How I Saved $10K for Travel in 5 Months
How did I save enough money to travel for a year? When I made the decision to move out of my apartment, quit my job, and head to Australia, I knew that I would have to save aggressively to do it. For my previous backpacking trips, I could get by on less than $1,500 for three weeks. I knew this trip was going to be a different beast, but I was determined to save as much as I could so that I wouldn’t have to pinch pennies abroad for a whole year.
One of the main reasons I did not take off on a round-the-world trip was because I wanted the Australian work / holiday visa. The whole point of paying for and getting the visa was so that I could make money as I traveled. Being able to work legally in Australia gave me peace of mind because I knew that I could earn money along the way and even save money.
I started saving for Australia in June 2016. I wasn’t ready to give up my annual, three-week backpacking trip, so even with Australia on the horizon, I went to Belize in May. I had about $2,500 saved for Belize, and when I came back, I had $312 remaining. So, that’s what I started with when it came to saving for Australia.
I’m going to share how much I saved, how I did it, and how you can do it, too.
My Personal Goals
As I started saving, I knew that there were several personal goals I wanted to accomplish. I wanted to be confident that I was leaving for Australia in good financial standing. I made three pledges to myself:
- I will pay off all my credit card debt before I leave.
- I will finish my master’s degree abroad so that my student loans will remain in deferment.
- I will save at least $10,000 for Australia.
While I want to be transparent in this post, I’m not going to share what my salary was because I'd be sharing the similar salaries of my colleagues and close friends. I had three years of professional work experience and was a fundraiser for a highly reputable, midsize nonprofit. I made a good salary that was mid-range with other professional fundraising jobs across the country like mine. The nonprofit I worked for also offered annual bonuses and merit pay increases based on performance. At the same time, it's not like I was working in the private sector for a multinational company.
Budgeting for My Trip
I did not initially create a budget for my year-long trip. Instead of doing the math to figure out how much I might spend in each country, I set a savings goal based on how much time I had left before I quit my job and how many paychecks I had remaining. Since I only had five months left, I calculated the maximum I could save from each paycheck if I cut back drastically on expenses during that time frame. That number ranged from $10,000 - $13,000.
I decided that $10,000 would be my savings goal, because I knew other expenses would inevitably come up.
Most people should start with creating a budget, though. You should determine a daily budget depending on where you want to go and for how long, plus the potential costs for travel gear, plane tickets, travel insurance, and vaccinations. The presumed cost of your trip should be your savings goal!
My Monthly Expenses
My first step was looking at what I was spending every month. Unfortunately, I had never gotten in the habit of keeping a budget or tracking my finances. That was the first change I had to make. I started tracking every dollar on a Google spreadsheet and I was shocked at what I was spending every month. This is what my monthly expenses looked like before I made lifestyle changes:
Rent: $1,470 for a one-bedroom apartment in a luxury complex in downtown Indy (includes parking, water, and trash)
Student loans: $225
Food & Entertainment: approx $400 (This covers anything from my Blue Apron meals, grabbing lunch or dinner, nights out with friends, trips to Chicago or Nashville, etc. Sometimes this number was above $400.)
Gas: approx $150 (This is a guess because I got reimbursed for gas when I used my personal car for work travels.)
Misc: approx $150 (Usually whatever I spent at Target or Walgreens aka black holes that sucked me in.)
I also made credit card payments on top of all my monthly expenses, which is what depleted my budget every month.
I was spending more than I was earning mainly due to the cost of my apartment. So I would slap purchases on my credit card, then would aggressively pay down my credit card the next month, only to not have enough cash funds for my budget that month. So the cycle started again. I had to change my lifestyle to actually be able to afford to quit my job and make Australia a reality.
Student Loan Debt
Yay for more transparency! My total student debt, from both my undergraduate and graduate degrees, is $45K. I'm in the same, sinking boat as any other millennial.
My student loans have been in deferment since February 2015, which is when I enrolled in grad school part-time. I do not have a minimum loan payment right now since I am enrolled in school, but I continued to make regular $225/month payments up until I left.
However, to keep my student loans in deferment, I must be enrolled part-time, which is why I am taking two online classes in the spring. I will finish my degree in May 2017 and my student loans will go back into repayment November 2017, which is when I plan to be back in the US and working again.
If you plan to have student loans in repayment while you travel, you must include your monthly student loan payments as part of your savings plan. You need to multiply your monthly loan payment by however many months you plan to be abroad for and ensure you save additional money to keep those payments up. Saving for a trip while paying off student loans may sound daunting, but it can definitely be done with patience and persistence! A lot of travel bloggers I follow continue to pay off student debt while traveling.
Credit Card Debt
I used my Barclay credit card to pay for my flights to Thailand and Belize. I stopped using that card in June 2017 and paid it off in full the next month.
I was using my Sapphire credit card for all payments to rack up miles, but I also used it to purchase a new laptop and whenever I ran out of cash money for the month (which was often, since I wasn't budgeting in the beginning). I paid off that card in full the day before I left for Australia, which cost me $2,000. It was hard to part with that money, but I knew it had to be done so that I could travel debt free -- it was one of the promises I made to myself.
