all of that number crunching is meant to demonstrate one thing.  Our end-of-the-year savings status is (drum roll):

Cautiously Optimistic

RTW travelers, I have two questions for you:

  1. How much money did you save to come home to after your trip?
  2. How much should I plan to pay for travel insurance per person?

If you’ve got any insight, please share in the comments.  Thanks!

RELATED POSTS:

{ 19 comments… read them below or add one }

Jill - Jack and Jill Travel The World January 5, 2011 at 8:40 pm

Hey there, it’s nice to see other RTW’ers savings goal. For re-entry (in case that’s what we’ll have to do), we’re budgeting the same amount that we’re spending on the trip itself.

Basically, we’re going to take a look at how much saving we’ll have by the end of March and say, ‘OK, 50% of that will go towards the trip.’

But we’re very conservative… and realistically, we’re probably going to spend more than 50%… it just sounds like the responsible thing to do right now :p

Reply

Skott and Shawna January 5, 2011 at 9:31 pm

Well, to be honest we are hopefully looking at about 20K to come home with. Like Jill though, we are very cautious. We will be renting our home while we are away, but it does mean that we will immediately step into a mortgage upon our return. Some of that 20K will also be in case something needs to be done while we are gone. Here’s hoping we don’t have to hear stories of our furnace needing replacement, or the roof leaking (knock on wood), but I sure as hell don’t want to come home early because of those things, so we might as well stockpile the cash. Secretly in my head, I am just as much bankrolling that money to extedn the trip if need be, as I am saving it for a cushion to come home to.

I have zero insight on travel insurance, as it is something we have yet to grab, but I will keep you posted when I find out.

Reply

Gillian January 5, 2011 at 9:41 pm

You guys are rocking the saving!! Seriously you saved more than $3000 in the month that contains Christmas!! Three paydays or not…that rocks!! It will be easier as it gets closer…every dollar spent will be weighed against what it could get you while on the road. We used the ‘how many days in Thailand’ comparison – it works!

We planned on $10000 once we got back BUT we had jobs to return to and had sold our house so actually had more in the bank. It’s a good number though.

Travel insurance:we paid about $600 each PLUS we had to pay $100/month (for both of us) in BC Health Insurance to qualify for travel insurance so, in the end, about $900 each. I know…it’s a lot…but I strongly believe it’s our responsibility to look after ourselves in case something horrible were to happen. We claimed twice for minor things that wouldn’t have broken the bank..but you never know.

Great new look by the way!! Cheers!

Reply

Kieron January 6, 2011 at 12:03 am

It’s nice to see other people’s numbers, you’re way ahead of where we are and we’re leaving 6 months before you!

We’re aiming to have about $40,000 to travel with and we’re about 50% of the way there. We’ll only have about $5,000 to come home to and whatever’s left over from our travel money (if any) – we don’t feel like we need that much as we’ll always have a bed to come back to at our parents and should be able to find employment pretty easily if times get tough.

World Nomads is the site you want to check out for long-term travel insurance. http://bit.ly/gnxNXp

Reply

Caitlin January 6, 2011 at 7:20 am

I have no tips for you, b/c I’m not planning a trip like this – sorry! But, 1. I am so super impressed with your savings ability, and 2. I’m depressed now b/c I’m in the world of khakis and I watch the Bengals! sad….

Reply

Erin Smith January 6, 2011 at 8:00 am

I just started using Mint last night and it was really enlightening to see all of my finances in one place at one time. It was eye-opening but also helpful for me to set my goals. Good luck with your savings. I am so happy I found this blog, you and Brian are inspiring.

Reply

Kim January 6, 2011 at 6:27 pm

@Jill- Wow, I am seriously impressed that you are saving half to come home to. I can’t say I wouldn’t do that myself if I had the funds. I think it is smart to be conservative.
@Skott and Shawna- I’m also impressed with 20K. You guys are awesome! We are going to try to sell our house, but if we can’t, we’ll be renting it out. If that’s the case, we’re going to have to change our departure date and save more. One of the major reasons I want to sell is the stress of coming home to a mortgage payment without a job! Though, I guess we could just continue to rent it out and get ourselves an apartment… something to consider…
@Gillian and Erin, thanks for the kind words and support. Erin, I’m not sure what Mint is but I’m going to google it!
@Kieron- Thanks for the tip on the travel insurance. Also, I think your plan is a good one. You guys will have more than enough. Six months before us means you are only six months away!!!!

