Part 3 in the series on our decision, our saving and our spending. Missed parts one and two?

So we made the decision to travel and saved the money, but how we’re going to make that money last is probably more important than how we saved it in the first place. It should be obvious by now that we will not be staying at 5-star resorts, but we do still plan to enjoy ourselves. I think when it comes to spending money while traveling there are three main categories: lodging, food, and transportation.

Let’s talk about food first, since that is probably the easiest to explain. Eating out three meals a day is simply not an option, both from a fiscal and a health perspective. We travel with two items to help us prepare our own food, a squishy bowl and a pair of sporks. Wherever we’re living we should generally be able to shop for food at a local market and prepared small meals ourselves. Outside of that, street food is totally in play as long as there is a long line of locals eating the same. By eating with the locals we’ll taste more authentic foods and have far more exciting adventures battling the revenge of Montezuma than we could ever have with a year’s supply of energy bars from the states.

When it comes to resting our heads there are a few different places we plan to use often. The most obvious, yet rare in the USA, is the hostel. Hostels are common across the entire globe, are nearly always affordable, and often have private rooms as well. One step up from hostels are small mom & pop hotels. Lastly, and probably our favorite option, is couchsurfing. You can see our earlier post on couchsurfing here. We participated as hosts for our final 8 months in DC and had nothing but great experiences with our CSers, many of whom we plan to see again on our travels and are likely reading this website right now.

The last major source of our trip spending comes with regard to transportation. Anyone who is thinking about meeting us somewhere has already realized how expensive international airfare can be…which is why we aren’t buying any. Instead we will be traveling overland as much as possible. For most of our trip this will mean using buses or rail travel where possible. Traveling slowly overland, besides being less expensive, also allows us to get a better feel for a place and see all of it, not just the touristy hot spots. It’s also another way for us to meet and interact with locals.

We may, upon reaching Europe, purchase a RTW airline ticket, allowing us one way passage through the rest of the globe at vastly reduced rates. We are not starting out with a ticket like this because they limit, amongst other things, our travel timeframe and the destinations we can travel to. Once we finish the Americas and Europe however we’ll likely be OK flying over large parts of war-torn Eurasia and so one of these tickets might work out better for us then.

So we’ve explained how we intend to save our money on the everyday activities but that is only so that we have the money to spend when it comes time to do the not so everyday activities. We hope to get SCUBA certified, hike Machu Picchu, tour the pyramids at Giza, go on an African Safari, and well, you get the picture.

Part 2 on how we’ve made this a reality. For Part 1 – The Decision – Click here.

One of the first things people ask us about the trip is how much we’ve saved. More important than the answer to that question is how we’ve saved. In my last post I talked about the decision to take this trip but more than a decision, it was the setting of a goal.

When I graduated from undergrad I had approximately $50k in student loans, when Jillian graduated a year later she had even more. It was a tremendous amount of money and far more than we have saved for the trip even now. To deal with it all we had to make it manageable. About 40% of our loans were ‘public’ loans which we were able to consolidated at extremely low interest rates, these loans still remain and we merely pay the minimum amount required by us each month. The remaining ‘monster’ portion had a much larger interest rate so we focused our efforts on paying that off as quickly as possible. For years every spare cent we had went to SallieMae and CitiBank as we payed off principal as quickly as possible.

You are probably asking how we managed to send that kind of money to the lenders. As I mentioned above, the decision to travel was as much a goal as it was a decision. I could sit here and give a listing of websites, all supplying different ways to manage money, but that wouldn’t really be very interesting. The way I see it, spending for twenty-year-olds without children falls into two categories…rent and beer.

Luckily, our housing situation fell into our lap. Right before we got engaged we managed to move into a co-op. The specifics of how that works is worthy of a chapter in a real-estate text book but I will explain the basics. We were able to build equity, reap tax benefits, pay a government ‘subsidized’ rent, and just save a lot of money. If it wasn’t for our housing, our student loans may have been overwhelming. So thats the first category.

As for the second, we aren’t exactly teetotalers. We do drink and we do go out with friends, we are just sure to watch our spending when we do. Our hobbies, mountain biking, kayaking and orienteering, help with that in that if we spend the whole day outside running around, we usually don’t feel like staying out till 2am at a bar working up a 3-digit tab. Better yet, since we bought the equipment we’ve hardly had to pay a cent to use it. The river is free and so are the trails.

Lastly, and the least fun, has been tracking our spending. As a business consultant I’ve had a love affair with MS Excel since my first day at work. A month into my tenure I created a spreadsheet to use to track my spending and as time passed this spreadsheet became more and more robust. For years now, every cent we’ve spent has been tagged and tracked in our spreadsheets and that has made us far more disciplined than we ever could have been on our own. Overtime many people have seen this sheet and asked about it and now we are – shameless plug – developing a free web service to do the same. We’ll update all of you once this is ready to be put to use.

I’ve said it once and I’ve said it before, the most important thing we did to make this possible was set a goal…that simple. Pay off the big loans and save as much as we could. Naturally we’ve had some extra help along the way from both of our parents, help that has made a world of difference, but we could have just as easily blown those gifts in Atlantic City or on a new TV…that we really really really wanted. It all came down to a single goal from a single decision; we stuck to our plan, made sacrifices when we needed, and now its time to go.

Stay tuned for Part 3 of our decision: how we plan to make our savings last as long as possible.