How My Savings Added Up to $10K
1. I moved out of my downtown apartment. I had lived in a brand new apartment that was right next to a huge sports complex and minutes away from bars and restaurants. My walk to work was under ten minutes. I loved where I lived, but this was the first thing that had to go. Choosing not to renew my lease was what I considered finally "pulling the trigger" on my dream trip.
Note: So you might be thinking, "Oh, she didn't pay rent. That's how she saved all this money. Well, this isn't an option for me so I can't save as much." FALSE. I moved out of my apartment because the timing made sense. My 15-month lease ended in August 2016. I planned to leave in October. So even if I hadn't had the option to move in with family friends, I would have crashed on a friend's couch for two months and paid them rent. Find a way to save money on rent, whether it means downsizing to a smaller apartment further from work, moving back in with your parents (gasp!), or crashing with a friend for the last month before your trip.
My apartment cost $1470 a month. I received my $535 deposit back. Every month, every dollar that would have gone towards rent went to my travel fund instead, including my deposit. Total saved: $5,365
2. I sold everything in my apartment. I sold my couch, desk, and coffee tables on Craigslist. I gave my queen sized mattress to a friend. I sold my textbooks on eBay and old shoes and clothes on Poshmark. I got rid of everything I didn't need. Total saved: $754
3. I put any extra money into my travel account. I ran odd errands for family members and received small goodbye gifts in the form of cash. This also includes the $312 that I initially started with when I came back from Belize. Total saved: $502
4. I changed my lifestyle to cut back on monthly expenses. Every single dollar that didn't have to go to the bare necessities (gas, groceries, and student loans) went straight into my travel account. I managed my budget twice a month when I got paid. After paying bills, which were almost null after moving out of my apartment, I kept money in my personal checking account for that month's expenses. The rest immediately went into my travel fund. I also received a work bonus and pay increase; that paycheck went into my travel fund. Total saved: $4,110
Final total: $10,731
Final credit card payment: ($1,927)
Final amount I left for Australia with: $8,073
I didn't hit my savings goals every month.
In fact, I didn't leave for Australia with $10,000 as I had hoped. I made good on my promise to pay off all my credit cards, which was a $2,000 payment. That left me with $8,000. So while I did manage to save over $10,000, it was more important to me that I leave for Australia debt-free than it was to leave with $10,000.
As I cut back on expenses, I was also constantly trying to balance my new lifestyle. I knew I was leaving, so it was hard for me to turn down dinner, lunch, or drinks with friends and coworkers. I felt like I had limited time, so as my departure date got closer, I said "yes" more often because I wanted to enjoy the time I had in Indy. I also drove home to Valpo more often, which was 2.5 hours away. I wanted to see my niece and sister as much as I could. It was the same reason I decided to spend the money to go to the Wizarding World of Harry Potter with friends. I didn't want to sacrifice relationships, which are often built on social outings and experiences, when I was about to leave for a year.
How I Cut Back My Expenses
I cancelled my gym membership. I had been paying $60/month for a gym that I really loved, but it was too expensive. I switched to a YMCA for $30/month, but eventually cancelled the membership.
I stopped paying for internet and electricity. These were obviously costs that came with having an apartment, which disappeared once I moved out. I never had cable in the first place, which saved me money every month.
I stopped dating. Depressing, I know, but dating can be expensive. The moment my mind was set on Australia, I stopped going on dates. I tended to chip in on food or more drinks, which would add up quickly on dates. Plus, I didn't see the sense in dating when I knew I was leaving.
I stopped drinking coffee. I stopped buying the expensive Keurig cups for my Keurig maker and cut out my usual Starbucks coffee runs. I never craved coffee, so this was an easy habit for me to break. However, in my last few, chaotic weeks of work, Starbucks became an old friend again.
I stopped traveling. Alright, kind of. It's always hard for me to say no to travel. So I did end up going to Belize and there was no way I could deny my 13-year-old self the trip of a lifetime to the Wizarding World of Harry Potter in Florida. But I didn't commit to trips to New York City and Austin, TX, even though I really wanted to.
I stopped going out. Nights out meant Uber, bar covers, and alcohol. Bar tabs added up quickly. Instead, I was working most weekends and when I got home, I would make some mac and cheese and throw on Netflix. Exciting? Not really. Free? Yes.
I cancelled subscriptions. I was paying $60/week for Blue Apron meals that were delivered to my apartment. I loved cooking them, but the cost added up quickly and sometimes I couldn't make the meals quick enough while I traveling for work. I also cancelled magazine subscriptions.
I stopped getting my hair cut. Haircuts were $50-60 and I was getting them on a regular basis to keep my hair shoulder-length. I let my hair grow out for a year to save money.
I went out to eat less often. This was the hardest social habit for me to change. It was so easy to grab food and since all my friends lived downtown, it was even easier to go out to dinner with them. It took a lot of willpower to turn down plans. I'd like to say I cooked more often at home, but in reality I was living off of peanut butter and jellies and cereal. It was like college all over again.