Reply

Skott and Shawna January 7, 2011 at 9:35 am

Mint is a “track your spending” type of software. I have never used it, but my sister and brother-in-law love it for tracking family expenses etc. I think it’s pretty …ummmm..nifty?

As far as the house thing goes…rent vs sell is a big debate no doubt. Obviously it depends upon the market, and everybody’s individual situation. Our story is that we did buy this place in late 2007, a time when house prices were rising, but still before the little Saskatchewan boom. Although prices have flattened now, they are still substantially higher than they were when we bought. If we sold we would absolutely be in fine shape short term. We would pay off our mtge and likely have 120-140K profit to play with…however, when we return, we then probably would need to be looking for 300K minimum for a starter home that would likely need a ton of work. More likely closer to 400K.

Now where this gets even dicier is…both Shawna and I are in commission-based sales jobs, and would heavily consider something similar upon returning. Generally in Canada (or at least my province), you need two years proof of income before they give you a mortgage. It might work for some, but we would rather not be put in that situation. Heck even if we don’t go into commission based jobs, banks have tightened their belts as to their lending….all in all, it was a really easy decision to rent for us (especially considering my sister and bro-in-law live 6-7 blocks away and will help in “landlording” for us while we are away). However it seems like you do hear of a lot more people who “sell everything to travel the globe” as opposed to “rent everything and travel the globe”, so it obviously depends on the individual situation.

The other factor to consider is if you feel you will be coming back home. Many travellers have more of a “we might never come back” feel to their trips. If that is true, sell it now and why worry about the headache. For us, although the possibility exists that we may extend the trip a bit, it is unlikely that we will not come back home at some point. Of course, as I type this it is -25°, so let’s just say we will be very flexible.

I nice piece of land in an undeveloped area of Central America sounds kinda nice right about now, eh?

Sorry for the long-winded reply…I should have just put this all in my own post… :)

Reply

Kim January 7, 2011 at 8:14 pm

Hi Skott. This is a fabulous reply and I think you hit the nail on the head as far as all of the considerations when it comes to selling vs. renting out the house. It sounds like you guys are golden as far as your house value is concerned. Brian and I bought in 2007, just before the height of the market. We bought a very inexpensive house (for Portland) and one we could easily afford. However, now that housing prices have deflated,we are in a position that, if we sell, we probably won’t make much money on it. In a perfect world, I’d like to keep the house, for an “investment” if nothing else, but if we are able to sell it than I think that living in an apartment for a few years once we return from our trip will be good for the pocketbook. I guess our tricky situation is that I hope not to return to a cube job after traveling (I want to write full time) and if my dreams come true I will certainly be happier but also poorer. So, how’s that for a long-winded reply to your long-winded reply? ;) And, yes, a piece of land in Central America sounds absolutely fantastic right about now :)

Reply

Skott and Shawna January 8, 2011 at 9:19 am

But how much will you lose when you sell it? If you are going to lose 40K over the purchase price, well that really sucks…in that case, provided you can find someone to help act as landlord, you might want to consider renting. If you will break even or lost a few thousand, then yeah, selling would likely make more sense.

However although many of the travel community don’t appear to be focused on things like long term investment (I could be wrong, but…) having a house is often a great thing for that exact reason (as you mentioned). Even if you are a full-time writer, having someone rent this place and pay your mortgage at the same time is pretty awesome. 20 years down the road, you sell this jewel, and all the profits are yours (less the governments share of course).

Reply

Kim January 8, 2011 at 9:41 am

Hi Skott. I think we will be able to break even on the house. If it becomes a matter of losing 40K there is no way we’d sell it, we’d just rent it and pay the difference in mortgage (I guess maybe something I didn’t say before is that we’d just rent it anyway if I thought rent could cover our mortgage). When we bought the place, Brian and I thought it would make a great investment since it is the perfect rental house. If we do sell, which I hope we do, I know we might kick ourselves in 20 years wishing we still had the house. Of course we bought in the “next big thing” neighborhood… and we’ve been here for five years and it’s always five years from becoming the next big thing! Ah, learned our lesson on that one. Thanks for all your insight.

