Backpacker Expense Management 101: Saving – Part 2

After all of the Candelaria excitement, I’m getting back to the financial side of life here on the road.  In this series I’ve been sharing my strategies for how I saved up enough loot to be able to responsibly travel around the world for two years without a steady income.  If you’re just joining the blog now, below is the list of other posts in this series:

Topics in this series:

In Part 1 of saving for world travel or any other goal you may have, I sketched out a macro plan of attack to get the savings process started.  Here in Part 2, I discuss some more specific savings strategies to consider once you have a more broad plan in place.

Sell it All

There is a lot of literature on selling all or most of your possessions to rack up some cash for traveling so I won’t belabor this point or drone on about how selling everything is like a giant weight being lifted off of one’s shoulders.  Selling everything is kind of an obvious strategy if your intentions are to travel for a longer period of time.  If you’re planning a one month career break or trying to save up for a goal other than travel, this most likely isn’t a realistic strategy.  You may want to do a quick inventory of your belongings and see if there are any obvious items that are saleable and that you can live without, but you’ll probably want to hang on to your house or lease.

When I moved to and from Amsterdam I sold off almost all of my durable goods such as the car and most of my furniture (I couldn’t in a million years part ways with my pillow-top mattress or my Greek carpet).  I was a renter so I didn’t have to worry about what I imagine is a cumbersome and possibly expensive process of selling a house.  The benefits of selling everything for me were two-fold:  I gained liquidity from selling a bunch of my fixed assets and I avoided storage costs for an unknown number of years.  All of my possessions that weren’t sold off comfortably fit in my parents’ house where I hope Brutus, the family dog, is making good use of my bed.

Couponing

Oh coupons!  Who doesn’t love them?  I believe their popularity is growing in the U.S. and there is even a TV show about people who are extreme couponers that share their tips on how to “save money” using this technique.  I use the quotation marks though in that last sentence because I think that the whole couponing phenomenon is a strategy that should be approached with caution.  Buying something because it is on sale or because you have a coupon for it is not a wise consumer decision if you didn’t need said item in the first place, and the value created by saving through couponing has a positive relationship with the quantity you are purchasing.  This is why I think this strategy is only suited to households of more than one person and for people whose saving goals are other than long-term travel.

The problem I see with coupons and sales alike is that they entice people to make a purchase based solely on external factors before a need was even established – this is basically Marketing 101 in a nutshell.  When you’re saving to travel, you want to focus on purchasing less, as opposed to getting a good deal.  So in essence, you want to be looking at coupons and sales from a backward perspective.  You decide what you absolutely need to purchase and then seek out the deals to buy it as cheaply as possible.

One particular savings method I never got to try out but I think would work in theory, is purchasing discounted gift cards from a site such as Plastic Jungle to buy something you were already planning on purchasing.  Since gift cards can be used as cash in retail stores, you’ve basically given yourself a discount before even heading into the store and taking advantage of any sales.  Again, this strategy is only valuable to you as a savings tool if you were already planning to make a purchase.

Slowing Down

Time is money.  This statement is proven by the fact that express services are priced at a premium over standard services.  If you want to get somewhere in a hurry, you’ll pay to fly as opposed to taking a train or a bus.  If you want fast food, you’ll pay more for the meal than the equivalent made on your own time.  Amusement parks now have “Fast Pass” tickets that you can purchase if you don’t want to spend all day standing in the queue.  While the benefits of slowing down can be observed and quantified in these hypothetical situations, the main idea here is a more subjective suggestion of slowing down your life in general.  I know I’ve been guilty of making too many promises and trying to do too many things at once.  Not surprisingly, such a fast-paced lifestyle can tally up to greater expenses.  This fact especially holds true while you are traveling.  The slower you travel and the more time you spend in each place, the less on average you will end up spending since transportation will be one of your biggest expenses.  One of the things I did to slow down my life was become a hardcore reader.  Books are a cheap form of entertainment and they take up a lot of time; it made sense for me.

Food Time Management

I think of this topic as an extension of the ‘Couponing’ and ‘Slowing Down’ strategies.  By taking the time to plan out your meals in advance, you are less likely to fall into the trap of buying things at the grocery store simply because they are on sale and you will be less likely to fall into the trap of eating fast food or eating out more often.  Before stepping foot in a grocery store, I would plot out all of my meals for however many days I was shopping for and make my purchases within those constraints.  I also stayed away from processed foods, which admittedly is much easier to do in Europe than it is in the U.S.  Aside from the health benefits, it is definitely much cheaper to buy raw fruits and vegetables and cook from scratch.  All you need in your pantry is olive oil, garlic and some spices and you can prepare just about anything in your kitchen in a minimal amount of time.

Specific Areas Where I Cut Spending

  • Shelter – I sought cheaper accommodations and moved in with my best friend Elisabete.  This decision proved to be one of the best I made from more than just a savings standpoint.  The memories we shared in that apartment are priceless!
  • Clothing – As I mentioned in the previous article I put out a cease-and-desist order when it came to clothing and accessory purchases.
  • Make-up – After analyzing my spending habits, I was also shocked at how much make-up was costing me over time.  I decided to make do with what I have and not purchase anymore.  Plus, on the backpacker route, I think you lose street credibility if you’re seen toting around any.  I actually do keep some foundation and my red lipstick handy (back off, it’s my trademark) in case I fancy a bloke but honestly, a six pack of beer is probably the more cost effective and thus rational option for attracting a member of the opposite sex if that is the main goal.
  • Travel – This sounds odd but when I moved to Amsterdam, I was very proactive about visiting the rest of Europe and would often go on city weekend retreats.  Though I still haven’t seen all I’ve wanted to see in Europe, I did scaled back on my Inter-Europe travel in the interest of other worldly pursuits.

And Areas Where I Didn’t Cut Spending

  • Happy Hour – I will be completely honest here and say that going out to happy hour was not something I cut down on, and I am both well aware and grateful that I was fortunate enough to be able to meet my goals without having to do so.  Going out for drinks is a standard part of expat life in Amsterdam and for me, I wanted to make my last year in Amsterdam with all of the amazing people I’ve met count.  I don’t think I completely threw caution to the wind in this respect, but I definitely adopted the approach of being a “Yes Woman” when it came to invitations to go out.  I could have saved a lot more money if I had reigned in the partying, but I was fortunate enough to not have to and I don’t regret one bit of it.  I’m sure this doesn’t help or motivate fellow savers, but in interest of complete disclosure I felt I should mention this tidbit about my spending behavior.

Assuming my saving advice was as useful in practice as it should be in theory, you should be well on your way to reaching your savings goal for traveling.  The next step of course is taking the plunge, getting on the plane and starting the next chapter in your life.  To this end, my final article will discuss my strategies for managing your expenses on the road so that you don’t end up in the sub-optimal situation of running out of money before you are done traveling.

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