I worked. A lot. I don't know if this counts exactly as cutting back on expenses, but since I was spending a lot more time working, I had less time to spend money. I loved my job so much that it was really important to me to leave things in the best possible state that I could. I dived even more into my work, and that kept me busy enough that I just didn't have time to spend money on miscellaneous, pointless things.
Some of these changes were easy, others were not. I recognize that some of these habits weren't super healthy, but I considered many of these changes to be short-term sacrifices for a long-term trip.
I was fortunate enough to be able to move in with Donna, a college alumna, and Ben, her husband. They had hosted me in their home three years previously, when I was interning during the summer in Indianapolis. When I told Donna about my plans for Australia and that my lease was ending in July, she didn't hesitate to offer me a room. Neither of them would take rent payment from me, although I tried. I was so grateful for their hospitality and they became like second family to me.
My lifestyle changed much more quickly once I moved in with them. I wasn't going out with friends or drinking because I no longer lived downtown; I now lived 30 minutes north of Indy. I went to bed earlier because Donna and Ben went to bed early. I stopped spending money on dinners because Ben enjoyed cooking. I know I was very lucky to be able to move in with Donna and Ben, especially considering that my family's home was more than two hours away and that would not have been feasible.
I had to pay $600 to fix the bumper of my car after I hit a rock in a parking lot (that's another story..). I had held the bumper together for four months with zip-ties, but they wouldn't last much longer. I wanted to cry when I looked at the $600 bill. With any unexpected expenses, I put the charge on my credit card and paid it off the next month with my paycheck instead of dipping into my travel fund. I never touched the money in my travel fund.
Other Ways I Saved Money
Travel vaccinations: My employer contributed annually to a Health Savings Account, which can only be used for medical costs. I decided to get rabies and typhoid vaccinations. The rabies vaccinations cost $728 total. The typhoid vaccination cost $90. Neither was covered by insurance because they are considered elective vaccinations. I paid for all the vaccinations using the HSA my employer contributed to, so it was at no cost to me. Total saved: $818
My flight: I paid $0 for my flight because I used all the points from my Chase Sapphire credit card to pay for the one-way ticket. It took me about a year to earn those points based on my normal spending, plus the initial sign up bonus. Total saved: $861
By taking advantage of my employer's HSA benefits and using miles to pay for my flight, I saved $1,679 that I didn't have to spend. More money for scuba diving!
Sooo, Why Am I Working?
If I saved $8,000 before going abroad, why am I working at a pizza shop? Well, because I've spent more than half of my savings already.
I spent $942 before I even left America, all on Australia-related costs. This includes travel insurance for three months (which I will have to re-purchase soon), travel gear (sandals, packing cubes, toiletries, Havaianas), the redesign of my blog, and SquareSpace hosting for one year.
I've spent $3,935 in Australia since my plane landed on October 22. This includes everything from accommodation, food, phone data, transportation, and activities / excursions. Activities and transportation are the bulk of this expense, from $500 for the scuba diving liveaboard to the $320 Greyhound bus pass.
But, to put things in perspective: $4,000 in three months might seem like a lot, but I was spending $3,000 a month in Indy before I changed my lifestyle. It is cheaper for me to be traveling the world than it is for me to be living in a big city. My financial habits and financial situation are in way better shape abroad than at home!
I have enough funds left to be on the road for another 3 months, so I don't technically have to be working right now. But I've met too many backpackers who waited until they were at $0 to start looking for work, and I don't want to be in that same, stressful situation. I also want to have enough money to splurge a bit in Southeast Asia - stay in some AirBnBs, book another scuba diving liveaboard, maybe get a spa treatment (wild!).
Between working at the restaurant, saving money on accommodation in Agnes, and my 2016 tax refund, I should leave this little town with another $5,000 before I continue on with my travels. That should comfortably get me through the rest of the year!
My Tips for Saving Money for Travel
I've re-written this section several times to boil it down to what I think is absolutely essential, whether you are saving money for a two-week trip or for a round-the-world trip.
- Open a separate account for your travel fund. I recommend Charles Schwab's high yield online checking account. Don't touch the money in this account unless it is related in any way to your upcoming trip.
- Figure out your monthly expenses and determine where you can cut back. Organize your expenses into categories: food, entertainment, gas, beauty, even coffee if it's a significant expense. Determine which categories are absolutely essential and which categories you can cut back on. Once you've determined your essential monthly expenses, add an additional $150 as a financial cushion, and subtract the difference from your paycheck.
- When your paycheck comes in, deposit the difference into your travel fund. Don't hesitate or try to move the numbers around. Stick to the budget you created!
Saving money and changing your lifestyle is not easy, but it is definitely worth it. You'll know it the moment you're sitting on a stunning beach in Bali, exploring the cobblestoned streets of Spain, taste-testing the best beers in Ireland, or sharing food with locals in Peru. The world is waiting for you to make it happen!
Questions? Let me know! Shoot me a message or leave a comment. Thanks!
(Main photo credit to Marta Rzepecka)