Katie January 17, 2011 at 7:32 am

Best of luck to you with selling your house! I am currently trying to sell my condo so I can eventually take a long term trip as well. Unfortunately, based on what I could get in rent for it, renting it is not an option (likely at least a $600-700 differential each month). I also wouldn’t want to have to deal with coming back to a mortgage payment right away – or deal with the stress of maintaining it or paying someone to maintain it while I’m gone.

Good luck!

Reply

Jason January 21, 2011 at 2:39 pm

I am really impressed with how much you guys are saving. You should easily meet your goal. We, a family of 3, are hoping to travel around the world as long as we can. Our goal is to only spend $35,000 a year for 2 years, and hopefully resettle somewhere else when our travel funds run dry. I am not sure I want to come back to the rain and gloom of the Pacific Northwest.

Reply

Kim January 21, 2011 at 3:35 pm

@Jason- on a day like today I totally hear you about avoiding the doom and gloom of the Pacific Northwest. I was on someone else’s travel blog this morning and they tracked the days of rain the had on their RTW and it was 11. Eleven!! I almost cried tears of jealousy.

Wow $35,000 a year… I need to relook at your blog but where are you planning on spending your time? I’m really hoping that our budget will keep us going for more than a year. Picking the number felt almost like playing pin the tail on the donkey. We closed our eyes and spun and 60K is where we landed. Though, after checking with other RTW’ers, it seems like pretty spot-on. Of course, I know we could get by on much less. I’ll check your blog to find out more.

Reply

Jason January 21, 2011 at 4:31 pm

Our plan is to travel slow. The slower you travel, the cheaper it is. We plan to rent places long term and stay at least a month at each place we visit. The three of us staying in hostels and eating out for every meal would drain our funds quickly. And, transportation costs add up quickly. If you stay put, your transportation costs go down.

Reply

Claire February 1, 2011 at 8:47 pm

I travelled for 6 months and still haven’t really tallied up the cost of it all… I will one day when I can handle it (or maybe when the credit card debt is dealt with) but I think it came in around $20-30K.

The trip itself was pretty much tracking as it should in terms of cost. I’m not a 5 star girl by any means, but I didn’t have a really strict budget that I needed to stick to, and could afford some luxuries along the way.

But – I massively underestimated my costs setting up here in Canada, my home for the next couple of years. By the time I factored in rent, a work wardrobe (it wasn’t feasible to bring along), some essential furniture, I’ve racked up a little debt getting settled.

Reply

Kim February 1, 2011 at 9:08 pm

@ Claire- yep, that is actually my biggest fear. I know we’ll have enough saved to travel with but coming home is this huge unknown. We plan to save about 10K to come back to, but will that be enough? 7 years ago when we made a new start in our adopted home of Oregon, 10K would have seemed like a fortune, but now it seems like a teeny bit of money when you take in to consideration that we will both be looking for jobs. Argh. Anyway, that’s just the way it’s going to have to be!

Reply

LivingIf February 1, 2011 at 9:58 pm

Good travel insurance, for an American, cost us $680 each, per year, from STA Insurance. We spoke to someone that actually had to use their insurance due to an accident and said they were treated great and had no problems getting claims paid.

Given our previous travels to over 30 countries, we estimated that we needed $100 per day on the road, including airfare and travel insurance. This is $36.5k per year for two people, equal to what Jason said. We saved north of $100k for the trip we’re on.

You can see how we are protecting our money and not paying bank fees while on the road here: http://www.livingif.com/moohla-management/

Reply

Kim February 2, 2011 at 6:19 pm

@Livingif So what you’re saying is we have enough money saved to travel for a year RIGHT NOW?!?!?!

Thanks for these tips. Also, FANTASTIC resources that you have there on your blog. That was one of the best articles about managing money on the road that I have ever read. Thanks for the heads up.

Reply

Leave a Comment

CommentLuv badge

{ 5 trackbacks }