Traveling on a shoestring Part I: Small savings add up

Dear Mike,

It's finally sinking in. All the planning, all the saving, all the buying of necessary detritus. All the selling of our unnecessary detritus... We are going on a road trip, and it will be epic. Now that the article has come out in GoTriad, we are running into people all over Greensboro that want to know more about our trip. Most of the responses we get are, "That's so awesome! I wish I could do that." Or, "You guys must have saved a lot of money for that."



Well, here's the thing: Anybody can do it and you don't need a lot of money. If you had told me four years ago that I would be able to do such a trip I would have thought you were crazy. I had a lot of credit card debt and saved little to no money from month to month. I lived hand-to-mouth, so to speak and the idea of being able to take off this much time from work and travel for this long would have meant putting more expenses on the plastic. So what changed? Well, I thought I would write a little bit about that so that other people can do the things they wish. Without going into too much detail, here are the steps that Kristen and I took:

• Get out of debt with a high amount of interest. I had racked up a bunch of debt on my credit card leftover from college and it was time for it to go. For a long time I only made the minimum payments and once I started making bigger payments it was so disheartening to only really see the interest being paid off. Luckily, I always made my payments on time, as meager as they were, so my credit was never affected. But, like a cloud hanging over my head, it just never seemed like it was going to go away. So one day, about 2 years ago, I walked into SECU and got a small unsecured loan that paid off my balance completely. With the regular payments that they scheduled for me, it would take me 33 months to pay off my loan, but I wasn't paying the same ridiculous percentage that I was paying on my card. Plus, I saw the light at the end of the tunnel, I knew when it would all be over. Then, anytime I had some extra money would use it to pay more of the loan off. Guess what? I paid it all off last June, in a little over two years time. I became debt free. Kristen was smart enough to not get herself in this position in the first place. She does still have student loan debt, but the payments are much lower with a much better interest rate.

• Make a budget. At the beginning of June last year, we sat down and made a list of all of our mandatory monthly expenses. Things like cell phone bills, rent, utilities, gas, food, and other such things. Then we looked at what we could cut back on. What didn't we really need? Could we somehow lower any of our other bills? We had already moved into a house with another couple to save money on rent, and neither of us had a car payment which really helped out. I figured that my mandatory expenses were about half of my monthly take-home salary. So where was the other half going? Out the window every month, adding up little by little over time. Going to eat out was probably our biggest expense by far, but it always felt like we were never eating well. Since we had this road-trip in mind while we were making a budget, we decided that we could afford to put about 40% of our monthly salary in savings. For me this was pretty easy because I went from paying off a loan every month, to just putting that money in savings. It's always easy to put a little extra every month, too, since you are saving towards a goal (not paying down debt). I get some supplemental income occasionally doing freelance design and photography. Anything extra that I made went right into savings since I didn't need that money to live month to month.



• Think in terms of one year increments when you are trying to save. $50 saved a month might not seem like that much. But $600 a year is quite a lot. If you could skip eating out for lunch just 7 times a month, you could save $50 a month easily. I decided to drastically cut back on getting coffee at coffee shops, and instead grind and brew my own at home. Instead of paying about $50/month on coffee, I was instead paying about $5-10. If you can come up with 3 things like that in your life that only require minor changes, you can then save almost $2000 extra a year without even really changing your lifestyle.

• Start a side business that you love. Besides the fact that you can write off expenses on your taxes, just making a little bit of extra money each month can add up. Plus, you are doing something that you love and you might decide you want to make a career out of it later. I have a side business for photography and design. Any equipment I buy, and film processing that I have done, any materials I purchase for jobs I write off. I keep all my relevant receipts stuffed in an old envelope and dump everything out and sort it at the end of the tax year. Kristen still had ties to her old job at Grassroots and the Carolina Theater and would occasionally get a chance to work events and the box office for them. Even 5-10 extra hours a month can add up.

• Borrow or rent things instead of buying them. Borrow a lawnmower once a week, split a studio to work in, rent equipment that you don't need year-round. Look on craigslist for trades, or deals on items that might only be six months old. Keep a mental or physical list of things you might need and ask people if they have them at yard sales or thrift stores. If you need something, see if any of your friends on Facebook can help you.

• Be careful what you spend your money on. I have actually found that now that my spending has to come out of my savings, I'm a lot less likely to spend it. With a credit card it was easy, "I'll pay for it later!", but once you know all the hard work that it took for you to earn your cash, you'll be more reluctant. I also like to think of how many hours of my life it will take to pay for something. Say you make $10/hour at your job, then it will take 20 hours out of your life to pay for a new iPhone, or 8 hours to buy a new pair of shoes.



Those choices, over the course of the last year, has allowed us to save almost 50% of our combined income. So, how do we stretch that money? I'll post more on that in Part II. Tomorrow we depart for Savannah and the trip officially begins. We shall then begin regular posts.

~Mario